FORM 8-K
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) November 22, 1995
INTERNATIONAL SPEEDWAY CORPORATION
(Exact name of registrant as specified in its charter)
FLORIDA O-2384 59-0709342
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
1801 WEST INTERNATIONAL SPEEDWAY BOULEVARD, DAYTONA BEACH, FLORIDA 32114
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (904) 254-2700
No Change
(Former name or address, if changed since last report)
Item 2. Acquisition or Disposition of Assets.
On November 22, 1995, Facility Investments, Inc., a newly formed wholly-owned
subsidiary of the Company, purchased 200 shares of the common stock,
representing 20% of the outstanding shares, of PSH Corp., a newly formed
Delaware corporation, for $14,975,000 in cash. The purchase price was
determined based upon negotiations between the Company and Penske Corporation
which indirectly beneficially owns the remaining 80% of the outstanding shares
of PSH Corp. The funds used in the transaction came from current assets of
the Company.
The acquisition of the 20% interest in PSH Corp., which will be accounted for
by the equity method, does not result in the direct or indirect acquisition of
control of the underlying assets, including businesses, indirectly controlled
by PSH Corp.
PSH Corp. owns 85% of the outstanding shares of Penske Speedways Holding
Corp., another newly formed corporation. The remaining 15% of Penske
Speedways Holding Corp. is owned by Kaiser Ventures Inc. Through a series of
transactions Kaiser Ventures Inc. contributed all of the issued and
outstanding stock of Speedway Development Corporation, its wholly owned
subsidiary, which owned approximately 460 acres of real property near Ontario,
California, in exchange for its 15% interest in Penske Speedways Holding
Corp. represented by convertible preferred stock.
Penske Speedways Holding Corp. owns 100% of the outstanding stock of Penske
Speedway, Inc. Penske Speedway, Inc. owns and operates Michigan International
Speedway, owns approximately 85% of Nazareth Speedway in Pennsylvania, 2% of
North Carolina Motor Speedway (Rockingham) and 100% of a racing souvenir
retailer called Motorsports International Corp. Prior to this transaction,
Penske Speedway, Inc. was 100% beneficially owned by Penske Corporation.
Through a series of transactions Penske Corporation contributed 100% of the
stock of Penske Speedway, Inc. and its subsidiaries (including The California
Speedway Corporation) and the sum of $5,000,000 in cash for its 80% indirect
beneficial interest in PSH Corp.
The California Speedway Corporation will use the cash contributed by Penske
Corporation and the Company, together with additional financing from
NationsBank, N.A., to construct The California Speedway on the land formerly
owned by Kaiser Ventures Inc. The effective beneficial ownership interest in
the expanded and combined operations of Penske Speedway, Inc., and its
subsidiaries (including The California Speedway Corporation) will be Penske
Corp. with 68%, the Company with 17%, and Kaiser with 15%.
Full-scale construction of The California Speedway will commence immediately
and plans call for a scheduled 1997 opening. The California Speedway is under
construction on a portion of the former Kaiser mill site property near Fontana
in San Bernardino County, California. It is contemplated that sanction
agreements will be obtained for a CART PPG Indy Car World Series event and a
NASCAR Winston Cup Series event at The California Speedway in 1997.
Some of the major events conducted by Penske Speedway, Inc. are late model
stock car races sanctioned by the National Association for Stock Car Auto
Racing, Inc. (NASCAR). NASCAR is a member of the France Family Group which
controls 61.41% of Company stock. There are four other members of the France
Family Group presently serving as Officers and/or Directors of the Company:
William C. France and James C. France are brothers. Lesa D. Kennedy and Brian
Z. France are the children of William C. France. Standard NASCAR sanction
agreements require racetrack operators to pay various monies to NASCAR for
each sanctioned event conducted. Included are sanction fees and prize and
point fund monies. The prize and point fund monies are distributed by NASCAR
to participants in the events. Since the beginning of Penske Speedway, Inc.'s
last fiscal year, it and Nazareth Speedway paid NASCAR the amounts indicated
for the following sanctioned events: Miller Genuine Draft 400 - $1,097,132; GM
Goodwrench Dealer 400 - $1,082,226; Detroit Gasket 200 - $294,131; and
Meridian Advantage 200 - $324,788. There were no other transactions between
NASCAR and Penske Speedway, Inc. during the last fiscal year in which the
amount involved exceeded $60,000. These transactions and payments are
considered normal in the ordinary course of business and similar transactions
and payments are planned during the current fiscal year.
Item 7. Financial Statements and Exhibits.
(c) Exhibits.
Exhibit
Number Description of Exhibit Filing Status
1. (2) Investment and Development Agreement filed herewith
2. (99.1) Press Release announcing investment filed herewith
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
INTERNATIONAL SPEEDWAY CORPORATION
Date: 12/7/95 /s/ William C. France
---------------- ----------------------------------
William C. France, Chairman
& Chief Executive Officer
INVESTMENT AND DEVELOPMENT AGREEMENT
This Agreement is entered into effective as of November 22, 1995, by and
between International Speedway Corporation, a Florida corporation, whose
address is 1801 International Speedway Boulevard, Daytona Beach, Florida
32114-1243 ("ISC"), and Penske Corporation, a Delaware Corporation, whose
address is 13400 Outer Drive West, Detroit Michigan 48239-4001 ("Penske
Corp."). (Penske Corp. and ISC are sometimes referred to herein individually
as a "Party" or collectively as "Parties").
RECITALS
A. Penske Speedway, Inc. ("PSI"), a Penske Corp. affiliate has
entered into with Kaiser Ventures, Inc. f/k/a Kaiser Resources, Inc.
("Kaiser") an Agreement Regarding the Development of a Motorsport Complex in
the County of San Bernardino, California dated April 11, 1994, as amended (the
"Development Agreement").
B. PSI and Kaiser set forth the general terms on which they
desired to proceed with the development of The California Speedway identified
in the Development Agreement, in an Outline of Terms dated April 11, 1995
modifying the Development Agreement (the "Outline of Terms").
C. Kaiser entered into an Organization Agreement dated November
21, 1995 (the "Organization Agreement") with Penske Speedways Holding Corp.
(hereinafter referred to as "Penske Speedways Holding"), a Delaware
corporation which is a shareholder of PSI, and PSH Corp. (hereinafter referred
to as "PSH"), a Delaware corporation which is a shareholder of Penske
Speedways Holding. The Organization Agreement is intended to implement the
terms of the Development Agreement and the Outline of Terms. A copy of the
Organization Agreement is attached as Exhibit A hereto.
D. Under the terms of the Organization Agreement, after
satisfaction of certain conditions specified in the Organization Agreement,
PSH shall cause Penske Speedways Holding to transfer to Kaiser fifteen
thousand (15,000) shares of preferred stock of Penske Speedways Holding (the
"Preferred Stock") in exchange for all the issued and outstanding stock of
Speedway Development Corp., a California corporation ("SDC"). At the time of
the exchange, SDC shall be the owner as of record of approximately 450 acres
of land located in the County of San Bernardino, California which is described
on Schedule 4.3(d) of the Organization Agreement (the "Raceway Property").
E. Penske Corp. desires that ISC shall participate in the
development of the Raceway Property into a motorsport complex (with facilities
and structures related and incidental thereto) to be known as The California
Speedway (the "Raceway"), with such participation potentially including the
advance of demolition financing and the acquisition of a twenty percent (20%)
equity interest in PSH.
F. ISC is willing to participate in the development of the
Raceway Property into a motorsport complex on the terms and subject to the
conditions hereinafter set forth.
G. The purposes of this Agreement are, among other things, to
set forth: (i)the terms on which the Parties will undertake the development
of the Raceway Property; (ii) the circumstances which will require ISC to
contribute funds toward development of the Raceway Property; (iii) the
structure of PSH and the affiliated group of corporations of which it will be
the parent corporation (iv) an outline of certain rights of ISC with respect
to the governance of PSH, and the affiliated group of which it will be the
parent corporation; and (v) the relationship between this Agreement and the
Organization Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth in this Agreement, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, ISC and Penske
Corp. agree as follows:
ARTICLE I
DEFINITIONS
1.1 Except as otherwise specified in this Agreement, the terms defined
in the Organization Agreement shall have the same meaning in this Agreement.
In addition to the terms that may be defined in other locations of this
Agreement, including the recitals set forth above, the following terms shall
have the meaning set forth below:
1.1.0 Agreement shall mean this Agreement between Penske Corp. and ISC
as the same may be amended from time-to-time.
1.1.1 Affiliate shall mean any person or entity controlling or
controlled by or under common control with a specified entity.
1.1.2 Applicable Laws shall mean all applicable federal, state and local
laws and regulations.
1.1.3 Demolition Costs shall mean up to $1,800,000 of costs which PSI is
obligated to advance under the terms of Section 3.4 of the Development
Agreement associated with the demolition of the existing structures and
foundations on the Raceway Property which demolition is necessary in order for
Kaiser to complete its remediation of hazardous materials in accordance with
terms of Section 3.2 of the Development Agreement.
1.1.4 Phase I Period shall mean the period of time from the date of this
Agreement through the PSH Formation Date.
1.1.5 PSH Affiliated Group shall mean PSH and each of its subsidiary
corporations which would qualify as part of the same "affiliated group" as
that term is defined in Section 1504 of the Internal Revenue Code of 1986, as
amended.
1.1.6 PSH Formation Date shall refer to the date on which there shall
have occurred both the Closing Date specified in the Organization Agreement
and the issuance to ISC of PSH stock in accordance with the terms of Section
5.1 below.
1.1.7 PSI Assets shall mean all the assets of PSI and its subsidiaries
including the Penske Assets as that term is defined in the Development
Agreement and the assets of Motorsports International Corp.
1.1.8 Public Company shall mean and refer to Penske Speedways
Holdings or any of its subsidiaries which have filed an effective registration
statement with the Securities and Exchange Commission and have sold registered
securities to the public.
ARTICLE II
PRE-DEVELOPMENT, INVESTIGATION AND ENTITLEMENT ACTIVITIES
2.1 Pre-Development and Entitlement Activities. To the extent that
any of the pre-development and entitlement activities set forth in Section 2.1
of the Development Agreement have not been completed prior to the date hereof,
Penske Corp. agrees to cause PSI to keep ISC fully advised of the status of
such activities, to provide ISC with copies of all documentation received by
PSI with respect to such activities and to permit ISC to fully participate in
meetings and discussions with Kaiser regarding such activities. Penske Corp.
represents that to the best of its knowledge Schedule 2.1 attached hereto sets
forth the status of pre-development, investigation and entitlement activities
that are outstanding as of the date of this Agreement.
2.2 Delivery of Information
(a) Raceway Property Information. Penske Corp. represents
and warrants to ISC that prior to the date hereof it has provided or made
available for review by ISC all documents relating to the Raceway Property
provided by Kaiser to PSI in accordance with the provisions of Section 2.2 of
the Development Agreement. Penske Corp. agrees that commencing with the date
hereof it will promptly provide ISC with copies of all documents relating to
the Raceway Property provided by Kaiser to PSI in accordance with the terms of
Section 2.2 of the Development Agreement or provided to Penske Speedways
Holding or PSH in accordance with the terms of the organization Agreement.
(b) PSI Information. Penske Corp. represents and warrants
to ISC that prior to the date hereof it has provided or made available for
review by ISC all documents in PSI's possession and related to the PSI Assets
which were provided or made available for review by Kaiser in accordance with
the provisions of Section 2.2 of the Development Agreement. Penske Corp.
agrees that commencing with the date hereof it will promptly provide ISC with
copies of all documents related to the PSI Assets which are provided to Kaiser
in accordance with the terms of Section 2.2 of the Development Agreement or
otherwise reasonably requested by ISC.
2.3 Inspection and Investigation of Raceway Property. Penske Corp.
hereby agrees to have PSI designate ISC as one of its designees entitled to
inspect the Raceway Property with all the rights of inspection given to PSI
under the Development Agreement. ISC agrees to conduct its activities on the
Raceway Property in such a manner as to avoid disturbing any tenant or other
occupant of the Raceway Property or in any way causing PSI or its Affiliates
to incur liability to anyone under, or related to, the Development Agreement.
2.4 Schedule of Development and Remediation Activities. Penske Corp.
represents that to the best of its knowledge Schedule 2.4 attached hereto sets
forth a timetable, accurate in all material respects, for obtaining all
governmental approvals necessary for the construction and initial development
of the Raceway Property and the performance by Kaiser of its environmental
remediation obligations under Section 5.3(b) of the Development Agreement.
ARTICLE III
DEMOLITION COST LOANS
3.1 Loan of Demolition Costs. During the Phase I Period, ISC shall
make loans to PSH in an aggregate amount not to exceed $360,000.00
("Demolition Cost Loans") to be used to cover twenty percent (20%) of the
Demolition Costs. Attached as Schedule 3.1 is a Statement of Demolition Costs
expended by Penske Corp. or its Affiliates through the date hereof. Penske
Corp. warrants that Schedule 3.1 is accurate and complete in all material
respects. Simultaneous with the execution hereof ISC shall make a Demolition
Cost Loan to reimburse Penske Corp. or its Affiliate designated by Penske
Corp. for twenty percent (20%) of Demolition Costs reflected on Schedule 3.1
with respect to which ISC has not made previous Demolition Cost Loans. During
the Phase I Period, eighty percent (80%) of any additional Demolition Costs
shall be paid by Penske Corp. or its Affiliates and twenty percent (20%) of
any additional Demolition Costs shall be paid by ISC through additional
Demolition Cost Loans to SHI. Penske Corp. shall provide to ISC reasonable
supporting documentation with respect to all Demolition Costs with respect to
which it is seeking Demolition Cost Loans. In no event shall ISC be obligated
to make Demolition Cost Loans aggregating more than $360,000.
3.2 Documentation and Repayment of Loans. In return for each
Demolition Cost Loan made by ISC, ISC shall receive a promissory note from PSH
in the principal amount of the Demolition Cost Loan. Each note shall be
guaranteed by Penske Corp. and shall be substantially in the form of the note
attached as Schedule 3.2 hereto.
3.3 Conversion of Demolition Cost Loans. Upon the occurrence of the
PSH Formation Date, the Demolition Cost Loans and the notes representing such
loans shall be canceled and the amounts represented by such loans shall be
treated as equity contributions made by ISC into PSH in accordance with the
terms of Section 5.1 below.
ARTICLE IV
OBLIGATIONS AND COVENANTS OF PENSKE CORP.
4.1 Modification of the Agreements. Between the date hereof and the
PSH Formation Date, neither the Development Agreement nor the Organization
Agreement shall be modified in any material respect and Penske Corp. shall not
permit PSI to waive any of its material rights under the Development Agreement
without the written consent of ISC, which will not be unreasonably withheld or
delayed. Penske Corp. shall provide ISC with prompt written notice of any
changes made or which it desires to make in the Development Agreement or the
Organization Agreement. If prior to the PSH Formation Date, ISC shall not
grant its written consent to any modification for which its consent is
required and Penske Corp. desires to proceed with the modification, ISC may
elect to terminate this Agreement by providing at least thirty (30) days
written notice to Penske Corp. After the PSH Formation Date, and as long as
ISC owns at least two percent (2%) of the outstanding stock of PSH, neither
the Organization Agreement nor any of the definitive agreements contemplated
by the Organization Agreement shall be modified except with ISC's prior
written consent, and Penske Corp. shall not permit any of its Affiliates to
waive any of their rights under such agreements without the prior written
consent of ISC.
4.2 Formation of the PSH Affiliated Group. Prior to the PSH
Formation Date, Penske Corp. shall have caused the PSH Affiliated Group to be
structured as reflected on Schedule 4.2 hereto subject only to the issuance of
stock to ISC and to Kaiser. On the PSH Formation Date, in accordance with the
terms of Section 5.1 below, Penske Corp. shall cause PSH to issue to ISC 200
shares of PSH's common stock which will constitute twenty percent (20%) of
PSH's outstanding stock.
4.3 Capital Contribution by Penske Corp. On or before the PSH
Formation Date, Penske Corp. shall have made capital contributions into PSH
totaling $5,000,000. Penske Corp., at its option, may treat reasonable and
verifiable amounts expended or advanced by Penske Corp. or its Affiliates for
the development and/or construction of the Raceway prior to the PSH Formation
Date as capital contributions made into PSH. Attached as Schedule 4.3 hereto
is a list of all development and construction expenditures or advances made by
Penske Corp. or its Affiliates through the date hereof which Penske Corp.
intends to treat as capital contributions into PSH.
4.4 Representations and Warranties of Penske Corp. Penske Corp.
represents and warrants to ISC that the following matters are true and correct
as of the date of execution of this Agreement and will be true and correct as
of the PSH Formation Date:
(a) Authority. Penske Corp. is a corporation, duly
organized, validly existing and in good standing under the laws of the State
of Delaware; this Agreement is duly authorized, executed, and delivered by
Penske Corp. and is a legal, valid and binding obligation of Penske Corp.
enforceable against Penske Corp. in accordance with its respective terms
(except to the extent that such enforcement may be limited by applicable
bankruptcy, insolvency, moratorium and other principles relating to or
limiting the rights of creditors generally) and will not violate any material
provision of any agreement to which Penske Corp. or any of its Affiliates is a
party or to which the PSI Assets may be subject.
(b) Legal Proceedings. To the best of Penske Corp.'s
actual knowledge (no independent investigation having been made by Penske
Corp.), there are no pending or threatened legal proceedings or actions which,
if concluded least favorably to Penske Corp., would prevent Penske Corp. from
entering into or performing this Agreement and the transactions contemplated
herein or have a material adverse impact on the status or value of the PSI
Assets.
(c) Required Actions. Except as set forth on Schedule
4.4(c) hereto, no consent of any partner, shareholder, trustee, trustor,
beneficiary, creditor, investor or, to the best of Penske Corp.'s actual
knowledge (no independent investigation having been made by Penske Corp.), any
judicial or administrative body, governmental authority or other party is
required in order for Penske Corp. to enter into or to perform this Agreement.
Notwithstanding the foregoing, Penske Corp. and ISC acknowledge that certain
permits, licenses, consents and approvals will be required in connection with
the development and operation of the Raceway and the PSI Assets.
(d) No Material Adverse Change. From the date of this
Agreement to the SHI Formation Date, there shall have been no material adverse
change in the status of the PSI Assets and their operation or to PSI or Penske
Corp. which would adversely affect the value of the PSI Assets, adversely
change Penske Corp.'s ability to perform under this Agreement, or adversely
affect the ability of Penske Corp. to obtain necessary financing for the
construction of the Raceway.
(e) Financial Statement. PSI's audited consolidated
financial statement for PSI and each of its corporate subsidiaries (the
"Subsidiaries") as of and for the fiscal year ended December 31, 1994 (the
"PSI Statement Date"), and the September 30, 1995 unaudited consolidated
Financial Statement for PSI and each of the subsidiaries, copies of which are
attached hereto as Schedule 4.4(e), are complete and correct in all material
respects, were prepared in accordance with generally accepted accounting
principles applied consistently and on a basis consistent with those applied
in previous accounting periods, and fairly present PSI's financial condition
as of said dates and the results of its operations for the periods covered
thereby on a consolidated basis with the Subsidiaries. Except as may be
indicated on Schedule 4.4(e), the amounts of net income shown therein, after
provision for federal and state income taxes, if any, represent operating
income from the normal operation of PSI's business and do not include any
material item of non-recurring or special income such as, but not limited to,
intercompany profits, profits on re-evaluation of inventory or other assets or
profit on the sale of capital assets (other than sale of motor vehicles and
the sale of other capital assets in the ordinary course of business which do
not exceed $500,000 in the aggregate during any fiscal year). PSI has no
subsidiaries in which it owns more than a fifty percent (50%) equity interest
except as reflected on Schedule 4.4(e).
(f) Changes in Condition. Since the PSI Statement Date,
PSI and the Subsidiaries have conducted their business in the usual, regular
and ordinary course and have not, except in accordance with the terms of the
Development Agreement or as set forth on Schedule 4.4(f) hereto:
(i) incurred any obligations or liabilities, accrued,
absolute, contingent or otherwise, other than normal contract liabilities
incurred in the conduct of their business in the ordinary and regular course
which are either terminable or will expire or be fully performed within twelve
months from their respective dates;
(ii) discharged or satisfied any lien or encumbrance
or paid any obligations, absolute, contingent, or otherwise, other than
current contract liabilities for goods or services incurred since the PSI
Statement Date in the normal and ordinary course of business;
(iii) mortgaged, pledged or created a security
interest in any of their assets, subjected their assets to any lien or other
encumbrance, sold or transferred any properties, rights or interests, or
cancelled, settled, compromised or released any receivables, contracts, claims
or rights, except in the normal and ordinary course of business;
(iv) made any charges to their capital or surplus
accounts; or
(v) used their assets or conducted their business in
any manner other than in the normal and ordinary course.
(g) Title. PSI and the Subsidiaries have good and
marketable title to all of their assets free and clear from all mortgages,
liens, security interests and encumbrances except for (i) taxes and
assessments not yet due and payable, (ii) mortgages, liens, security interests
and encumbrances which are noted or reflected on Schedule 4.4(e) and (iii)
purchase money liens incurred in the usual, regular and ordinary course of
business.
(h) Damage. Since the PSI Statement Date, neither PSI nor
any of the Subsidiaries have suffered any material damage, destruction or
other loss (whether or not covered by insurance) and no other event or
condition has occurred which has materially and adversely affected the
operations by PSI or any of the Subsidiaries of the speedways operated by
them.
(i) Negative Covenants. Except for matters disclosed on
the financial statements set forth as Schedule 4.4(e) hereto, disclosed in the
Organization Agreement, disclosed or permitted by Section 4.4(f) hereto, or
which are disclosed in Schedule 4.4(i) hereto:
(i) Neither PSI nor any of the Subsidiaries is a party
to or bound by any material written or legally enforceable oral contract,
lease, permit, franchise, license or other instrument, document, commitment,
undertaking or obligation. For purposes of the immediately preceding
sentence, a contract shall be deemed to be material if it creates an
obligation in excess of $250,000.
(ii) There is no material litigation, claim, or
condition pending or to the knowledge of Penske Corp. threatened which would,
might or seeks to materially affect or change the assets, financial condition,
business or right to carry on its business of PSI or any of the Subsidiaries
and there is no material basis known to Penske Corp. therefor.
(iii) There is no material investigation, audit or
other proceeding pending or to the knowledge of Penske Corp. threatened by or
before any governmental commission, agency or other public or regulatory
authority which would, might or seeks to materially affect or change the
assets, financial condition, business or right to carry on its business of PSI
or any of the Subsidiaries, and there is no material basis known to Penske
Corp. therefor.
(iv) To the best of the knowledge of Penske Corp. The
PSI receivables shown on Schedule 4.4(e) in all material respects represent,
valid, undisputed and liquidated claims due from the debtors as of the dates
thereof, and in all material respects, except as stated on such Schedule
4.4(e), are current and collectible in the aggregate recorded amounts thereof,
less amounts collected in the ordinary course of business subsequent to the
date thereof and are not subject to any material set-off, counterclaim or any
other condition of payment.
(v) To the best of the knowledge of Penske Corp.
inventories maintained by PSI or any of the Subsidiaries consist in all
materials respects of items of a quality and quantity usable or salable in the
normal course of the business, and except for items which in the aggregate are
not material, the value of obsolete and damaged items and of items which are
below standard quality has been written down to realizable market value, or
adequate reserves have been provided for.
(vi) All material real property owned or leased by PSI
or any of the Subsidiaries and all material improvements thereon and the
equipment therein (i) are in good operating condition and repair and
satisfactory for the uses for which they are intended, normal wear and tear
excepted, (ii) to the best of the knowledge of Penske Corp., conform with all
material applicable federal, state and local laws, zoning and building
ordinances and health and safety ordinances and (iii) to the best of the
knowledge of Penske Corp. to the extent pertinent, are zoned for the various
purposes for which such buildings and structures are being used; none of the
improvements on the premises materially encroaches upon any adjoining premises
in a manner which is likely to materially and adversely affect the conduct of
business upon the premises of PSI or any of the Subsidiaries, nor is there any
material encroachment by others upon the premises of PSI or any of the
Subsidiaries in a manner which is likely to materially and adversely affect
the conduct of business upon the premises of PSI or any of the Subsidiaries
and to the best of Penske Corp.'s knowledge and belief all certificates,
licenses and permits which are required for the lawful use and occupancy of
the premises and structures used by PSI or any of the Subsidiaries, and the
absence of which is likely to materially and adversely affect the conduct of
business upon such premises, have been obtained and are in full force and
effect.
(vii) All of the material leases of PSI or the
Subsidiaries are in full force and effect, valid and enforceable in accordance
with their terms (subject to general equitable principles and except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally) and, except as specifically provided in writing
in such leases, grant the leasehold interests they purport to grant free and
clear of all mortgages, liens, security interests and encumbrances created by
PSI or any of the Subsidiaries.
(viii) PSI and the Subsidiaries are in compliance with
all federal and state laws respecting employment and employment practices,
terms and conditions of employment, and wages and hours, to the extent that
the failure to comply with such laws could have a material adverse effect upon
the business of PSI or the Subsidiaries taken as a whole or on the current
operation of any speedway by PSI or any of the Subsidiaries, and are not
engaged in any unfair labor practices; and there are no pending or threatened
labor strikes or grievances or arbitration proceedings against the PSI or any
of the Subsidiaries regarding labor matters. There are not now and for the
last three years there have not been any unfair labor practice complaints or
union representation questions pending against PSI or any of the Subsidiaries
before the National Labor Relations Board. Except as disclosed on Schedule
4.4(i) hereto, all obligations of PSI and the Subsidiaries for payment to
their employees, to trusts or other funds to any governmental agencies, for
workmen's compensation, unemployment compensation, pension, profit sharing,
retirement, deferred compensation, social security bonus or any other form of
compensation or benefit, have been paid, or adequate accruals have been made
therefor and are fully reflected on PSI's financial statements in accordance
with generally accepted accounting principals. Neither PSI nor any of the
Subsidiaries is a party to or bound by any collective bargaining agreements.
(ix) There have been filed on behalf of PSI and the
Subsidiaries all tax returns and other reports and returns required to be
filed by all federal, state and local authorities within the time required for
each such filing, and there have been paid all taxes, assessments,
contributions, fees and other amounts due and payable thereon unless the
failure to do so will not have a material adverse effect upon PSI or the
Subsidiaries taken as a whole or are being challenged in good faith. All
outstanding tax challenges involving potential tax liability in excess of
$25,000 are listed on Schedule 4.4(i) hereto. All taxes imposed on or with
respect to the real property owned or leased by PSI or any of the Subsidiaries
have been paid in full on or before the date on which they are due, subject to
the terms of the immediately proceeding sentence.
(x) Neither PSI nor any of the Subsidiaries is in
default under or in breach or violation of any of the terms, conditions or
obligations of (A) its Articles of Incorporation, Bylaws, Code of Regulations
or corporate resolutions; (B) any material contract, lease, mortgage or other
agreement or obligation or any material license, franchise, permit or similar
authorization to which it is a party, by which it is bound, or to which it is
subject; (C) any federal, state, local or other law; or (D) any rule,
regulation, order, judgment, decree or other requirement of any federal,
state, local or other governmental agency or authority or court or judicial
body to the extent any failure to comply will have a material adverse effect
on PSI and the Subsidiaries taken as a whole or on the current operation of
any speedway by PSI or any of the Subsidiaries.
(xi) No consent, approval, authorization or order of
any person, firm or corporation, who or which is not a party to this Agreement
or of any court or governmental agency is required for the consummation of the
sale of PSH stock to ISC as contemplated by this Agreement.
(xii) There are no material instruments, agreements or
arrangements creating liens, encumbrances, charges or restrictions on the use
or transfer of any assets or property of PSI or any of the Subsidiaries.
(xiii) There are no material compensation, pension,
bonus, profit sharing, stock option, stock purchase, hospital and medical
insurance, retirement, deferred compensation and other employee benefit plans
of PSI or any of the Subsidiaries.
(xiv) There are no material deeds, leases, letters of
intent and other agreements to which PSI or any of the Subsidiaries is a party
relating to any real property or any interest therein.
(xv) Except as disclosed on Schedule 4.4(i) hereto,
there are no material patents, trademarks, trade names, copyrights, franchises
and licenses or applications therefor presently owned, held or used by PSI or
any of the Subsidiaries or which are necessary for the current operation of
any speedway being operated by PSI or any of the Subsidiaries.
(xvi) Except as disclosed on Schedule 4.4(i) hereto,
there are no material policies of insurance carried or paid for by or for the
benefit of PSI or any of the Subsidiaries.
(xvii) There are no securities owned by PSI or any of
the Subsidiaries, except as reflected on Schedule 4.2 hereto and other than an
approximately two percent (2%) interest in North Carolina Motor Speedway, Inc.
4.5 Access. From the date hereof and prior to the PSH Formation
Date, Penske Corp. shall provide ISC with such information as ISC may from
time to time reasonably request with respect to the PSI Assets, and the
transactions contemplated by this Agreement, and shall provide ISC and its
representatives reasonable access during regular business hours and upon
reasonable notice to the properties, books and records of PSI and the
Subsidiaries as ISC may from time to time reasonably request, subject to the
provisions of this Agreement regarding the confidentiality of such information
and data.
4.6 Conduct of Business. Except as may be otherwise contemplated by
this Agreement or except as ISC may otherwise consent in writing (which
consent shall not be unreasonably withheld) from the date hereof through the
PSH Formation Date, Penske Corp. shall cause PSI (a) to operate its business
only in the ordinary course and use its best efforts to preserve intact the
PSI Assets, (b) to take all actions necessary to implement the terms of this
Agreement applicable to PSI and (c) to fully perform all its obligations under
the Development Agreement.
4.7 Representations and Warranties Regarding PSH. Penske Corp.
covenants and agrees that as of the PSH Formation Date each of the following
representations and warranties regarding PSH shall be true:
(a) Organization, Standing and Authority. PSH shall be a
corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware and have the requisite power and authority to
own, lease and operate its assets, properties and business and to carry on its
business as is contemplated by this Agreement.
(b) Certificate of Incorporation and Bylaws. PSH shall
have filed a Certificate of Incorporation in the form attached as Schedule
4.7(b)(i) hereto, adopted bylaws in the form attached as Schedule 4.7(b)(ii)
hereto and held an initial meeting of directors, the minutes for which are in
the form of Schedule 4.7(b)(iii) hereto. Except as reflected on Schedule
4.7(b)(iii) hereto, there shall not have been any other actions of the Board
of Directors or Shareholders of PSH.
(c) Capitalization. The authorized capital stock of PSH
shall consist of 10,000 shares of Common Stock (par value $.01 per share) of
which as of the PSH Effective Date 800 shares shall have been issued to Penske
Corp. and 200 shares (the "ISC Shares") shall have been issued to ISC. PSH
will hold no shares of its capital stock in its treasury. No person will have
any agreement, subscription, option or warrant or any other right or
commitment entitling such person to acquire from PSH any shares of PSH's
capital stock or any other securities or other instruments convertible into or
exchangeable for any such shares. The outstanding shares shall have been
issued in compliance with all applicable federal and state securities laws.
(d) Title to Shares. ISC will have acquired the ISC Shares
free and clear of all liens, encumbrances, security agreements, equities,
options, claims, charges and restrictions which have not been created by ISC
(other than restrictions of general applicability imposed by federal and state
securities and other laws and those contemplated by this Agreement) and will
have acquired good and marketable title to the ISC Shares (subject to the
above referenced restrictions).
(e) Assets of PSH. PSH shall have no liabilities other
than for taxes, organizational expenses and any liabilities arising out of its
status as a shareholder of Penske Speedways Holding. The sole assets of PSH
shall be its ownership of eighty-five percent (85%) of the outstanding stock
of Penske Speedways Holding, the capital contributions of ISC contemplated by
this Agreement and advances made by PSH to its Affiliates.
4.8 Representations and Warranties Regarding Penske Speedways
Holding. Penske Corp. covenants and agrees that as of the PSH Formation Date
each of the following representations and warranties regarding Penske
Speedways Holding shall be true:
(a) Organization, Standing and Authority. Penske Speedways
Holding shall be a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware and have the requisite power
and authority to own, lease and operate its assets, properties and business
and to carry on its business as is contemplated by this Agreement and the
Development Agreement.
(b) Capitalization. The authorized capital stock of Penske
Speedways Holding shall be as set forth on Schedule 4.8 hereto. Penske
Speedways Holding will hold no shares of its capital stock in its treasury.
No person will have any agreement, subscription, option or warrant or any
other right or commitment entitling such person to acquire from Penske
Speedways Holding any shares of Penske Speedways Holding's capital stock or
any other securities or other instruments convertible into or exchangeable for
any such shares except as set forth on Schedule 4.8 hereto. The outstanding
shares shall have been issued in compliance with all applicable federal and
state securities laws.
(c) Title to Shares. Penske Speedways Holding will have
acquired all the outstanding stock of PSI (the "PSI Shares") free and clear of
all liens, encumbrances, security agreements, equities, options, claims,
charges and restrictions (other than restrictions of general applicability
imposed by federal and state securities and other laws, those contemplated by
this Agreement and those set forth as Schedule 4.8 hereto) and will have
acquired good and marketable title to the PSI Shares (subject to the above
referenced restrictions).
ARTICLE V
INVESTMENT BY ISC INTO PSH
5.1 Timing of Investment. On the PSH Formation Date, ISC shall
convert the principal amount of the Demolition Cost Loans into an equity
contribution in PSH in return for the ISC Shares. No interest shall be
charged on the Demolition Cost Loans in the event of such conversion. On the
PSH Formation Date, ISC shall make an additional equity investment in PSH in
an aggregate amount equal to $14,975,000 less the total amount of the
Demolition Costs Loans previously made by ISC.
5.2 Conditions Precedent to Investment. The obligation of ISC to
make the investment contemplated by Section 5.1 above is subject to the
satisfaction or ISC's waiver in writing, of each of the following conditions:
(a) All the conditions specified in Section 4.4 of the
Organization Agreement shall have been accomplished without any waiver of any
such conditions and PSH shall have received assurances reasonably satisfactory
to it that the Closing specified in Article IV of the Organization Agreement
shall occur immediately following the PSH Formation Date without waiver by any
party of any material conditions to Closing specified in Article IV of the
Organization Agreement.
(b) Penske Corp. shall have performed in all material
respects all agreements and covenants required by this Agreement to be
performed by it prior to the PSH Formation Date.
(c) Each of the representations and warranties of Penske
Corp. set forth in this Agreement and of the parties thereto set forth in the
Development Agreement and the Organization Agreement shall be true and correct
in all material respects.
(d) There shall have occurred no material adverse change
in the financial condition of PSI from the financial condition reflected on
the most recent unaudited financial statement attached as part of Schedule
4.4(e) hereto.
(e) All applicable requirements under the Applicable Laws
shall have been met with respect to the transactions contemplated by this
Agreement and the transactions contemplated by the Organization Agreement
which are to occur on the Closing Date.
(f) ISC shall be reasonably satisfied that (i) all required
material permits, licenses and consents to build the Raceway as contemplated
by the Business Plan which is specified in the Organization Agreement and a
copy of which shall have been provided to ISC prior to the date hereof (the
"Business Plan") will be received in a timely manner; and (ii) all financing
necessary for the construction and operation of the Raceway, as contemplated
by the Business Plan, is available on terms reasonably satisfactory to ISC.
(g) No material state or private action shall be pending or
threatened seeking to challenge or materially delay the development of the
Raceway Property as contemplated by the Business Plan or any of the
transactions contemplated by this Agreement.
(h) The Parties shall have entered into a shareholders
agreement reasonably satisfactory to ISC which incorporates the provisions set
forth in Sections 6.1 and 6.6 below.
(i) ISC shall have received evidence reasonably
satisfactory to it that Kaiser has consented to all the terms of this
Agreement which can be implemented only with Kaiser's consent or cooperation.
5.3 Representations and Warranties of ISC. ISC represents and
warrants to Penske Corp. that the following matters are true and correct as of
the date of execution of this Agreement and will be true and correct as of the
PSH Formation Date, unless otherwise limited:
(a) Authority. ISC is a corporation, duly organized,
validly existing and in good standing under the laws of the State of Florida;
this Agreement is duly authorized, executed, and delivered by ISC and is a
legal, valid and binding obligation of ISC enforceable against ISC in
accordance with its terms (except to the extent that such enforcement may be
limited by applicable bankruptcy, insolvency, moratorium and other principles
relating to or limiting the rights of creditors generally) and will not
violate any material provision of any agreement to which ISC is a party.
(b) Legal Proceedings. To the best of ISC's actual
knowledge (no independent investigation having been made by ISC), there are no
pending or threatened legal proceedings or actions which, if concluded least
favorably to ISC, would prevent ISC from entering into or performing this
Agreement and the transactions contemplated herein.
(c) Required Actions. No consent of any partner,
shareholder, trustee, trustor, beneficiary, creditor, investor or, to the best
of ISC's actual knowledge (no independent investigation having been made by
ISC), any judicial or administrative body, governmental authority or other
party is required in order for ISC to enter into or to perform this Agreement.
(d) No Material Adverse Change. From the date of this
Agreement to the PSH Formulation Date, there shall have been no material
adverse change in ISC's ability to perform under the terms of this Agreement
or a material adverse change in the financial condition of ISC.
5.4 Conditions Precedent to Penske Corp.'s Obligations. The
obligation of Penske Corp. to proceed with the transactions contemplated by
this Agreement is subject to the satisfaction or Penske Corp.'s waiver in
writing of each of the following conditions:
(a) All the material conditions precedent to the Closing
specified in Article IV of the Organization Agreement shall have been
accomplished without any waiver of any such conditions and the Closing
contemplated by the Organization Agreement shall be scheduled to occur
immediately following the PSH Formation Date and the parties to the
Organization Agreement shall be prepared to Close under the Organization
Agreement at that time.
(b) ISC shall have performed in all material respects all
agreements and covenants required by this Agreement to be performed by it
prior to the PSH Formation Date.
(c) Each of the representations and warranties of ISC set
forth in this Agreement and of Kaiser set forth in the Organization Agreement
shall be true and correct in all material respects.
(d) There shall have occurred no material adverse change in
the financial condition of ISC from the financial condition reflected on the
audited financial statement attached as Schedule 5.4(d) hereto.
(e) All applicable requirements under the Applicable Laws
shall have been met with respect to the transactions contemplated by this
Agreement and the transaction contemplated by the Organization Agreement to
occur on the Closing Date.
(f) Penske Corp. shall be reasonably satisfied that (i) all
required material permits, licenses and consents to build and operate the
Raceway as contemplated by the Business Plan specified in the Development
Agreement have been or will be received in a timely manner; (ii) all financing
necessary for the construction and operation of the Raceway as contemplated by
the aforesaid Business Plan is available on terms reasonably satisfactory to
Penske Corp.
(g) No material state or private action shall be pending or
threatened seeking to challenge or materially delay the development of the
Raceway Property as contemplated by the Business Plan or any of the
transactions contemplated by this Agreement.
(h) The Parties shall have entered into a shareholders
agreement reasonably satisfactory to Penske Corp. which incorporates the
provisions set forth in Sections 6.1 and 6.6 below.
(i) Penske Corp. shall have received evidence reasonably
satisfactory to it that Kaiser has consented to all the terms of this
Agreement which can be implemented only with Kaiser's consent or cooperation.
ARTICLE VI
SPECIAL PROVISIONS
6.1 Minority Shareholder Rights. After the PSH Formation Date and as
long as ISC owns at least ten percent (10%) of the outstanding stock of PSH,
ISC shall be afforded the following rights and privileges in PSH and to the
extent specified below, in the members of the PSH Affiliated Group and, such
rights shall be reflected in appropriate documents, including, without
limitation, the PSH Articles of Incorporation and a shareholders agreement.
(a) Preemptive and Other Stock Rights. PSH's articles of
incorporation shall provide pre-emptive rights to a shareholder thereby
allowing a shareholder to maintain its equity interest in PSH if it chooses to
make any capital contributions. Pre-emptive rights shall cover all shares of
any class of stock issues or to be issued by PSH as well as all securities
convertible into or exercisable for voting shares or that are granted
contingent voting rights. Before attempting to raise capital through issuance
of securities, PSH and Penske Corp. must first satisfy their obligations under
Section 6.1(g) below. Thereafter, if PSH has a legitimate business need to
raise capital through the issuance of securities, ISC shall be given a minimum
of sixty (60) days advance written notice of the proposed issuance or creation
of such securities and the option to exercise its pre-emptive rights with
respect thereof. Such notice shall detail the rights and privileges of such
securities, as well as the sales price of such securities. Except as
permitted by this Section 6.1(a), neither PSH nor Penske Corp. shall take any
other steps to dilute the equity interest of ISC except with ISC's prior
written consent, which consent will not unreasonably be withheld.
(b) Books and Records. ISC shall have the right, from time
to time, upon reasonable notice to inspect the books, records, contracts and
other documents and information of or pertaining to PSH, its assets and its
wholly or partially owned subsidiaries and their assets.
(c) Major Decisions. Any decision that would otherwise
require approval by a minimum of a majority of the voting securities of PSH
under applicable corporate law, shall require the approval of a minimum of
eighty-five percent (85%) of the voting securities. At the Board of Directors
level, the following decisions shall require the consent of at least one ISC
representative to the Board of Directors of PSH (and the consent of at least
one of ISC's representatives to the Board of Directors of each member of the
PSH Affiliated Group which has an ISC representative on its board until such
member becomes a Public Company):
(i) Capital expenditures on an annual basis in excess
of $10,000,000 calculated on an aggregate basis for PSI and the Subsidiaries,
provided however that capital expenditures with respect to the development and
construction of the Raceway Property shall not be considered as part of this
limitation until the first calendar year after the calendar year in which a
commercial auto race is conducted at the Raceway;
(ii) During the first five (5) years after the date
hereof annual aggregate borrowing of funds on a secured basis by all members
of the PSH Affiliated Group in excess of fifty percent (50%) of total annual
aggregate capital expenditures for all the members of the PSH Affiliated Group
(except for a refinancing of existing mortgages and financing obtained for the
initial development and construction of the Raceway Property).
(iii) After five (5) years from the date hereof,
permitting the PSH Affiliated Group to have a ratio of funded debt to funded
debt plus tangible net worth which is greater than forty percent (40%). In
calculating "funded debt", any advances made by Penske Corp. or its lending
Affiliate as contemplated by Section 6.1(g)(ii)(A) below, shall be
disregarded.
(iv) The issuance of securities except as may be
permitted by this Agreement;
(v) Except as otherwise permitted by this Agreement,
the sale or other disposition of assets outside of the ordinary course of
business with a fair market value or book value in excess of $1,000,000
calculated on an aggregate basis for all members of the PSH Affiliated Group.
Except as otherwise permitted by this Agreement, the acquisition of assets
outside of the ordinary course of business with a fair market value in excess
of $8,500,000 calculated on an aggregate basis for all the members of the PSH
Affiliated Group; and
(vi) Amending the articles of incorporation or bylaws
of PSH or any of the members of the PSH Affiliated Group without the consent
of ISC, such consent not to be unreasonably withheld.
(d) Dividend Policy. It shall be the policy of PSH and its
Board of Directors, subject to the reasonable discretion of the Board of
Directors and subject to any financial covenants in any applicable financial
institution documents, to declare and pay a dividend equal to one hundred
percent (100%) of the annual net income of PSH and the PSH Affiliated Group on
a consolidated basis after the payment of operating costs and fees, debt
service, taxes and the creation of reserves necessary for reasonable operating
and capital expenditures and taxes.
(e) Management Parent Company Charges. The Board of
Directors of PSH, with the consent of at least one (1) ISC representative to
the PSH Board of Directors, shall approve the payment by PSH of management
fees to Penske Corp., its Affiliates or to ISC. Except as specified above,
Penske Corp. and its Affiliates shall not receive any management fees or other
parent company charges (excluding payments on Penske Corp. or its Affiliates
loans, group corporate insurance, and other expenses incurred on behalf of the
PSH Affiliated Group by Penske Corp. or its Affiliates which are reasonable
and verifiable) from any member of the PSH Affiliated Group except for
management fees which ultimately pass through PSH.
(f) Corporate Opportunities. In the event Penske Corp. or
any of its Affiliates (specifically including Penske Speedways Holding) do not
elect to exercise any right of first refusal to participate in any transaction
or opportunity that relate to the conduct or ownership of a motorsports
complex that may come to them arising out of Section 8.7 of the Organization
Agreement, then ISC shall have a right of second refusal to elect to
participate.
(g) Priority of Sources of Capital.
(i) Penske Corp. and ISC agree that PSH shall use its
best efforts to cause Penske Speedways Holding to obtain, upon reasonable
terms, all funds necessary for its capital and operating expenditures (which
shall include the funds necessary to construct the Raceway on the Raceway
Property) (the "Necessary Capital") in accordance with the terms of Section
8.8 of the Organization Agreement; provided, however, that in no event shall
ISC be obligated to provide any guarantees of financing or make any capital
contributions except as specified in Section 5.1 above. Penske Corp. shall
use its best efforts to cause Penske Speedways Holding to obtain additional
financing as needed to permit the full commercial development of the Raceway
Property and/or the Raceway. In the event that Kaiser does not advance its
proportionate share of a capital call made in accordance with the terms of
Section 8.8 of the Organization Agreement, Penske Corp. shall provide ISC with
written notice of such failure. Within thirty (30) days after such notice,
ISC, at its option, subject to compliance with all applicable laws, shall be
permitted to advance the capital call made on Kaiser as a capital contribution
to Penske Speedways Holding and in return for advancing Kaiser's proportionate
share of the capital call ISC shall receive from Kaiser and/or Penske
Speedways Holding a number of shares of Penske Speedways Holding stock equal
in value to the amount of ISC's advance to Penske Speedways Holding, such
value to be based on a per share value for Penske Speedways Holding stock
calculated as of the date of the advance utilizing the valuation procedure set
forth in Section 8.6(b) of the Organization Agreement.
(ii) Penske Corp. agrees that in the event PSH has not
been able to obtain the Necessary Capital despite the best efforts of Penske
Corp. made in accordance with the terms of paragraph (i) immediately above,
Penske Corp. shall then proceed as follows to obtain the Necessary Capital:
(A) Penske Corp. directly or through its
Affiliates which are not members of the PSH Affiliated Group may elect to
advance (and to the extent repaid, readvance) the first five million dollars
($5,000,000) of Necessary Capital as an unsecured term loan with interest at
the then current market rate as established by ISC's principal lending bank
(the "Market Interest Rate"), to be repaid with interest in equal monthly
installments over a two to five year term, such term to be established by
Penske Corp. or its lending Affiliate.
(B) In the event Penske Corp. or one of its
Affiliates has made the advance specified in paragraph (A) above, and there
are additional Necessary Capital requirements, a capital call notice (the
"Capital Notice") may be given to the PSH shareholders. Subject to the terms
of paragraph (E) below, within fifteen (15) days after receipt of a Capital
Notice, ISC will take one of the following actions: (x) satisfy its
proportionate share of the capital call, (y) give notice to Penske Corp. that
ISC has made a good faith determination that due to a cash flow problem it is
currently unable to satisfy its proportionate share of the capital call and
request that Penske Performance, Inc. ("PPI") or one of its Affiliates which
is not a member of the PSH Affiliated Group, advance to PSH ISC's share of the
capital call or (z) give notice to Penske Corp. that ISC desires that Penske
Corp. advance ISC's share of the capital call as an additional capital
contribution to PSH in return for additional stock in PSH.
(C) In the event PPI satisfies its proportionate
share of the capital call and ISC has provided notice as specified above that
it is unable to satisfy its proportionate share of the capital call, then PPI
or one of its Affiliates which is not a member of the PSH Affiliated Group,
may elect to advance to PSH ISC's share of the capital call. The advance
shall be initially treated as a loan to ISC which will earn interest at the
Market Interest Rate and be documented by ISC's promissory note substantially
in the form of the note attached as Schedule 6.1(g)(ii)(C) hereto. ISC shall
use commercially reasonable efforts to repay the loan as soon as its cash flow
reasonably permits. If not repaid sooner, the loan plus accrued interest is
payable in full six months from the date of the loan unless the six month
period would expire in the month of October or November in which case the loan
plus accrued interest would be payable on December 31 following the expiration
of the six month period. In the event the loan plus accrued interest is not
paid when due, PPI will seek in good faith for a thirty (30) day period to
obtain third party financing for Penske Speedways Holding and/or PSH
sufficient to repay PPI for the full amount of the Necessary Capital advanced
plus interest thereon calculated at the Market Interest Rate. If such
financing is not available, then PPI at its option, upon ten (10) days notice,
at any time until the loan plus accrued interest has been paid in full, may
apply the loan plus accrued interest for the purchase of an appropriate number
of ISC's shares of stock of PSH. The purchase price for the ISC shares shall
be based on a per share value calculated as of the end of the notice period
utilizing the valuation procedure set forth in Section 8.6(b) of the
Organization Agreement substituting ISC for "Kaiser", PPI for "Penske" and PSH
for the "Corporation". After the per share value of ISC's shares have been
determined, the loan plus accrued interest will be retired by ISC's transfer
of a number of shares of PSH stock equal in value to the loan plus accrued
interest. If ISC's stock holdings are not sufficient to pay the full
principal amount of the loan plus accrued interest, ISC shall immediately pay
any remaining balance.
(D) In the event PPI satisfies its proportionate
share of the capital call and in accordance with a notice from ISC, PPI or one
of its Affiliates advances ISC's proportionate share as an additional capital
contribution to PSH, then in return for advancing ISC's proportionate share,
PPI shall receive from ISC a number of additional shares of PSH stock equal in
value to the amount of ISC's proportionate share advanced by PPI or its
Affiliate, such value to be based on a per share value for PSH stock
calculated as of the end of the notice period utilizing the valuation
procedure set forth in Section 8.6(b) of the Organization Agreement
substituting ISC for "Kaiser", PPI for "Penske" and PSH for the "Corporation".
(E) In no event will ISC be obligated to make any
capital contributions with respect to a Capital Notice until after all
applicable requirements under all Applicable Laws shall have been satisfied
with respect to the capital contributions contemplated by the Capital Call.
(h) Put Option. In the event that Kaiser exercises the put
option as set forth in Section 8.6 of the Organization Agreement, Penske Corp.
shall offer or cause to be offered to ISC the right to acquire from Kaiser the
stock subject to the put and if ISC elects to exercise such right, ISC will
fully perform the "put" obligations in accordance with its terms. ISC shall
notify Penske Corp. in writing within thirty (30) days following receipt of
notice of the opportunity to purchase the shares to be put by Kaiser of its
decision relating to the purchase of the shares subject to the put. The
notice once given shall be irrevocable.
(i) Option to Purchase. In the event Penske Corp. or its
Affiliates obtain any rights to acquire any of Kaiser's stock in Penske
Speedways Holding, Penske Corp. shall offer or cause to be offered to ISC a
first option to exercise such rights and if ISC exercises such option, ISC
will perform the stock purchase obligations in accordance with the terms of
the option. ISC shall notify Penske Corp. in writing within thirty (30) days
following receipt of the notice of the opportunity to purchase the shares to
be sold by Kaiser of its decision relating to the purchase of the shares. The
notice once given shall be irrevocable.
(j) Limitation on Payments from the PSH Affiliated Group.
Except for payments or distributions specified as Schedule 6.1(j) hereto, or
otherwise contemplated by this Agreement, without the prior written consent of
ISC no payments or distributions shall be made by any member of the PSH
Affiliated Group to Penske Corp. or any of its Affiliates which are not
members of the PSH Affiliated Group unless such transactions are on
commercially reasonable terms at least as favorable as terms generally
available from unaffiliated parties.
(k) Limitation on Kaiser Distributions. Total
distributions and payments from the members of the PSH Affiliate Group to
Kaiser during any fiscal year of PSH shall in no event exceed seventy-five
percent (75%) of the total distributions and payments from the members of the
PSH Affiliated Group to PSH during the same period. The foregoing provisions
of this paragraph (k) shall not apply to the $650,000 annual special
development management fee to be paid to Kaiser under the terms of Section 8.5
of the Organization Agreement or to commercially reasonable transactions on
terms at least as favorable as generally available from unaffiliated parties.
(l) Business Plan. Penske Corp. shall prepare and submit
to the Board of Directors of PSH prior to January 15 of each year, for
discussion and approval by the Board, a detailed business plan (including
operating budgets and capital budgets) for all corporate members of the PSH
Affiliated Group for the calendar year in which the January 15 due date
occurs.
(m) Operations of Motorsport Complexes. The Parties hereto
acknowledge that the business of the members of the PSH Affiliated Group shall
be limited to developing and operating motorsport complexes and activities
related or incidental thereto, including, but not limited to (i) development
of museums, exhibit halls, living quarters and testing facilities and (ii)
engaging in merchandising activities related to motorsports. The members of
the PSH Affiliated Group shall not engage in any other business activities or
make any material investments in any other business activities without the
consent of ISC.
6.2 Board Representation. Except as otherwise specified in this
Section 6.2, ISC shall at all times be permitted to designate a percentage of
the members of the board of directors of PSH, Penske Speedways Holding, PSI
and The California Speedway Corporation equal to the greater of (i) twenty
percent (20%) or (ii) the percentage of stock ownership of ISC in PSH as
adjusted from time to time to reflect changes in such percentage; provided,
however, ISC's representation on each of such boards of directors, shall never
be less than (a) two (2) individuals as long as ISC owns at least ten percent
(10%) of the issued and outstanding stock of PSH or (b) one (1) individual as
long as ISC owns at least two percent (2%) of the issued and outstanding stock
of PSH. In addition, as long as ISC is permitted to have at least two members
on a board, at least one (1) of ISC's representatives on each of such boards
shall serve on any executive or similar committee that may be created by the
board. If Penske Speedways Holding, PSI or any of the Subsidiaries becomes a
Public Company in which Penske Corp. or its Affiliates own less than fifty
percent (50%) of the issued and outstanding voting stock, then Penske Corp.
cannot guarantee ISC's representation on the board of directors of the Public
Company, but Penske Corp. shall use its best efforts (but at no expense to
Penske Corp. or its Affiliates) to cause PSH to cause to be elected to the
Board of Directors of such Public Company two (2) individuals designated by
ISC far as long as ISC owns at least ten percent (10%) of the issued and
outstanding stock of PSH or one (1) individual designated by ISC for as long
as ISC owns at least two percent (2%) of the issued and outstanding stock of
PSH. The shareholders of PSH and each of the members of the PSH Affiliated
Group shall vote their shares in favor of ISC's nominees to the board of
directors in accordance with the terms of this Section 6.2. ISC shall be
permitted to send an observer to any meeting of the board of directors of any
of the members of the PSH Affiliated Group which is not a Public Company and
with respect to which ISC has not designated a director. ISC shall be
provided the same notice as is provided to the members of the board of
directors (but not less than five (5) business days notice) of each board of
directors meeting with respect to which it is permitted to send an observer.
6.3 Construction Rights.
(a) Design of Raceway. Attached as Schedule 6.3(a) hereto
are plans for the development of the Raceway. No material revisions or
modifications of the plans shall be made without the advance written consent
of ISC.
(b) Construction Budget. Attached as Schedule 6.3(b)
hereto is a detailed construction budget for the development of the Raceway.
The budgeted amount for any line item reflected on Schedule 6.3(b) shall not
be increased or decreased by more than ten percent (10%) without the prior
written consent of ISC.
(c) Construction Financing. Attached as Schedule 6.3(c)
hereto is a loan commitment for the construction financing with respect to the
construction of the Raceway. ISC acknowledges that the attached loan
commitment is satisfactory to it.
6.4 Transactions Among Penske Corp. Affiliates. Except with the
prior written consent of ISC, which consent shall not be unreasonably
withheld, or as specifically permitted by this Agreement, no member of the PSH
Affiliated Group shall engage in any transaction which will result in income
or profits of any member of the PSH Affiliated Group being transferred to any
Affiliate of Penske Corp. which is not a member of the PSH Affiliated Group.
Penske Corp. and its Affiliates shall be permitted to be reimbursed for
reasonable and verifiable expenses incurred for the benefit of the members of
the PSH Affiliated Group including by way of example insurance costs,
accounting fees, legal fees and income tax liabilities.
6.5 Construction Reimbursement. The Parties recognize that prior to
the PSH Formation Date, Penske Corp. and its Affiliates will have loaned or
advanced certain amounts with respect to the development and construction of
the Raceway. Penske Corp. shall be permitted to reimburse itself and its
Affiliates from construction loan proceeds or additional equity investments,
for any reasonable and verifiable amounts loaned or advanced with respect to
the development and construction of the Raceway which are not treated as PSH
capital contributions under the terms of Section 4.3 above. Attached as
Schedule 6.5 hereto is a list of all such items to date with respect to which
Penske Corp. or its Affiliates are entitled to seek reimbursement under the
terms of this Section 6.4. A copy of Schedule 6.5 updated through the PSH
Formation Date shall be delivered to ISC on the PSH Formation Date.
6.6 Mutual Rights of First Refusal. On the PSH Formation Date,
Penske Corp. and ISC shall enter into an agreement which contains terms
applicable to PSH and its shareholders substantially identical to the terms
set forth in Article VI of the Development Agreement.
ARTICLE VII
ADDITIONAL COVENANTS OF PENSKE CORP.
Penske Corp. covenants and agrees as follows:
7.1 No Encumbrances or Transfers. After the date of the mutual
execution of this Agreement and through the PSH Formation Date or earlier
termination of this Agreement, no material part of the PSI Assets shall be
leased, subleased, alienated, encumbered or otherwise transferred by PSI other
than in the normal course of its business consistent with past practices and
the secured liabilities of PSI shall not be increased beyond the amounts set
forth in Schedule 4.4(e) hereto except as permitted by Schedule 6.3(c) hereto
or the Organization Agreement and except for draws made against existing lines
of credit in the ordinary course of business. For purposes of this Section
7.1, "material" shall mean or refer to a value of $100,000 or greater. In
addition, after the date of the mutual execution of this Agreement and through
the PSH Formation Date or the termination of this Agreement there shall be no
change in the ownership of PSI except as contemplated by this Agreement.
7.2 Continuance of the Normal Course of Business. Except as may be
contemplated by this Agreement or by the Organization Agreement and as long as
ISC owns at least ten percent (10%) of the issued and outstanding stock of
PSH, Penske Corp. shall cause PSI to continue to operate the PSI Assets in
accordance with the normal course of its business as historically conducted.
7.3 Public Offering of Securities. Except as may be contemplated by
this Agreement, no public offering of the securities of any member of the PSH
Affiliated Group shall occur without ISC's prior written approval of the terms
of the offering including the terms relating to the application and
distribution of the proceeds from the offering such consent not to be
unreasonably withheld. It is contemplated by this Agreement that there may
occur in the future a public offering of the securities of PSI or The
California Speedway Corporation.
7.4 Applicable Law Compliance. Penske Corp. shall cause PSI, and
shall use its best efforts to cause Kaiser, to make all required filings under
the Applicable Laws with respect to the transactions contemplated by the
Organization Agreement as soon as practicable after the date of this
Agreement, and prior to Kaiser's conversion of the Penske Speedways Holding
preferred stock to be issued to Kaiser under the terms of the Organization
Agreement.
ARTICLE VIII
TERMINATION
8.1 Events Terminating this Agreement. This Agreement shall
terminate prior to the PSH Formation Date:
(a) Upon the mutual written agreement of the Parties;
(b) If the PSH Formation Date has not occurred on or before
June 30, 1996;
(c) Upon termination of the Development Agreement;
(d) By either Party's written notice if there shall have
been a material breach by the other Party of any of the representations,
warranties, covenants or agreements contained herein.
(e) By ISC, if any of the conditions specified in Section
5.2 shall not have been met or waived prior to such time as such condition can
no longer be satisfied; or
(f) By Penske Corp., if any of the conditions specified in
Section 5.4 shall not have been met or waived prior to such time as such
condition can no longer be satisfied.
8.2 Effect of Termination. In the event of termination of this
Agreement, nothing herein contained shall relieve either Party from liability
for a breach of this Agreement occurring prior to the termination hereof. The
provisions of this Section and Section 2.3, Article IX and the provisions of
Article X shall survive the termination of this Agreement.
ARTICLE IX
INDEMNIFICATION; SURVIVAL OF
REPRESENTATIONS AND WARRANTIES
9.1 Indemnity Obligations of Penske Corp. Penske Corp. shall
indemnify and hold ISC and its subsidiaries, affiliates, directors, officers,
employees and agents (collectively, "ISC Affiliates") and PSH harmless from,
and reimburse ISC and each ISC Affiliate and PSH for any ISC Indemnity Claims
and PSH Indemnity Claims, respectively (as such terms are hereinafter defined)
arising under the terms and conditions of this Agreement. For the purposes of
this Agreement, the term "ISC Indemnity Claim" shall mean any loss, damage,
deficiency, claim, liability, obligation, suit, action, fee, cost or expense
of any nature whatsoever arising out of, based upon or resulting from (i) any
breach of any representation and warranty of Penske Corp. which is contained
in Sections 2.4, 3.1, 4.4 and 4.8 of this Agreement or any Schedule or
certificate required to be delivered pursuant thereto; (ii) any breach or
nonfulfillment of, or any failure to perform, any of the covenants, agreements
or undertakings of Penske Corp. which are contained in or made pursuant to
this Agreement; (iii) any liabilities or obligations arising out of any and
all actions, claims, suits, proceedings, demands, assessments, judgments,
recoveries, damages, costs and expenses or deficiencies incident to the
disposal of any matter which is the subject of indemnification in this Section
9.1 or Section 10.1 and (iv) all interest, penalties, costs and expenses
(including, without limitation, all out-of-pocket expenses, and reasonable
fees and disbursements of accountants and counsel) arising out of or related
to any ISC Indemnity Claims asserted under this Section 9.1. The term "PSH
Indemnity Claim" shall have the same meaning as ISC Indemnity Claim for all
purposes hereunder except that: (x) the indemnity shall relate to the breach
of any representation and warranty of Penske Corp. which is contained in
Sections 4.4(d) through 4.4(h) of this Agreement or any Schedule or
certificate required to be delivered pursuant thereto; (y) any recovery with
regard thereto shall be for the account of PSH; and (z) ISC shall have the
right to pursue such claims, and to exercise the rights of an indemnified
party hereunder, on behalf of PSH. The foregoing indemnification shall
calculate any loss to the indemnified party after considering any tax benefit
to the indemnified party resulting from the loss. In the event there shall be
an ISC Indemnity Claim which also constitutes a PSH Indemnity Claim, ISC shall
have a first right of recovery under the ISC Indemnity Claim.
9.2 Indemnity Obligations of ISC. ISC hereby agrees to indemnify and
hold Penske Corp. and its respective subsidiaries, affiliates, directors,
officers, employees and agents (collectively, "Penske Affiliates"), harmless
from, and to reimburse, Penske Corp. and each Penske Affiliate for any Penske
Indemnity Claims (as that term is hereinafter defined) arising under the terms
and conditions of this Agreement. For purposes of this Agreement, the term
"Penske Indemnity Claim" shall mean any loss, damage, deficiency, claim,
liability, suit, action, fee, cost or expense of any nature whatsoever arising
out of, based upon or resulting from (i) any breach of any representation and
warranty of ISC which is contained in this Agreement or any Schedule or
certificate required to be delivered pursuant thereto; (ii) any breach or
nonfulfillment of, or failure to perform, any of the covenants, agreements or
undertakings of ISC contained in or made pursuant to the terms and conditions
of this Agreement; (iii) any obligations or liabilities arising out of any and
all actions, claims, suits, proceedings, demands, assessments, judgments,
recoveries, damages, costs and expenses or deficiencies incident to the
disposal of any matter which is the subject of indemnification under this
Section 9.2; and (iv) all interest, penalties, costs and expenses (including,
without limitation, all out-of-pocket expenses, reasonable investigation
expenses and reasonable fees and disbursements of counsel and accountants)
arising out of or related to any Penske Indemnity Claims asserted under this
Section 9.2. The foregoing indemnification shall calculate any loss to the
indemnified party after considering any tax benefit to the indemnified party
resulting from the loss.
9.3 Notification of Claims. Subject to the provisions of Section 9.4
below, in the event of the occurrence of an event which any party asserts
constitutes an ISC Indemnity Claim or an PSH Indemnity Claim or a Penske
Indemnity Claim, as applicable, the indemnified party shall provide the
indemnifying party with prompt notice of such event and shall otherwise make
available to the indemnifying party all relevant information which is material
to the claim and which is in the possession of the indemnified party. If such
event involves the claim of any third party (a "Third Party Claim"), the
indemnifying party shall have the right to elect to join in the defense,
settlement, adjustment or compromise of any such Third-Party Claim, and to
employ counsel to assist such indemnifying party in connection with the
handling of such claim, at the sole expense of the indemnifying party, and no
such claim shall be settled, adjusted or compromised, or the defense thereof
terminated, without the prior consent of the indemnifying party unless and
until the indemnifying party shall have failed, after the lapse of a
reasonable period of time, but in no event more than 30 days after written
notice to it of the Third-Party Claim, to join in the defense, settlement,
adjustment or compromise of the same. An indemnified party's failure to give
timely notice or to furnish the indemnifying party with any relevant data and
documents in connection with any Third-Party Claim shall not constitute a
defense (in part or in whole) to any claim for indemnification by such party,
except and only to the extent that such failure shall result in any material
prejudice to the indemnifying party. If so desired by any indemnifying party,
such party may elect, at such party's sole expense, to assume control of the
defense, settlement, adjustment or compromise of any Third-Party Claim,
insofar as such claim relates to the liability of the indemnifying party,
provided that such indemnifying party shall obtain the consent of all
indemnified parties before entering into any settlement, adjustment or
compromise of such claim, or ceasing to defend against such claim, if as a
result thereof, or pursuant thereto, there would be imposed on an indemnified
party any liability or obligation not covered by the indemnity obligations of
the indemnifying parties under this Agreement (including, without limitation,
any injunctive relief or other remedy).
9.4 Duration. Except as otherwise provided in this Agreement, all
representations, warranties, covenants and agreements of the parties contained
in or made pursuant to this Agreement, and the rights of the parties to seek
indemnification with respect thereto, shall survive the PSH Formation Date;
provided, however, that (except in respect of any claims for indemnification
as to which notice shall have been duly given prior to the relevant expiration
date set forth below) such representations, warranties, covenants, agreements
and rights shall expire on the following dates:
(a) in the case of an ISC Indemnity Claim or an PSH Indemnity
Claim arising as a result of the breach of the representations and warranties
set forth in Section 4.4(i)(ix), or an ISC Indemnity Claim set forth in
Section 10.1, the date of expiration of the relevant statute of limitations,
including any extensions thereof;
(b) in the case of all other claims for indemnification arising
under this Agreement, on the second anniversary of the PSH Formation Date.
9.5 Limitations. Notwithstanding anything to the contrary herein:
(a) Any claim by an indemnified party against any indemnifying
party under this Agreement shall be payable by the indemnifying party only in
the event and to the extent that the accumulated amount of all claims in
respect of such indemnifying party's obligations to indemnify under this
Agreement shall exceed the amount of $100,000 in the aggregate (the
"Indemnification Threshold"). In no event shall the aggregate total of all
ISC Indemnity Claims and PSH Indemnity Claims payable pursuant to this
Agreement exceed $14,975,000 plus any additional capital contributions made by
ISC to PSH and less dividends and management fees previously received by ISC
from PSH pursuant to this Agreement.
(b) If any party becomes aware of any breach of any
representation or warranty or any breach or non-fulfillment of any covenant or
obligation of another party hereunder, the party becoming so aware shall
promptly notify the other party or parties of such breach or non-fulfillment
and afford such other party or parties a reasonable opportunity to cure such
breach or non-fulfillment prior to seeking any indemnification hereunder. An
indemnified party's failure to give timely notice shall not constitute a
defense (in part or in whole) to any claim for indemnification by such party
except and only to the extent that such failure shall result in any material
prejudice to the indemnifying party.
(c) The amount of damages payable by an indemnifying party to an
indemnified party hereunder with respect to a claim based on particular facts,
circumstances or liabilities shall be reduced by amounts previously paid by
such indemnifying party or its affiliates with respect to such facts,
circumstances or liabilities to the extent such recovery constitutes a double
recovery for the same claim.
(d) Each indemnified party shall use reasonable efforts to
mitigate damages with respect to claims hereunder. The indemnifying party
shall, upon payment to the indemnified party of damages with respect to any
claim, be subrogated to the rights of the indemnified party against third
parties with respect to the matters forming the basis for such claim, to the
extent of such damages paid. The foregoing subrogation rights shall in no
event permit the indemnifying party to pursue any claims against any Affiliate
of the indemnified party.
ARTICLE X
MISCELLANEOUS
10.1 Environmental Indemnity. Subject to the provisions of Section
9.3 above, Penske Corp. shall cause PSI (without direct or indirect
contribution by ISC) to indemnify, protect, defend (with counsel satisfactory
to ISC) and hold ISC, and its officers, directors, shareholders, partners or
other owners, employees, agents, subsidiaries, affiliates, successors and
assigns, other than PSI, harmless from and against any and all claims,
damages, judgments, suits, causes of action, losses, liabilities, penalties,
fines, liens, expenses and costs (including, without limitation, cleanup,
removal, remediation, restoration and monitoring costs and attorneys' fees and
other professional fees and costs of all types) which arise out of or result
from the presence or release of any hazardous materials on, in, under or about
the PSI Assets which exist on or prior to the PSH Formation Date
("Environmental Claims"). Except for Environmental Claims with respect to
which Penske Corp. or any of its Affiliates had actual notice prior to the PSH
Formation Date and which are not disclosed in any Schedule of this Agreement,
the foregoing environmental indemnity is intended to indemnify ISC only for
direct loss or injury, arising out of Environmental Claims rather than
indirect loss or injury, arising out of a reduction in the value of ISC's
investment in PSH. In the event Penske Corp. or any of its Affiliates had
actual notice of Environmental Claims prior to the PSH Formation Date and
failed to disclose such Environmental Claims on a Schedule to this Agreement,
then the foregoing environmental indemnity shall cover both direct and
indirect loss or injury to ISC in accordance with its terms.
10.2 Prohibition on Assignment/Binding Effect. This Agreement may
not be assigned or transferred by either Party without the express written
consent of the other Party, which consent may be withheld in such Party's sole
and absolute discretion. Subject to the foregoing, this Agreement shall
extend to and be binding upon the legal representatives, successors, and
permitted assigns of ISC and Penske Corp. Furthermore, except as otherwise
permitted by this Agreement, Penske Corp. may not dilute its equity ownership
directly or through Affiliates in PSH or Penske Speedways Holding below fifty
one percent (51%) without the prior written consent of ISC which consent may
be withheld in ISC's sole and absolute discretion.
10.3 Notices and Demands. All notices or demands required or
permitted under this Agreement shall be in writing, signed by the Party giving
the same, and shall be deemed properly given and received when personally
served or upon the earlier of (a) receipt or (b) rejection, if sent by
registered or certified mail, postage prepaid, or by nationally recognized
overnight courier service, such as Federal Express, and addressed to the
intended recipient at the address set forth below or at any other address
which such Party gives the other Party notice in accordance with the
provisions of this Section 10.3.
International Speedway Corporation Penske Corporation
1801 International Speedway Boulevard 3400 Outer Drive West
Daytona Beach, FL 32114-1243 Detroit, Michigan 48239-4001
Attn: H. Lee Combs Attn: President
10.4 Captions for Convenience. The headings and captions hereof are
for convenience and reference only and shall not be considered in interpreting
the provisions hereof.
10.5 Severability. Any provision in this Agreement which is illegal,
invalid or unenforceable in any jurisdiction, shall as to such jurisdiction,
be ineffective to the extent of such illegality, invalidity or
unenforceability, without invalidating the remaining provisions hereof or
affecting the legality, validity or enforceability of such provision in any
other jurisdiction. ISC and Penske Corp. shall negotiate in good faith to
replace any illegal, invalid or unenforceable provision of this Agreement with
a legal, valid and enforceable provision that, to the extent possible, will
preserve the economic bargain of this Agreement, or shall otherwise amend this
Agreement, including the provision relating to choice of law, to achieve such
result.
10.6 Governing Law. This Agreement shall be interpreted and enforced
according to the laws of the State of Florida.
10.7 No Oral Amendment or Modifications. No provision of this
Agreement may be amended or modified except to the extent any such amendment
or modification is expressly and specifically set forth in a written
instrument executed by the Party against whom the amendment or modification is
sought.
10.8 Relationship of Penske Corp. and ISC. Nothing contained herein
shall be deemed or construed as creating the relationship of principal and
agent, partnership or joint venture, and no provision in this Agreement and no
act of ISC or Penske Corp. until the PSH Formation Date shall be deemed to
create any relationship other than that expressly provided in this Agreement.
Without limiting the generality of the foregoing, all obligations of ISC and
Penske Corp. with respect to third parties shall be independent obligations of
each party.
10.9 Attorneys' Fees. If it is necessary for either ISC or Penske
Corp. to bring an action, (including any form of dispute resolution pursuant
to this Agreement), either at law or in equity, to enforce or interpret the
terms of this Agreement, the prevailing Party in such action shall be entitled
to recover its reasonable attorneys' fees and other professional fees and
costs of all types, as a part of any judgment therein, in addition to any
other award which may be granted.
10.10 Waiver. The waiver by either ISC or Penske Corp. of any default
in the performance by the other party of any agreement or covenant contained
herein shall not be construed to be a waiver of any preceding or subsequent
default of the same or any other agreement or covenant contained herein.
10.11 Entire Agreement. This Agreement and the exhibits attached
hereto contains all of the agreements and understandings, with respect to the
matters covered hereby, and no prior agreements, oral or written, or
understandings, representations, or warranties of any nature or kind
whatsoever pertaining to such matters shall be effective for any purpose
unless expressly incorporated into the provisions of this Agreement or the
exhibits or schedules attached hereto. Notwithstanding the foregoing, the
parties agree that additional documents will need to be prepared, executed,
and delivered from time-to-time to carry out the terms of and the transactions
contemplated by this Agreement.
10.12 Exhibits. All exhibits and schedules which are referred to in
this Agreement are incorporated into this Agreement as though fully set forth
herein.
10.13 Confidentially. If a Party gives notice to the other Party that
certain of its information (or information of one of its Affiliates or of
Kaiser) is being furnished (or for which access is being given to the other
Party) on a confidential basis, then, to the extent that such information is
disclosed or made available to it, the other Party shall thereafter treat and
maintain the same as confidential information and shall not use it or disclose
it to others without the prior consent of the Party giving notice; provided,
however, that this provision shall not apply to (a) disclosure or use as is
necessary to perform the provisions of any transactions contemplated by this
Agreement and (b) disclosure or use which is required or compelled by law.
Notwithstanding the foregoing, this Section 10.13 shall not apply to any
information which the Party to which the information has been furnished can
show (i) has been published or become part of the public domain other than by
the conduct of such Party, it officers, employees or agents; (ii) has been
furnished or made known to such Party by third parties (other than those
acting directly or indirectly on behalf of such Party) as a matter of legal
right and without restriction on disclosure or (iii) was lawfully in such
Party's possession before the disclosure by the disclosing Party.
10.14 Publicity. Neither Party will disclose or reveal information
concerning this Agreement or the transactions contemplated hereby to any
Person other than such Party's immediate legal, accounting, or financial
advisors, who will in turn hold all such information confidential except as
may be required by law or except as may be required to perform the provisions
of and transactions contemplated by this Agreement. The Parties acknowledge
that filings with the Securities and Exchange Commission will need to be made
by ISC which describe and discuss this Agreement. All press releases and
other public announcements of the Parties and their Affiliates concerning the
transactions contemplated by this Agreement shall be jointly planned and
coordinated by and between Penske Corp. and ISC. Neither Party shall act
unilaterally in this regard without the prior consent of the other, which
consent shall not be unreasonably withheld.
10.15 Good Faith and Fair Dealing. Except where this Agreement
expressly permits a Party to act or refuse to act in its sole discretion, each
Party shall act reasonably and shall cooperate with the other Party and shall
exercise the utmost in good faith and fair dealing towards the other Party, so
that the purposes of this Agreement can be attained. Except where this
Agreement expressly permits a Party to act or refuse to act in its sole
discretion wherever in this Agreement the consent or approval by one Party is
required to an act of the other Party such consent or approval shall not be
unreasonably withheld or delayed. The Parties also recognize that in the
course of their relationship under this Agreement circumstances may change.
Therefore, they agree to exercise the utmost in good faith and fair dealing
towards one another in negotiating amendments to this Agreement so as to
provide the flexibility which shall enable them to attain the purposes of this
Agreement. In addition, neither PSH or any member of the PSH Affiliated Group
shall enter into an agreement with any Person, written or verbal, in which the
consideration paid to such Person would be an amount in excess of that which
would be paid to another or an independent third party providing similar goods
and services in an arm's length transaction. Similarly, if a Person is
acquiring rights or benefits from PSH or any member of the PSH Affiliated
Group, no such Person shall pay less consideration to the PSH or any member of
the Affiliated Group than would be received from another or independent Person
in an arm's length transaction.
10.16 Cooperation. From the date hereof and prior to the PSH
Formation Date, the Parties will use their reasonable efforts, and will
cooperate with each other, to secure all necessary consents, approvals,
authorizations, exemptions and waivers from third parties as shall be required
in order to enable the Parties to effect the transactions contemplated hereby,
and will otherwise use its reasonable efforts to cause the consummation of
such transactions in accordance with the terms and conditions hereof. Each
Party shall take such further actions and sign or cause to be executed and
delivered such further documents as may be necessary from time to time to
carry out the purposes of this Agreement.
10.17 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
shall constitute one and the same instrument.
10.18 Consents in Writing. All consents which one Party is required
to obtain from the other Party under this Agreement must be obtained in
advance and in writing unless otherwise specified to the contrary.
10.19 ISC Limited Right to Assign. On or before the PSH Formation
Date, ISC, in its sole discretion, may assign any or all of its rights and
obligations with respect to this Agreement to a corporation in which ISC holds
directly all of the voting stock ("ISC's Subsidiary"), provided that ISC's
Subsidiary joins in this Agreement and the shareholder's agreement
contemplated hereby, and that no such assignment shall relieve ISC of any
obligation or liability to Penske Corp. hereunder, and provided further that
ISC shall provide Penske Corp. prompt written notice of any such assignment
and the execution by ISC's Subsidiary of this Agreement and the shareholder's
agreement on or before the PSH Formation Date. In the event of such an
assignment, ISC's subsidiary shall acquire the ISC Shares on the PSH Formation
Date and have all the rights of ISC specified in this Agreement.
IN WITNESS WHEREOF, ISC and Penske Corp. have caused this Agreement to be
executed by their duly authorized respective representative, the day and year
first above written.
"ISC"
INTERNATIONAL SPEEDWAY CORPORATION
By: /s/ James C. France
----------------------------------
President
"PENSKE CORP."
PENSKE CORPORATION
By: /s/ Walter P. Czarnecki
---------------------------------
Exec. V. President
AGREEMENT OF ISC SUBSIDIARY
Facility Investments, Inc. ("FII"), a wholly owned subsidiary of
International Speedway Corporation ("ISC") hereby joins in the foregoing
Investment and Development Agreement (the "Agreement") and acknowledges that
as contemplated by Section 10.19 of the Agreement, FII has received an
assignment from ISC of all of ISC's rights and obligations with respect to the
Agreement.
FACILITY INVESTMENTS, INC.
By: s/ James C. France
--------------------------
President
<PAGE>
[The following is a list briefly identifying the contents of the Schedules and
Exhibits to the Investment and Development Agreement which are omitted from
this filing. The Registrant agrees to furnish supplementally a copy of any
omitted schedule upon the written request of the Commission. The Registrant
reserves the right to submit any requested schedule on a confidential basis.]
Exhibit A
Organization Agreement dated November 22, 1995 between Kaiser Ventures
Inc., PSH Corp. and Penske Speedways Holding Corp. intended to implement
the terms of the prior agreements between Kaiser and Penske Speedway,
Inc.
Schedule 2.1
Outstanding Predevelopment Activities - Sets forth the status of
pre-development, investigation and entitlement activities that are
outstanding as of the date of the Investment and Development Agreement.
Schedule 2.4
Raceway Governmental Approvals - Sets forth a timetable for obtaining
material governmental approvals necessary for the construction and
initial development of the Raceway Property.
Schedule 3.1
Statement of Pre-development and development expenses advanced by Penske
Corp. or its Affiliates through a recent date prior to the date of the
Investment and Development Agreement.
Schedule 3.2
Intentionally deleted.
Schedule 4.2
Structure of PSH and its subsidiaries.
Schedule 4.3
Penske Corp. Fund Transfers - Sets forth a list of all pre-development
and development expenses advanced by Penske Corp. or its Affiliates
through a recent date prior to the date of the Investment and
Development Agreement which Penske Corp. intends to treat as capital
contributions into PSH.
Schedule 4.4(c)
Schedule of Required Consents for Penske Participation - Indicates that
no consent of any partner, shareholder, trustee, trustor, beneficiary,
creditor, investor or, to the best of Penske Corp.'s actual knowledge,
any judicial or administrative body, governmental authority or other
party is required in order for Penske Corp. to enter into or to perform
the Investment and Development Agreement.
Schedule 4.4(e)
PSI Financial Statements - PSI's audited consolidated financial
statements for PSI and its subsidiaries as of and for the fiscal
year ended December 31, 1994, and the September 30, 1995
unaudited consolidated financial statements for PSI and its
subsidiaries.
Schedule 4.4(f)
Changes in Condition - Indicates PSI and its subsidiaries have conducted
their business in the usual, regular and ordinary course of their
business since the dates of the financial statements.
Schedule 4.4(i)
Exceptions as to Negative Covenants.
Schedule 4.7(b)(i)
Certificate of Incorporation for PSH.
Schedule 4.7(b)(ii)
Bylaws for PSH.
Schedule 4.7(b)(iii)
Minutes of Organizational meeting of Directors for PSH.
Schedule 4.8
Capitalization of Penske Speedways Holding Corp.
Schedule 5.4(d)
Financial Statement of International Speedway Corporation.
Schedule 6.1(g)(ii)(C)
Form of FII note.
Schedule 6.1(j)
Permitted Penske Distributions.
Schedule 6.3(a)
Construction Plans for the Development of The California Speedway.
Schedule 6.3(b)
Budget for the Construction of The California Speedway.
Schedule 6.3(c)
Loan Commitment for the construction financing with respect to The
California Speedway.
Schedule 6.5
Permitted Penske Reimbursements. - Sets forth a list of reasonable and
verifiable amounts advanced by Penske Corp. with respect to the
development of The California Speedway which are not treated as PSH
capital contributions and to which Penske Corp. is entitled to seek
reimbursement.
KAISER VENTURES INC.
Corporate Headquarters
3633 E. Inland Empire Boulevard
Suite 850
Ontario, California 91764
909/483-8500
NEWS RELEASE
KAISER AND PENSKE EXECUTE FINAL AGREEMENT;
FINANCING COMPLETED FOR THE CALIFORNIA SPEEDWAY
International Speedway Corp. To Be Part of Venture
ONTARIO, CALIF., Nov. 27/PRNewswire/ - - Kaiser Ventures Inc. (Nasdaq:
KRSC) announced today it has consummated its agreement with Penske Speedway,
Inc. for the joint ownership of a new corporate entity that will own The
California Speedway, Michigan International Speedway, Nazareth Speedway, and
Motorsports International, a motorsports apparel company. Kaiser and Penske
also jointly announced that Facility Investments, Inc., a wholly-owned
subsidiary of International Speedway Corporation (OTC: ISWY), will participate
as an equity investor and that construction financing for The California
Speedway will be provided by NationsBank, N.A. Full-scale construction of The
California Speedway will commence immediately and plans call for a scheduled
1997 opening.
Under the terms of the transaction, Penske contributed its two existing
speedways in Michigan and Pennsylvania, Motorsports International and $5
million in equity to the new entity. Facility Investments, Inc. invested in
excess of $14 million of new equity, and Kaiser contributed approximately 475
acres of land for The California Speedway. The effective ownership interest
in the combined operations will be Penske with 68%, Facility Investments with
17%, and Kaiser with 15%.
The California Speedway formalized its credit facility with NationsBank,
headquartered in Charlotte, N.C., a leader in the financing of sports and
other entertainment businesses.
"We are pleased to complete this agreement and join two of the most
successful and respected motorsports management companies in the business,"
Daniel N. Larson, Kaiser's President and Chief Executive Officer said. "We
believe this agreement involving International Speedway Corporation and Penske
Speedway enhances the ultimate success and value of this venture."
Walter P. Czarnecki, President of Penske Speedway, Inc., said, "This
final agreement represents the culmination of our two-year effort to return
major league auto racing to a world-class permanent facility in Southern
California. It is a natural extension of the success we have enjoyed at
Michigan and Pennsylvania. Having two strategic associates of this caliber is
consistent with our Penske Corporation policy of aligning ourselves with the
finest companies in their respective industries.
The California Speedway is under construction on a portion of the former
Kaiser mill site property near Fontana in San Bernardino County, California.
Both Championship Auto Racing Teams, Inc. (CART) and the National Association
for Stock Car Auto Racing, Inc. (NASCAR) have committed to sanction agreements
for PPG Indy Car World Series and Winston Cup Series events in 1997.
International Speedway Corporation is a publicly-owned company based in
Daytona Beach, Florida, which owns interests in five motorsports facilities
including Daytona International Speedway, Talladega Superspeedway, Darlington
Raceway, Tucson Raceway Park and Watkins Glen International.
Penske Corporation is a diversified transportation services company
comprised of Detroit Diesel Corporation, Penske Truck Leasing Company, and a
group of retail automotive dealerships in Southern California. Penske also
owns the most successful team in Indy car racing history and competes with a
team in the NASCAR Winston Cup Series.
Kaiser Ventures is an emerging asset development company pursuing
projects that address critical issues in water resources, land redevelopment,
and waste management.
-0- 11/27/95
/CONTACT: Pamela M. Catlett of Kaiser Ventures 909-483-8500; or Dan R.
Luginbuhl of Penske, 313-592-7669/
(KRSC ISWY)
-0-
