UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
GRAND PRIX ASSOCIATION OF LONG BEACH, INC.
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(Name of issuer)
COMMON STOCK, NO PAR VALUE
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(Title of class of securities)
386 176 10 1
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(CUSIP number)
ROBERT H. KURNICK, JR.
3270 W. BIG BEAVER ROAD, SUITE 130
TROY, MICHIGAN 48084
(248) 614-1116
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(Name, address and telephone number of person
authorized to receive notices and communications)
AUGUST 11, 1997
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(Date of event which requires filing of this statement)
If the filing person has previously filed a statement on Schedule 13G
to report the acquisition which is the subject of this Schedule 13D, and is
filing this schedule because of Rule 13d-1(b)(3) or (4), check the following
box. |_|
Check the following box if a fee is being paid with this statement. |_|
(A fee is not required only if the reporting person: (1) has a previous
statement on file reporting beneficial ownership of more than five percent of
the class of securities described in Item 1; and (2) has filed no amendment
subsequent thereto reporting beneficial ownership of five percent or less of
such class. See Rule 13d-7.)
(Page 1 of 10 Pages)
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CUSIP NO. 386 176 10 1 SCHEDULE 13D PAGE 2 OF 10 PAGES
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1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Penske Motorsports, Inc.
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [ ]
(b) [X]
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3 SEC USE ONLY
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4 SOURCE OF FUNDS WC
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEM 2(d) or 2(e)
[ ]
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6 CITIZENSHIP OR PLACE OF ORGANIZATION DELAWARE
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NUMBER OF 7 SOLE VOTING POWER 315,000
SHARES -------------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER 315,000
OWNED BY -------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER 315,000
REPORTING -------------------------------------------
PERSON WITH: 10 SHARED DISPOSITIVE POWER 315,000
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 315,000
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES [ ]
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 7.2%
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14 TYPE OF REPORTING PERSON CO
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ITEM 1. SECURITY AND ISSUER.
This report concerns the common stock, no par value (the "Common
Stock"), of Grand Prix Association of Long Beach, Inc. (the "Company"), whose
principal executive offices are located at 3000 Pacific Avenue, Long Beach,
California 90806.
Effective August 11, 1997, Penske Motorsports, Inc., a Delaware
corporation ("PMI"), acquired 315,000 shares of Common Stock of the Company
pursuant to that certain Stock Purchase Agreement, dated as of August 8, 1997
(the "Stock Purchase Agreement"), between PMI and the Company a copy of which is
attached as EXHIBIT 1.
In connection with such acquisition, PMI also entered into (i) that
certain Registration Rights Agreement, dated as of August 8, 1997 (the
"Registration Rights Agreement"), between PMI and the Company, a copy of which
is attached as EXHIBIT 2, and (ii) that certain Right of First Refusal
Agreement, dated as of August 8, 1997 (the "Right of First Refusal Agreement"),
among PMI, Midwest Facility Investments, Inc., a Florida corporation ("Midwest")
and the Shareholders listed on SCHEDULE I thereto, a copy of which is attached
as EXHIBIT 3 (collectively, the Stock Purchase Agreement, the Registration
Rights Agreement and the Right of First Refusal Agreement shall be refereed to
as the "Transaction Documents").
The summary set forth below of certain aspects of the transactions
described in the Transaction Documents do not purport to be a complete
description thereof and is qualified in its entirety by reference to the
exhibits hereto, which are incorporated herein for all purposes.
ITEM 2. IDENTITY AND BACKGROUND.
(a) NAME.
The persons filing this Statement include is PMI.
PMI is the record holder of 315,000 shares of Common Stock of the
Company, which are the subject of this filing.
PMI shall be referred to herein as the "Reporting Person". Each
executive officer, director and controlling person of PMI is a
person identified pursuant to Instruction C to Schedule 13D and
therefore the information required by Items 2 through 6 of this
Statement is provided for such persons (all of whom are
collectively referred to herein as the "Instruction C
Individuals"). The controlling persons of PMI include (i) PSH
Corp., a Delaware corporation ("PSH"), which is the record holder
of 7,783,875 shares of common stock, par value $.01 per share, of
PMI ("PMI Common Stock"); (ii) Penske Performance, Inc., a
Delaware corporation ("PPI"), which owns directly 80% of the stock
of PSH; (iii) Penske Corporation, a Delaware corporation ("PC"),
which owns directly all of the stock of PPI; and (iv) Roger S.
Penske, a United States citizen ("Penske"), who beneficially (x)
owns approximately 57% of the stock of PC, (y) owns 61,479
additional shares of PMI
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Common Stock, and (z) beneficially owns 8,200 shares of PMI Common
Stock, held by relatives of Penske (collectively, PSH, PPI, PC and
Penske shall be referred to as the "Pesnke Group").
For additional information with respect to PSH, PPI, PC and
Penske, see the Schedule 13G statements filed by each of PSH, PPI,
PC and Penske with respect to each of their beneficial ownership
of PMI Common Stock, dated as of February 12, 1997 and filed with
the Securities and Exchange Commission on or about February 12,
1997.
The name of each Instruction C Individual other than the Penske
Group (and the members thereof) is set forth on EXHIBIT 4 hereto.
The relationship between the Reporting Person and the Instruction
C Individuals (including the Penske Group) does not create a
group; consequently, the Instruction C Individuals disclaim
membership in a group with respect to the Company.
The relationship between the Reporting Person, Midwest and the
other parties to the Right of First Refusal Agreement also does
not create a group; consequently, the Reporting Person disclaim
membership in a group with such parties (the "Grand Prix Right of
Refusal Parties").
Notwithstanding the disclaimers of group membership above, voting
and dispositive power with respect to the 315,000 shares of Common
Stock that are the subject of this Statement may be deemed to be
shared among PMI and the Penske Group, the Instruction C
Individuals and the Grand Prix Right of Refusal Parties, primarily
due to (i) the control of PMI by the Penske Group and the other
Instruction C Individuals, (ii) the limitations on PMI's transfer
of Company Common Stock set forth in the Right of First Refusal
Agreement, and (iii) the director voting provisions set forth in
Article Five of the Right of First Refusal Agreement. See Item
5(b).
(b) ADDRESS OF PRINCIPAL BUSINESS OFFICE OR, IF NONE, RESIDENCE.
(i) The business address of PMI is 13400 West Outer Drive,
Detroit, Michigan 48239-4001.
(ii) The business address of each of the Instruction C
Individuals (other than the Penske Group) is set forth on
EXHIBIT 4 hereto.
(c) THE PRINCIPAL BUSINESS.
(i) The principal business of PMI is engaging in the operation,
ownership, promotion and marketing of motorsports activities
in the United States. In connection with PMI's principal
business, PMI is investing in the Company and to own the
Common Stock of the Company.
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(iii) Each of the Instruction C Individuals' principal occupation
or employment and the name, principal business and address
of any corporation or other organization in which such
employment is conducted (other than the Penkse Group) is set
forth on EXHIBIT 4.
(d) CRIMINAL CONVICTIONS.
Neither of the Reporting Person nor, to the best knowledge of the
Reporting Person, any of the Instruction C Individuals has been
convicted in a criminal proceeding during the last five years.
(e) CIVIL PROCEEDINGS.
Neither of the Reporting Person nor, to the best knowledge of the
Reporting Person, any of the Instruction C Individuals has been
subject to a judgment, decree or final order enjoining future
violation of or prohibiting or mandating activities subject to
federal or state securities laws or finding any violation with
respect to such laws during the last five years.
(f) CITIZENSHIP.
PMI is a Delaware corporation. All of the Instruction C
Individuals are citizens of the United States.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
The funds used to make the acquisition of securities which require the
submission of this Statement came from the working capital of PMI.
ITEM 4. PURPOSE OF TRANSACTION.
The shares of Company Common Stock referred to in Item 5 below were
acquired by the Reporting Person to provide a significant equity investment in
the Company. At the present time, but subject to the Reporting Person's
continuing evaluation of the factors noted below, it is intended that the
Reporting Person will retain such shares. Pursuant to the Stock Purchase
Agreement, the Company shall cause the size of its Board of Directors to be
increased by one and appoint one individual designated by PMI as a member of the
Board of Directors of the Company. PMI's designee on the Company's Board may
attempt to influence the operating and financial policies of the Company as part
of the Reporting Person's equity investment. Whether the Reporting Person
purchase or otherwise acquire any additional shares of Company Common Stock, and
the amount, method and timing of any such purchases or acquisitions, will depend
upon the Reporting Person's continuing assessment of pertinent factors,
including, among other things: the limitations on acquisitions and dispositions
of Common Stock and other activities set forth in the Transaction Documents; the
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availability of such shares for purchase or acquisition at particular price
levels or upon particular terms; the business and prospects of the Reporting
Person and the Company; other business and investment opportunities available to
the Reporting Person; economic conditions; the attitude and actions of other
shareholders of the Company; the availability and nature of opportunities to
dispose of the Common Stock; and other plans and requirements of the Reporting
Person. Depending upon their assessment of these factors from time to time, the
Reporting Person may elect to acquire additional shares of Company Common Stock
(by means of privately negotiated purchases of shares, market purchases, a
tender offer, a merger or otherwise) or to dispose of some or all of the Common
Stock.
Other than as mentioned above, neither the Reporting Person nor, to the
best knowledge of such persons, any of the Instruction C Individuals have any
plans or proposals that relate to or would result in:
(a) The acquisition or disposition by any person of additional
securities of the Company;
(b) Any extraordinary corporate transactions, such as mergers,
reorganizations or liquidations, involving the Company or any of its
subsidiaries;
(c) A sale of transfer of a material amount of assets of the Company or
any of its subsidiaries;
(d) A change in the current board of directors or management of the
Company, including any plans or proposals to change the number or term of
directors or to fill any existing vacancies on the board;
(e) Any material change in the current capitalization or dividend
policy of the Company;
(f) Any other material change in the Company's business or corporate
structure;
(g) Changes in the Company's charter or bylaws or other actions which
may impede the acquisition of control of the Company by any person;
(h) Causing a class of the Company's securities to be delisted from a
national securities exchange or to cease to be authorized to be quoted in an
inter-dealer quotation system of a registered national securities association;
(i) A class of equity securities of the Company becoming eligible for
termination of registration pursuant to ss.12(g)(4) of the Securities and
Exchange Act of 1934; or
(j) Any action similar to those enumerated above.
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ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
(a) (i) The aggregate number of shares beneficially owned by the
Reporting Person is 315,000 shares of Company Common Stock, amounting to
approximately 7.2% of the Company's outstanding Common Stock, based on the
representations and warranties of the Company pursuant to the Stock Purchase
Agreement.
(ii) To the best knowledge of the Reporting Person, none of
the Instruction C Persons (including the Penske Group) beneficially owns any
shares of Company Common Stock.
(b) (i) PMI may be deemed to share voting and dispositive power with
respect to the 315,000 shares of Common Stock of the Company subject to this
Statement with the members of the Penske Group and the other Instruction C
Individuals. See Item 1 above. However, each member of the Penske Group and each
other Instruction C Individual disclaims beneficial ownership of these shares
and this Statement shall not be deemed an admission that the Penske Group is the
beneficial owner of such securities.
(b) (ii) The Right of First Refusal Agreement contains certain
provisions relating to (x) voting of shares of Common Stock for the election of
directors of the Company, and (y) transfers of stock. Accordingly, the Reporting
Person may be deemed to share voting and dispositive power with Midwest and the
other Grand Prix Right of Refusal Parties. However, this Statement shall not be
deemed an admission that any of the Grand Prix Right of Refusal Parties
beneficially own any of the Common Stock held of record by PMI. Moreover, the
Reporting Person expressly disclaim beneficial ownership of the shares of Common
Stock held of record by the Grand Prix Right of Refusal Parties.
(c) Except as disclosed herein, there have been no transactions in the
securities of the Company by the Reporting Person nor, to the best knowledge of
the Reporting Person, by the Instruction C Individuals during the past sixty
days.
(d) Not applicable.
(e) Not applicable.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO SECURITIES OF THE ISSUER.
Reference is made to the Transaction Documents, copies of which are
attached as Exhibits 1, 2 and 3 and are incorporated herein by reference.
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ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
EXHIBIT
NUMBER DESCRIPTION
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1. Stock Purchase Agreement, dated as of August 8, 1997, by and between
Penske Motorsports, Inc. and Grand Prix Association of Long Beach, Inc.
2. Registration Rights Agreement, dated as of August 8, 1997, by and
between Penske Motorsports, Inc. and Grand Prix Association of Long
Beach, Inc.
3. Right of First Refusal Agreement, dated as of August 8, 1997, by and
among Midwest Facility Investments, Inc., Penske Motorsports, Inc.,
and the Shareholders listed on Schedule I thereto.
4. Names, Addresses and Principal Occupations of Executive Officers,
Directors and Controlling Persons of the Reporting Person.
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SIGNATURES
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Date: August 21, 1997 PENSKE MOTORSPORTS, INC.
By: /s/ ROBERT H. KURNICK, JR.
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Robert H. Kurnick, Jr.
Senior Vice President, General Counsel
and Secretary
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<TABLE>
<CAPTION>
INDEX TO EXHIBITS
EXHIBIT NO. DESCRIPTION
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<S> <C>
1 Stock Purchase Agreement dated August 8, 1997, by and between
Penske Motorsports, Inc. and Grand Prix Association of Long
Beach, Inc.
2 Registration Rights Agreement dated August 8, 1997, by and
between Penske Motorsports, Inc. and Grand Prix Association of
Long Beach, Inc.
3 Right of First Refusal Agreement, dated August 8, 1997, by and
among Midwest Facility Investments, Inc., Penske Motorsports,
Inc. and the Shareholders listed on Schedule I thereto.
4 Names, Addresses and Principal Occupations of Executive
Officers, Directors and Controlling Persons of the Reporting
Person
</TABLE>
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EXHIBIT 1
STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT (the "Agreement") dated as of August 8, 1997,
by and between Penske Motorsports, Inc., a Delaware corporation (the
"Purchaser") and Grand Prix Association of Long Beach, Inc., a California
corporation (the "Corporation").
RECITALS
A. Subject to the terms and conditions, set forth herein, the Purchaser
desires to purchase from the Corporation, 315,000 shares of Common Stock, no par
value, of the Corporation (the "Shares"), representing 7.2% of the Corporation's
issued and outstanding Common Stock.
B. The Corporation desires to sell the Shares to Purchaser on the terms
and subject to the conditions set forth herein.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and mutual
covenants set forth in this Agreement and other good and valuable consideration,
the receipt and sufficiency of which is hereby acknowledged, Purchaser and the
Corporation agree as follows:
ARTICLE ONE 1
1.1 SALE AND PURCHASE OF THE SHARES. On the basis of the
representations, warranties, covenants and agreements, and subject to the terms
set forth herein, the Corporation hereby issues and sells to the Purchaser, free
and clear of any and all liens and encumbrances of whatever character created by
the Corporation ("Liens") and the Purchaser hereby purchases, acquires and
accepts delivery from the Corporation, the Shares, for an aggregate purchase
price of Three Million Eight Hundred Eighty Seven Thousand One Hundred Dollars
($3,887,100) (the "Purchase Price").
1.2 DELIVERIES. In order to give effect to the transaction
contemplated by Section 1.1 hereof, (i) the Purchaser hereby delivers to the
Corporation a bank cashier's check or wire transfer of immediately available
funds in the amount of the Purchase Price, and (ii) the Corporation hereby
delivers to the Purchaser certificates representing the Shares.
ARTICLE TWO 2
2.1 REPRESENTATIONS AND WARRANTIES OF THE CORPORATION. In order to
induce the Purchaser to enter into this Agreement and to purchase the Shares,
the Corporation hereby represents and warrants to the Purchaser as follows:
(a) ORGANIZATION; QUALIFICATION. The Corporation is a
corporation duly incorporated, validly existing and in good standing under the
laws of the State of California. The Corporation has full corporate power and
authority to own and operate its properties and assets and to conduct and carry
on its business as it is now being conducted and operated. The Corporation (i)
is duly qualified to do business and is in good standing in each jurisdiction in
which the ownership or lease of real property or the conduct of its business
requires it to be so qualified and (ii) has all governmental licenses,
certifications, permits, approvals and other authorizations necessary to own its
properties and assets and carry on its business as it is presently being
conducted, except, in each case, where the failure to so qualify or be in good
standing, or to have obtained any such governmental licenses, certifications,
permits, approvals and other authorizations, could not reasonably be expected to
have a Material Adverse Effect (as hereinafter defined).
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(b) AUTHORIZATION. The Corporation has full corporate power
and authority to execute and deliver this Agreement, to perform its obligations
hereunder and consummate the transactions contemplated hereby. This Agreement
has been duly authorized by all necessary corporate action on the part of the
Corporation, has been duly and validly executed and delivered by the
Corporation, and (assuming due execution and delivery by the Purchaser)
constitutes the legal, valid and binding obligation of the Corporation,
enforceable in accordance with its terms, except as such enforcement may be
limited by general equitable principles or by applicable bankruptcy, insolvency,
moratorium, or similar laws and judicial decisions from time to time in effect
which affect creditors' rights generally.
(c) CAPITALIZATION. The authorized capital stock of the
Corporation consists of (i) 20,000,000 shares of Common Stock, no par value (the
"Common Stock"), of which 3,768,286 shares of Common Stock are issued and
outstanding as of the date hereof; (ii) 10,000,000 shares of Preferred Stock, no
par value (the "Preferred Stock"), of which none of the shares of the Preferred
Stock are issued and outstanding as of the date hereof other than the "Series B
Preferred Stock" (as hereinafter defined); and (iii) 250,000 shares of Series B
Convertible Preferred Stock ("Series B Preferred Stock"), of which 250,000
shares of the Series B Preferred Stock are issued and outstanding as of the date
hereof. The Shares have been duly authorized and upon payment of the Purchase
Price in accordance with the terms hereof will be validly issued, fully paid and
non-assessable, and have not been subject to or issued in violation of (i i) any
preemptive or other rights of any Person to acquire securities of the
Corporation, or (ii ii) subject to the accuracy of the representations and
warranties of Article Three, any applicable securities laws. Except as set forth
in SCHEDULE 2(C) to this Agreement, there are no outstanding (i) securities or
instruments convertible into or exchangeable for any of the capital stock of the
Corporation; (ii) options, warrants, subscriptions or other rights to acquire
capital stock of the Corporation; or (iii) commitments, agreements or
understanding of any kind to which the Corporation is a party, including
employee benefit arrangements, relating to the issuance or repurchase by the
Corporation of any capital stock of the Corporation, any such securities or
instruments convertible into or exchangeable for capital stock of the
Corporation or any such options, warrants or rights. As of the date hereof, the
Corporation had reserved not more than (x) 474,718 shares of Common Stock for
issuance upon exercise of outstanding stock options, and (y) 400,000 shares of
Common Stock for option and other "Section 423" stock purchase grants that may
be made in the future pursuant to the Corporation's 1996 stock option plan, in
each case subject to adjustment pursuant to the anti-dilution provisions
thereof. SCHEDULE 2(C) shall also set forth the name of the holder and vesting
schedule for each outstanding convertible security, option, warrant or similar
right, as well as the number of shares of Common Stock subject thereto.
(d) NO VIOLATION. Except as set forth in Schedule 2(d), the
execution, delivery and performance of this Agreement by the Corporation does
not and will not (i) conflict with or violate any provision of the Corporation's
Articles of Incorporation or By-laws, (ii) violate or breach any provision of,
or constitute or result in a default (or an event which, with notice or lapse of
time or both, would constitute such a default) under, or result in the
imposition of any lien upon or the creation of a security interest in the
assets, business or properties of the Corporation pursuant to, any note, bond,
mortgage, indenture, deed, license, franchise, permit, lease, contract or other
agreement to which the Corporation is a party or by which the Corporation or any
of its assets is bound or subject, (iii) violate any order, writ, injunction,
decree, judgment or ruling of any court or governmental authority applicable to
the Corporation, (iv) violate any statute, law, rule or regulation applicable to
the Corporation, or (v) require the Corporation to obtain any waiver, consent,
approval or authorization of, or make any filing with, any governmental
authority, except such reports as may be required to be filed by the Corporation
with the Securities and Exchange Commission (the "Commission") pursuant to
Regulation D promulgated under the 1933 Act (as hereinafter defined) or the
Securities and Exchange Act of 1934 (the "1934 Act").
(e) SEC REPORTS. The Corporation has filed all forms,
reports and documents required to be filed with the Commission prior to the date
hereof, and has heretofore delivered or made available to the Purchaser, in the
form filed with the Commission, its (i) Annual Report on Form 10-KSB for the
fiscal year ended November 30, 1996, (ii) its Quarterly Reports on Form 10-QSB
for the quarters ended February 28, 1997 and May 31, 1997, and (iii) its Proxy
Statement with respect to the 1997 annual
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meeting of its shareholders (collectively, the "SEC Reports"). The SEC Reports
(i) were prepared in all material respects in compliance with the requirements
of the 1934 Act, and (ii) did not at the time they were filed contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. The audited financial
statements and unaudited interim financial statements of the Corporation
included in such SEC Reports were prepared in accordance with generally accepted
accounting principles applied on a consistent basis during the periods involved
(except (A) as otherwise indicated in such financial statements and the notes
thereto or, in the case of audited statements, in the related report of the
Corporation's independent accountants or (B) in the case of unaudited interim
statements, to the extent they may not include footnotes or may be condensed or
summary statements), and fairly present the consolidated financial position,
results of operations and cash flows of the Corporation as of the dates thereof
and for the periods indicated therein (subject, in the case of any unaudited
interim financial statements, to normal year-end audit adjustments).
(f) ABSENCE OF CERTAIN CHANGES. Except as set forth in
Schedule 2(f), since November 30, 1996, there has not been (i) any event or
change in circumstances that has had or could reasonably be expected to have a
material adverse effect on the business, financial condition, results of
operations, properties or prospects of the Corporation and its subsidiaries
taken as a whole or on the ability of the Corporation to timely consummate the
transactions contemplated hereby (a "Material Adverse Effect"), or (ii) any
damage, destruction or loss that has had or could reasonably be expected to have
a Material Adverse Effect.
(g) STATUS, TITLE TO ASSETS.
(i) GENERAL. Except as disclosed in Schedule 2(g)
attached hereto or in the SEC Reports, the Corporation has good and
marketable title to all the properties and assets reflected in the
latest audited balance sheet included in such SEC Reports (except
properties sold or otherwise disposed of since the date thereof in the
ordinary course of business), free and clear of all claims, liens,
charges, security interests, or encumbrances of any nature whatsoever
except (i) statutory liens securing payments not yet due and (ii) such
imperfections or irregularities of title, claims, liens, charges,
security interests, or encumbrances as do not materially affect the use
of the properties or assets subject thereto or affected thereby or
otherwise materially impair business operations at such properties, or
as do not materially impair the marketability thereof.
(ii) LEASED PROPERTIES. Except as disclosed in the
SEC Reports filed prior to the date of this Agreement, the Corporation
is the valid lessee of all material leasehold estates reflected in the
latest audited financial statements included in such SEC Reports or
acquired after the date thereof (except for leases that have expired
without default by their terms since the date thereof) and is in valid
possession of the properties purported to be leased thereunder, and
each such lease is in full force and effect and without default
thereunder in any material respect by the lessee or, to the
Corporation's knowledge, the lessor.
(h) LITIGATION AND PROCEEDINGS. Except as set forth in the
SEC Reports or SCHEDULE 2(H) attached hereto, no litigation, proceeding, whether
civil or criminal, or governmental investigation is pending or, to the
Corporation's knowledge, threatened against or relating to the Corporation or
its properties or businesses which could reasonably be expected to have a
Material Adverse Effect.
(i) TAX RETURNS AND AUDITS. The Corporation has duly filed
all federal, state, local and foreign tax returns required to be filed by it and
has duly paid or made adequate provision for the payment of all Federal income
and other material taxes that are due and payable pursuant to such returns or
pursuant to any assessment with respect to taxes in such jurisdictions, whether
or not in connection with such returns. Except as set forth in SCHEDULE 2(I),
there are no pending, or to the Corporation's knowledge, threatened, claims
asserted for taxes or assessments of the Corporation or relating to the
Corporation's present practices in computing or reporting taxes which could
reasonably be
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expected to have a Material Adverse Effect. Adequate provision has been made in
the Corporation's most recent balance sheet, included in the SEC Reports for all
then accrued and unpaid taxes, whether or not yet due and payable and whether or
not disputed by the Corporation.
(j) ENVIRONMENTAL AND SAFETY LAWS. Except as disclosed in
SCHEDULE 2(J) attached hereto, the Corporation is not the subject of any
environmental enforcement proceeding, and complies in all material respects with
all laws and regulations relating to pollution control and environmental
protection in all jurisdictions in which the Corporation is presently doing
business. In addition, the Corporation has no material liability for past
violations of such laws and regulations in jurisdictions in which the
Corporation presently does business or in the past has done business.
(k) BROKERS, FINDERS, ETC. The Corporation has not employed
any broker, finder or other intermediary in connection with the transactions
contemplated by this Agreement who might be entitled to a fee or commission from
the Corporation or the Purchaser in connection with the transactions
contemplated by this Agreement other than L.H. Friend, Weinress, Frankson &
Presson, Inc. ("L.H. Friend"). A true, correct and complete description of the
Corporation's fee and other arrangements in connection with this Agreement and
the transactions contemplated hereby with L.H. Friend is included in SCHEDULE
2(K) hereto.
ARTICLE THREE 3
3.1 REPRESENTATIONS AND WARRANTIES OF THE PURCHASER. To induce the
Corporation to enter into this Agreement and to issue and sell the Shares, the
Purchaser hereby represents and warrants to the Corporation as follows:
(a) ORGANIZATION; QUALIFICATION. The Purchaser is a
corporation duly incorporated, validly existing and in good standing under the
laws of the State of Delaware. The Purchaser has full corporate power and
authority to own and operate its properties and assets and to conduct and carry
on its business as it is now being conducted and operated. The Purchaser (i) is
duly qualified to do business and is in good standing in each jurisdiction in
which the ownership or lease of real property or the conduct of its business
requires it to be so qualified and (ii) has all governmental licenses,
certifications, permits, approvals and other authorizations necessary to own its
properties and assets and carry on its business as it is presently being
conducted, except, in each case, where the failure to so qualify or be in good
standing, or to have obtained any such governmental licenses, certifications,
permits, approvals and other authorizations, could not reasonably be expected to
have a material adverse effect on the Purchaser.
(b) AUTHORIZATION. The Purchaser has full corporate power
and authority to execute and deliver this Agreement, to perform its obligations
hereunder and consummate the transactions contemplated hereby. This Agreement
has been duly authorized by all necessary corporate action on the part of the
Purchaser, has been duly and validly executed and delivered by the Purchaser,
and (assuming due execution and delivery by the Corporation) constitutes the
legal, valid and binding obligation of the Purchaser, enforceable in accordance
with its terms, except as such enforcement may be limited by general equitable
principles or by applicable bankruptcy, insolvency, moratorium, or similar laws
and judicial decisions from time to time in effect which affect creditors'
rights generally.
(c) NO VIOLATION. The execution, delivery and performance of
this Agreement by the Purchaser does not and will not (i) conflict with or
violate any provision of the Purchaser's Articles of Incorporation or By-laws,
(ii) violate or breach any provision of, or constitute or result in a default
(or an event which, with notice or lapse of time or both, would constitute such
a default) under, or result in the imposition of any lien upon or the creation
of a security interest in the assets, business or properties of the Purchaser
pursuant to, any material note, bond, mortgage, indenture, deed, license,
franchise, permit, lease, contract or other agreement to which the Purchaser is
a party or by which the Purchaser or any of its assets is bound or subject,
(iii) violate any order, writ, injunction, decree, judgment or ruling of any
court or governmental authority applicable to the Purchaser, (iv) violate any
statute, law, rule or
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<PAGE>
regulation applicable to the Purchaser, or (v) require the Purchaser to obtain
any waiver, consent, approval or authorization of, or make any filing with, any
governmental authority, except such reports as may be required to be filed by
the Purchaser with the Commission pursuant to the 1934 Act.
(d) NO REGISTRATION, ETC. The Purchaser acknowledges that
the Corporation's offering and sale of the Shares to the Purchaser pursuant to
this Agreement (i) has not been registered under the Securities Act of 1933, as
amended (the "1933 Act"), or under the securities or "blue sky" laws, rules or
regulations of any State (collectively, the "Securities Laws") and (ii) is
intended to be exempt from registration under the 1933 Act by virtue of Section
4(2) of the 1933 Act and the provisions of Rule 506 of Regulation D promulgated
thereunder by the Commission. In furtherance thereof, the Purchaser represents
and warrants to the Corporation that it is an "accredited investor", as defined
in Rule 501 of Regulation D promulgated under the 1933 Act. The Purchaser
acknowledges that it has been afforded, prior to the execution of this
Agreement, the opportunity to ask questions of, and to receive answers from, the
Corporation and its management. The Shares are being purchased by Purchaser for
its own account for investment and not for resale or distribution to others
within the meaning of the federal Securities Laws. The Purchaser agrees that it
will not transfer the Shares unless such Shares are registered under any
applicable Securities Laws, or unless an exemption is available under such
Securities Laws.
(e) BROKERS, FINDERS, ETC. The Purchaser has not employed
any broker, finder or other intermediary in connection with the transactions
contemplated by this Agreement who might be entitled to a fee or commission from
the Purchaser or the Corporation upon execution of this Agreement or
consummation of such transactions.
ARTICLE FOUR 4
COVENANTS OF THE CORPORATION
AND THE PURCHASER
4.1 FURTHER ASSURANCES. Subject to the terms and conditions hereof,
each of the Purchaser and the Corporation agree to use all reasonable efforts to
take, or cause to be taken, all further actions and to do, or cause to be done,
all things necessary, proper or reasonably requested by the other to give effect
to the transactions contemplated by this Agreement.
4.2 PREEMPTIVE RIGHTS. If, subsequent to the date hereof and during
the "Covered Period" (as hereinafter defined), the Corporation desires to issue
and sell any shares of capital stock of the Corporation (other than "Excluded
Stock," as hereinafter defined), the Corporation shall afford the Purchaser
"preemptive rights" (exercisable within 10 days following reasonably detailed
written notice from the Corporation of the proposed sale of stock) in order to
permit the Purchaser to maintain its proportionate percentage ownership in the
Corporation (it being agreed that the Purchaser's "proportionate" ownership
shall be computed by comparing the Corporation's aggregate number of outstanding
shares of common stock to the aggregate number of shares of common stock then
held by Purchaser and acquired pursuant to this Agreement on the date hereof and
the "Right of First Refusal Agreement" being executed by Purchaser on or about
the date hereof). As used herein, the term (x) "Covered Period" shall mean the
period commencing on the date hereof and ending on the earliest to occur of (i)
the date four years after the date hereof, and (ii) the date Purchaser no longer
owns at least 80% of the Shares acquired pursuant to this Agreement on the date
hereof; and (y) "Excluded Stock" shall mean (i) securities issued upon exercise
of options or warrants or conversion of convertible securities outstanding as of
the date hereof as disclosed in SCHEDULE 2(C) to this Agreement, (ii) shares of
Common Stock issuable pursuant to stock options or "Section 423" stock purchase
rights (with per share exercise or purchase prices no less than 85% of the fair
market value of the Common Stock on the date of grant) that may be granted in
the future pursuant to the Company's 1996 and 1993 stock option plans (as such
plans are currently in effect), (iii) securities issued to Purchaser or Penske
Motorsports, Inc. ("Penske") or any of their respective affiliates, (iv) shares
of Common Stock issued in "private placement" transactions that constitute bona
fide financings or acquisitions, if and only if , with respect to
-5-
<PAGE>
this item (iv), (A) at least 50%-in-interest of the acquirors of such stock (the
"New Shareholders") enter into agreements (in form reasonably acceptable to
Purchaser) substantially the same as the Right of First Refusal Agreement (with
the term of such agreement not to exceed the then remaining term of the Right of
First Refusal Agreement), and (B) the identity of all of such New Shareholders
is approved by the Purchaser, which approval shall not be unreasonably withheld
or delayed it being agreed that approval shall not be required with respect to
(x) institutional investors, or (y) any other New Shareholder that would not be
required to file or amend a Schedule 13D statement with respect to the
Corporation by reason of its acquisition or ownership of Common Stock (a
"Non-13D Filer"); PROVIDED, HOWEVER, that upon consummation of such a financing
or acquisition where the Purchaser does not approve the Non-13D Filer (whether
or not required), the Corporation shall be obligated to file a "shelf" resale
registration statement with the Commission within 15 business days of the
consummation of such financing or acquisition with respect to the potential
public offering and sale of up to all of the shares of Common Stock owned by
Purchaser unless a "shelf" resale registration statement is then in effect or on
file with the Commission with respect to such shares of Common Stock owned by
Purchaser, and (v) securities issued pursuant to stock dividends, stock splits,
and similar "no sale" events that apply generally to all shares of outstanding
Common Stock.
4.3 RIGHT TO NOMINATE DIRECTORS. The Corporation shall (i) take all
corporate action necessary to immediately cause the size of the Corporation's
Board to be increased by one and appoint one (1) individual designated by the
Purchaser and reasonably acceptable to the Corporation's Board (it being agreed
that any of Purchaser's officers who also serves as an executive officer or
director of Purchaser shall be deemed reasonably acceptable to the Corporation's
Board), as a member of the Board of Directors of the Corporation to fill such
vacancy, and (ii) thereafter during the Covered Period use reasonable efforts,
consistent with and no less than are taken with respect to all other nominees to
the Board of Directors, to have such designee (or other reasonably acceptable
designee of Purchaser) to be nominated and elected to its Board of Directors at
each election of the Corporation's directors (it being agreed that Purchaser
shall be entitled to two (2) designees for election as director if at any time
during the Covered Period Purchaser acquires the Corporation's Common Stock
hereafter transferred by Penske, and, as a result of such acquisition, Penske or
any of its affiliates loses its rights to nominate a director designee). Each
Purchaser designee elected to the Board of Directors shall be indemnified by the
Corporation to the fullest extent permitted by law and, without limiting the
generality of the foregoing, shall be given indemnification agreement
protection, if any, by the Corporation in the same form as currently in effect
for the Corporation's current directors. The Corporation agrees to provide each
such Purchaser designee with the same compensation paid by the Corporation to
its other outside directors and to reimburse the Purchaser's designee for
out-of-pocket expenses reasonably incurred in connection with his or her
attendance of Board meetings. In the event the Purchaser's designee(s) is (are)
not elected as a member of the Board of Directors during the Covered Period, the
Corporation shall take all corporate action necessary to entitle such
designee(s) to attend and participate in all of the Corporation's Board of
Directors meetings.
4.4 PUBLICITY. Except as required by law or by the rules of the
Nasdaq Stock Market or the Commission, neither of the parties hereto shall issue
or make any public release or announcement concerning this Agreement or the
transactions contemplated hereby. In addition, each party shall use its
reasonable best efforts to first consult in advance with the other party
concerning the content of any required public release or arrangement relating to
this Agreement.
4.5 INDEMNITY. Each of the Purchaser and the Corporation hereby
agrees to indemnify and hold harmless the other and the other's officers,
directors and agents, and their respective successors and assigns, from, against
and in respect of any and all demands, claims, actions or causes of action,
assessments, liabilities, losses, costs, damages, penalties, charges, fines or
expenses, including without limitation attorney's fees and expenses, arising out
of or relating to any breach by such indemnifying party of any representation,
warranty, covenant or agreement made in this Agreement. Such right to
indemnification shall be in addition to any and all other rights of the parties
under this Agreement or otherwise, at law or in equity.
-6-
<PAGE>
4.6 ACCESS. The Corporation shall during the Covered Period: (i)
afford to the Purchaser and its agents and representatives reasonable access to
the properties, books, records and other information of the Corporation,
provided that such access shall be granted upon reasonable notice and at
reasonable times during normal business hours in such a manner as to not
unreasonably interfere with normal business operations; (ii) use its reasonable
efforts to cause the Corporation's personnel, without unreasonable disruption of
normal business operations, to assist the Purchaser in its investigation of the
Corporation pursuant to this Section 4.6; and (iii) furnish promptly to the
Purchaser all information and documents concerning the business, assets,
liabilities, properties and personnel of the Corporation as the Purchaser may
from time to time reasonably request. In addition, from the date of this
Agreement, the Corporation shall cause one or more of its officers to confer on
a regular basis with officers of the Purchaser and to report on the general
status of its ongoing operations.
4.7 SHARES. The Corporation shall use its reasonable best efforts to
take any and all action necessary after the date hereof so that the Shares sold
by the Corporation to the Purchaser are listed on the Nasdaq National Market.
4.8 USE OF PROCEEDS. Without the prior written consent of the
Purchaser, the Corporation shall use the Purchase Price proceeds solely to fund
capital expenditures for Board approved improvement projects that are intended
to enhance the Corporation's ability to promote additional sanctioned
motorsports events at the Corporation's Millington, Tennessee and/or Madison,
Illinois facility(ies).
4.9 FUTURE STOCK ISSUANCE. Without the prior written consent of
Purchaser, and notwithstanding Section 4.2 hereof, during the Covered Period,
the Corporation shall not issue (or agree to issue) any shares of capital stock
other than Excluded Stock.
4.10 STANDSTILL. Until the "Standstill Termination Date" (as
hereinafter defined), Purchaser and its affiliates (which for purposes hereof
shall not include Penske or any of its subsidiaries) will not, directly or
indirectly, without the express permission of the Corporation's Board of
Directors, (A) purchase or offer to purchase any of the Corporation's equity
securities (or securities convertible into the Corporation's equity securities),
(B) conduct a "proxy contest" to obtain control of the Corporation's Board, or
(C) enter into any non-market transaction to sell Common Stock to any person or
entity which does not agree in writing (in form reasonably acceptable to the
Corporation) to be subject to and bound by the provisions of this Section 4.10;
PROVIDED, HOWEVER, that nothing herein shall limit the right of the Purchaser
and its affiliates to (i) purchase securities pursuant to, and exercise all
other rights contemplated by, this Agreement and the "Right of First Refusal
Agreement" being executed in connection herewith, (ii) purchase additional
Common Stock that does not represent more than 5% of the Corporation's aggregate
outstanding shares of Common Stock, (iii) except to the extent limited by the
Right of First Refusal Agreement, vote shares and exercise rights as directors
and/or (iv) if and only if Purchaser owns at least 10% of the outstanding shares
of the Corporation's Common Stock by reason of (A) purchases pursuant to this
Agreement on or about the date hereof, and (B) purchases pursuant to the Right
of First Refusal Agreement, purchase additional Common Stock that, together with
such purchases and purchases made pursuant to the preceding clause (ii),
represents in the aggregate not more than 20.5% of the Corporation's aggregate
outstanding shares of Common Stock (it being agreed that any purchases pursuant
to this item (iv) shall reduce on a one-for-one basis the number of shares that
Purchaser is entitled to purchase under the Right of First Refusal Agreement);
PROVIDED, FURTHER, that the provisions of this Section 4.10 shall automatically
terminate in full if (x) the Corporation enters into a merger, asset purchase,
business combination or similar agreement pursuant to which the Corporation's
shareholders would own less than fifty percent (50%) of the surviving
corporation's capital stock, or (y) a tender offer or exchange offer commences
for the Corporation's equity securities. For purposes hereof, "Standstill
Termination Date" means the earlier of (A) the sixth anniversary of the date of
this Agreement, and (B) the date that Christopher R. Pook no longer serves as
Chief Executive Officer of the Corporation (unless within 120 days of the
termination of Mr. Pook's service a successor is appointed who is approved by
Purchaser, which approval shall not be unreasonably withheld or delayed).
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<PAGE>
4.11 BREACH OF REPRESENTATION REGARDING OUTSTANDING SECURITIES. The
parties specifically agree that if the Corporation's representation regarding
outstanding securities set forth in Section 2.3 hereof and the related SCHEDULE
2(C) is incorrect, then (x) the Corporation shall promptly file and use its
reasonable best efforts to have declared effective as soon as practicable
thereafter the shelf resale registration statement contemplated by Section 2 of
the "Registration Rights Agreement" being executed in connection herewith,
notwithstanding the time periods set forth therein, (y) the Purchaser shall have
the option to purchase (at a per share exercise price equal to the per share
Purchase Price paid pursuant to this Agreement) the number of shares equal to
50% of the excess (the "Total Shortfall Number"), if any, of (A) the "Actual
Fully Diluted Shares" OVER (B) the "Disclosed Fully Diluted Shares," AND (iii)
if and only if the fair market value of the Total Shortfall Number of shares of
Common Stock (based on the "Then Fair Market Value") exceeds $250,000, the
Purchaser shall have the right, exercisable by written notice within 60 days of
the "Shortfall Discovery Date," to require the Corporation to purchase all or
any specified number of the shares of Common Stock then held by Purchaser, at a
price equal to the greater of (i) the Then Fair Market Value, and (ii) the per
share Purchase Price paid pursuant to this Agreement. For purposes of this
Section 4.11:
(a) "Actual Fully Diluted Shares" means the sum of (i) all
shares of Common Stock to be issued Purchaser pursuant to this Agreement and all
shares to be issued to Penske on or about the date hereof, plus (ii) the
aggregate number of shares of Common Stock that are currently outstanding, to be
issued upon conversion of outstanding convertible securities, to be issued
pursuant to outstanding options, warrants or other rights, and/or to be issued
pursuant to awards that can be made in the future under the Corporation's
current employee benefit plans.
(b) "Disclosed Fully Diluted Shares" means that number of
Actual Fully Diluted Shares described in paragraph (a)(ii) above that are
accurately set forth on SCHEDULE 2(C).
(c) "Then Fair Market Value" means the average closing sales
price for the Common Stock during the ten trading days preceding the Shortfall
Discovery Date.
(d) "Shortfall Discovery Date" means the first date that the
Corporation or the Purchaser notifies the other of any misrepresentation in
Section 2(c) hereof and provides a reasonable description thereof.
Notwithstanding the above, the Total Shortfall Number shall be reduced
by the number of shares of Common Stock which become subject to and bound by the
terms of the Right of First Refusal Agreement within twenty (20) business days
subsequent to the earlier of (x) the Shortfall Discovery Date, and (y) the date
that the Chief Executive Officer or Chief Financial Officer of the Corporation
had actual knowledge of the likelihood of a Total Shortfall Number.
ARTICLE FIVE 5
MISCELLANEOUS
5.1 GOVERNING LAW. This Agreement and its validity, construction and
performance shall be governed in all respects by the internal laws of the State
of Florida (without reference to the conflict of laws provisions or principles
thereof).
5.2 BINDING EFFECT; ASSIGNMENT. This Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective successors
and assigns; but neither this Agreement nor any of the rights, benefits or
obligations hereunder shall be assigned, by operation of law or otherwise, by
either party hereto without the prior written consent of the other party.
Nothing in this Agreement, express or implied, is intended to confer upon any
person other than the parties hereto and their respective permitted successors
and assigns, any rights, benefits or obligations hereunder.
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<PAGE>
5.3 AMENDMENT; WAIVER. This Agreement shall not be changed, modified or
amended in any respect except by the mutual written agreement of the parties
hereto. Any provision of this Agreement may be waived in writing by the party
which is entitled to the benefits thereof. No waiver of any provision of this
Agreement shall be deemed to or shall constitute a waiver of any other provision
hereof (whether or not similar), nor shall any such waiver constitute a
continuing waiver.
5.4 NOTICES. Any notices, requests, demands and other communications
required or permitted to be given hereunder must be in writing and, except as
otherwise specified in writing, will be deemed to have been duly given when
personally delivered, telexed or facsimile transmitted, or three days after
deposit in the United States mail, by certified mail, postage prepaid, return
receipt requested, as follows:
IF TO THE CORPORATION: Grand Prix Association of Long Beach, Inc.
3000 Pacific Avenue
Long Beach, CA 90806
Attention: Christopher R. Pook
Telephone: (562) 490-4520
Facsimile: (562) 981-2632
WITH A COPY TO: Barry L. Dastin
Kaye, Scholer, Fierman, Hays & Handler, LLP
1999 Avenue of the Stars, Suite 1600
Los Angeles, California 90067
Telephone: (310) 788-1000
Facsimile: (310) 788-1200
IF TO PURCHASER: Penske Motorsports, Inc.
3270 W. Big Beaver Road, Suite 130
Troy, Michigan 48084
Attention: Robert H. Kurnick, Jr.
Telephone: (248) 614-1116
Facsimile: (248) 614-1125
WITH A COPY TO: Greenberg Traurig Hoffman Lipoff
Rosen & Quentel, P.A.
1221 Brickell Avenue
Miami, Florida 33131
Attention: Bruce E. Macdonough
Telephone: (305) 579-0500
Facsimile: (305) 579-0717
Any party may change its address for the purposes of this Agreement by
giving notice of such change of address to the other parties in the manner
herein provided for giving notice.
5.5 SURVIVAL. The representations and warranties of the
parties set forth in this Agreement shall survive the Closing; provided, that
all such representations and warranties shall expire, terminate and be of no
force and effect (or provide the basis for any claim) and no party hereto shall
have any obligation to indemnify any other party with respect thereto unless
written notice of any claim with respect thereto is received prior to the third
anniversary of this Agreement.
5.6 SEVERABILITY. Any term or provision of this Agreement
which is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction only, be ineffective only to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof or
affecting the validity or enforceability of such provision in any other
jurisdiction.
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<PAGE>
5.7 HEADINGS. The captions, headings and titles herein are for
convenience of reference only and shall not effect the construction, meaning or
interpretation of this Agreement or any term or provision hereof.
5.8 COUNTERPARTS. This Agreement may be executed through the
use of one or more counterparts, each of which shall be deemed an original and
all of which shall be considered one and the same agreement, notwithstanding
that all parties are not signatories to the same counterpart.
5.9 EXPENSES. Each party to this Agreement shall bear their
own fees, costs and expenses incurred in connection with the negotiation,
execution and consummation of this Agreement and the transactions contemplated
hereby.
5.10 ENTIRE AGREEMENT. Except for written agreements executed
on or about the date hereof in connection with the transactions contemplated
hereby, this Agreement merges and supersedes any and all prior agreements,
understandings, discussions, assurances, promises, representations or warranties
among the parties with respect to the subject matter hereof, and contains the
entire agreement among the parties with respect to the subject matter hereof.
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<PAGE>
IN WITNESS WHEREOF, the Corporation and the Purchaser have each duly
executed this Agreement as of the date first above written.
PENSKE MOTORSPORTS, INC.
BY: /s/ GREGORY W. PENSKE
-----------------------------------------
GREGORY W. PENSKE
GRAND PRIX ASSOCIATION OF
LONG BEACH, INC.
BY: /s/ Christopher R. Pook
-----------------------------------------
CHRISTOPHER R. POOK
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<PAGE>
<TABLE>
<CAPTION>
SCHEDULE 2(c)
NAME WARRANTS CONVERTIBLE SHARES 1993 OPTIONS (1)
- ---- -------- ------------------ ----------------
<S> <C>
Christopher R. Pook 174,435
James P. Michaelian 108,702
Dwight Tanaka 20,830 (6)
Michael S. Clark 12,691 (6)
Rick Lalor 31,728
Gemma Bannon 9,064 (6)
James Sullivan 14,939
Wayne Kees 11,952 (7)
Daniel S. Gurney 11,952 (7)
George Pellin 14,939
Joseph Ainge 14,939
Lou Mirabile 11,952 (2)(3)
Ruth Queen 11,952 (3)
John R. Queen, Jr. 11,952 (3)
</TABLE>
EDMARJON-RONBREWDAVE, LLC.
A Tennessee limited liability company
(successor in interest to Memphis International
Motorsports Corporation) 45,000 (4)
L. H Friend, Weinress,
Frankson & Presson, Inc. 31,250 (5)
- ----------------
(1) Options granted 12/93 under the Corporation's 1993 Stock Option Plan vest
one-fifth on 12/1/94, 12/1/95, 12/1/96, 12/1/97 and 12/1/98 respectively,
except as otherwise noted.
(2) Subject to right of first refusal agreement dated 8/8/97 between he and
Christopher R. Pook.
(3) All fully vested.
(4) Holders of Series B Convertible Preferred shares have the right to
convert to Common stock of the Corporation on a share for share basis, as
more fully described in the Certificate of Rights, Preferences and
Privileges of Series B Convertible Preferred Shares as amended, filed
with the California Secretary of State.
(5) Warrant to purchase 31,250 shares of common stock of the Corporation for
$10.00 per share must be exercised prior to June 24, 2001.
(6) Remaining 2/5 of original grant, 1/2 will vest on 12/1/97 and the
balance on 12/1/98.
(7) Remaining 4/5 of original grant. 1/2 is vested, 1/4 will vest on 12/1/97
and the balance on 12/1/98.
Note: 1993 Stock options, Series B Covertible Preferred shares and L.H.
Friend, etc. Warrant are all subject to certain anti-dilution provisions.
<PAGE>
SCHEDULE 2(d)
None.
<PAGE>
SCHEDULE 2(f)
CHANGE OF RACES DATES FROM MEMPHIS MOTORSPORTS PARK TO GATEWAY RACEWAY. The
Corporation's recent decision to move the ARCA and USAC Silver Crown series
events scheduled for September 13, and 14, 1997, from Memphis Motorsports Park
to Gateway Raceway due to construction delays.
WEATHER AND CONSTRUCTION DELAYS. Adverse weather conditions have caused delays
and could cause future delays in construction at Gateway Raceway and/or Memphis
Motorsports Park. Construction delays resulting from various other factors have
or could have an Material Adverse Effect on the Corporation's ability to meet
the deadlines necessary to host the major events scheduled in 1997 at Gateway
Raceway and/or Memphis Motorsports Park. The Corporation's motorsports events
could be adversely affected by weather patterns and seasonal weather changes.
MANPOWER OVERLOAD AND GROWTH MANAGEMENT. The operation of the 1997 major events
at Gateway Raceway and/or Memphis Motorsports Park placed substantial burdens on
the Corporation's management resources and financial controls since the
Corporation has never before promoted and/or operated more than three major
events in one year.
EFFECT OF SEASONALITY. The Corporation had very limited racing during the winter
season and, accordingly, reported an operating loss during its first fiscal
quarter.
GOVERNMENT REGULATION OF SPONSORS. The Corporation derives a significant portion
of its revenue each year from sponsorship and advertising by various companies,
including tobacco and liquor companies. The impact of the recently settled
litigation between various states' attorneys general and several large tobacco
companies, as well as other tobacco litigation, could have a Material Adverse
Effect. In addition, actions by certain liquor companies with respect to
advertising could lead to additional regulation or otherwise may have a Material
Adverse Effect.
ENVIRONMENTAL MATTERS. There may be undetected environmental contamination at
the Corporation's Long Beach, Gateway Raceway or Memphis Motorsports Park
properties. Present but undetected environmental contamination, as well as the
conduct of the Corporation's business could have resulted in damage to persons
or property or contamination of the environment by pollutants, substances,
contaminants or wastes. The Corporation could have liability under California,
Illinois or Tennessee statutes, or Federal law, including but not limited to the
Federal Water Pollution Control Act, Comprehensive Environmental Response,
Compensation and Liability Act, and the Resource Conservation and Recovery Act
for violations of environmental laws by the Company or by prior owners of its
properties.
LIABILITY FOR PERSONAL INJURIES. Motorsports activities, construction and
weather conditions have resulted in injuries to third parties including
participants and spectators at the Corporation's facilities. If the Corporation
is held liable for personal injuries beyond the scope of its insurance coverage,
such liability could result in a Material Adverse Effect.
<PAGE>
SCHEDULE 2(h)
Claim by former Chief Financial Officer for wrongful termination, as of the
date hereof no lawsuit filed but counsel has been retained by such former chief
financial officer and threatens to seek damages including punitive and attorneys
fees.
<PAGE>
SCHEDULE 2(i)
None.
<PAGE>
SCHEDULE 2(j)
The Corporation obtained Phase I environmental reports on all properties it owns
prior to the purchase thereof and knows of no presence of undetectable
environmental hazards at any of those properties. Because Phase I reports do not
include testing of soil, water or air or other types of samples, it is possible
that there may be undetected environmental contamination at one or more of the
Corporation's properties. In addition, the conduct of the Corporation's business
may result in damage to persons or property or contamination of the environment
by pollutants, substances, contaminants or wastes used, generated or disposed of
by the Corporation (for example, gasoline used at the motorsports facilities).
The Corporation could have liability under California, Illinois or Tennessee
statutes, or Federal law, including but not limitied to the Federal Water
Pollution Control Act, Comprehensive Environmental Response, Compensation and
Liability Act, and the Resource Conservation and Recovery Act for past
violations of environmental laws by prior owners of those properties.
<PAGE>
SCHEDULE 2(k)
L.H. Friend, Weinress, Frankson & Presson, Inc. compensation agreement pursuant
to which the Corporation has agreed to compensate L. H. Friend etc. $50,000.00
for its services in connection with this Agreement and the transactions
contemplated hereby.
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT ("Agreement") is made and entered into
this 8th day of August, 1997, between GRAND PRIX ASSOCIATION OF LONG BEACH,
INC., a California corporation (the "Company") and Penske Motorsports, Inc., a
Delaware corporation (the "Holder").
RECITALS
A. The Company is contemporaneously issuing and delivering to Holder
315,000 shares of the Company's common stock, no par value per share (the
"Common Stock").
B. In connection with that certain Stock Purchase Agreement, dated as
of August 8, 1997 (the "Purchase Agreement"), between the Company and the
Holder, the Company has agreed to provide to Holder certain registration rights
with respect to the 315,000 shares of Common Stock issued to Holder pursuant to
the Purchase Agreement (such 315,000 shares of Common Stock being referred to
herein as the "Restricted Shares").
AGREEMENT
NOW, THEREFORE, in consideration of the premises and covenants set forth
in the Purchase Agreement, the parties agree as follows:
1. INCIDENTAL (PIGGYBACK) REGISTRATION. Subject to the
limitations set forth in this Agreement, if the Company at any time within three
(3) years of the date hereof proposes to file on its behalf and/or on behalf of
any of its security holders ("the demanding security holders") a Registration
Statement under the Securities Act of 1933, as amended (the "Securities Act") on
any form (other than a Registration Statement on Form S-4 or S-8 or any
successor form for securities to be offered in a transaction of the type
referred to in Rule 145 under the Securities Act or to employees of the Company
pursuant to any employee benefit plan, respectively) for the general
registration of any sale or resale of Common Stock or any other class of the
Company's securities, it shall give written notice to the Holder at least 15
days before the initial filing with the Commission of such Registration
Statement, which notice shall set forth the intended method of disposition of
the securities proposed to be registered by the Company. The notice shall offer
to include in such filing the aggregate number of shares of Restricted Shares as
Holder may request.
If Holder desire to have any offer and sale of Restricted
Shares registered under this Section 1, it shall advise the Company in writing
within 10 days after the date of receipt of such offer from the Company, setting
forth the amount of such Restricted Shares for which registration is requested.
The Company shall thereupon include in such filing the number of shares of
Restricted Shares for which registration is so requested, subject to the
following. In the event that the proposed registration by the Company is, in
whole or in part, an underwritten public offering of securities of the Company,
the Company shall not be required to include any of the Restricted Shares in
such underwriting unless Holder agrees to accept the offering on the same terms
and conditions as the shares of Common Stock, if any, otherwise being sold
through underwriters under such registration. In each case all shares of Common
Stock owned by the Holder which are not included in the underwritten public
offering shall be withheld from the market by the Holder for a period, not to
exceed ninety (90) calendar days, which the managing underwriter reasonably
determines as necessary in order to effect the underwritten public offering. In
the event the Company chooses a registration form which limits the size offering
either in terms of the number of shares or dollar amount, the Company shall not
be required to include in the offering (in addition to the number of shares to
be sold by the Company) Restricted Shares which would exceed such limits.
In no event shall the Company be required to provide the
"piggyback" registration rights contemplated by this Section 1 in connection
with the Company's filing, not later than September 30,1997, of a registration
statement for the resale by Memphis International Motorsports, Inc. (or its
permitted transferees) of the Common Stock issued or to be issued to it upon
conversion of the Company's outstanding Series B Convertible Preferred Stock.
<PAGE>
2. SHELF REGISTRATION
Subject to the limitations set forth in this Agreement, not
later than June 30, 1998 the Company will file a Registration Statement for an
offering to be made on a continuous basis pursuant to Rule 415 under the
Securities Act (the "Shelf Registration Statement") covering the Holder's sale,
from time to time or any time (in public sales, negotiated sales, or otherwise)
up to all of the Restricted Shares and thereafter shall use its reasonable best
efforts to cause the Shelf Registration Statement to be declared effective as
soon as practicable following such filing and to maintain such effectiveness for
a period of at lease two (2) years from the effective date thereof; PROVIDED,
HOWEVER, that the Company shall have the right to prohibit the sale of Common
Stock pursuant to the Shelf Registration Statement, upon notice to the Holder if
in the opinion of counsel for the Company, the Company would thereby be required
to disclose information not otherwise then required by law to be publicly
disclosed, provided that the Company shall use its best efforts to minimize the
period of time in which it shall prohibit the sale of any shares of Common Stock
and in no event shall the prohibition on sales extend more than ten (10)
calendar days or twenty (20) days in any twelve (12) month period.
Notwithstanding anything herein to the contrary, the Company shall not be
obligated to maintain the effectiveness of the Shelf Registration Statement
pursuant to this Section 1(b), to deliver any prospectus under the Shelf
Registration Statement or to provide the "piggyback" registration rights
contemplated by Section 1 hereof if the Holder owns less than 1% of the
Company's outstanding shares and has owned the Restricted Shares at least a
year.
3. EXPENSES. Subject to the limitations contained in this
Section 3 and except as otherwise specifically provided in this Agreement, the
entire costs and expenses of the registrations and qualifications pursuant to
Sections 1 and 2 hereof shall be borne by the Company. Such costs and expenses
shall include, without limitation, the fees and expenses of counsel for the
Company and of its accountants, all other costs, fees and expenses of the
Company incident to the preparation, printing and filing under the Securities
Act of the registration statement and all amendments and supplements thereto
(including all expenses incident to filing with the NASD), the cost of
furnishing copies of each preliminary prospectus, each final prospectus and each
amendment or supplement thereto to underwriters, dealers and other purchasers of
the Restricted Shares and the costs and expenses (including fees and
disbursements of counsel) incurred in connection with the qualification of the
Restricted Shares under the blue sky laws of various jurisdictions. The Company
shall not, however, pay (x) any underwriting discount or commissions to the
extent related to the sale of the Restricted Shares sold in any registration and
qualification, (y) the fees and expenses of counsel or any other adviser(s) to
the Holder, or (z) any stock transfer taxes payable by the Holder.
4. REGISTRATION PROCEDURES.
(a) In the case of each registration or qualification pursuant
to Sections 1 or 2, the Company will keep Holder advised in writing as to the
initiation of proceedings for such registration and qualification and as to the
completion thereof, and will advise any such holder, upon request, of the
progress of such proceedings.
(b) Except as otherwise specifically provided in this
Agreement, at the Company's expense, the Company will keep each registration and
qualification under this Agreement effective (and in compliance with the
Securities Act) by such action as may be necessary or appropriate until the
distribution contemplated thereby is completed, including, without limitation,
the filing of post-effective amendments and supplements to any registration
statement or prospectus necessary to keep the registration statement current and
the further qualification under any applicable blue sky or other state
securities laws to permit such sale or distribution, all as requested by Holder;
PROVIDED, HOWEVER, that except as expressly provided in Section 2 hereof, the
Company shall have no obligation to keep any registration statement current for
more than 90 days after its initial effective date. The Company will immediately
notify Holder pursuant to this Agreement, at any time when a prospectus relating
thereto is required to be delivered under the Securities Act, of the happening
of any event as a result of which the prospectus included in such registration
statement, as then in effect, includes an untrue statement of a material fact or
omits to state any material fact required to be stated therein or necessary to
make the statements therein not misleading in light of the circumstances then
existing.
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(c) In connection with all underwritten offerings, the Company
will use its reasonable best efforts to furnish to Holder a signed counterpart,
addressed to Holder, of (i) an opinion of counsel for the Company, dated the
effective date of such registration statement, and (ii) a so-called "cold
comfort" letter signed by the independent public accountants who have certified
the Company's financial statements included in such registration statement, and
such opinion of counsel and accountants' letter shall cover substantially the
same matters with respect to such registration statement (and the prospectus
included therein) and, in the case of such accountants' letter, with respect to
events subsequent to the date of such financial statements, as are customarily
covered in opinions of issuer's counsel and in accountants' letters delivered to
underwriters in connection with underwritten public offerings of securities.
(d) Without limiting any other provision hereof, in connection
with any registration of the Restricted Shares under this Agreement, the Company
will use its reasonable best efforts to comply with the Securities Act, the
Securities Exchange Act of 1934, as amended (the "Securities Exchange Act"), and
all applicable rules and regulations of the Commission, and will make generally
available to its securities holders, as soon as reasonably practicable, an
earnings statement covering a period of at least twelve months, beginning with
the first month of the first fiscal quarter after the effective date of such
registration statement, which earnings statement shall satisfy the provisions of
Section 11(a) of the Securities Act.
(e) In connection with any registration of the Restricted
Shares under this Agreement, the Company will provide, if appropriate, a
transfer agent and registrar for the Restricted Shares not later than the
effective date of such registration statement.
(f) If the Company at any time proposes to register any of its
securities under the Securities Act, other than pursuant to a request made under
Section 2 hereof, whether or not for sale for its own account, and such
securities are to be distributed by or through one or more underwriters, then
the Company will make reasonable efforts, if requested by Holder pursuant to
Section 1 hereof, to arrange for such underwriters to include such Restricted
Shares among the securities to be distributed by or through such underwriters.
Holder shall be party to any such underwriting agreement, and (x) the
representations and warranties by, and the other agreements on the part of, the
Company to and for the benefit of such underwriters shall also be made to and
for the benefit of Holder, and (y) the Holder shall make customary
representations and agreements with respect to itself for the benefit of the
underwriters and the Company.
(g) In connection with the preparation and filing of each
registration statement registering the Restricted Shares under this Agreement,
the Company will give Holder and its underwriters, if any, and its counsel and
accountants the opportunity to participate in the preparation of such
registration statement, each prospectus included therein or filed with the
Commission, and each amendment thereof or supplement thereto, and will give each
of them such reasonable access to its books and records and such opportunities
to discuss the business of the Company with its officers, its counsel and the
independent public accountants who have certified its financial statements, as
shall be necessary, in the opinion of Holder or such underwriters or their
respective counsel, in order to conduct a reasonable and diligent investigation
within the meaning of the Securities Act. Without limiting the foregoing, each
registration statement, prospectus, amendment, supplement or any other document
filed with respect to a registration under this Agreement shall be subject to
review and reasonable approval by Holder and by its counsel, which shall not be
unreasonably delayed.
(h) The Company will use reasonable efforts to list, on or
prior to the effective date of each registration statement registering the
Restricted Shares under this Agreement, all shares covered by such registration
statement on any securities exchange on which any of the Common Stock is then
listed, if any.
(i) The Company will cooperate with Holder and each
underwriter or agent participating in the disposition of securities subject to
any registration hereunder and their respective counsel in connection with any
filings required to be made with the National Association of Securities Dealers.
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(j) The Company will use reasonable efforts to prevent the
issuance by the SEC or any other governmental agency or court of a stop order,
injunction or other order suspending the effectiveness of each registration
statement registering the Restricted Shares under this Agreement and, if such an
order is issued, use reasonable efforts to cause such order to be listed as
promptly as practicable.
(k) The Company will promptly notify Holder and each
underwriter of the happening of any event, during the period of distribution, as
a result of which any registration statement registering the Restricted Shares
under this Agreement includes an untrue statement of a material fact or omits to
state any material fact required to be stated therein or necessary to make the
statements therein not misleading in light of the circumstances then existing
(in which case, the Company shall promptly provide Holder with revised or
supplemental prospectuses and, if so requested by the Company in writing, Holder
shall promptly take action to cease making any offers of the Common Stock until
receipt and distribution of such revised or supplemental prospectuses).
(l) To the extent required by law, the Company will use its
reasonable best efforts to register or qualify the securities to be sold by
Holder under such other securities or blue sky laws of such jurisdictions within
the United States as Holder shall reasonably request (provided, however, the
Company shall not be obligated to qualify as a foreign corporation to do
business under the laws of any jurisdiction in which it is not then qualified or
to file any general consent to service of process), and do such other reasonable
acts and things as may be required of it to enable such holder to consummate the
disposition in the jurisdiction of the securities covered by such registration
statement.
5. PROVISION OF DOCUMENTS. The Company will, at the expense of the
Company, furnish to Holder such number of registration statements, prospectuses,
offering circulars and other documents incident to any registration or
qualification referred to in Sections 1 or 2 as Holder from time to time may
reasonably request.
6. INDEMNIFICATION. In the event of any registration of any Restricted
Shares under the Securities Act pursuant to this Agreement, the Company shall
indemnify and hold harmless Holder, any underwriter (as defined in the
Securities Act) for Holder, each broker or any other person, if any, who
controls any of the foregoing persons, within the meaning of the Securities Act
against any losses, claims, damages or liabilities, joint or several, and
expenses (including reasonable attorneys' fees and expenses and reasonable costs
of investigation) to which any of the foregoing persons, or such controlling
person may be subject, under the Securities Act or otherwise, insofar as any
thereof arise out of or are based upon (i) any untrue statement or alleged
untrue statement of a material fact contained in (A) any registration statement
under which such Restricted Shares were registered under the Securities Act
pursuant to Sections 1 or 2 hereof, any prospectus or preliminary prospectus
contained therein, or any amendment or supplement thereto or (B) any other
document incident to the registration of the Restricted Shares under the
Securities Act or the qualification of the Restricted Shares under any state
securities laws applicable to the Company, (ii) the omission or alleged omission
to state in any item referred to in the preceding clause (i) a material fact
required to be stated therein or necessary to make the statements therein not
misleading, or (iii) any violation or alleged violation by the Company of the
Securities Act, the Securities Exchange Act or any other federal or state
securities law, rule or regulation applicable to the Company and relating to
action or inaction by the Company in connection with any such registration or
qualification, except insofar as such losses, claims, damages, liabilities or
expenses arise out of or are based upon any untrue statement or alleged untrue
statement or omission or alleged omission based upon information furnished to
the Company in writing by Holder or by any underwriter for Holder expressly for
use therein (with respect to which information Holder or underwriter shall so
indemnify and hold harmless the Company, any underwriter for the Company and
each person, if any, who controls the Company or such underwriter within the
meaning of the Securities Act). The Company will enter into an underwriting
agreement with the underwriter or underwriters for any underwritten offering
registered under the Securities Act pursuant to Sections 1 or 2 hereof and with
Holder pursuant to such offering, and such underwriting agreement shall contain
customary provisions with respect to indemnification and contribution which
shall, at a minimum, provide the indemnification set forth above.
7. CERTAIN LIMITATIONS ON REGISTRATION RIGHTS. Notwithstanding the
other provisions of this Agreement, the Company shall not be obligated to
register the Restricted Shares of Holder if, in the opinion of counsel to the
Company reasonably satisfactory to Holder, the sale or other disposition of
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<PAGE>
Holder's Restricted Shares may be effected without registering such Restricted
Shares under the Securities Act. The Company's obligations under Section 1 or 2
are also expressly conditioned upon Holder furnishing to the Company in writing
such information concerning Holder and their controlling persons and the terms
of such Holder's proposed offering of Restricted Shares as the Company shall
reasonably request for inclusion in the Registration Statement.
8. MISCELLANEOUS.
(a) NOTICE GENERALLY. Any notice, demand, request, consent, approval,
declaration, delivery or other communication hereunder to be made pursuant to
the provisions of this Agreement shall be sufficiently given or made if in
writing and either delivered in person with receipt acknowledged, delivered by
reputable overnight courier, telecopied and confirmed separately in writing by a
copy mailed as follows or sent by registered or certified mail, return receipt
requested, postage prepaid, addressed as set forth in the Purchase Agreement.
(b) GOVERNING LAW. This Agreement shall be governed by the laws of the
State of Florida, without regard to the provisions thereof relating to conflict
of laws.
(c) BINDING EFFECT; ASSIGNMENT; THIRD PARTY BENEFICIARIES. This
Agreement shall be binding upon the Parties and their respective successors and
assigns and shall inure to the benefit of the Parties and their respective
successors and permitted assigns. No Party shall assign any of its rights or
delegate any of its duties under this Agreement (by operation of law or
otherwise) without the prior written consent of the other Parties. Any
assignment of rights or delegation of duties under this Agreement by a Party
without the prior written consent of the other Parties, if such consent is
required hereby, shall be void. No person (including, without limitation, any
employee of a Party) shall be, or be deemed to be, a third party beneficiary of
this Agreement.
(d) ENTIRE AGREEMENT. This Agreement, together with the Purchase
Agreement and the "Right of First Refusal Agreement" executed in connection
therewith, is intended by the parties as a final expression of their agreement
and intended to be a complete exclusive statement of the Agreement and
understanding of the parties hereto in respect of the subject matter contained
herein and therein. There are no restrictions, promises, warranties or
undertakings, other than those set forth or referred to herein and therein. This
Agreement supersedes all prior agreements and understandings between the parties
with respect to the subject matter hereof.
(e) AMENDMENTS. No addition to, and no cancellation, renewal,
extension, modification or amendment of, this Agreement shall be binding upon a
Party unless such addition, cancellation, renewal, extension, modification or
amendment is set forth in a written instrument which states that it adds to,
amends, cancels, renews, extends or modifies this Agreement and has been
approved by all of the Parties.
(f) WAIVERS. No waiver of any provision of this Agreement shall be
binding upon a Party unless such waiver is expressly set forth in a written
instrument which is executed and delivered by such Party or on behalf of such
Party by an officer of, or attorney-in-fact for, such Party. Such waiver shall
be effective only to the extent specifically set forth in such written
instrument. Neither the exercise (from time to time and at any time) by a Party
of, nor the delay or failure (at any time or for any period of time) to
exercise, any right, power or remedy shall constitute a waiver of the right to
exercise, or impair, limit or restrict the exercise of, such right, power or
remedy or any other right, power or remedy at any time and from time to time
thereafter. No waiver of any right, power or remedy of a Party shall be deemed
to be a waiver of any other right, power or remedy of such Party or shall,
except to the extent so waived, impair, limit or restrict the exercise of such
right, power or remedy.
(g) REMEDIES.
(i) The rights, powers and remedies of the Parties set forth herein
for a breach of or default under this Agreement are cumulative and in addition
to, and not in lieu of, any rights or remedies that any Party may otherwise have
under this Agreement, at law or in equity.
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(ii) The Parties acknowledge that the Restricted Shares are unique,
and that any violation of this Agreement cannot be compensated for by damages
alone. Accordingly, in addition to all of the other remedies which may be
available hereunder or under applicable law, any Party shall have the right to
any equitable relief which may be appropriate to remedy a breach or threatened
breach by any other Party hereunder, including, without limitation, the right to
enforce specifically the terms of this Agreement by obtaining injunctive relief
in respect of any violation or non-performance hereof, and any Party shall have
the right to seek recovery of and be awarded attorneys' fees and expenses in any
proceeding with respect to this Agreement as reasonably determined by the court
in which such proceeding is brought.
(h) HEADINGS; COUNTERPARTS. The headings set forth in this Agreement
have been inserted for convenience of reference only, shall not be considered a
part of this Agreement and shall not limit, modify or affect in any way the
meaning or interpretation of this Agreement. This Agreement may be signed in any
number of counterparts, each of which (when executed and delivered) shall
constitute an original instrument, but all of which together shall constitute
one and the same instrument. It shall not be necessary when making proof of this
Agreement to account for any counterparts other than a sufficient number of
counterparts which, when taken together, contain signatures of all of the
Parties.
(i) SEVERABILITY. If any provision of this Agreement shall hereafter be
held to be invalid, unenforceable or illegal, in whole or in part, in any
jurisdiction under any circumstances for any reason, (i) such provision shall be
reformed to the minimum extent necessary to cause such provision to be valid,
enforceable and legal while preserving the intent of the Parties as expressed
in, and the benefits to the Parties provided by, this Agreement or (ii) if such
provision cannot be so reformed, such provision shall be severed from this
Agreement and an equitable adjustment shall be made to this Agreement
(including, without limitation, addition of necessary further provisions to this
Agreement) so as to give effect to the intent as so expressed and the benefits
so provided. Such holding shall not affect or impair the validity,
enforceability or legality of such provision in any other jurisdiction or under
any other circumstances. Neither such holding nor such reformation or severance
shall affect or impair the legality, validity or enforceability of any other
provision of this Agreement.
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IN WITNESS WHEREOF, the Company and Holder have executed this Agreement as
of the date first above written.
GRAND PRIX ASSOCIATION OF LONG BEACH, INC.
By: /S/CHRISTOPHER R. POOK
------------------------------
CHRISTOPHER R. POOK
PENSKE MOTORSPORTS,, INC.
By: /s/ GREGORY W. PENSKE
------------------------------
Gregory W. Penske
7
RIGHT OF FIRST REFUSAL AGREEMENT
THIS RIGHT OF FIRST REFUSAL AGREEMENT ("Agreement") is made and entered
into as of August 8, 1997, by and among Midwest Facility Investments, Inc., a
Florida corporation ("Facility"), Penske Motorsports, Inc., a Delaware
corporation ("PMI") (collectively, Facility and PMI shall be referred to as the
"Purchasers"), and each of the individuals listed on Schedule I hereto
(individually a "Shareholder" and collectively the "Shareholders").
RECITALS
A. This Agreement is entered into in connection with (i) that certain
Stock Purchase Agreement, dated as of August 8, 1997 (the "Stock Purchase
Agreement"), between Facility and Grand Prix Association of Long Beach, Inc., a
California corporation (the "Corporation"), pursuant to which Facility is
contemporaneously acquiring 315,000 shares of common stock, no par value
("Common Stock"), of the Corporation (together with any and all other shares of
the Corporation's Common Stock that may be acquired by Facility in the future,
the "Facility Shares") and (ii) that certain Stock Purchase Agreement, dated as
of August 8, 1997, between PMI and the Corporation (the "PMI Stock Purchase
Agreement") (collectively, the Facility Stock Purchase Agreement and the PMI
Stock Purchase Agreement shall be referred to as the "Stock Purchase
Agreements"), pursuant to which PMI is contemporaneously acquiring 315,000
shares of Common Stock of the Corporation (together with any and all other
shares of the Corporation's Common Stock that may be acquired by PMI in the
future, the "PMI Shares") (collectively, the Facility Shares and the PMI Shares
shall be referred to as the "Purchased Shares").
B. The Shareholders own collectively 1,403,632 shares of common stock
of the Corporation as of the date hereof (together with any and all other shares
of the Corporation's capital stock that may be acquired by any of the
Shareholders in the future, the "Shareholder Shares").
C. Following consummation of the transactions contemplated by Stock
Purchase Agreements, Facility will own 7.2 percent of the issued and outstanding
shares of the Corporation Common Stock, PMI will own 7.2 percent of the issued
and outstanding shares of the Corporation Common Stock and the Shareholders will
own collectively 37.2 percent of the issued and outstanding shares of the
Corporation Common Stock.
D. As a condition to the willingness of Facility, PMI and the
Corporation to enter into the Stock Purchase Agreements, Facility, PMI and the
Corporation have each requested that the Shareholders agree, and in order to
induce Facility, PMI and the Corporation to enter into the Stock Purchase
Agreements, the Shareholders, Facility and PMI have agreed to place certain
restrictions upon the right of transfer of their respective interests in the
Corporation.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and mutual covenants
set forth in this Agreement and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, Facility, PMI and each
Shareholder agree as follows:
ARTICLE ONE
REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS
Each Shareholder hereby severally represents and warrants to the
Purchasers as follows (as to such Shareholder only):
(a) AUTHORITY. Such Shareholder has the power and authority to execute
this Agreement and perform such Shareholder's obligations hereunder. This
Agreement has been duly
<PAGE>
executed and delivered by such Shareholder and (assuming the due execution and
delivery hereof by the Purchasers) constitutes a valid and binding obligation of
such Shareholder enforceable against such Shareholder in accordance with its
terms, except to the extent that its enforceability may be limited by applicable
bankruptcy, insolvency, reorganization or other laws affecting the enforcement
of creditors' rights generally or by general equitable principles.
(b) NO BREACH. The execution, delivery and performance by such
Shareholder and the consummation of the transactions contemplated hereby and
thereby: (i) do not and will not violate or conflict with any provision of law
or regulation, or any writ, order, judgment or decree of any court or
governmental or regulatory authority specifically naming such Shareholder; and
(ii) do not and will not, with or without the passage of time or the giving of
notice, result in the breach of, or constitute a default, cause the acceleration
of performance, permit the unilateral modification or termination of, or require
any consent under, or result in the creation of any lien, charge or encumbrance
upon any property or assets of such Shareholder pursuant to, any material
instrument or agreement to which such Shareholder is a party or by which such
Shareholder may be bound or affected, except in each case where the violation,
breach, default, modification, termination, absence of consent or lien could not
reasonably be expected to impair such Shareholder's timely and complete
performance of his obligations hereunder.
(c) OWNERSHIP. The Shareholder Shares set forth opposite such
Shareholder's name on SCHEDULE 1, hereto are owned by such Shareholder, free and
clear of any liens, encumbrances, security interests, options or claims,
including, without limitation, claims or rights under "buy-sell" or other
shareholder agreements (other than this Agreement and other liens heretofore
disclosed in writing to Purchasers).
ARTICLE TWO
RESTRICTIONS IMPOSED UPON THE
TRANSFER OF STOCK BY THE SHAREHOLDERS
2.1 GENERAL PROHIBITION ON TRANSFERS. Except as is specifically
permitted by the provisions of this ARTICLE TWO, the sale, assignment, pledge,
gift, transfer or other disposition of any of Shareholder's "Stock" (as defined
in Section 6.13 hereof), either directly or indirectly, to any person or entity,
is prohibited.
2.2 PERMITTED TRANSFERS. The following transfers of Stock shall be
permitted transfers which do not require the giving of a Notice of Right of
First Refusal under Section 2.3 of this ARTICLE TWO.
(a) TRANSFERS WITH CONSENT. Notwithstanding the provisions of Section
2.1, a transfer or disposition of any kind or character otherwise prohibited by
this ARTICLE TWO may be permitted if approved by each of the Purchasers.
(b) TRANSFERS TO FAMILY MEMBERS. Notwithstanding the provisions of
Section 2.1, each Shareholder shall be permitted to transfer (whether by
purchase, assignment, gift, bequest, devise, levy, execution or other means of
transfer) all or any portion of his or her Stock to (i) his or her spouse or any
family members, (ii) any custodian, guardian or other representative for a
spouse or family members, and/or (iii) the trustee of any trust created for the
benefit of the Shareholder, his or her spouse and/or family members
(collectively the "Permitted Family Transferees") provided that each and every
such Permitted Family Transferee executes a written acknowledgment that (i) all
Stock held by the Permitted Family Transferee will, notwithstanding the transfer
to such Permitted Family Transferee, be deemed for all purposes of this
Agreement to be owned by the transferring Shareholder, and (ii) the Permitted
Family Trustee is to be bound by all of the terms of this Agreement as if a
signatory "Shareholder" hereto.
(c) BONA FIDE PLEDGE. Notwithstanding the provisions of Section 2.1, a
Shareholder shall be entitled to make a bona fide pledge of his or her stock to
a financial institution or broker in
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connection with borrowing transactions (each a "Lender"); provided, however,
that, as contemplated by Section 2.4 hereof, any transfer of Stock to the Lender
pursuant to such arrangement, upon foreclosure or otherwise, shall be subject to
the "Right of First Refusal" provisions of Sections 2.3 and 2.4 hereof.
(d) TRANSFER OF WARRANT. Notwithstanding the provisions of Section 2.1,
L.H. Friend, Weinress, Frankson & Presson, Inc. (the "Firm") shall be permitted
to assign its warrant to purchase 31,250 shares of the Corporation's common
stock to one or more officers and directors of the Firm ("Permitted
Transferees") in the percentages the Firm shall deem fit, provided, however,
that (i) notwithstanding such assignment, the warrant shall be deemed for
purposes of this Agreement to be owned by the Firm, and (ii) each such Permitted
Transferee agrees to be bound by the terms of this Agreement as if a signatory
hereto.
2.3 TRANSFERS TO THIRD PARTIES.
(a) NOTICE OF RIGHT OF FIRST REFUSAL. Notwithstanding the provisions of
Section 2.1, and absent the right to make a transfer of Stock pursuant to
Section 2.2, each Shareholder may transfer all or a portion of his or her Stock,
subject in all respects to the following "right of first refusal" provisions of
this Section 2.3. If any Shareholder (the "Selling Shareholder") desires to sell
Stock on the market in a "broker's transaction" or to a party unrelated to the
Selling Shareholder, the Selling Shareholder shall, not less than five (5)
business days prior to the date of the proposed sale, assignment, transfer or
other disposition, deliver a Notice of Right of First Refusal to (x) the
"Shareholders Representatives" (which shall mean Christopher R. Pook and/or Jim
Michaelian, acting in such capacity, and/or their assigns, as applicable), and
(y) each of the Purchasers, containing the following information:
(i) the number of shares of Stock proposed to be so transferred (the
"Offered Stock");
(ii) the terms and conditions of the proposed transfer, including the
identity of the proposed transferee(s), if not a "market transaction" and the
cash consideration to be received therefor (the "Offered Terms"); and
(iii) an affirmative offer made by the Selling Shareholder to transfer
the Offered Stock to the Shareholders Representatives and the Purchasers at a
price (the "Offer Price") equal to the total cash price in the proposed transfer
for the Offered Stock as indicated in the Notice of Right of First Refusal
(I.E., the number of shares multiplied by the per share-cash price, to be
received for the shares of Stock to be transferred), it being agreed that, (x)
without the prior written approval of each of the Purchasers, all transfers
permitted by this Section 2.3 must be solely for consideration consisting of
cash, and (y) the Offer Price for all broker's transactions shall be the
weighted average sales price for the Common Stock on the date of delivery of the
Notice of Right of First Refusal.
The date that the Notice of Right of First Refusal is delivered to the
Shareholders Representatives and the Purchasers shall constitute the First
Refusal Notice Date.
(b) PRIMARY RIGHT OF FIRST REFUSAL BY THE SHAREHOLDERS REPRESENTATIVES.
Each of the Shareholders Representatives shall have the sole and exclusive
option to acquire all or any specified portion of the shares of Stock offered
for transfer in accordance with the provisions of the Notice of Right of First
Refusal for a period of two (2) business days from the First Refusal Notice Date
(the "Shareholder Exclusive Option Period"). The Shareholders Representatives
may exercise such option by giving written notice of exercise to the Selling
Shareholder and the Purchasers prior to the termination of the Shareholder
Exclusive Option Period. Such notice of exercise shall refer to the Notice of
Right of First Refusal and shall set forth the number of shares to be acquired
by the Shareholders Representatives. The Shareholders Representative may assign
their purchase rights under this Section 2.3 to any of the other Shareholders or
to any other then current executive officer or director of
3
<PAGE>
the Company who agrees in writing (in form reasonably acceptable to Purchasers)
to be subject to and bound by the terms of this Agreement.
(c) SECONDARY RIGHT OF FIRST REFUSAL BY THE PURCHASERS. In the event
the Shareholders Representatives do not collectively elect to acquire all of the
Offered Stock, the Purchasers shall have an exclusive option for three (3)
business days after the expiration of the Shareholder Exclusive Option Period to
acquire all or any portion of the Offered Stock not acquired by the Shareholders
Representatives. The Purchasers may, by agreement, allocate between themselves
the right to acquire such part of the Offered Stock that will not be acquired by
the Shareholders Representatives.
In the absence of such an agreement, each Purchaser will be entitled to
give written notice to the Selling Shareholder (the "Purchase Notice"), within
such three business day period, of such Purchaser's election to acquire all or
any part of such Offered Stock that is not being acquired by the Other
Shareholders ("Excess Offered Stock"). If the Purchasers' offers to purchase
exceed the amount of Excess Offered Stock, the option to acquire such Stock
shall be allocated between the Purchasers as follows:
(i) Each Purchaser shall be absolutely entitled to acquire the
number of shares of Excess Offered Stock that is equal to or less than
its proportionate part of such Excess Offered Stock, based upon the
number of shares owned by each Purchaser;
(ii) Each Purchaser electing to acquire more than its
proportionate part of the Excess Offered Stock under the previous
allocation step may acquire the remainder of the Excess Offered Stock
which is not previously allocated to the other Purchaser (I.E., because
the other Purchaser did not elect to acquire its entire ratable portion
under the preceding allocation step);
(d) REQUIREMENT TO PURCHASE ALL OFFERED STOCK. Notwithstanding the
provisions of the Section 2.3(b), the option to purchase shares of Stock
described in a Notice of Right of First Refusal that describes a proposed
non-market transaction may be exercised and the Closing (as hereinafter defined)
consummated only if the Shareholders Representatives and the Purchasers
collectively agree to purchase all of the shares of the Offered Stock.
(e) CLOSING AND TENDER REQUIREMENTS. The consummation of any transfer
required pursuant to an exercise of option rights created by this ARTICLE TWO
shall constitute the "Closing", and the time and date of such Closing shall
constitute the "Closing Date." The Closing shall be held at the principal office
of the Corporation, at 10:00 a.m. on or before the 25th day subsequent to the
delivery of the final Purchase Notice, and if the Closing Date falls on a
Saturday, Sunday or legal holiday, the Closing Date shall be postponed to the
next succeeding regular business day following such Saturday, Sunday or legal
holiday. At the Closing, the Selling Shareholder shall present to the acquiring
Shareholders and/or Purchaser(s), or cause the Transfer Agent to, or the
Corporation, as the case may be, all share certificates for Stock required to be
sold in proper form for transfer. Such Stock shall be transferred free of all
liens and encumbrances or adverse claims of any kind or character created by the
Selling Shareholder. At the Closing, the acquiring Shareholders and/or
Purchaser(s), upon receipt of proper tender of the Stock, shall tender full
payment of the Offer Price in conformity with the Offered Terms as set forth in
the Notice of Right of First Refusal.
(f) PERMITTED TRANSFER FOLLOWING RIGHT OF FIRST REFUSAL. If all of the
Stock identified in the Notice of Right of First Refusal is not elected to be
purchased in the five business day time period specified above or, if so
elected, is not purchased as required on or prior to the 25th day subsequent to
the delivery of the final Purchase Notice (it being agreed that the Purchasers
shall be entitled to purchase all of the remaining Offered Shares to be acquired
by the Shareholders Representatives if and to the extent that Purchasers are not
provided, at least three business days prior to the Closing Date, with
reasonable evidence that the Shareholders Representatives have deposited in
escrow the full cash purchase price the Common Stock to be acquired by them or
otherwise established a reasonably
4
<PAGE>
acceptable guarantee of payment therefor), then all of such Stock (including any
Stock for which a proper tender was made) may be transferred by the Selling
Shareholder at any time during the ensuing 30 days (10 days in the case of a
market transaction) at any price (in the case of a market transaction) or, in
the case of a non-market transaction, in strict conformity with the Offered
Terms (or on terms more favorable to the Selling Shareholder) set forth in the
Notice of Right of First Refusal (it being agreed that the identity of any
purchaser in a non-market transaction may not be changed without submission of a
new Notice of Right of First Refusal). Nothing herein shall limit the rights of
any Selling Shareholder, the Shareholders Representatives or either Purchaser
relating to any breach by any other party hereto.
2.4 TRANSFERS INCLUDE FORECLOSURE. For purposes of this ARTICLE TWO,
a transfer of Stock by a Shareholder shall be deemed to include, but shall not
be limited to, any transfer of legal or beneficial ownership by reason of
foreclosure under any pledge, hypothecation or similar credit transactions (in
which case the 25 day closing period contemplated by Section 2.3(e) shall be
reduced to ten (10) business days).
2.5 COMPLIANCE. Absent the right to make a transfer of Stock pursuant
to Section 2.2 or 2.3 hereof, any transfer described in this ARTICLE TWO of a
Shareholder's Stock without complying with the giving of a Notice of Right of
First Refusal shall be void, and the Corporation shall have the right to issue a
Notice of Right of First Refusal upon discovery of such transfer, a copy of
which shall be sent to the person making such transfer and his or her
transferee. Upon the giving of the Notice of Right of First Refusal, the time
periods for the exercise of the options specified in Section 2.3 shall commence
running.
ARTICLE THREE
RESTRICTIONS IMPOSED UPON THE
TRANSFER OF STOCK BY FACILITY AND PMI
3.1 GENERAL PROHIBITION ON TRANSFERS. Except as is specifically
permitted by the provisions of this ARTICLE THREE, the sale, assignment, pledge,
gift, transfer or other disposition of any of the Purchased Shares, either
directly or indirectly, to any person or entity, is prohibited.
3.2 PERMITTED TRANSFERS. The following transfers of the Purchased
Shares shall be permitted transfers which do not require the giving of a Notice
of Right of First Refusal under Section 3.3 of this ARTICLE THREE.
(a) TRANSFERS WITH CONSENT. Notwithstanding the provisions of Section
3.1, a transfer or disposition of any kind or character otherwise prohibited by
this ARTICLE THREE may be permitted if approved by the Shareholders
Representatives.
(b) TRANSFERS TO AFFILIATES. Notwithstanding the provisions of Section
3.1, each of the Purchasers shall be permitted to transfer (whether by purchase,
assignment, gift, bequest, devise, levy, execution or other means of transfer)
all or any portion of the Purchased Shares to its affiliate (as defined within
the meaning of Section 13(d)(3) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act") provided that each and every such affiliate
executes a written acknowledgment that (i) all Purchased Shares held by such
affiliate will, notwithstanding the transfer to such, be deemed for all purposes
of this Agreement to be owned by the transferring Purchaser, and (ii) that such
affiliate agrees in writing to be bound by all of the terms of this Agreement.
3.3 TRANSFERS TO THIRD PARTIES.
(a) NOTICE OF RIGHT OF FIRST REFUSAL. Notwithstanding the provisions of
Section 3.1, and absent the right to make a transfer of the Purchased Shares
pursuant to Section 3.2, either of the Purchasers may also transfer all or a
portion of the Purchased Shares, subject in all respects to the following "right
of first refusal" provisions of this Section 3.3. If either of the Purchasers
(the "Selling
5
<PAGE>
Purchaser") desires to sell Purchased Shares on the market or to a party
unrelated to such Purchaser in a "non-market" sale, the Selling Purchaser shall
not less than five (5) business days prior to the date of the proposed sale,
assignment, transfer or other disposition, deliver to the Other Purchaser and
the Corporation a "Purchaser Notice of Right of First Refusal" containing the
following information:
(i) the number of shares of Purchased Shares proposed to be so
transferred (the "Purchaser Offered Stock");
(ii) the terms and conditions of the proposed transfer, including the
identity of the proposed transferee(s) and the per share price to be charged (if
any) for the Purchased Shares to be transferred and the cash consideration to be
received therefor (the "Purchaser Offered Terms"); and
(iii) an affirmative offer made by the Selling Purchaser to transfer
the Offered Stock to the Other Purchaser and, after the Exclusive Option Period
(as hereinafter defined), to the Corporation at a price (the "Purchaser Offer
Price") equal to the total cash price in the proposed transfer for the Purchaser
Offered Stock as indicated in the Purchaser Notice of Right of First Refusal
(I.E., the number of shares multiplied by the per share price, if any, to be
charged for the shares of Stock to be transferred), it being agreed that, (x)
without the prior written approval of the Other Purchaser all transfers
permitted by this Section 3.3 must be solely for consideration consisting of
cash or cash equivalents, and (y) the Purchase Offer Price for all broker's
transactions shall be the weighted average sales price for the Common Stock on
the date of delivery of the Purchaser Notice of Right of First Refusal.
The date that the Purchaser Notice of Right of First Refusal is
delivered to the Purchasers Representatives and the Corporation shall constitute
the Purchaser First Refusal Notice Date.
(b) PRIMARY RIGHT OF FIRST REFUSAL BY THE PURCHASERS REPRESENTATIVES.
The Other Purchaser shall have the sole and exclusive option to acquire all or
any portion of the Purchased Shares offered by the Selling Shareholder for
transfer in accordance with the provisions of the Purchaser Notice of Right of
First Refusal for a period of five (5) business days from the Purchaser First
Refusal Notice Date (the "Purchaser Exclusive Option Period"). The Other
Purchaser may exercise such option by giving written notice of exercise to the
Selling Purchaser prior to the termination of its Exclusive Option Period. Such
notice of exercise shall refer to the Purchaser Notice of Right of First Refusal
and shall set forth the number of Purchased Shares to be acquired by the Other
Purchaser.
(c) SECONDARY RIGHT OF FIRST REFUSAL BY THE CORPORATION. The
Corporation shall have an exclusive option for two (2) business days after the
expiration of the Purchaser Exclusive Option Period to acquire all of the
Offered Stock that will not be acquired by the Other Purchaser. The Corporation
may assign its purchase rights under this Section 3.3 to any or all of the
Shareholders or to any other current executive officer or director of the
Company who agrees in writing (in form reasonably acceptable to Purchasers) to
be subject to and bound by the terms of this Agreement).
(d) REQUIREMENT TO PURCHASE ALL OFFERED STOCK. Notwithstanding the
provisions of the Section 3.3(b), the option to purchase the Purchased Shares
described in a Purchaser Notice of Right of First Refusal that describes a
proposed non-market transaction may be exercised and the Purchaser Closing (as
hereinafter defined) consummated only if the Corporation and/or the Other
Purchaser collectively agree to purchase all of the shares of the Purchaser
Offered Stock.
(e) CLOSING AND TENDER REQUIREMENTS. The consummation of any transfer
required pursuant to an exercise of option rights created by this ARTICLE THREE
shall constitute the "Purchaser Closing", and the time and date of such Closing
shall constitute the "Purchaser Closing Date." The Purchase Closing shall be
held at the principal office of the Corporation, at 10:00 a.m. on or before the
25th day subsequent to the expiration of the Purchaser Exclusive Option Period
and if the Closing Date falls on a Saturday, Sunday or legal holiday, the
Purchase Closing Date shall be postponed to the next succeeding regular business
day following such Saturday, Sunday or legal holiday. At the Purchaser
6
<PAGE>
Closing, the Selling Purchaser shall present to the Corporation and/or the Other
Purchaser, as the case may be, all share certificates for the Purchased Shares
required to be sold in proper form for transfer. Such Purchased Shares shall be
transferred free of all liens and encumbrances or adverse claims of any kind or
character. At the Purchaser Closing, the Corporation and/or the Other Purchaser,
as the case may be, upon receipt of proper tender of the Purchased Shares, shall
tender full payment of the Purchaser Offer Price in conformity with the
Purchaser Offered Terms as set forth in the Purchaser Notice of Right of First
Refusal.
(f) PERMITTED TRANSFER FOLLOWING RIGHT OF FIRST REFUSAL. If all of the
Purchased Shares identified in the Purchaser Notice of Right of First Refusal
are not purchased by the Corporation and/or the Other Purchaser prior to the
25th day subsequent to the expiration of the Purchaser Exclusive Option Period,
then all of such Purchased Shares (including any shares for which a proper
tender was made) may be transferred by the Selling Purchaser at any time during
the ensuing 30 days (10 days in the case of a market transaction) at any price
(in the case of a market transaction) or, in the case of a non-market
transaction, in strict conformity with the Purchaser Offered Terms (or on terms
more favorable to the Selling Purchaser) set forth in the Purchaser Notice of
Right of First Refusal.
ARTICLE FOUR
THE GIVING OF NOTICES REQUIRED BY THIS AGREEMENT
4.1 ADDRESSES. Any notices, requests, demands and other communications
required or permitted to be given hereunder must be in writing and, except as
otherwise specified in writing, will be deemed to have been duly given when
personally delivered, telexed or facsimile transmitted, or three days after
deposit in the United States mail, by certified mail, postage prepaid, return
receipt requested, as follows. The addresses of the Corporation, Facility, PMI
and the Shareholders, which shall be considered to be their last known addresses
unless subsequently changed in accordance with the provisions of this Agreement,
are as follows:
IF TO THE CORPORATION: Grand Prix Association of Long Beach, Inc.
3000 Pacific Avenue
Long Beach, CA 90806
Attention: Christopher R. Pook
Telephone: (562) 490-4520
Facsimile: (562) 981-2632
IF TO FACILITY: Midwest Facility Investments, Inc.
1801 West International Speedway Boulevard
Daytona Beach, Florida 32120
Attention: H. Lee Combs
Telephone: (904) 947-6731
Facsimile: (904) 257-0266
IF TO PMI: Penske Motorsports, Inc.
3270 W. Big Beaver Road, Suite 130
Troy, Michigan 48084
Attention: Robert H. Kurnick, Jr.
Telephone: (248) 614-1116
Facsimile: (248) 614-1125
7
<PAGE>
IF TO ANY SHAREHOLDER: at the address reflected opposite
the Shareholder's name on
Schedule 1 hereto
IF TO EITHER SHAREHOLDER
REPRESENTATIVE: Christopher R. Pook or Jim Michaelian
Grand Prix Association of Long Beach, Inc
3000 Pacific Avenue
Long Beach, CA 90806
Attention: Christopher R. Pook
Telephone: (562) 490-4520
Facsimile: (562) 981-2632
Any party may change its address for the purposes of this Agreement by giving
notice of such change of address to the other parties in the manner herein
provided for giving notice.
4.2 FORM OF NOTICE. Any notice or communication hereunder must be in
writing, and may be personally delivered or given by registered or certified
mail, return receipt requested, and if given by registered or certified mail,
shall be deemed to have been given and received forty-eight hours after deposit
in the United States mail of a registered or certified letter, return receipt
requested, containing such notice, properly addressed, with postage prepaid; and
if given otherwise than by registered or certified mail, it shall be deemed to
have been given when received by the party to whom it is addressed at the time
received.
4.3 FAILURE TO NOTIFY OF CHANGED ADDRESS. It shall be the
responsibility of each of the parties to this Agreement to notify all other
parties of their respective addresses and any changes thereof, and any
objections to the performance of any act required hereunder based upon a failure
to receive a notice mailed in conformity with the provisions of this Agreement
shall be meritless.
ARTICLE FIVE
ELECTION OF DIRECTORS
During the term of this Agreement, each of the Shareholders and
Purchasers agrees to vote all shares of Corporation Common Stock owned by such
party to elect as directors of the Corporation (x) those designees of Facility
and/or PMI that such Purchaser(s) then has (have) the right to designate as
director nominees pursuant to the Stock Purchase Agreements, and (y) such other
nominees for election as are proposed from time to time by the Corporation's
Board of Directors or appropriate nominating committee thereof.
ARTICLE SIX
MISCELLANEOUS
6.1 CUSTODY. In connection with and to facilitate the terms of this
Agreement, the Shareholders, Facility, PMI and the Corporation hereby appoint
L.H. Friend, Weinress, Frankson & Presson, Inc. as custodian (the "Custodian")
and herewith deposit with the Custodian certificates representing the
Shareholder Shares currently held by the Shareholders listed on Schedule I
hereto, together with certificates representing the Facility Shares and the PMI
Shares. Each such certificate so deposited is in negotiable and proper
deliverable form endorsed in blank with the signature of the Shareholder thereon
guaranteed by a commercial bank or trust company in the United States or by a
member firm of the New York Stock Exchange, or is accompanied by a duly executed
stock power or powers in blank, bearing the signature of the Selling Shareholder
so guaranteed. The Custodian is hereby authorized and directed to hold in
custody the certificate or certificates delivered herewith. The Shareholders,
Facility and PMI understand that the certificates evidencing such party's Common
Stock will bear a restrictive legend prohibiting transfer thereof except in
compliance with (i) applicable state and federal securities laws and may not be
transferred of record except in compliance therewith, and (ii) the
8
<PAGE>
terms of this Agreement. The Shareholders and Purchasers agree to promptly make
such deliveries and to execute any additional agreement required to accomplish
the deposit with the Custodian of all certificates evidencing Common Stock now
owned or that may be acquired in the future.
6.2 TERMINATION. This Agreement shall terminate upon the earlier of
(i) six years from the date hereof, (ii) with respect to Facility's rights
hereunder, the date Facility ceases to own at least 80% of the shares of Common
Stock acquired by Facility pursuant to the Facility Stock Purchase Agreement,
and (iii) with respect to PMI's rights hereunder, the date PMI ceases to own at
least 80% of the shares of Common Stock acquired by PMI pursuant to the PMI
Stock Purchase Agreement. This Agreement shall terminate as to any specific
Shareholder upon the date such Shareholder ceases to own any Stock.
6.3 MODIFICATION. This Agreement may only be amended, terminated or
modified by the written consent of the Corporation and the Shareholder or
Shareholders to be bound by such modification.
6.4 SUCCESSORS. This Agreement shall be binding upon the parties
hereto, their heirs, administrators, successors, executors and assigns, and the
parties hereto do covenant and agree that they themselves and their respective
heirs, executors, successors, administrators and assigns will execute any and
all instruments, releases, assignments and consents that may be reasonably
required of them to more fully execute the provisions of this Agreement.
6.5 COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall serve as an original for all purposes, but all
copies of which shall constitute but one and the same Agreement.
6.6 HEADINGS. All headings set forth in this Agreement are intended
for convenience only and shall not control or affect the meaning, construction
or effect of this Agreement or of any of the provisions thereof.
6.7 GOVERNING LAW. This Agreement shall be governed by and shall be
construed and enforced in accordance with the laws of the State of Florida.
6.8 WAIVER. The waiver by any party hereto of a breach of any
provision of this Agreement must be in writing and shall not operate or be
construed as a waiver of any subsequent breach by any party.
6.9 ENTIRE AGREEMENT. This Agreement, together with the Stock
Purchase Agreements and "Registration Rights Agreements" executed in connection
therewith, constitute the entire agreement of the parties hereto with respect to
the transactions contemplated hereby, and it is hereby agreed that any prior
oral or written agreements concerning the sale or disposition of Stock shall be
null and void.
6.10 SEVERABILITY. If any provision of this Agreement shall be held
to be illegal or unenforceable, such illegality or unenforceability shall extend
to that provision solely, and the remainder of this Agreement shall be enforced
as if such illegal or unenforceable provision were not incorporated herein.
6.11 SPECIFIC PERFORMANCE. The right to own and vote capital stock
of the Corporation is hereby declared by the parties hereto to be a unique
right, the loss of which is not susceptible to monetary quantification.
Consequently, the parties hereto agree that an action for specific performance
of the purchase and sale obligations created by this Agreement is a proper
remedy for the breach of its provisions. If any party(ies) to this Agreement
institute legal proceedings in connection with this Agreement, the prevailing
party(ies) shall be entitled to recover their reasonable attorneys' fees and
court costs.
9
<PAGE>
6.12 BUSINESS DAYS. References to "Business Days" or "Business Day"
shall mean any day in which The Nasdaq Stock Market is open for business.
Whenever the terms of this Agreement call for the performance of a specific act
on a specified date, which date falls on a Saturday, Sunday or legal holiday,
the date for the performance of such act shall be postponed to the next
succeeding regular business day following such Saturday, Sunday or legal
holiday.
6.13 STOCK REFERENCES. References to "Stock" herein shall mean (i)
each Shareholder's Shares and any capital stock of the Corporation purchased or
otherwise acquired, as of the date hereof or subsequent thereto, by any
Shareholder, and the 31,250 Shares issuable upon exercise of the L.H. Friend,
Weinress, Frankson & Presson, Inc. Warrant, dated as of June 24, 1996 (ii) any
equity securities issued or issuable, as of the date hereof or subsequent
thereto, directly or indirectly with respect to the Stock referred to in clause
(i) above by way of stock dividend or stock split or in connection with a
combination of shares, recapitalization, merger, consolidation or other
reorganization, and (iii) any other shares of any class or series of capital
stock of the Corporation held by a Shareholder.
6.14 FAILURE TO DELIVER STOCK. If a Purchaser or a Shareholder (or
any personal representative or other representative of a Shareholder) who has
become obligated to sell stock of the Corporation hereunder shall fail to
deliver such stock on the terms and in accordance with this Agreement, the
party(ies) having the right to purchase such stock, in addition to all other
remedies they may have, may send to the such obligated party by registered mail,
return receipt requested, the purchase price for such Stock on the terms
provided for in this Agreement. Thereupon, the Corporation, upon written notice
to such obligated Purchaser or Shareholder, shall cause the cancellation on its
books or cause the Transfer Agent to cancel the certificates representing the
stock to be sold; and thereupon, all of the obligated Purchaser's or
Shareholder's rights in and to such Stock shall terminate.
10
<PAGE>
IN WITNESS WHEREOF, the parties to this Agreement have hereunto set
their names as of the date first above written.
MIDWEST FACILITY INVESTMENTS, INC.
By: /s/ H. LEE COMBS
-----------------------------------------
H. Lee Combs
PENSKE MOTORSPORTS, INC.
By: /s/ GREGORY W. PENSKE
-----------------------------------------
Gregory W. Penske
GRAND PRIX ASSOCIATION OF LONG BEACH, INC.
SHAREHOLDERS:
/s/ CHRISTOPHER R. POOK
-----------------------------------------
Christopher R. Pook
/s/ JAMES P. MICHAELIAN
-----------------------------------------
James P. Michaelian
/s/ DWIGHT R. TANAKA
-----------------------------------------
Dwight R. Tanaka
/s/ MICHAEL S. CLARK
-----------------------------------------
Michael S. Clark
/s/ RICHARD LALOR
-----------------------------------------
Richard Lalor
/s/ GEMMA A. BANNON
-----------------------------------------
Gemma A. Bannon
/s/ TODD BRIDGES
-----------------------------------------
Todd Bridges
/s/ ROD WOLTER
-----------------------------------------
Rod Wolter
/s/ JAMES SULLIVAN
-----------------------------------------
James Sullivan, Trustee of the S.R.E.
Industries Pension Plan & Trust and
individually
/s/ WAYNE G. KEES
-----------------------------------------
Wayne Kees, Trustee of the Wayne G. Kees
Living Trust dated 10/24/89 and
individually
/s/ DANIEL S. GURNEY
-----------------------------------------
Daniel S. Gurney, Trustee under the Gurney
Family Trust and Individually
/s/ JOHN R. QUEEN, III
-----------------------------------------
John R. Queen, III
/s/ GEORGE PELLIN
-----------------------------------------
George Pellin
11
<PAGE>
GRAND PRIX ASSOCIATION OF LONG BEACH, INC.
SHAREHOLDERS:
/s/ ELLEN L. POOK
-----------------------------------------
Ellen L. Pook
/s/ EVI GURNEY
-----------------------------------------
Evi Gurney
/s/ EVI GURNEY
-----------------------------------------
Evi Gurney Trustee
under the Gurney Family Trust
/s/ GILBERT L. FRIES
-----------------------------------------
Gilbert L. Fries, Trustee of the
Lambert-Fries Trust dated 12-6-91
/s/ MARY LOU LAMBERT FRIES
-----------------------------------------
Mary Lou Lambert Fries, Trustee of
the Lambert-Fries Trust dated 12-5-91
/s/ SHARON TANAKA
-----------------------------------------
Sharon Tanaka
/s/ GAYLE SETTE
-----------------------------------------
Gayle Sette
/s/ VICTORIA BRIDGES
-----------------------------------------
Victoria Bridges
/s/ JOSEPH AINGE
-----------------------------------------
Joseph Ainge, Trustee of the Ainge
Family Trust dated 11-21-96
and individually
MATLINS FINANCIAL CONSULTING, INCN.
PROFIT SHARING PLAN
/s/ NEIL MATLINS
-----------------------------------------
Neil Matlins, Trustee
THE LINCOLN FUND, LP
/s/ NEIL MATLINS
-----------------------------------------
12
<PAGE>
THE LINCOLN FUND TAX
ADVANTAGED, LP
/s/ NEIL MATLINS
-----------------------------------------
THE GORDON FUND, LP
/s/ NEIL MATLINS
-----------------------------------------
/s/ J. RODNEY BRYAN
-----------------------------------------
J. Rodney Bryan Trustee
of the Rodney Bryan Trust dated 12-15-93
/s/ MARY ANN BRYAN
-----------------------------------------
Mary Ann Bryan Trustee
of the Rodney Bryan Trust dated 12-15-93
/s/ BETTY SULLIVAN
-----------------------------------------
Betty Sullivan
/s/ BETTY SULLIVAN
-----------------------------------------
Betty Sullivan Trustee of the S.R.E.
Industries Pension Plan & Trust
/s/ CONSTANCE AINGE
-----------------------------------------
Constance Ainge, Trustee of the Ainge
Family Trust dated 11-21-96
/s/ MARTIN BANNON
-----------------------------------------
Martin Bannon
13
<PAGE>
/s/ PENNY NICCOLE
-----------------------------------------
Penny Niccole, Trustee of the Nicolle
Family Trust dated 11-13-95
/s/ MICHAEL NICCOLE
-----------------------------------------
Michael Niccole, Trustee of the Nicolle
Family Trust dated 11-13-95
EDMARJON-RONBREWDAVE, LLC*
A Tennessee limited liability company
/s/ ED H. GATLIN
-----------------------------------------
Ed H. Gatlin, CEO
L.H. FRIEND, WEINRESS, FRANKSON,
PRESSON, INC.
By:/S/ GREGORY E. PRESSON
-------------------------------------
Gregory E. Presson
President
-------------------------------------
/s/ RUTH QUEEN
-----------------------------------------
Ruth Queen
/s/ JOHN R. QUEEN, JR.
-----------------------------------------
John R. Queen, Jr.
/s/ HERMAN MAIER
-----------------------------------------
Herman Maier
* Only 45,000 shares of EDMARJON-RONBREWDAVE, LLC is subject to the Right of
First Refusal Agreement.
14
<PAGE>
/s/ PATRICIA QUEEN
---------------------------------
Patricia Queen
<PAGE>
SCHEDULE I TO RIGHT OF FIRST REFUSAL AGREEMENT
NAME SHARES 1993 OPTIONS
- ---- ------ ------------
Christopher R. Pook 310,207(8) 174,435
Christopher R. Pook 72,341(9)
Ellen L. Pook 65,804
James P. Michaelian 176,499(12) 108,702
Dwight Tanaka
and Sharon Tanaka 55,204(6) 20,830
Michael S. Clark 32,190(5) 12,691
Rick Lalor 31,728
Gemma Bannon 9,064
Gemma Bannon
and Martin Bannon 23,049(7)
Todd Bridges
and Victoria Bridges 1,400
Rod Wolter 500
James Sullivan 7,114 14,939
Betty Sullivan 7,114
James Sullivan and
Betty Sullivan Trustees
under the S.R.E. Industries
Penion Plan & Trust 41,799
Wayne Kees 11,952
Wayne Kees Trustee of
the Wayne G. Kees Living
Trust dated 10/24/89 49,014
Daniel S. Gurney 11,952
Daniel S. Gurney and
Evi Gurney Trustees of
the Gurney Family Trust 70,841(1)
Evi Gurney 2,987
John Queen, III 36,570(3)
George Pellin 59,195(2) 14,939
Joseph Ainge 14,939
Joseph Ainge and
Constance Ainge, Trustees
of the Ainge Family Trust
dated 11/21/96 46,027
<PAGE>
NAME
- ----
Gilbert L. Fries and
Mary Lou Lambert Fries,
Trustees of The Lambert-Fries
Trust dated 12-5-91 35,000(4)
The Lincoln Fund, LP 66,600
The Lincoln Fund Tax
Advantaged, LP 18,750
The Gordon Fund, LP 15,625
Matlins Financial Consulting,
Inc. Profit Sharing Plan 6,250
Rod Sette and Gayle Sette 37,508(11)
J. Rodney Bryan and
Mary Ann Bryan Trustees
of the Rodney Bryan Trust
dated 12/15/93 23,120
Penny Niccoli and
Michael Niccoli Trustees
of the Niccoli Family Trust
dated 11/13/95 35,570
Ruth Queen 38,557 11,952
John R. Queen, Jr. and
Patricia Queen 81,910(1) 11,952
Herman Maler 14,228
EDMARJON-RONBREWDAVE, LLC
A Tennessee limited liability
company (successor in interest
to Memphis International
Motorsports Corporation) 45,000(1)
L.H. Friend, Weinress,
Frankson & Presson, Inc. Warrant to purchase 31,250
(1) 16,148 pledged to secure $12,485 note to GPALB.
(2) 18,148 subject to $44,500.42 margin balance with Evern Securities.
(3) Shares in a Mortgage Pledge Account at Merrill Lynch will be released
within 10 days.
(4) Subject to $105,677 margin balance account with Christopher Weil & Co.
(5) Pledged to secure $24,887.50 note to GPALB.
(6) Pledged to secure $42,679 note to GPALB.
(7) Pledged to secure $17,820 note to GPALB.
(8) Subject to $342,731 margin balance with Bear Stearns.
(9) Shares and options owned by Lou Mierabile subject to right of first
refusal agreement with dated 8-8-97 in favor of Christopher R. Pook
(10,457 of Mr. Mirabile's shares are pledged to secure $8,085 note to
GPALB.)
(10) intentionally ommitted.
(11) 10,457 pledged to secure $8,085 note to GPALB.
(12) 114,997 pledged to secure $88,907.50 note to GPALB.
(13) Part of total 250,000 series B convertible preferred shares which are
held by First Commercial Bank of Memphis to secure a $1,500,000 note.
EXHIBIT 4
Names, Addresses and Principal Occupations
of
Executive Officers, Directors and
Controlling Persons of the
Reporting Persons
<TABLE>
<CAPTION>
NAMES AND ADDRESSES PRINCIPAL OCCUPATION
------------------- --------------------
<S> <C>
I. PENSKE MOTORSPORTS, INC.
Roger S. Penske Chairman of the Board of PMI
13400 Outer Drive West
Detroit, Michigan 49239
Walter P. Czarnecki Vice Chairman of the Board of PMI
13400 Outer Drive West
Detroit, Michigan 49239
Richard J. Peters Director and President of R.J. Peters & Company
73 Kercheval
Grosse Pointe Farms, Michigan 48236
Gregory W. Penske President and Chief Executive Officer of PMI
3534 North Peck Road
El Monte, California 91731
Les Richter Executive Vice President of PMI
3633 E. Inland Empire Boulevard
Suite 850
Ontario, California 91764
James H. Harris Senior Vice President and Treasurer of PMI
13400 Outer Drive West
Detroit, Michigan 49239
Robert H. Kurnick, Jr. Senior Vice President, General Counsel and
3270 W. Big Beaver Road Secretary of PMI
Suite 130
Troy, Michigan 48084
Gene Haskett Executive Vice President of PMI
Michigan International Speedway
12626 US-12
Brooklyn, Michigan 49230
H. Lee Combs Director and Senior Vice President--Operations of
International Speedway Corporation International Speedway Corporation
1801 West International Speedway Boulevard
Daytona Beach, Florida 32114
William C. France Director and Chairman of the Board and Chief Executive
International Speedway Corporation Officer of International Speedway Corporation
1801 West International Speedway Boulevard
Daytona Beach, Florida 32114
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
NAMES AND ADDRESSES PRINCIPAL OCCUPATION
------------------- --------------------
<S> <C>
Richard E. Stoddard Director and Chairman of the Board of Kaiser
3633 E. Inland Empire Boulevard Ventures Inc.
Suite 850
Ontario, California 91764
James E. Williams Director and Chairman and Chief Executive
18301 Von Karman Avenue Officer of Golden State Foods
Suite 1100
Irvine, California 92715-0110
Gary W. Dickinson Director and President of NonLinear Dynamics, Inc.
NonLinear Dynamics, Inc.
334 E. Washington Street
Ann Arbor, Michigan 48108
Jo DeWitt Wilson Director and President and Chief Executive Officer of
North Carolina Motor Speedway North Carolina Motor Speedway
111 Washington Street
Rockingham, North Carolina 28345
</TABLE>
