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) July 14, 1997
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 July 14, 1997, Phoenix Speedway Corporation, a newly formed wholly-owned
Delaware corporate subsidiary of the Company, acquired substantially all of
the assets comprising the business and motorsports complex known as "Phoenix
International Raceway" (PIR) from Phoenix International Raceway, Inc. an
Arizona corporation, PIR/Phoenix International Raceway, L.L.C., an Arizona
limited liability company and Phoenix International Raceway Limited
Partnership, an Arizona limited partnership (Sellers) for consideration
consisting of a $46,100,000 cash payment plus an obligation to pay applicable
federal and Arizona state income taxes on the transaction in several
installments in 1998 and 1999. The total amount of all of the payments,
including the initial $46.1 million, is estimated to be between $60 and $67
million, depending upon the tax treatment ultimately afforded the transaction.
The purchase price was determined based upon negotiations between the Company
and Sellers. The funds used in the transaction came from current assets of
the Company.
PIR is a motorsports complex just outside Phoenix, Arizona located on 320
acres owned by the Company. The complex has a 1 mile oval racing surface and
a 1.51 road course. There are 65,000 grandstand seats and 25 suites. PIR
currently hosts the annual NASCAR Winston Cup series Dura-Lube 500, presented
by K-Mart, as well as an Indy Racing League (IRL) event, two NASCAR Craftsman
Truck Series events and a number of other smaller events. The Company plans
to continue utilization of the assets as a motorsports complex.
There are four 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. Some of the major events conducted by the Sellers at PIR
mentioned above are late model stock car races sanctioned by the National
Association for Stock Car Auto Racing, Inc. (NASCAR). NASCAR is also a member
of the France Family Group which controls a majority of Company stock and
voting rights. Standard NASCAR sanction agreements require racetrack
operators to pay various monies to NASCAR for each sanctioned event conducted.
The sanction agreements between NASCAR and the Sellers were the only material
relationships between the Sellers and the Company or any of its affiliates,
any director or officer of the Company, or any associate of any such director
or officer. The sanction agreements were assigned to the Company at the
closing of the acquisition transaction being reported.
Emmett S. Jobe, Jr. (Jobe) is a principal and controlling person for each of
the Sellers. Effective upon the closing of the transaction being reported,
Jobe became the president of Phoenix Speedway Corporation, the Company's new
subsidiary, pursuant to the provisions of a three-year employment agreement.
There are no other material relationships between the Sellers and the Company
or any of its affiliates, any director or officer of the Company, or any
associate of any such director or officer.
Item 7.Financial Statements and Exhibits.
(a)Financial statements of businesses acquired.
At the time of this report it is not practicable to provide the required
financial statements of the business acquired. Such statements will be filed
under cover of Form 8 as soon as practicable and not later than September 25,
1997.
(b)Pro forma financial information.
At the time of this report it is not practicable to provide the required
pro forma financial statements. Such statements will be filed under cover of
Form 8 as soon as practicable and not later than September 25, 1997.
(c) Exhibits.
Exhibit
Number Description of Exhibit Filing Status
1. (2) Asset Purchase Agreement filed herewith
2. (99.1) Press Release announcing acquisition 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: 7/25/97 /s/ James C. France
---------------- ----------------------------------
James C. France, President
/TEXT
<PAGE>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-2
<SEQUENCE>2
<DESCRIPTION>ASSET PURCHASE AGREEMENT FOR PHOENIX INTERNATIONAL RACEWAY
ASSET PURCHASE AGREEMENT
FOR PHOENIX INTERNATIONAL RACEWAY
THIS AGREEMENT (the "Agreement"), dated June 19, 1997 by and among
PHOENIX SPEEDWAY CORP., a Delaware corporation ("Purchaser");
INTERNATIONAL
SPEEDWAY CORPORATION, a Florida corporation and the sole shareholder of
Purchaser ("ISC"); PHOENIX INTERNATIONAL RACEWAY, INC., an Arizona
Corporation
("PIR Corp."); PIR/PHOENIX INTERNATIONAL RACEWAY, L.L.C., an Arizona limited
liability company ("PIR LLC"); and PHOENIX INTERNATIONAL RACEWAY LIMITED
PARTNERSHIP, an Arizona limited partnership ("PIR Partnership") (PIR Corp.,
PIR LLC, and PIR Partnership are sometimes hereinafter referred to
individually as a "Seller" and jointly as the "Sellers") and EMMETT S. JOBE,
JR. (a/k/a Buddy Jobe), an unmarried man, a principal of each of the Sellers
(the "Principal").
W I T N E S S E T H :
WHEREAS, Sellers and the Principal desire for Sellers to sell to
Purchaser substantially all the assets, properties and business of Sellers;
WHEREAS, Purchaser desires to purchase said assets and assume certain
specified liabilities and obligations of Sellers on the terms and conditions
set forth herein;
WHEREAS, Purchaser has had an opportunity to perform certain due
diligence with respect to the transaction contemplated by this Agreement prior
to the date hereof;
NOW, THEREFORE, in consideration of the premises and the covenants and
agreements herein contained and other good and valuable consideration, receipt
of which is hereby acknowledged, it is hereby agreed as follows:
1. SALE AND PURCHASE OF ASSETS.
Subject to the terms and conditions of this Agreement, and to the
continued accuracy of the representations and warranties contained herein on
the Closing Date (as hereinafter defined), Sellers shall sell, convey, assign,
transfer and deliver to Purchaser and Purchaser shall purchase, receive and
accept delivery from Sellers, at the Closing provided for in Article 5, all of
Sellers right, title and interest in then existing properties, assets and
business as a going concern (except for the assets described on Schedule 1.0
hereto (the "Excluded Assets")) of every kind and nature, real, personal or
mixed, tangible or intangible, wherever located, and whether on or off the
books of Seller relating to the business of Sellers (collectively, the
"Purchased Assets"), including, without limitation, the following:
1.1 The business of staging and promoting motorsports events as well
as operating the motorsports complex known as the "Phoenix International
Raceway" (the "Complex") including without limitation, with respect to such
business, the following: (a) Sellers' rights to the trademark "Phoenix
International Raceway" and all other trademarks, service marks, trademark and
service mark reservations which are owned by or licensed to Sellers and all
goodwill associated with Sellers' business including all goodwill with
motorsports sanctioning bodies and sponsors; and (b) all lists of ticket
purchasers, correspondence and records and all copies thereof, advertising and
promotional materials, forms and other property, tangible or intangible, owned
and/or used by Sellers in connection with the operation of Sellers' business
whether or not reflected on Sellers' books of account. All trademarks,
service marks, trade names and copyrights belonging to Sellers and being
transferred to Purchaser hereunder are identified on Schedule 1.1 hereto (the
"Proprietary Rights");
1.2 All of Sellers' furniture, equipment, improvements, machinery,
furnishings, motor vehicles, office equipment, art work, trophies, promotional
material, programs, videos, films, office memorabilia, trade premiums, tools
and other articles of personal property, whether on or off the books of
Sellers, used or usable in connection with the business of Sellers (the
"Furniture and Equipment"), the material items of which are described on
Schedule 1.2 hereto;
1.3 Sellers' fee simple interest in and to the real property on which
the Complex is situated and which is more fully described on Schedule 1.3
hereto and all right, title and interest of Sellers in and to all easements,
rights-of-way, privileges and appurtenances related to such real property (the
"Appurtenances") (such real property and all improvements and fixtures thereon
and the Appurtenances are referred to as the "Real Property").
1.4 All of the water rights, whether for ground water (the "Ground
Water Rights") or surface water ("Surface Water Rights"), appurtenant or non-
appurtenant, owned by Sellers and used in connection with the operation of the
Complex, such rights being more fully described on Schedule 1.4 hereto
(collectively, the "Water Rights");
1.5 All contracts, permits, rights-of-entry, and/or leases relating to
parking facilities for the Complex or by the terms of which Sellers lease or
have the right to use any other real property, which contracts, permits,
rights-of-entry, and/or leases are described and are identified on Schedule
1.5 hereto (the "Real Property Leases").
1.6 All of Sellers' right, title and interest, as lessee(s), in any
personal property used in connection with the business of Sellers, which
leases are described and are identified on Schedule 1.6 hereto (the "Equipment
Leases");
1.7 All product designs, licenses, franchises, memberships, permits,
trade secrets, common law rights, privileges and general intangibles, if any,
owned or used by Sellers in connection with their business (the "Intangible
Rights");
1.8 All accounts receivable, contract signing bonuses, if any, and
prepaid expenses (including, without limitation, deposits, advertising
materials, and brochures) arising out of or relating to events, transactions,
or services occurring or scheduled to occur at the Complex on or after the
Closing Date, subject to any appropriate prorations in accordance with the
terms of paragraph 5.5 below (the "Accounts Receivable");
1.9 All supplies and sundry items (the "Supplies"), including,
without limitation, telephone numbers, keys and lock combinations, computer
software programs and systems, customer records, and books and records of, or
relating to and material to the operation of, the business of Sellers, the
Purchased Assets and the obligations and liabilities of Sellers assumed by
Purchaser hereunder (including, but not limited to, all customer files,
supplier records, records relating to accounts payable and copies of all tax
and accounting records for each of the Sellers for the period commencing with
the start of the last full fiscal year of the Seller preceding the Closing
Date and ending on the Closing Date) but excluding (i) records relating solely
to executory contracts not assumed by Purchaser, if any, and (ii) records
related to the Excluded Assets;
1.10 Copies of all personnel records and payroll records for the then
current and three preceding fiscal years of each of the Sellers for all
persons who have worked for the business of Sellers at any time during such
period (the "Personnel Records");
1.11 All right, title and interest of Sellers in any merchandising,
concession, sponsorship, sanction agreements or other agreements, contracts
and licenses to which any of the Sellers is a party (the "Contracts"), all the
Contracts involving aggregate amounts in excess of $5,000 or which cannot be
fully terminated by Sellers upon not more than 30 days notice being listed on
Schedule 1.11;
1.12 The benefit of all expenditures paid by Sellers prior to the
Closing Date that directly relate to events which are scheduled to occur at
the Complex on or subsequent to the Closing Date, including, but not
necessarily limited to, advertising or promotional expenses, which expenses
are described and are identified on Schedule 8.8(c) hereto (the "Prepaid Event
Expenses");
1.13 All rights of Sellers arising under barter transaction
arrangements. All barter transaction arrangements entered into by any of the
Sellers during the twelve month period prior to the Closing involving bartered
goods or services having a fair market value in excess of $5,000 are described
on Schedule 1.13;
1.14 Copies of all surveys, maps, site inspections, plans and
specifications and "as built" drawings relating to the Complex in the
possession or control of the Sellers; and
1.15 All other assets of Sellers of whatever nature or description,
whether tangible or intangible, not otherwise detailed above, including,
without limitation, all claims and causes of action against third parties
(excluding only that certain claim by Sellers against Evening Star, CV No. 95-
05659), warranties, refunds and all licenses, franchises, permits and other
governmental authorizations and permits affecting or relating to the business
of Sellers, so that Purchaser may carry on the business of Sellers as
presently conducted after the Closing Date ("Miscellaneous Assets").
2. CONSIDERATION.
2.1 Purchase Price. The total purchase price (the "Purchase Price")
for the Purchased Assets shall be as set forth on Schedule 2.1 attached
hereto, which Purchase Price shall be adjusted as set forth herein and
allocated among the Sellers and among the Sellers' assets in accordance with
Schedule 2.1. The Purchase Price shall be paid in accordance with the payment
schedule set forth on Schedule 2.1.
2.2 Assumption and Payment of Certain Liabilities and Obligations.
On the Closing Date, Purchaser shall assume only those liabilities and
obligations of Sellers listed on Schedule 2.2 hereto (the "Assumed
Liabilities") and shall assume and agree to perform Sellers' unexecuted
obligations and liabilities under the Contracts listed on Schedule 1.11 hereto
and the Contracts which are not required to be listed on Schedule 1.11 hereto
by the terms of paragraph 1.11, and the Equipment Leases listed on Schedule
1.6 hereto, all relating to the business of Sellers from and after the Closing
Date. Such assumption shall be pursuant to an assumption agreement to be
executed and delivered at the Closing in the form of Exhibit A hereto. If
Purchaser agrees in writing to assume the benefits of any contract which
Sellers inadvertently omitted from Schedule 2.2, Purchaser shall also be
deemed to have assumed any liabilities associated therewith, but Sellers shall
remain liable to Purchaser for any damages incurred by Purchaser as a result
of the failure of Sellers to make disclosure of such contract (and the
liabilities associated therewith) prior to the Closing.
2.3 Nonassumption of other Liabilities. Other than the Assumed
Liabilities, the Contracts specified in paragraph 2.2, and the Equipment
Leases, and except as otherwise provided in this Agreement, Purchaser does not
assume and shall in no event be liable for any liabilities, debts or
obligations of Sellers, whether accrued, absolute, matured, contingent or
otherwise, including, without limitation, taxes of any kind, any liabilities
for fees or expenses incident to the preparation of this Agreement or the
consummation of the transactions contemplated hereby, including, without
limitation, counsel, accountant's or finder's fees of Sellers, liabilities
under Employee Benefit Plans (as defined in paragraph 6.16 below), other trade
payables or expenses, debt, contracts, agreements, leases or other obligations
which are not specifically assumed hereunder. Purchaser recognizes that
Sellers may pay all such fees and expenses out of Sellers' cash (excluding the
Prepaid Event Expenses) prior to the Closing Date. Except as listed on
Schedule 2.2 hereto, Purchaser shall not assume or be obligated to pay any
liability or obligations of Sellers to any affiliates of the Sellers. Except
as listed on Schedule 2.3 hereto, at the time of the Closing any contracts
related to the Complex or any of the Purchased Assets, and with respect to
which Sellers or their affiliates are the sole parties, shall be terminated.
3. NON-ASSIGNABLE PURCHASED ASSETS.
Sellers shall hold in trust for the benefit of and account of Purchaser,
any non-assignable Purchased Assets and all Purchased Assets with respect to
which consents to assignments shall not have been obtained prior to the
Closing Date, and, insofar as permissible, assign to the Purchaser, from time
to time, all of such Purchased Assets, and remit to the Purchaser all amounts
paid to Sellers with respect thereto after the Closing promptly upon the
receipt thereof less all charges properly allocable thereto other than charges
resulting from new agreements entered into in connection with or in
contemplation of the consummation of the transactions contemplated hereby.
Schedule 3 hereto lists all consents required to transfer the Purchased Assets
to Purchaser of which Sellers have actual knowledge. As used throughout this
Agreement, "Sellers' knowledge" or "Sellers' actual knowledge" or similar
phrases used throughout this Agreement shall mean the actual knowledge of the
Principal, Susan Tyers or Randy Fitzpatrick. Sellers shall use their best
efforts and otherwise cooperate with Purchaser in Purchaser's efforts to
obtain the consents specified on Schedule 3, however, nothing contained in
this Agreement shall obligate Sellers to actually obtain any consents
disclosed on Schedule 3 other than those which Purchaser in good faith
designates to Sellers as being material within twenty (20) business days after
receipt of Schedule 3 (the "Material Consents"). Sellers shall indemnify and
hold harmless Purchaser from any loss, liability or damage suffered by
Purchaser resulting from failure to obtain any Material Consents.
4. TRANSFER OF EMPLOYEES AND EMPLOYEE BENEFITS.
4.1 Workers Compensation. Sellers shall be responsible for any
workers compensation claims based on injuries occurring prior to the Closing
Date regardless of the date on which the claim was filed, and Sellers shall
jointly and severally indemnify and hold Purchaser harmless against any and
all losses, damages, costs and expenses (including, without limitation,
reasonable attorney's fees and related expenses) arising out of or relating to
all such claims in accordance with paragraph 12.1 hereof. Prior to the
Closing Date, Sellers may obtain a "tail coverage" workers' compensation
policy covering Sellers' workers' compensation liability for the period prior
to the Closing Date and the cost of such policy will be paid out of Sellers'
cash excluding the Prepaid Event Expenses. Purchaser shall be responsible for
all such claims of its employees based on injuries occurring on and after the
Closing Date and shall indemnify and hold Sellers and the Principal harmless
against any and all losses, damages, costs and expenses (including, without
limitation, reasonable attorneys fees and related expenses) arising out of or
relating to all such claims in accordance with paragraph 12.2 hereof.
4.2 Transfer of Employees. It is the present intention of Purchaser
to employ on the Closing Date, substantially all of the present employees of
the business of Sellers related to the Complex but Purchaser shall be under no
obligation to do so. Except for the employment contract with the Principal
specified in paragraph 5.3(h) below, nothing in this Agreement shall create
any employment rights for any current employees of the Sellers.
4.3 Employee Benefit Plans. The parties hereto agree that Purchaser
shall not have any liability or obligation to continue or to make any
contribution or payment with respect to any Employee Benefit Plan (as defined
in paragraph 6.16) maintained by Sellers for employees, whether salaried or
hourly. To the extent that any Seller shall incur liability for withdrawal
under any multi-employer pension plan to which it may be a party, or for any
other unfunded benefit liabilities, Sellers and the Principal shall bear all
such liability and shall jointly and severally indemnify and hold Purchaser
harmless against such liability.
5. THE CLOSING.
5.1 The Closing. The "Closing" or "Closing Date" means the time at
which Sellers effect the transfer of the Purchased Assets in exchange for the
consideration to be delivered by Purchaser pursuant to Article 2 hereof. The
Closing shall take place at the offices of Grant, Williams, Lake &
Dangerfield, P.C., Suite 900, 302 North First Avenue, Phoenix, Arizona 85003,
at 10:00 a.m. local time on July 14, 1997 (or at such earlier date as may be
agreed to in writing by Purchaser and Sellers or such later date to which the
Closing Date may be extended in accordance with the terms of this Agreement).
5.2 Escrow.
(a)Establishment of Escrow. Promptly after the execution
hereof, an escrow (the "Escrow") for this transaction shall be established
with First American Title Insurance Company, 111 West Monroe, Phoenix, Arizona
85003, Attention: Ms. Carol Peterson, or such other national title insurance
company as may be reasonably acceptable to both Sellers and Purchaser (the
"Escrow Agent") and Escrow Agent is hereby employed by the parties to handle
the Escrow. This Agreement shall constitute escrow instructions and a fully
executed copy or counterpart copies shall be deposited with Escrow Agent for
this purpose. Should Escrow Agent require the execution of its standard form
printed escrow instructions, Purchaser and Sellers agree to execute the same;
however, such instructions shall be construed as applying only to Escrow
Agent's employment, and, if there are conflicts between the terms of this
Agreement and the terms of the printed escrow instructions, the terms of this
Agreement shall control. Notwithstanding anything in this Agreement to the
contrary, all documents and funds to be delivered at the Closing pursuant to
this Agreement shall be delivered through the Escrow.
(b)Cancellation of Escrow. If the Escrow fails to close
because of Sellers' default, Sellers shall be liable for all customary escrow
cancellation charges. If the Escrow fails to close because of Purchaser's
default, Purchaser shall be liable for all customary escrow cancellation
charges. If the Escrow fails to close for any other reason, Sellers and
Purchaser shall each be liable for one-half (1/2) of all customary escrow
cancellation charges.
5.3 Certain Events at Closing. At the Closing, in addition to such
other actions as may be provided for herein, the following actions shall be
taken:
(a)Sellers shall deliver to Purchaser a duly executed and
acknowledged bill of sale in the form of Exhibit B hereto, a duly executed and
acknowledged assignment in the form of Exhibit C hereto relating to certain
intangible items, a duly executed and acknowledged deed for the Real Property
and the Water Rights in the form of Exhibit D hereto, and all such other
executed endorsements, assignments, vehicle registrations and other
instruments of transfer and conveyance, in a form and substance reasonably
satisfactory to counsel for Purchaser, as Purchaser shall reasonably request
to effectively vest in Purchaser all of the right, title and interest of
Sellers in the Purchased Assets, free and clear of all mortgages, liens and
encumbrances of any kind whatsoever except as otherwise disclosed herein or in
any Schedule delivered pursuant hereto.
(b)Purchaser shall deliver to Sellers an assumption agreement
as provided for in paragraph 2.2 hereof and such other instruments of
assumption of the debts, liabilities and obligations of Sellers to be assumed
by Purchaser, pursuant to the provisions hereof in form and substance
reasonably satisfactory to counsel for Sellers.
(c)Purchaser shall deliver to Sellers the cash payment as
provided on Schedule 2.1 hereof.
(d)Sellers shall deliver to Purchaser the opinion of counsel
provided for in paragraph 9.5 hereof.
(e)Purchaser shall deliver to Sellers the opinion of counsel
provided for in paragraph 10.4 hereof.
(f) Sellers shall deliver to Purchaser the certificate provided
for in paragraph 9.2 hereof.
(g) Purchaser shall deliver to Sellers the certificate provided
for in paragraph 10.2 hereof.
(h) Purchaser and the Principal shall enter into an employment
contract substantially in the form attached as Exhibit E hereto.
(i) PIR LLC shall deliver to Purchaser an affidavit confirming
that it is not a foreign person or entity or person controlled by a foreign
person as required by the United States Internal Revenue Service.
(j) Purchaser and Sellers shall execute an affidavit of
property value as required by applicable Arizona law.
(k) Sellers shall provide Purchaser with an ALTA Extended
Coverage Owner's Policy of Title Insurance (10/17/92 form), including
comprehensive (owner's), survey, patent reservation, water rights and
contiguity endorsements, an endorsement insuring access to Indian Spring Road
(aka Baseline Road), an endorsement over Exclusion 4 of such policy, and an
endorsement over Condition and Stipulation 7(b) of such policy (collectively,
the "Owner's Title Policy"). The Owner's Title Policy shall be issued by
First American Title Insurance Company or such other national title insurance
company as may be reasonably acceptable to both Sellers and Purchaser (the
"Title Insurer"), be in the amount of $22,000,000.00, be effective as of the
Closing Date, and shall insure Purchaser that fee simple title to the Real
Property is vested in Purchaser and that Purchaser is the Permittee under the
SLUP and Right-of-Entry (as those terms are defined in subparagraph (l)
below), subject only to: (i) the usual printed exceptions and exclusions
contained in such title insurance policies (except those to be endorsed over
as provided above); and (ii) the exceptions to title identified on Schedule
5.3(k). In addition, if the State Land (as that term is defined in paragraph
28.1 below) has or is to be conveyed in fee to Purchaser at the Closing as
provided for in paragraph 28.1, the Owner's Title Policy shall also include
the State Land and shall insure Purchaser that fee simple title to the State
Land is vested in Purchaser, subject only to (i) the usual printed exceptions
and exclusions contained in such title insurance policies (except those to be
endorsed over as provided above); and (ii) the exceptions to title identified
in Schedule 5.3(k). In such case, the amount of the Owner's Title Policy
shall be increased by the purchase price for such land.
(l) PIR LLC shall assign or cause to be assigned to Purchaser
whatever rights it or its affiliates may have arising under (i) Special Land
Use Permit No. 23-102379 (the "SLUP") issued by the Arizona State Land
Department (the "Department") for approximately 26.6 acres located north of
the Real Property, as the same may be extended, renewed or amended and (ii)
Right-of-Entry Application and Agreement No. 29-102217 with the Department for
approximately 80 acres located west of the Real Property, as the same may be
extended, renewed or amended.
5.4 Closing Costs.
(a) Sellers' Closing Costs. Upon the Closing, Sellers agree to
pay all recording costs, one-half (1/2) of the escrow charges and that portion
of the cost of the Owner's Title Policy equal to the cost of a standard
coverage owner's policy of title insurance.
(b) Purchaser's Closing Costs. Upon the Closing, Purchaser
agrees to pay one-half (1/2) of the escrow charges and that portion of the
cost of the Owner's Title Policy which exceeds the cost of a standard coverage
owner's policy of title insurance and the cost of any endorsements.
5.5 Prorations and Apportionments.
(a) General. All revenues and all expenses of the Complex
shall be prorated and apportioned as of 12:01 a.m. on the Closing Date, so
that Sellers shall bear all expenses with respect to the Purchased Assets and
shall have the benefit of all income with respect to the Purchased Assets for
the period preceding the Closing Date. Any revenue or expense amount which
cannot be ascertained with certainty as of the Closing Date shall be prorated
on the basis of the parties' reasonable estimates of such amount and shall be
the subject of a final proration outside of escrow forty-five (45) days after
the Closing Date or as soon thereafter as the precise amounts can be
ascertained.
(b) Prorations. Items to be prorated shall include, without
limitation, tenant rents and other amounts payable under the Real Property
Leases and Equipment Leases; real estate taxes and personal property taxes
with respect to the Purchased Assets; income and expenses under the Contracts;
and utility charges for the Complex.
(c) Taxes. In prorating real estate and personal property
taxes, the proration shall be based upon the most recently available tax rate
and valuation. Sellers represent and warrant to Purchaser that no real
property tax appeal is pending as of the date hereof and one will not be
initiated without the prior written consent of Purchaser, not to be
unreasonably withheld. All assessments against the Real Property shall be
paid in full on or before the Closing Date by Sellers.
(d) Utilities. If possible, in lieu of prorating utility
charges, utility readings will be taken on the day prior to the Closing Date.
Sellers shall pay the charges for utility services based on such reading, and
Purchaser shall contract for such utilities and pay all utility expenses
incurred after the Closing Date.
(e) Payment. At the Closing, the net adjustment by reason of
the closing costs incurred by the parties and by the foregoing prorations and
apportionments, if in favor of Sellers, shall be paid by Purchaser in
immediately available funds to Escrow Agent, or, if in favor of Purchaser,
shall be paid by set off against the portion of the Purchase Price due at
Closing.
6. REPRESENTATIONS OF SELLERS
The following representations and warranties are made, jointly and
severally, by Sellers and the Principal to Purchaser:
6.1 Organization and Qualification. PIR Corp is a corporation duly
formed, validly existing and in good standing under the laws of the State of
Arizona. PIR LLC is a limited liability company duly formed and validly
existing under the laws of the State of Arizona. PIR Partnership is a limited
partnership duly formed and validly existing under the laws of the State of
Arizona. Each of the Sellers has all requisite power and authority to own its
property and to carry on its business as now being conducted; and is duly
qualified to do business in each jurisdiction in which the character of its
properties and assets owned or leased or the nature of its business
transacted, makes such qualification necessary. Copies of the formation
documents for each of the Sellers, as amended to date, (the "Formation
Documents") which have been delivered to Purchaser are complete and correct,
and no amendments have been made thereto since the date hereof.
6.2 Subsidiaries and other Equity Investments. Except as set forth in
Schedule 6.2, no Seller owns, directly or indirectly, any shares of capital
stock of any corporation or any equity investment in any partnership,
association or other business organization.
6.3 Authority. Each Seller has the full power and authority to enter
into this Agreement and to carry out its obligations hereunder. The execution
and delivery of this Agreement by each Seller and the performance by it of all
obligations contemplated hereby have been duly authorized by all requisite
partnership, corporate or company actions including any necessary approval of
all the partners, shareholders or members of each Seller. This Agreement and
all other agreements entered into in connection with the transactions
contemplated hereby to which any Seller is a party, constitute, or will
constitute upon execution and delivery, the valid and legally binding
obligations of Sellers enforceable against each Seller in accordance with
their respective terms.
6.4 No Violations. Neither the execution nor delivery of this
Agreement, the consummation of any of the transactions contemplated hereby,
nor the fulfillment of any of the terms hereof except to the extent disclosed
herein or in any Schedule hereto (i) will violate or conflict with the
Formation Documents, (ii) will result in any breach of or default under any
provision of any contract or agreement of any kind to which any Seller is a
party or by which any Seller is bound or to which any property or asset of any
Seller is subject, which would have an adverse effect on the Purchased Assets,
or (iii) will result in a violation of any statutes, laws, ordinances, rules,
regulations or requirements of governmental authorities having jurisdiction
over Sellers or the business of Sellers.
6.5 Financial Statements. Each of the Sellers has delivered to
Purchaser its balance sheets at the end of its 1995 and 1996 fiscal years and
the related income statements for each of such two fiscal years (collectively,
the "Year-End Financial Statements"). The Year-End Financial Statements are
correct and complete and present fairly the financial position of each Seller
at the fiscal year-end dates, and the results of its operations on the accrual
basis of accounting. Purchaser has been advised that in preceding fiscal
years Sellers used the cash basis of accounting. PIR, Inc. has also delivered
to Purchaser its unaudited balance sheet and the statement of income of such
Seller for between the end of its 1996 fiscal year and May 31, 1997 (the
"Interim Financial Statements Date") (the "Interim Financial Statements"). The
Interim Financial Statements are correct and complete and present fairly the
financial position of PIR, Inc. at the Interim Financial Statements Date and
the results of its operations on the accrual basis of accounting and
consistent with the method used in the immediately preceding fiscal year
except for normal year end adjustments. The Year-End Financial Statements and
the Interim Financial Statements are sometimes collectively referred to herein
as the "Financial Statements" . The Financial Statements are collectively
attached as Exhibit G hereto.
6.6 No Undisclosed Liabilities, Etc. Since the Interim Financial
Statements Date (except (i) for the transactions contemplated by this
Agreement, and (ii) as set forth in Schedule 2.3 or elsewhere in this
Agreement):
(a) Sellers have not incurred any liability or obligation
(absolute, accrued, contingent or otherwise) with respect to the Purchased
Assets of any nature, other than liabilities and obligations incurred in the
ordinary course of business; and
(b) Sellers do not maintain any inventory of goods.
6.7 Absence of Certain Changes. Except as disclosed in the Financial
Statements or in any Schedule delivered pursuant hereto, since the Interim
Financial Statements Date (except (i) for the execution and delivery of this
Agreement and (ii) as set forth in Schedule 6.7), no Seller has:
(a) had any material change in its condition (financial or
otherwise), present operations, business, properties, assets, or liabilities,
other than changes in the ordinary course of business, none of which has been
materially adverse;
(b) suffered any damage, destruction or loss of physical
property (whether or not covered by insurance) materially and adversely
affecting its condition or operations;
(c) incurred or agreed to incur any indebtedness for borrowed
money secured by any of the Purchased Assets;
(d) paid or obligated itself to pay in excess of $25,000 in the
aggregate for fixed assets;
(e) suffered any losses or waived any rights of any value in
excess of $25,000;
(f) sold, transferred or otherwise disposed of, or agreed to
sell, transfer or otherwise dispose of, any assets having a fair market value
at the time of sale, transfer or disposition of $25,000 or more in the
aggregate, or canceled, or agreed to cancel, any debts or claims in the amount
of $10,000 or more in the aggregate, other than in the ordinary course of
business and consistent with past practice;
(g) mortgaged, pledged or subjected to any charges, liens,
claims or encumbrances, or agreed to mortgage, pledge or subject to any
charges, liens, claims or encumbrances, any of the Purchased Assets;
(h) made any distribution other than cash or Excluded Assets to
its partners, shareholders or members;
(i) increased, or agreed to increase, the compensation or
bonuses or special compensation of any kind of any of its officers, employees
or agents over the rate being paid to them on December 31, 1996, other than
merit, incentive, and/or cost-of-living increases made in the ordinary course
of business following past practice or increases in accordance with the terms
of contracts disclosed on Schedule 1.9, and no such increases are required by
written agreement, or adopted or increased any benefit under any insurance,
pension or other employee benefit plan, program or arrangement made to, for or
with any such officer, employee or agent;
(j) discharged or satisfied any lien or encumbrance or paid any
obligation or liability (absolute or contingent) other than current
liabilities reflected in the Interim Financial Statements or incurred since
the Interim Financial Statements Date in the ordinary course of business;
(k) entered into any lease of real or personal property which
provides for an annual rental in excess of $25,000 and which is of a duration
of more than one year;
(l) made or permitted any material amendment or termination of
any material contract, agreement or license to which such Seller is a party
other than in the ordinary course of business;
(m) had any resignation or termination of employment of any of
its key officers or employees or received written notification of any
impending or threatened resignation or resignations or termination or
terminations of employment that would have a material adverse effect on its
operations or business;
(n) had any strike, work stoppage or any other labor dispute;
(o) made any material change in its accounting methods or
practices with respect to its condition, operations, business, properties,
assets or liabilities; or
(p) entered into any transaction not in the ordinary course of
its business. Neither any of the Sellers nor the Principal has any knowledge
of any existing or threatened occurrence, event or development which, as far
as can be reasonably foreseen, is likely to have a material adverse effect on
any of the Sellers or any of the Purchased Assets.
6.8 Title to and Condition of Properties and Assets. Sellers have
good and marketable title to all tangible personal properties included as part
of the Purchased Assets including, without limitation, (i) all those used in
the business of Sellers and (ii) those reflected in the Financial Statements
(except as sold or otherwise disposed of in the ordinary course of business).
None of the tangible personal properties included as part of the Purchased
Assets are subject to any mortgage, pledge, conditional sales contract, lien,
security interest, right of possession in favor of any third party, claim or
other encumbrance, except (i) the lien of current taxes not yet due and
payable, (ii) as set forth in Schedule 6.8, (iii) as reflected in the
Financial Statements, (iv) for such minor imperfections of title, if any, as
do not interfere with the present use of the property or properties subject
thereto or affected thereby in a manner materially adverse to the business of
Sellers, and (v) for liens not material in amount and arising from the
ordinary course of conduct of the business of Sellers. Subsequent to the
Interim Financial Statements Date, except as contemplated by this Agreement,
Sellers have not sold or disposed of any of their tangible personal properties
or assets or obligated themselves to do so except in the ordinary course of
business. Except as disclosed on Schedule 1.2, the facilities, machinery,
furniture, office and other equipment (including computer software) of Sellers
that are used in their business are in good operating condition and repair,
subject only to ordinary wear and tear. The tangible personal property of
Sellers and all improvements on the Real Property have been constructed and/or
maintained in compliance with all applicable laws, rules and regulations, and
to the best of Sellers' knowledge are free from any latent defects. Sellers
have not received any written notice from any governmental agency, board,
bureau, body, department or authority of any federal, state, municipal or
foreign jurisdiction, to the effect that Sellers or any tangible personal
property or asset owned or leased by Sellers is in violation of any applicable
ordinance, regulation or building, zoning, environmental or other law in
respect thereof, the violation of which will have a material adverse effect on
the conduct of the business or the ownership or use of any of such properties
or assets of any of the Sellers. Since the Interim Financial Statements Date,
there has not been any significant interruption of the operations of Sellers
due to inadequate maintenance of structures, machinery or equipment or because
of computer software or data processing failures.
6.9. Real Property.
(a) Title. PIR LLC is the owner of record of all right, title
and interest in and to the Real Property free from any mortgage, deed of
trust, lien, security interest, right of possession or encumbrance in favor of
any third party except (i) the lien for real estate taxes not yet due and
payable or (ii) as set forth in Schedule 6.9(a) hereto. The title to the Real
Property is insurable at standard rates by First American Title Insurance
Company or such other reputable national title insurance company which shall
be reasonably acceptable to Purchaser and Sellers.
(b) Condemnation. Except as disclosed on Schedule 6.9(b)
hereto, as of the date hereof, neither the whole nor any portion of the Real
Property is subject to temporary requisition or use by any governmental
authority, nor is there pending as of the date hereof any condemnation,
requisition or similar proceeding affecting the Real Property or any portion
thereof. PIR LLC has received no notice and has no knowledge that any such
proceeding is contemplated as of the date hereof.
(c) Violations. As of the date hereof, to the best of Sellers
actual knowledge, there are no existing violations of and no Seller has
received notice of any alleged violation, which remains uncured, of any
federal, state or municipal laws, ordinances, orders, regulations or
requirements affecting the Real Property.
(d) Owner's Affidavit or Bond. Prior to Closing, PIR LLC shall
provide the title company insuring title to the Real Property with either (i)
bonds in an amount and in a form reasonably satisfactory to the title company
or (ii) such affidavits and other evidence as may reasonably be required by
the title company, so as to enable the title company to furnish Purchaser with
a title insurance policy without exception for mechanic's liens.
(e) Outstanding Contractual Rights. PIR LLC is not currently
in default and on the Closing Date will not be in default under the terms of
any of its contractual obligations affecting the Real Property.
(f) Zoning and Use. To the best of Sellers' actual knowledge,
the use by PIR LLC and the other Sellers of the Real Property through the
Closing Date, specifically including its use as a speedway facility, has been
and is in compliance with all applicable laws including zoning, subdivision
and other land use laws, building codes, laws for the protection of rights of
individuals with disabilities, fire and floodplain regulations and ordinances
pertaining thereto. None of the Sellers has received written notice of
building violations which remain uncured against the Real Property or of any
deficiencies in the fixtures, fittings and mechanical systems which constitute
part of the Real Property. All improvements made by Sellers to the Real
Property prior to the Closing Date comply with all applicable laws including
zoning, subdivision and other land use laws, building codes, laws for the
protection of rights on individuals with disabilities, fire and floodplain
regulations and ordinances pertaining thereto.
(g) Fire Insurance Requirements. To the best of Sellers'
actual knowledge, prior to Closing, there are no outstanding requirements or
recommendations by the fire underwriters or rating boards, or any insurance
companies, requiring or recommending any repairs of work to be done with
reference to the Real Property.
(h) Compliance with Covenants, etc. PIR LLC is not in default
or breach of any of the covenants, conditions, restrictions, rights-of-way or
easements or deeds of trust affecting the Real Property or any portion
thereof.
(i) Building Systems. To the best of Sellers' actual knowledge,
except as disclosed in Schedule 6.9(i) hereto, the improvements located on the
Real Property are structurally sound, all material building systems and
facilities are in good condition and working order, and there are no material
defects or deficiencies with respect to the construction of the improvements
on the Real Property. All improvements made by Sellers to the Real Property
prior to the Closing Date are structurally sound, in good condition and
working order, and there are no material defects or deficiencies with respect
to the construction thereof. Such systems and facilities will be in the same
condition at the Closing Date as they are upon execution of this Agreement,
reasonable wear and tear excepted. Neither the Sellers nor the Principal have
received any written notice of any defect or deficiency in the design of the
improvements on the Real Property.
(j) Hazardous Materials or Toxic Substances.
(i) Except as set forth on Schedule 6.9(j) hereto, to the
best of Sellers' actual knowledge, the Real Property does not contain and will
not on the Closing Date contain (A) asbestos in any form; (B) transformers or
other equipment which contain dielectric fluid containing levels of
polychlorinated biphenyls in excess of 50 parts per million; (C) radon levels
above acceptable standards; or (D) any oil, hazardous waste, toxic substances,
chemical matter, other pollutants or any other chemical materials or
substances, in amounts or concentrations which are prohibited, limited or
regulated by or may require remediation under any federal, state, county,
regional or local authority or which, even if not so regulated, may or could
pose a hazard to the health, safety or welfare of any person.
(ii) Except as set forth on Schedule 6.9(j) hereto,
including any update of such Schedule which is delivered to Purchaser prior to
Closing, (A) to the best of Sellers' actual knowledge, the Real Property is
not now and has never been used to generate, manufacture, refine, transport,
treat, store, handle, dispose, transfer, produce, process or in any manner
deal with Hazardous Materials, or Toxic Substances, as said terms are
hereinafter defined, except in accordance with Environmental Laws, as
hereinafter defined, and in such manner as not to pose a hazard to the health
and safety of any person, and (B) Sellers have not caused or permitted the
Real Property or any part thereof to be contaminated by Hazardous Materials,
Hazardous Waste or Toxic Substances.
(iii) There are no pending or threatened lawsuits,
investigations or inquiries by any governmental authorities concerning
environmental issues which affect the Real Property, or to the best of
Sellers' actual knowledge, any adjacent property.
(iv) The terms "Hazardous Materials", "Hazardous Waste",
and "Toxic Substances" as used herein shall include, without limitation,
gasoline, petroleum products, lead-based paints, explosives, radioactive
materials, hazardous materials, hazardous wastes, hazardous or toxic
substances, polychlorinated biphenyls or related or similar materials,
asbestos or any material containing asbestos, or any other substance or
material as may be defined as a hazardous or toxic substance by any Federal,
state or local environmental law, ordinance, rule, or regulation (collectively
the "Environmental Laws") including, without limitation, the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980, as amended
(42 U.S.C. Sections 9601, et seq.), the Hazardous Materials Transportation
Act, as amended (49 U.S.C. Sections 1801, et seq.), the Resource Conservation
and Recovery Act, as amended (42 U.S.C. Sections 6901, et seq.), the Federal
Water Pollution Control Act (33 U.S.C. Sections 1251, et seq.), the Clean Air
Act (42 U.S.C. Sections 7401, et seq.), the Toxic Substance Control Act (15
U.S.C. Sections 2601, et seq.), the Arizona Environmental Quality Act, Arizona
Revised Statutes Title 49, and in regulations adopted or orders or permits
issued pursuant thereto.
(k) Water Rights.
(iPIR LLC is the legal and beneficial owner of the Water
Rights and such Water Rights are not subject to any lien, charge, option,
mortgage, deed of trust, security interest or other encumbrance of any type
except as specified in the Agreement dated January __, 1996 among Phoenix
International Raceway, the Buckeye Irrigation Company, the Buckeye Water
Conservation and Drainage District, the Arlington Canal Company and the City
of Goodyear.
(ii)The quantity of water available with respect to the
Water Rights has been adequate to operate the Complex and conduct the events
which have been historically conducted at the Complex without supplementing
the water from any other source except the purchase of water from the Gila
River from an owner of water rights located downstream from the Complex at
$.001 per gallon.
(iii)The septic system available at the Complex has been
adequate to permit the operation of the Complex and conduct events which have
been historically conducted at the Complex without the need for any
improvements to such system and without the need to obtain modified licenses
or permits for any governmental authority. Sellers have received no notice of
any restrictions imposed by any governmental authority concerning the
construction at the Complex of additional toilet facilities utilizing such
septic system which will be necessary to service the Complex if it is expanded
to include a total of 125,000 spectator seats for events historically
conducted at the Complex.
(l)Real Estate Leases.
(i)Schedule 1.5 sets forth a list and summary description
of the Real Property Leases. Sellers have furnished Purchaser with a copy of
each lease by which any of the Sellers acquired an interest in the Real
Property Leases. Each Real Property Lease is in full force and effect and is
valid and enforceable in accordance with its terms. There is not under any
Real Property Lease any default, or any event that with notice or lapse of
time or both would constitute such a default. To the best of Sellers' and the
principal's knowledge, there is not under any Real Property Lease any default
by any other party thereto or any event that with notice or lapse of time or
both would constitute such a default thereunder by such party.
(ii)Sellers have not received any notice that the use of
any improvements to the property subject to the Real Property Leases and the
conduct of Sellers' business therein are in violation of any law, statute,
ordinance, rule or regulation of any government, governmental body, agency or
authority (federal, state, municipal, foreign or local) in any respect
(including, without limitation, those concerned with environmental standards,
occupational safety standards or the protection of rights of individuals with
disabilities).
6.10Contracts. Except as set forth on Schedule 1.9 or as otherwise
disclosed in or pursuant to this Agreement, including any Schedule or
attachment hereto, Sellers are not a party to any written or oral:
(a)contract with any labor union;
(b)any employment contract or any consulting or other contract
not terminable on thirty days advance notice for services involving a payment
of more than $10,000 annually;
(c)lease whether as lessor or lessee with respect to any
property, real or personal involving a payment of more than $10,000 annually;
(d)license agreement whether as licensor or licensee relating
to the business or any of the properties or assets of Seller involving the
payment of more than $10,000 annually;
(e)loan agreement or instrument relating to any debt involving
the payment of more than $10,000 annually;
(f)contract of purchase or sale involving the payment of more
than $10,000 annually;
(g)contract with any agent involving the payment of more than
$10,000 annually;
(h)stand-by letter of credit, guarantee or performance bond
involving more than $10,000;
(i)contract or agreement restricting the ability of the Sellers
from freely engaging in any business or competing anywhere in the world;
(j)contract not made in the ordinary course of business
involving the payment of more than $10,000 annually;
(k)contract with any party that to the knowledge of Sellers or
the Principal is expected to result in a material loss; or
(l)other contract or agreement, except insubstantial contracts
for supplies or services or not involving the payment of more than $10,000
annually.
Except as set forth on Schedule 1.9 or otherwise herein, no Seller
is a party to any material contract with any governmental authority. Each
Contract listed in Schedule 1.9 is in full force and effect against Sellers
and is valid and enforceable by Sellers, in accordance with its terms,
assuming the due authorization, execution and delivery thereof by each of the
other parties thereto. Neither of the Sellers nor, to the knowledge of
Sellers and the Principal, any other party is in default in the observance or
the performance of any material term or obligation to be performed by it under
any Contract listed in said Schedule 1.9. To the knowledge of Sellers and the
Principal, no other person is in default in the observance or the performance
of any material term or obligation to be performed by it under any Contract
listed in said Schedule 1.9. Sellers will provide to Purchaser prior to the
Closing Date true and complete copies of all Contracts listed in Schedule 1.9
as in effect on the date hereof.
6.11Certain Indebtedness. Schedule 6.11 is a correct and complete
list of all instruments, agreements and arrangements pursuant to which any
Seller has borrowed money, incurred any indebtedness or established any line
of credit which represents a liability of such Seller on the date hereof.
True and complete copies of all such instruments, agreements and arrangements
that are in writing and summaries of all others thereof have heretofore been
delivered to Purchaser. All of such indebtedness has been incurred for valid
business purposes of Sellers. Sellers are not in material default under any
indenture, loan agreement or any other agreement relating to borrowed money to
which any of the Sellers is a party or by which any of the Sellers or their
assets or properties are bound nor does any condition exist which, with notice
or lapse of time or both, would constitute such a default, and each such
indenture, loan agreement or other agreement is in full force and effect
against Sellers.
6.12Litigation. Except as set forth on Schedule 6.12, there are no
actions, suits, proceedings or investigations, either at law or in equity, or
before any commission or other administrative authority in any federal, state,
municipal or foreign jurisdiction, of any kind now pending or, to the best of
knowledge of Sellers and the Principal, threatened or proposed in any manner,
or, to the knowledge of Sellers and the Principal, any circumstances which
reasonably form the basis of any such action, suit, proceeding or
investigation, involving Sellers or any of their properties or assets that (i)
if asserted and decided adversely to Sellers, would materially and adversely
affect the operations or the business of Sellers, or of Purchaser or its
successors or assigns with respect to the Purchased Assets, or (ii) questions
the validity of this Agreement, or (iii) seeks to delay, prohibit or restrict
in any manner any action taken or contemplated to be taken by Sellers under
this Agreement. Except as set forth in Schedule 6.12, there is no arbitration
proceeding pending or, to the knowledge of Sellers, threatened with respect to
individual claims under any collective bargaining agreement or other agreement
which claims, individually or in the aggregate, if adversely decided could
have a material adverse effect on the business or operations of Sellers.
Neither the Sellers nor any of their properties or assets is subject to any
judicial or administrative judgment, order, decree or restraint. Except as
set forth on Schedule 6.12, there have been no actions, suits, proceedings or
investigations, either at law or in equity, or before any commission or other
administrative authority in any federal, state, municipal or foreign
jurisdiction of any kind which were material and were initiated against any of
the Sellers and settled or otherwise resolved prior to the date hereof.
6.13Proprietary Rights. Except as set forth on Schedule 6.13, there
are no written claims or demands or proceedings pending or threatened that
pertain to or challenge the right of Sellers to use the Proprietary Rights
identified in Schedule 1.1 and no valid basis exists for any such claim. None
of the Sellers knows of any third party that has infringed on any of Sellers
Proprietary Rights. Sellers have not granted any currently outstanding
licenses or other rights with respect to the Proprietary Rights and have no
legally binding obligation to grant licenses or other rights. The Proprietary
Rights identified in Schedule 1.1 constitute all trademarks, service marks,
trade names and copyrights owned by Sellers which are used or are required in
connection with the operation of Sellers' business including the operation of
the Complex. Sellers are the sole and exclusive owner of, and have the sole
and exclusive right to use, the Proprietary Rights all of which will be
assigned to Purchaser at the Closing free and clear of all claims, liens,
charges or any encumbrances whatsoever. Except as disclosed in Schedule 1.1,
Sellers have not allowed any material Proprietary Rights to lapse.
6.14Compliance with Laws. In all material respects, Sellers have
complied with and are in compliance with all federal, state, local (including
county and municipal) and foreign statutes, laws, ordinances, regulations,
rules, permits, judgments, orders or decrees which affect the Purchased
Assets, and there does not exist, to the best of Sellers' and the Principal's
knowledge, any basis for any claim of default under or violation of any such
statute, law, ordinance, regulation, rule, judgment, order or decree. With
respect to all actions taken by Sellers with respect to the Purchased Assets
(a) at the time such action was taken, Sellers were in compliance with (i) all
applicable requirements of all United States, state, local (including county
and municipal) and foreign governmental authorities with respect to
environmental protection, including, without limitation, regulations
establishing quality criteria and standards for air, water, land and hazardous
materials, and (ii) all applicable laws and related rules and regulations of
all federal, state, local (including county and municipal) and foreign
jurisdictions affecting sale of alcoholic beverages, public health and safety
standards, labor union activities, handicapped access for facilities, civil
rights or employment, including without limitation, the Civil Rights Act of
1964, the Age Discrimination in Employment Act of 1967, the Equal Employment
Opportunity Act of 1972, the Employee Retirement Income Security Act of 1974,
as amended (ERISA), the Equal Pay Act, as amended, and the National Labor
Relations Act, as amended and (b) to the best of Sellers actual knowledge,
the Purchased Assets are still in compliance.
6.15Governmental Authorizations and Regulations. Schedule 6.15 lists
all licenses, franchises, permits and other governmental authorizations held
by Sellers material to the conduct of their business. Such licenses,
franchises, permits and other governmental authorizations are valid, and
Sellers have not received any written notice that any governmental authority
intends to cancel, terminate or not renew any such license, franchise, permit
or other governmental authorization. Except for the limited rights under the
SLUP and the Right of Entry specified above, Sellers hold all licenses,
franchises, permits and other governmental authorizations the absence of any
of which would have a material adverse effect on their business.
6.16Employee Benefit Plans.
(a)Except for the group health plan described on Schedule 6.16
(the "Group Health Plan"), Sellers do not currently maintain and do not have
any obligation with respect to any pension, profit sharing, retirement,
deferred compensation, stock purchase, stock option, incentive, bonus,
vacation, severance, disability, hospitalization, medical insurance, life
insurance and other employee benefit plans, programs or arrangements (other
than obligations to make current wage or salary payments or sales commissions
terminable on notice of 30 days or less) in respect of, or which otherwise
cover, any of the current officers or employees of any Seller, or their
beneficiaries (hereinafter individually referred to as a "Employee Benefit
Plan" and collectively referred to as the "Employee Benefit Plans"). Sellers
have delivered or made available to Purchaser true and complete copies of all
documents, as they may have been amended to the date hereof, embodying or
relating to the Group Health Plan
(b)Sellers have made all payments due from it to date under or
with respect to the Group Health Plan, and all amounts properly accrued to
date as liabilities of Sellers under or with respect to the Group Health Plan
for the current plan years have been properly recorded on the books of
Sellers.
(c)The Group Health Plan has been administered in compliance
with the continuation coverage requirements contained in the Consolidated
omnibus Budget Reconciliation Act of 1985 and as provided under Section 162(k)
of the Code and all regulations promulgated or proposed thereunder.
6.17Accounts Receivable. The Accounts Receivable represent
transactions actually made in the ordinary course of business and relate to
events, transactions or services occurring or scheduled to occur at the
Complex on or after the Closing Date, and are current and collectible without
discount. Each of the Accounts Receivable is listed on Schedule 6.17 and will
be collected in full, without any set-off or counter claim, within 90 days
after the Closing Date except as noted on Schedule 6.17. If by its terms an
Accounts Receivable is not due within 90 days after the Closing Date and that
information is disclosed on Schedule 6.17, then such Account Receivable (an
"Extended Account Receivable") shall be paid in full without set-off or
counterclaim within 30 days from the date on which it was due. Except as
disclosed on Schedule 6.17, since the Interim Financial Statements Date, no
Accounts Receivable of Sellers have been written off as uncollectible.
6.18[Intentionally Deleted]
6.19Taxes. Each of the Sellers has duly and timely filed, within
applicable extension periods, all tax reports and returns required to be filed
by it and Sellers have duly and timely paid all taxes with respect to the
business of the Sellers imposed by federal, state, local (including county and
municipal) or foreign taxing authorities (the "Taxing Authorities")
(including, without limitation, those due in respect of the tangible and
intangible properties, leasehold interests, income, franchises, licenses,
sales or payrolls of Sellers); and there are no tax liens or encumbrances upon
any property or assets of Sellers except liens for current taxes not yet due.
The tax returns of Sellers required to be filed by any Taxing Authorities have
been examined by such Taxing Authorities for all periods to and including
those set forth in Schedule 6.19; and, except to the extent shown therein, all
deficiencies asserted as a result of such examinations have been paid or
finally settled and no issue has been raised by any Taxing Authorities except
as disclosed in Schedule 6.19. Except to the extent set forth in Schedule
6.19, there are no outstanding agreements or waivers extending the statutory
period of limitation applicable to any tax return for any period. Copies of
all tax returns for Sellers in respect of all years not barred by the statute
of limitations have heretofore been delivered by Sellers to Purchaser and all
such returns are listed in Schedule 6.19.
6.20Insurance. Schedule 6.20 contains an accurate and complete
description of all material policies of fire, liability, workmen's
compensation, errors and omissions and other forms of insurance owned or held
by Sellers. All such policies are in full force and effect, all premiums due
and payable with respect thereto covering all periods up to and including the
date of the Closing have been paid, and no written notice of cancellation or
termination has been received with respect to any such policy. Such policies
are sufficient for compliance with all requirements of law and of all
agreements to which any Seller is a party; are valid, outstanding and
enforceable policies; provide insurance coverage customary in Sellers'
industry for the assets and operations of Sellers; will remain in full force
and effect through the respective dates set forth in Schedule 6.20 without the
payment of additional premiums. Schedule 6.20 identifies all risks which
Sellers have designated as being self-insured. Neither Seller has been
refused any insurance with respect to its assets or operations, nor has its
coverage been limited, by any insurance carrier to which it has applied for
any such insurance or with which it has carried insurance during the last
three years.
6.21Certain Transactions. Except as set forth in Schedule 6.21, or
elsewhere set forth herein, with respect to the Purchased Assets, there is no
transaction or contractual relationship, and no transaction or contractual
relationship is now proposed, to which any Seller is a party and in which any
partner, member, shareholder or officer of Sellers or any affiliate of Sellers
had or has a direct or indirect material interest.
6.22Accounting Practices. Each Seller makes and keeps accurate books
and records reflecting its assets and operations in accordance with the
accrual basis of accounting in compliance with all applicable tax regulations
and maintains internal accounting controls that provide reasonable assurance
that (i) transactions are executed in accordance with proscribed policies and
with management's authorization, (ii) all valid transactions are properly
valued and timely and accurately recorded so as to permit timely preparation
of financial statements in accordance with the accrual basis of accounting in
compliance with all applicable tax regulations, (iii) access to the assets of
such Seller is permitted only in accordance with proscribed policies and
management's authorization and (iv) the reported accountability of the assets
of such Seller is compared with existing assets at reasonable intervals.
6.23[Intentionally Deleted]
6.24Labor Agreements and Policies. No Seller is a party to or bound
by any collective bargaining agreement. To the best of Sellers' actual
knowledge, each Seller has complied with all applicable federal and state laws
with respect to hours worked by, working conditions and any payments made to
its employees and the classification of individuals performing services for
each Seller as an employee or independent contractor.
6.25Schedules. All lists or other statements, information or
documents set forth in or attached to any Schedule delivered or to be
delivered pursuant to this Agreement shall be deemed to be representations and
warranties of the parties making them with the same force and effect as if
such lists, statements, information and documents were set forth herein. Any
list, statement, document or any information set forth in or attached to any
Schedule delivered or required to be delivered pursuant to this Agreement
shall be deemed to constitute disclosure for any other Schedule delivered or
to be delivered pursuant to this Agreement.
6.26No Untrue Statements. No statement by any Seller or the Principal
contained in this Agreement contains any untrue statement of a material fact,
or omits to state a material fact necessary in order to make the statements
therein contained not misleading. 6.27Adequacy of the Purchased Assets.
Except as disclosed on Schedule 6.27, the Purchased Assets are now and on the
Closing Date will be all of the property, real and personal, tangible and
intangible, material to the operation of the Complex after the Closing in a
manner consistent with its operations prior to the Closing. Nothing contained
herein shall limit Sellers rights with respect to the Excluded Assets.
6.28Tickets. Included as part of the Purchased Assets are all of
Sellers' ticket inventory and ticket stock. Except as reflected on Schedule
6.28 hereto, Sellers have not issued any free tickets with respect to any
motorsports or other events scheduled to occur on or after the Closing Date.
Sellers maintain accurate and complete records of all tickets sold prior to
the Closing Date for motorsports and other events scheduled to occur after the
Closing Date.
6.29Sellers' Knowledge. All material knowledge regarding the
Purchased Assets and the operations of the Complex is known by either the
Principal, Susan Tyers or Randy Fitzpatrick.
6.30Gila River Bridge. Neither Sellers nor the Purchased Assets are
subject to any obligation or claim with respect to the providing of any
financing relating to the construction of a new bridge over the Gila River
proximate to the Complex (the "Gila Bridge") except that applicable taxing
authorities may allocate sales tax revenues from the Complex to support the
construction of such new bridge. To the best of Sellers' actual knowledge,
the allocation of sales tax revenues from the Complex will not involve any
increase in the current sales tax rate imposed on retail sales made at the
Complex. Neither Sellers nor the Principal have made any legally binding
commitment to any governmental authority as an inducement for the construction
of the Gila Bridge.
7. REPRESENTATIONS OF PURCHASER
Purchaser represents and warrants to Sellers and the Principal:
7.1Organization and Authority. Purchaser is a corporation duly
incorporated, validly existing and in good standing under the laws of its
jurisdiction of incorporation, has all requisite corporate power and authority
to own its properties, to carry on its businesses as now being conducted, to
execute and deliver this Agreement and to consummate the transactions
contemplated hereby.
7.2Authorization of Agreement. The execution and delivery of this
Agreement by Purchaser and the consummation by Purchaser of all obligations
contemplated hereby have been duly authorized by all requisite corporate
action. This Agreement and any other agreements and written obligations
entered into and undertaken in connection with the transactions contemplated
hereby and thereby constitute the valid and legally binding obligations of
Purchaser, enforceable against it in accordance with their respective terms.
The execution, delivery and performance of this Agreement and the transactions
contemplated hereby by Purchaser will not, with or without the giving of
notice and/or the passage of time, violate any provisions of law applicable to
Purchaser or conflict with or result in the breach or termination of any
provision of, constitute a default under, or result in the creation of any
lien, charge or encumbrance upon any of the properties or assets pursuant to
any corporate charter, by-law, indenture, mortgage, deed of trust or other
agreement or instrument to which Purchaser is a party or by which it is or may
be bound.
8. AGREEMENTS OF SELLERS AND PURCHASER
8.1Access to Properties and Records; Confidentiality. Sellers
represent and warrant that prior to the date of this Agreement, Sellers have
afforded to the officers, employees, attorneys, accountants and other
authorized representatives of Purchaser, free and full access upon reasonable
notice to all offices, properties, books and records of Sellers so that
Purchaser has had full opportunity to make such investigation as it desired to
make of the business, properties and affairs of Sellers. After the date of
this Agreement (a), Sellers shall furnish to Purchaser such financial and
operating data and other information as to the business and properties of
Sellers as Purchaser shall reasonably request including copies of any interim
financial statements prepared by Sellers and (b) Sellers shall permit
Purchaser and its agents to have reasonable access to the officers, employees
and facilities of Sellers provided that such access does not unreasonably
interfere with the operations of Sellers. If, for any reason, the transactions
contemplated by this Agreement are not consummated, Purchaser agrees that it
will not disclose to any third person or use for its own benefit any
confidential information relating to the business of Sellers that Purchaser
may have acquired in the course of its examination and investigation and that
is not otherwise public knowledge or available from other sources and that it
will promptly return and cause its accountants and attorneys to return to
Sellers any property, books, records or papers relating to the business of
Sellers and any copies thereof which Purchaser, its accountants and attorneys
may then have in their possession. The Purchaser shall advise all of its
agents who have access to any confidential information relating to the
business of Sellers that such agents are obligated to maintain such
information as confidential.
8.2Conduct of Business. From the date hereof until the Closing Date:
(a)Except as contemplated by this Agreement or with the prior
written consent of Purchaser which shall not be unreasonably withheld or
delayed, Sellers will not: (i) take any action to amend their Formation
Documents; (ii) admit any new partners, shareholders or members of Sellers;
(iii) incur any contractual obligation or liability (absolute or contingent)
except liabilities incurred, and obligations arising under contracts entered
into in the ordinary course of business; (iv) declare or make any payment or
distribution to any partners, shareholders or members in their capacity as
partners, shareholders or members of Sellers other than cash distributions;
(v) mortgage, pledge, or subject to any lien, charge or any other encumbrance
(except for existing floating liens or mechanic s or similar liens) any of the
assets, tangible or intangible which are included in the Purchased Assets;
(vi) sell, assign, or transfer any of their tangible or intangible assets,
except in the ordinary course of business; (vii) cancel any debts or claims,
except in the ordinary course of business; (viii) merge or consolidate with or
into any other entity; (ix) make, accrue or become liable for any bonus,
profit sharing or incentive payment except for payments or accruals under
existing plans, or increase the rate of compensation payable or to become
payable by them to any of their officers, employees or partners except in
accordance with the terms of written employment contracts disclosed on
Schedule 1.11; (x) other than understandings with governmental bodies relating
to the allocation of sales tax revenues from the Complex to support the
construction of a new bridge over the Gila River proximate to the Complex,
enter into any lease, contract, agreement or understanding other than in the
ordinary course of business; (xi) enter into any contract, employment
relationship or arrangement with any agent or consultant other than in the
ordinary course of business; (xii) waive any rights of material value; (xiii)
modify, amend, alter or terminate any of their executory contracts of a
material value or which are material in amount; (xiv) take any action or fail
to take any action constituting a breach or default under any material
contract, indenture or agreement by which any Seller is bound; (xv) fail to
use their reasonable efforts to preserve the possession and control of their
assets and business, to keep in faithful service their present officers and
key employees, to preserve the goodwill of their licensors, customers, agents,
consultants and others having business relations with them, and to keep and
preserve their business existing on the date hereof; (xvi) fail to operate
their business and maintain their books, accounts and records in the customary
manner and in the ordinary or regular course of business and maintain in good
repair their business premises, fixtures, furniture and equipment; (xvii) make
any further additions to their properties or further purchases of equipment,
except in the ordinary course of business or except to maintain such property
or equipment; (xviii) pay or discharge any claim or lien, except in the
ordinary course of business; (xix) waive any rights with respect to any
Accounts Receivable; (xx) fail to preserve their Proprietary Rights; or (xxi)
materially change any of their current accounting practices.
(b)Each Seller will (i) duly comply in all material respects
with all laws and regulations, which are applicable to it or to the conduct of
its business, (ii) maintain all of its insurance currently in effect as of the
date of this Agreement, and (iii) use its reasonable efforts to obtain all
requisite waivers, consents and approvals of all third parties required to be
obtained to consummate the transactions contemplated by this Agreement and
provide to Purchaser an updated written report of the status of such efforts
on the first business day of each calendar month unless more frequently
requested by the Purchaser.
(c)From time to time prior to the Closing, Sellers will deliver
or cause to be delivered to Purchaser in writing supplemental information (the
Supplemental Information) concerning events subsequent to the date hereof
which would render any statement, representation or warranty made in this
Agreement or any information contained in any Schedule required by this
Agreement inaccurate or incomplete in any material respect. Any information
which the Sellers desire to have treated as Supplemental Information under the
terms of this paragraph 8.2.(c) must be conspicuously captioned as
Supplemental Information provided under the terms of paragraph 8.2.(c).
Within ten business days after Purchaser s receipt of any Supplemental
Information which Purchaser deems in its reasonable business judgment to be
material and adverse with respect to the ability of Purchaser to operate the
Complex and fully utilize the Purchased Assets after the Closing (the
Material Supplemental Information), Purchaser shall provide to Sellers written
notice of its intent to exercise its right of offset in accordance with the
terms of paragraph 12.3 below, if such paragraph is applicable or if such
paragraph is not applicable to terminate this Agreement under the terms of
paragraph 17.1(g). The notice shall specify which information disclosed in
the Supplemental Information forms the basis for the right of offset or the
termination. Sellers shall then have ten (10) days to provide a cure or other
resolution reasonably satisfactory to Purchaser. If the cure or other
resolution is not fully achieved within such ten (10) day period, Purchaser
shall exercise its right of offset in accordance with the terms of paragraph
12.3 below if such paragraph is applicable, or if such paragraph is not
applicable, Purchaser may then elect to terminate this Agreement under the
terms of paragraph 17.1(g) by written notice to Sellers given within five (5)
business days after the expiration of such ten (10) day cure period. If the
Supplemental Information is provided within ten (10) business days of the
Scheduled Closing Date, Purchaser, at its option, may extend the Closing Date
for a sufficient number of days to permit the operation of the notice and cure
provisions specified above. If Purchaser fails to timely exercise its
termination right within such period with respect to a specific disclosure of
Supplemental Information, the Supplemental Information provided as part of
such disclosure shall be deemed to amend and replace the information corrected
by such Supplemental Information.
(d)Prior to the Closing, Sellers will use their best efforts to
oppose the administrative appeal filed by Sierra Estella Venture Group with
respect to the grant of the SLUP, and after the Closing, Sellers will
cooperate with Purchaser in opposing such appeal.
(e)Prior to the Closing, Sellers shall use their best efforts
to cause the term of the Right-of-Entry Agreement to be extended for an
additional year beyond the expiration of its current term on October 2, 1997,
and after the Closing, Sellers will cooperate with Purchaser in seeking such
extension.
8.3.Further Assurances. From and after the Closing Date, Sellers and
the Principal shall take all such steps as may be necessary to put Purchaser
in actual possession and operating control of the Purchased Assets, and
Sellers and the Principal agree that at any time or from time to time (without
further cost or expense to Purchaser) after the Closing Date, upon the request
of Purchaser, Sellers and the Principal will execute, acknowledge and deliver
such other instruments of conveyance and transfer and take such other action
as Purchaser may reasonably require to vest more effectively in the Purchaser
good and marketable title to any of the Purchased Assets and to reasonably
assist and cooperate in collection of any of the Accounts Receivable. Without
limiting the generality of the foregoing, at the option of Purchaser, Sellers
and the Purchaser shall participate in taking such action as may be necessary
to substitute the Purchaser for Sellers as plaintiff or claimant of record in
any action, suit, proceeding or claim by Sellers with respect to or based upon
or arising out of the business of Sellers to the extent that such substitution
will not materially adversely affect any such action, suit, proceeding or
claim, in which event Sellers shall remain as plaintiff or claimant with
counsel approved by Purchaser on behalf of and for the benefit of Purchaser.
In the event that Sellers remain as plaintiff or claimant, Sellers shall remit
to Purchaser all amounts paid to Sellers on account of any judgment, order,
settlement or payment resulting from any such action, suit, proceeding or
claim and Purchaser shall bear the costs and expenses incurred by Sellers
after the Closing in connection therewith.
8.4Other Transactions. Until termination of this Agreement under
paragraph 17.1 below or the Closing, neither the Sellers nor the Principal
shall solicit, initiate, encourage or participate in any discussions
concerning, or approve any merger, consolidation, disposition of all or
substantially all of its business, properties or assets (other than pursuant
to this Agreement), acquisition or other business combination, or proposal
therefor, or furnish or cause to be furnished any information concerning the
business, properties or assets of Sellers to any party in connection with any
transaction involving the acquisition of Sellers or all or any substantial
part of their assets by any person other than Purchaser.
8.5Accounts Receivable Collection. Purchaser shall exercise its
reasonable commercial efforts to collect the Accounts Receivable but shall not
be obligated to initiate litigation as part of such collection efforts. All
payments received by Purchaser after the Closing Date from third parties who
are the obligors on the Accounts Receivable shall be applied to the oldest
remaining Accounts Receivable for such third party unless otherwise indicated
on any remittance advice from such third party which accompanies such payment.
Any Account Receivable, other than an Extended Account Receivable, which
remains unpaid after 90 days from the Closing, and any Extended Account
Receivable which remains unpaid after 30 days from its due date and with
respect to which Purchaser obtains payment from Sellers under paragraph 12.1,
shall be reassigned to Sellers for collection by Sellers for their own
account. Purchaser shall have no right to pursue claims against Sellers under
paragraph 12.1 with respect to an Accounts Receivable if Purchaser or any of
its corporate affiliates have materially interfered with the ability of
Sellers to collect such Account Receivable.
8.6Retained Information. From and after the Closing Date, the
Sellers shall not retain any records or other documents related to the
business or operations of the Complex prior to the Closing Date (the
"Transferred Business Records") other than records or other documents which
relate to the Excluded Assets and copies of financial records and supporting
documents which relate to tax years which remain subject to review and audit
by taxing authorities having jurisdiction over Sellers. After the Closing,
Purchaser shall make available to Sellers the Transferred Business Records for
inspection and copying to the extent Sellers require access to such records in
response to tax audits or other reasonable business necessity provided that
such records shall not be used in a manner which is detrimental to the
interests of the Purchaser. After the Closing, the Sellers shall make
available to the Purchaser the Retained Business Records for inspection and
copying to the extent Purchaser requires access to such records for reasonable
business necessity provided that such records shall not be used in a manner
which is detrimental to the interests of the Sellers. Nothing contained in
this paragraph 8.6 shall restrict either Sellers or Purchaser from obtaining
access to the Transferred Business Records or the Retained Business Records
incident to discovery in litigation to which Purchaser or Sellers are parties
and utilizing such records with respect to any such litigation.
8.7Publicity. Prior to the Closing, no party to this Agreement shall
make or issue, or cause to be made or issued, any announcement or written
statement concerning this Agreement or the transactions contemplated hereby
for dissemination to the general public without the prior written consent of
the other parties to this Agreement. After the Closing, Sellers and the
Principal shall not make or issue, or cause to be made or issued, any
announcement or written statement concerning this Agreement or the
transactions contemplated hereby for dissemination to the general public
without the prior written consent of the Purchaser, such consent not to be
unreasonably withheld. The foregoing provisions of this paragraph 8.7 shall
not apply, however, to any announcement or written statement required to be
made by law or the regulations of any federal, state or foreign governmental
agency or any stock exchange, except that the party required to make such
announcement shall, whenever practicable, consult with the other party
concerning the timing and content of such announcement before such
announcement is made.
8.8Special Provisions Addressing Deferred Income and Prepaid Event
Expenses.
(a)Purchaser and Sellers agree that inherent in the operation
of Sellers' business is (i) the action of selling admission tickets,
sponsorships, signage, suite rentals and other revenue items which are either
specific to an event or specific to a period of time, and typically, many of
these sales are made and payment is received in advance of the event or time
period, and (ii) the necessity from time to time to prepay certain expenses
which are directly related to a future event, including, but not necessarily
limited to, advertising or promotional expenses.
(b)Sellers agree that with respect to the operations of Sellers
prior to the Closing, (i) revenues collected in advance of a specific event or
time period will be recorded on the balance sheet as a liability, hereinafter
referred to as "Deferred Income", and (ii) material expenses paid in advance
of a specific event will be recorded in the balance sheet as an asset,
hereinafter referred to as "Prepaid Event Expenses".
(c)Sellers warrant that (i) sales made or contracts entered
into prior to the Closing Date that relate to obligations that the Purchaser
must perform subsequent to the Closing Date, are recorded on the Sellers
combined balance sheet as Deferred Income. Furthermore, Schedule 8.8(c) as
updated through the Closing Date will be a complete and accurate list of the
components of Deferred Income as of the Closing Date and, (ii) all material
expenses paid by Sellers prior to the Closing Date that directly relate to
events which are scheduled to occur at the Complex on or subsequent to the
Closing Date have been accounted for on the Sellers' combined balance sheet as
Prepaid Event Expenses. Furthermore, Sellers warrant that Schedule 8.8(c), as
updated through the Closing Date, will be a complete and accurate list of the
components of Prepaid Event Expenses as of the Closing Date, and these Prepaid
Event Expenses represent direct costs relating to events scheduled to occur at
the Complex subsequent to the Closing Date. Furthermore, Sellers warrant that
the Prepaid Event Expenses listed on Schedule 8.8(c) do not include any
allocation of indirect expenses, including, but not necessarily limited to,
general and administrative expenses.
(d)Purchaser and Sellers agree that in conjunction with the
prorations and apportionments to be made under the terms of paragraph 5.5
above, at the Closing the Purchase Price shall be adjusted upward for any
excess of Prepaid Event Expenses over Deferred Income; or, that the Purchase
Price shall be adjusted downward for any excess of Deferred Income over
Prepaid Event Expenses.
8.9Definition of Material. Except to the extent that different
criteria are specified with respect to a specific paragraph of this Agreement,
an event, occurrence or circumstance will be deemed to be material with
respect to a party if such event, occurrence or circumstance causes or will
cause damage, loss or expense to such party in excess of $20,000.00. A
series of related or similar events, occurrences or circumstances will be
deemed to be material with respect to a party if such series of related or
similar events, occurrences or circumstances cause or will cause damage, loss
or expense to such party in excess of $100,000.
9. CONDITIONS TO OBLIGATIONS OF PURCHASER.
Subject to the terms of paragraph 12.3 below, the obligations of
Purchaser under this Agreement are subject, at the Closing Date, to the
fulfillment in all respects of the following conditions precedent, each of
which may be waived in writing at the sole discretion of Purchaser:
9.1Continued Truth of Representations and Warranties. Each of the
representations and warranties of Sellers in this Agreement shall be true in
all respects on and as of the Closing Date as though such representations and
warranties were made on and as of such date, except for any changes permitted
by the terms hereof or consented to in writing by Purchaser, and Sellers shall
have performed and complied in all material respects with all of the terms,
conditions, obligations, agreements and restrictions required by this
Agreement to be performed or complied with by Sellers prior to or on the
Closing Date.
9.2Certificate. Sellers shall have delivered to Purchaser a
certificate addressed to Purchaser and executed by general partners of Sellers
dated the Closing Date in the form attached hereto as Exhibit G.
9.3Consents of Third Parties. Sellers shall have received and
delivered in writing to Purchaser all the Material Consents and any other
waivers, consents and approvals of any third parties whose waiver, consent or
approval is material to the ability of Purchaser to fully operate the Complex
after the Closing and therefore is required to be obtained by Sellers to
consummate the transactions contemplated hereby but which were not listed on
Schedule 3 hereto (the "Additional Consents"), in form reasonably satisfactory
to Purchaser, and Sellers agree to use their best efforts to obtain the
Additional Consents prior to the Closing Date. If notwithstanding Sellers
best efforts to obtain the Additional Consents by the scheduled Closing Date,
Sellers are not able to obtain all the Additional Consents, Sellers shall then
have the option to extend the Closing Date by up to twenty days to provide
Sellers with additional time to obtain any missing Additional Consents.
9.4Absence of Challenge. At or prior to the Closing Date no material
action or proceeding by or before any court or other governmental body shall
have been instituted by any governmental body or person whatsoever other than
Purchaser against any of the parties hereto, or any partner, officer, employee
or other representative of Sellers seeking to prevent or delay any transaction
provided for in this Agreement, whether preceding the execution and delivery
of this Agreement or arising subsequently.
9.5Opinion of Sellers' Counsel. Purchaser shall have received the
opinion dated the Closing Date of Grant, Williams, Lake & Dangerfield, P.C.,
counsel for Sellers, substantially in the form of Exhibit H attached hereto.
9.6Litigation. No action or proceeding shall have been instituted or
threatened by any public authority prior to the Closing Date before a court or
governmental body or agency of any kind for the stated purpose or with the
probable effect of enjoining or preventing the consummation of this Agreement
and the transactions contemplated herein or to recover damages by reason
thereof. No action or proceeding shall have been instituted by any private
person prior to the Closing Date before a court or governmental body or agency
of any kind with the probable effect of enjoining or preventing the
consummation of this Agreement and the transactions contemplated hereby.
9.7Hart-Scott-Rodino Approval. All consents and/or approval to the
transactions contemplated by this Agreement as may be required under the
provisions of the Hart-Scott-Rodino Anti-Trust Improvements Act shall have
been obtained or deemed given.
9.8Adverse Disclosure. There shall have been no disclosure in any
Schedule delivered after the date of execution and delivery of this Agreement,
or the documents described therein, which, in the commercially reasonable
judgment of Purchaser, does or may have a materially adverse effect on the
value of the business of Sellers or on their assets, properties or goodwill
except as already disclosed to Purchaser as of the date hereof.
9.9Correction of Notice of Abandonment. The parties acknowledge that
in July 1989, Sellers' predecessor filed a Notice of Abandonment with the
Arizona Department of Water Resources (ADWR ) mistakenly abandoning a well
described as Well Registration Number 55-611894. On or prior to the Closing,
Sellers shall take such action as is required by ADWR to reverse such
abandonment and instead abandon that certain well described as Well
Registration Number 55-611895.
9.10Sanctions and Sponsorship Agreements. All material existing
sanction agreements and sponsorship agreements with respect to motorsports
events scheduled to occur at the Complex after the Effective Date shall have
been duly assigned to Purchaser.
9.11Other Actions to be Taken. All actions listed in paragraph 5.3
hereof to be performed by Sellers shall have been taken.
10. CONDITIONS TO OBLIGATIONS OF SELLERS
The obligations of Sellers under this Agreement are subject, at the
Closing Date, to the fulfillment in all material respects of the following
conditions precedent, each of which may be waived in writing at the discretion
of Sellers:
10.1Continued Truth of Representations and Warranties. The
representations and warranties made by Purchaser in this Agreement shall be
true in all material respects on and as of the Closing Date as though such
representations and warranties were made on and as of such date, except for
any changes permitted by the terms hereof or consented to in writing by
Sellers, and Purchaser shall have performed and complied with all terms,
conditions, obligations, agreements and restrictions required by this
Agreement to be performed or complied with by it prior to or on the Closing
Date.
10.2Certificate. Purchaser shall have delivered to Sellers a
certificate addressed to Sellers and executed by an authorized officer of
Purchaser dated the Closing Date to the effect set forth in Exhibit I.
10.3Litigation. No action or proceeding shall have been instituted or
threatened by any public authority prior to the Closing Date before a court or
governmental body or agency of any kind for the stated purpose or with the
probable effect of enjoining or preventing the consummation of this Agreement
and the transactions contemplated herein or to recover damages by reason
thereof. No action or proceeding shall have been instituted by any private
person prior to the Closing Date before a court or governmental body or agency
of any kind with the probable effect of enjoining or preventing the
consummation of this Agreement and the transactions contemplated hereby.
10.4Opinion Of Purchaser s Counsel. Sellers shall have received the
opinion of Lewis and Roca LLP, counsel to Purchaser, dated the Closing Date,
in the form attached hereto as Exhibit J.
10.5Hart-Scott-Rodino Approval. All consents and/or approval to the
transactions contemplated by this Agreement as may be required under the
provisions of the Hart-Scott-Rodino Anti-Trust Improvements Act shall have
been obtained or deemed given.
10.6Absence of Challenge. At or prior to the Closing Date no material
action or proceeding by or before any court or other governmental body shall
have been instituted by any governmental body or person whatsoever other than
Sellers against any of the parties hereto, or any partner, officer, employee
or other representative of Purchaser seeking to prevent or delay any
transaction provided for in this Agreement, whether preceding the execution
and delivery of this Agreement or arising subsequently.
10.7Security Documents. Purchaser shall have executed and delivered
the Security Documents specified in Article 27 below.
11. SURVIVAL OF REPRESENTATIONS AND WARRANTIES
11.1Survival of Sellers' and Principal's Warranties. Any
investigation or examination by Purchaser of the business, properties or
affairs of Sellers shall not affect the representations and warranties of
Sellers and the Principal herein contained, and the respective representations
and warranties of the parties herein contained shall survive the Closing. All
such representations and warranties shall expire and be terminated and
extinguished on the third anniversary of the Closing Date, except as to
particular claims submitted in writing prior to said expiration date, and also
except as to the representations and warranties of Sellers contained in
paragraph 6.19 which shall continue in effect until the applicable Statute of
Limitations has expired.
11.2Survival of Purchaser's Warranties. Any investigation or
examination by Sellers of the business, properties or affairs of Purchaser
shall not affect the representations and warranties of Purchaser herein
contained, and the respective representations and warranties of the parties
herein contained shall survive the Closing. All such representations and
warranties shall expire and be terminated and extinguished on the third
anniversary of the Closing Date.
12. INDEMNIFICATION AND PURCHASER'S SETOFF RIGHTS
12.1Indemnification by Sellers and the Principal. Sellers and the
Principal agree, jointly and severally, to indemnify Purchaser and hold it
harmless from any loss, damage or expense (including reasonable attorneys'
fees) which Purchaser, or any of its officers, directors, parents or
subsidiaries or other affiliates, actually incur (to be offset by applicable
insurance recovery obtained), suffer or become liable for as a result of or in
connection with (a) the inaccuracy or breach of any agreement, representation
or warranty of Sellers or the Principal contained in this Agreement, any
Exhibit or Schedule to be delivered pursuant hereto occurring or developing
during the period of survival of such agreement, representation or warranty
including any claims by any third parties alleging facts or circumstances
which, if true, would constitute such inaccuracy or breach; (b) non-compliance
with any applicable law for the protection of creditors which would give
Sellers' creditors a claim against any of the Purchased Assets or the
Purchaser after the Closing; (c) failure to pay any sales, use or other tax
liability of the Sellers for periods through the Closing Date; (d) any
assertion against Purchaser of any claim or liability of Seller not expressly
assumed hereunder by Purchaser; (e) unless expressly assumed by Purchaser
hereunder, the assertion against Purchaser by any person, firm, governmental
agency or corporation of any obligation or liability of Sellers accruing on or
prior to, or existing on, the Closing Date and thereafter accrued, including
without limitation, tax claims or liabilities; (f) failure of Sellers to
obtain necessary consents to assignment of any of the Purchased Assets to the
extent required by this Agreement; or (g) any and all actions, suits,
proceedings, claims, demands, assessments, judgments, costs and expenses
incident to any of the foregoing or in enforcing this indemnity. Purchaser
shall give Sellers and the Principal prompt written notice of any claim, suit
or demand which Purchaser believes will give rise to indemnification by
Sellers and the Principal under this paragraph; provided, however, that the
failure to give such notice shall not affect the liability of Sellers and the
Principal hereunder unless the failure to give such notice adversely and
materially affects the ability of Sellers or the Principal to defend
themselves against a claim or to cure the breach or inaccuracy giving rise to
the claim for indemnification on account thereof. Except as hereinafter
provided, Sellers and the Principal shall have the right to defend and to
direct the defense against any such claim, suit or demand, in their names or
in the name of Purchaser at Sellers' and the Principal's expense and with
counsel of Sellers' and the Principal's own choosing, which counsel shall be
reasonably satisfactory to Purchaser. Purchaser shall, at Sellers' and the
Principal's expense, cooperate in the defense of any such claim, suit or
demand. If Sellers and the Principal , within reasonable time after notice of
a claim, fail to defend Purchaser or if, in the good faith judgment of
Purchaser, the facts giving rise to indemnification hereunder shall involve a
possible claim by Purchaser or any of its affiliates against a third party, or
the facts concern a claim constituting or challenging any material rights or
assets of Sellers acquired by Purchaser pursuant to this Agreement or seeking
an injunction or other equitable relief against Purchaser or any of its
affiliates, Purchaser shall be entitled to have separate counsel undertake the
defense, compromise or settlement of such claim at the expense of and for the
account and risk of Sellers and the Principal subject to the right of Sellers
and the Principal to assume the defense of such claim at any time prior to the
settlement, compromise or final determination thereof if the only issues
remaining therein involve liability for, or the amount of, money damages to be
assessed against Purchaser, provided Sellers and the Principal will not,
without Purchaser's written consent (not to be unreasonably withheld) settle
or compromise any claim or consent to any entry of judgment which does not
include as an unconditional term thereof the giving by the claimant or the
plaintiff to Purchaser and, if applicable, Purchaser's affiliates, a release
from all liability in respect of such claim. No right or remedy conferred in
this paragraph is intended to be exclusive of any other right or remedy
available, now or hereafter at law or in equity or otherwise, to the parties
hereto.
12.2Indemnification by Purchaser. Purchaser agrees to indemnify
Sellers and the Principal and hold Sellers and the Principal harmless from any
loss, damage or expense (including reasonable attorneys' fees) which Sellers
or the Principal actually incur (to the extent not covered by insurance
recoveries obtained), suffer or become liable for as a result of or in
connection with (a) the inaccuracy or breach of any agreement, representation
or warranty of Purchaser contained in this Agreement occurring or developing
during the period of survival of such agreement, representation or warranty
including any claims by any third party alleging facts and circumstances
which, if true, would constitute such inaccuracy or breach; (b) any assertion
against Sellers or the Principal of any claim or liability of Purchaser
accruing on or after the Closing Date or arising out of the operation of the
Complex after the Closing Date or arising out of Purchaser's failure to
satisfy the Assumed Obligations; (c) the assertion against Sellers or the
Principal by any person, firm, governmental agency or corporation of any
obligation or liability of Purchaser occurring after the Closing Date and
thereafter occurred, including without limitation, tax claims or liabilities,
or (d) any claim by Harper Sand & Rock and its successors, affiliates and
assigns relating in any way to the diversion or alleged diversion of the Gila
river channel as described in correspondence attached, see Schedule 6.12.
Sellers and the Principal shall give Purchaser prompt written notice of any
claim, suit or demand which they believe will give rise to indemnification by
Purchaser under this paragraph; provided, however, that the failure to give
such notice shall not affect the liability of Purchaser hereunder unless the
failure to give such notice adversely and materially affects the ability of
Purchaser to defend itself against a claim or to cure the breach or inaccuracy
giving rise to the claim for indemnification on account thereof. Except as
hereinafter provided, Purchaser shall have the right to defend and to direct
the defense against any such claim, suit or demand, in its name or in the
names of Sellers or the Principal at Purchaser's expense and with counsel of
Purchaser's own choosing, which counsel shall be reasonably satisfactory to
Sellers and the Principal. Sellers and the Principal shall, at Purchaser's
expense, cooperate in the defense of any such claim, suit or demand. If
Purchaser, within reasonable time after notice of a claim, fails to defend
Sellers or the Principal or if, in the good faith judgment of Sellers or the
Principal, the facts giving rise to indemnification hereunder shall involve a
possible claim by Sellers and the Principal or any of their affiliates against
a third party seeking an injunction or other equitable relief against Sellers
or any of their affiliates, Sellers and the Principal shall be entitled to
have separate counsel undertake the defense, compromise or settlement of such
claim at the expense of and for the account and risk of Purchaser subject to
the right of Purchaser to assume the defense of such claim at any time prior
to the settlement, compromise or final determination thereof if the only
issues remaining therein involve liability for, or the amount of, money
damages to be assessed against Sellers and the Principal, provided Purchaser
will not, without Sellers' and the Principal's written consent (not to be
unreasonably withheld or delayed), settle or compromise any claim or consent
to any entry of judgment which does not include as an unconditional term
thereof the giving by the claimant or the plaintiff to Sellers and the
Principal a release from all liability in respect of such claim. No right or
remedy conferred in this paragraph is intended to be exclusive of any other
right or remedy available, now or hereafter at law or in equity or otherwise,
to the parties hereto.
12.3Purchaser's Setoff Rights. Purchaser may not refuse to Close as a
result of the failure of the Sellers or the Principal to satisfy any condition
precedent specified in Article 9 or as a result of Sellers' failure to provide
a timely cure or resolution reasonably satisfactory to Purchaser of events or
occurrences which constitute Material Supplemental Information as that term is
defined in paragraph 8.2(c), provided that (a) such failure or failures will
not, in Purchaser's reasonable business judgment (i) be material and adverse
with respect to the ability of Purchaser to operate the Complex and fully
utilize the Purchased Assets after the Closing or (ii) substantially interfere
with the timely conducting of the events which have been historically
conducted at the Complex and (b) it is possible to calculate the damage or
expense to Purchaser arising out of such failure or failures with reasonable
accuracy. If Closing shall occur notwithstanding the failure of the Sellers
or the Principal to satisfy any condition precedent specified in Article 9 or
as a result of a failure to provide timely cure or resolution reasonably
satisfactory to Purchaser of events or occurrences which constitute Material
Supplemental Information as that term is defined in paragraph 8.2(c), then
Purchaser shall have the right to set off against the Purchase Price an amount
equal to any damage or expense (including reasonable attorney's fees incurred)
arising out of such failure or failures. No right or remedy conferred in this
paragraph is intended to be exclusive of any other right or remedy available
under paragraph 12.1 above.
13. EFFECTIVENESS OF THIS AGREEMENT
This Agreement shall become effective upon the execution and delivery of
this Agreement (or counterpart thereof) by all parties hereto and shall not be
binding upon any party executing this Agreement (or counterpart thereof) until
executed by all parties hereto.
14. BROKERS
14.1For Sellers. Sellers and the Principal agree, jointly and
severally, to indemnify and hold harmless Purchaser against any claims or
liabilities asserted against it by any person acting or claiming to act as a
broker or finder on behalf of Sellers or the Principal.
14.2For Purchaser. Purchaser agrees to indemnify and hold harmless
Sellers and the Principal against any claims or liabilities asserted against
any of them by any person acting or claiming to act as a broker or finder on
behalf of Purchaser or any affiliate of Purchaser.
15. EXPENSES AND ATTORNEY'S FEES
Except as may otherwise be expressly provided herein, Purchaser on the
one hand and Sellers and the Principal on the other hand shall pay their own
expenses in connection with this Agreement and the transactions contemplated
hereby, including attorneys' and accountants' fees. In the event of any
dispute arising under this Agreement, the prevailing party shall be permitted
to recover its attorney s fees, court costs and expenses.
16. SALES, USE, TRANSFER AND OTHER TAXES
Except as otherwise specified in this Agreement, Sellers and Purchaser
shall share equally all transfer taxes of any nature, notarial fees,
documentary tax stamps, other taxes or surtaxes and recording fees incurred in
connection with the consummation or the transactions contemplated hereby
specifically including the transfer of the Real Property to Purchaser.
Sellers and Purchaser shall share equally any fees and recording costs related
to the Security Documents specified in Article 27 below including fees related
to the release of any liens created by such Security Agreements.
17. TERMINATION OF AGREEMENT
17.1Termination. Subject to the terms of paragraph 17.2 below, this
Agreement may be terminated and all transactions contemplated hereby abandoned
at any time prior to the Closing Date:
(a)By mutual written consent of Purchaser and Sellers and the
Principal;
(b)By Purchaser if Sellers materially default under this
Agreement and such default is not fully cured within twenty (20) days after
written notice specifying the default;
(c)By Sellers or the Principal if Purchaser materially defaults
under this Agreement and such default is not fully cured within ten (10) days
after written notice specifying the default;
(d)If the Closing shall not have occurred by the Closing Date,
unless the failure of the Closing to occur is the result of a material breach
of this Agreement by the party seeking to terminate this Agreement;
(e)Subject to the terms of paragraph 12.3 above, by Purchaser
if any of the conditions set forth in Article 9 hereof shall have become
incapable of fulfillment, and shall not have been waived by Purchaser; or
(f)By Sellers or the Principal if any of the conditions set
forth in Article 10 hereof shall have become incapable of fulfillment, and
shall not have been waived by Sellers and the Principal.
(g)Subject to the terms of paragraph 12.3 above, by Purchaser
under the terms of paragraph 8.2(c).
17.2Effect of Termination. In the event of termination of this
Agreement as provided in paragraph 17.1, except as specified in this paragraph
17.2, the parties shall have no further obligations under this Agreement but a
non-defaulting party shall be permitted to pursue its available legal remedies
against a defaulting party. Notwithstanding the terms of the immediately
preceding sentence, in the event Sellers refuse or otherwise fail to Close,
Purchaser's sole remedy shall be to obtain specific performance of Sellers'
obligations under this Agreement and to recover expenses incurred in pursuing
such remedy, provided that (a) such remedy can be obtained promptly from a
court of competent jurisdiction and (b) Sellers have taken no action which
diminishes the value of the Purchased Assets or the ability of Sellers to
transfer the Purchased Assets in accordance with the terms of this Agreement.
If the foregoing conditions which limit Purchaser s remedy of specific
performance are not satisfied, Purchaser may pursue any available legal remedy
against Sellers. The obligations of the parties arising under paragraphs 8.1,
12.1, 12.2, 14.1, 14.2 and 15 shall survive any termination of this Agreement.
18. RISK OF LOSS, DELAY IN CLOSING
18.1Damage and Destruction. In the event that subsequent to the date
hereof and prior to the Closing Date there occurs more than $500,000 of damage
to the Purchased Assets or any part of the Purchased Assets material to the
operations of the Complex are damaged or destroyed by fire or other casualty
(without regard to the dollar amount of the damages) then Sellers shall
promptly notify Purchaser. Subject to the terms of paragraph 18.2 below,
Purchaser may, at its option, by giving written notice to Sellers within five
(5) business days after receipt of notice of such casualty terminate this
Agreement but only if damaged or destroyed Purchased Assets cannot be fully
restored by Sellers, and the Sellers fail to agree to complete such
restoration, by the earlier of (a) twenty days after the date established by
the parties as the Closing Date or (b) August 15, 1997. If Purchaser does
not terminate the Agreement as permitted above in this paragraph 18.1, the
Closing Date shall be adjusted to accommodate the specified restoration
period. In the event that subsequent to the date hereof and prior to the
Closing Date condemnation or eminent domain proceedings (or private purchase
in lieu thereof) shall be commenced by any public or quasi-public authority
having jurisdiction against all or any significant part of the Real Property,
then Sellers shall promptly notify Purchaser. Subject to the terms of
paragraph 18.2 below, Purchaser may, at its option, by giving written notice
to Sellers within five (5) business days after receipt of notice of such
condemnation proceedings, terminate this Agreement but only if such
condemnation or eminent domain proceeding (or private sale in lieu thereof)
shall have a material adverse effect on the ability to operate the Complex in
the manner it is being operated as of the date hereof. Upon such termination,
neither Purchaser nor Sellers shall have any liability to the other. In the
event Purchaser does not elect to terminate this Agreement, then, except as
otherwise provided in paragraph 18.2, all insurance proceeds and/or any awards
in condemnation, as the case may be, as well as all unpaid claims and rights
in connection with such casualty or condemnation will be assigned to
Purchaser, at the time of Closing hereunder, or, if paid to Sellers prior
thereto, shall be credited against the unpaid balance of the Purchase Price
due at Closing. In addition to any insurance proceeds, Sellers will pay to
Purchaser the amount of any deductible or self insured portion related to the
insured loss for which insurance proceeds were received. Sellers shall not
adjust or settle any insurance claims or condemnation awards whatsoever
without the prior written approval of Purchaser.
18.2Delay of Closing. In the event the Complex is damaged by fire or
other casualty to the extent that the damage can be fully repaired within
sixty (60) days from the date of such damage, Purchaser shall, at its option,
either accept an assignment of insurance proceeds in accordance with the terms
of paragraph 18.1 with respect to such damage, or permit Sellers to retain
such insurance proceeds and extend the date of Closing up to ninety (90) days
to permit the Sellers to fully repair such damage. If Purchaser elects to
permit Sellers to repair such damage, Sellers shall proceed at their sole
expense, utilizing available insurance proceeds and any other amounts
necessary to repair the damage as quickly as possible, and the date of Closing
shall be extended by the number of days (not to exceed ninety (90) days)
required by Sellers to complete such repair. If the repair is not completed
at the end of such ninety (90) day period, Purchaser may terminate this
Agreement.
18.3Possession and Risk of Loss. Possession of the Purchased Assets
will be given to Purchaser at Closing. Sellers shall bear the risk of a loss
with respect to the Purchased Assets, by reason of fire or other casualty,
between the date hereof and the Closing.
19. COVENANT NOT TO COMPETE
The Principal hereby covenants and agrees that for a period of five (5)
years from and after the Closing Date, he will not, without the express
written consent of Purchaser, directly or indirectly engage, participate or
invest in or assist, as owner, part-owner, shareholder, partner, director,
trustee, independent contractor, agent or consultant, or in any other
capacity, in any business organization engaged in the business (a "Competitive
Business") of operating a motorsports facility anywhere in the State of
Arizona; or of staging or promoting auto racing events in the State of
Arizona, except that Principal may stage or promote auto racing events at
Manzanita Speedway provided, however, that the Principal may make passive
investments in competititve enterprises, the shares of which are publicly
traded on a national securities exchange, if the Principal's investment
constitutes less than five percent (5%) of the issued and outstanding stock of
the same class of securities except that the Principal may engage in
activities permitted under the terms of the employment contract attached as
Exhibit F hereto. Specifically excluded from the investment limitations
imposed by this paragraph are investments in ISC.
The Principal covenants and agrees that for a period of five (5) years
from the Closing Date, the Principal will not, without the express written
consent of Purchaser, hire, or attempt to hire for employment, in any business
venture, any person who was an employee of the Purchaser or any of its
affiliates on the date of termination of the Principal's employment, or within
the two (2) year period immediately preceeding such date, or attempt to
influence any such person to terminate such employment; or in any other manner
interfere with, disrupt or attempt to disrupt the relationship, contractual or
otherwise, between the Purchaser or any of its affiliates and any of their
customers, suppliers or employees.
In making this undertaking the Principal understands and agrees that it
is of the essence of this Agreement and that his willingness to make and carry
out this covenant not to compete with Purchaser for the aforementioned period
stated therein has induced Purchaser to enter into this Agreement. Without
prejudice to the right of Purchaser to seek an award for damages for any
breach of this covenant by the Principal, this covenant shall be specifically
enforceable by way of injunctive relief without the requirement of posting a
bond, which requirement is specifically waived by the Principal. It is the
express opinion and intention of the parties hereto that they shall be bound
by the provisions of said covenant not to compete and the parties hereto each
agree that said covenant is reasonable and appropriate in light of the
transaction set forth herein, the consideration being paid therefor and the
purpose of this Agreement.
20. NOTICES
Any notices or other communications required or permitted hereunder
shall be sufficiently given if delivered personally or sent by registered or
certified mail, return receipt requested, postage prepaid, or transmitted by
telecopy, addressed as follows or to such other address of which the parties
may have given notice in accordance with this paragraph 20:
a.In the case of Purchaser:
c/o International Speedway Corporation
1801 West Speedway Boulevard
Daytona Beach, Florida 32114-1243
Attn: W. Garrett Crotty, Esq., Corporate Counsel
Telecopy: (904) 947-6884
with a copy to:
Miller, Cassidy, Larroca, & Lewin, L.L.P.
2555 M. Street, N.W.
Washington, D.C. 20037-1302
Attn: John Cassidy, Esq.
Telecopy: (202) 293-1827
b.In the case of Sellers:
c/o Emmett S. Jobe, Jr.
1313 North Second Street, Suite 18
Phoenix, Arizona 85004
with a copy to:
Grant, Williams, Lake & Dangerfield, P.C.
302 North First Avenue, Suite 900
Phoenix, Arizona 85003
Attn: Merwin D. Grant, Esq.
Telecopy: (602) 258-6288
21. SUCCESSORS/NO THIRD PARTY BENEFICIARIES
This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns, except that
Purchaser, on the one hand, and Sellers, on the other hand, shall not assign
their respective obligations hereunder, other than an assignment by Purchaser
to one of its affiliates, without the prior written consent of the other
parties. In the event Purchaser assigns this Agreement to one of its
affiliates, Purchaser shall guaranty to Sellers and the Principal the
obligations of such affiliate hereunder. No individual or entity who or which
is not a party to this Agreement shall have any rights or claims arising under
this Agreement. This Agreement and every provision hereof is expressly for
the benefit of Sellers, Purchaser, Principal and ISC. No provision of this
Agreement shall be construed to create any enforceable rights in any person or
entity other than Sellers, Purchaser, Principal and ISC.
22. PARAGRAPH HEADINGS
The paragraph headings are for the convenience of the parties and in no
way alter, modify, amend, limit, or restrict the contractual obligations of
the parties.
23. GOVERNING LAW; CONSENT TO SERVICE
This Agreement shall be governed by and construed in accordance with the
laws of the State of Arizona applicable to agreements made and to be performed
therein (without giving effect to the conflict of law provisions of such
State). Each Seller and the Principal irrevocably consents to the
jurisdiction of the courts of the State of Arizona with respect to any action,
suit or proceeding brought arising under this Agreement or any of the
transactions or agreements contemplated herein and agree further that service
of process of notice in any such action, suit or proceeding shall be effective
if in writing and sent by certified or registered mail, return receipt
requested, postage prepaid, as provided in paragraph 19 hereof.
24. ENTIRE AGREEMENT
This Agreement, including all Schedules and Exhibits hereto, and all
agreements to be delivered by the parties pursuant hereto represent the entire
understanding and agreement between the parties hereto with respect to the
subject matter hereof and, therefore, supersede all prior negotiations between
such parties and cannot be amended, supplemented or changed orally, but only
by an agreement in writing which makes specific reference to this Agreement or
the agreement delivered pursuant hereto, as the case may be, and which is
signed by the party against whom enforcement of any such amendment, supplement
or modification is sought.
25. COUNTERPARTS
This Agreement may be signed in two or more counterparts, each signed by
one or more of the parties hereto so long as each party shall sign at least
one counterpart of this Agreement, all of which taken together shall
constitute one and the same instrument.
26. GUARANTEE
26.1To induce Sellers to enter into this Agreement, ISC
unconditionally guarantees and promises to pay Sellers at the Closing the
portion of the Purchase Price which is payable at the Closing (the "Initial
Installment of the Purchase Price").
26.2The obligations of Purchaser and ISC to pay the Initial
Installment of the Purchase Price are joint and several, and a separate action
or actions may be brought and prosecuted against ISC or Purchaser, or either
one of them.
26.3This Guaranty shall not be impaired by any modification,
supplement, extension or amendment of this Agreement or any other contract or
agreement to which the parties thereto may hereafter agree, nor by any
modification, release or other alteration of any of the obligations hereby
guaranteed or of any security therefor.
26.4ISC hereby represents to Sellers that it is currently informed of
the financial condition of Purchaser and of all other circumstances which bear
upon the risk of non-payment or non-performance of any obligations of
Purchaser guaranteed hereby.
26.5ISC agrees to pay reasonable attorney's fees and all other costs
and expenses which may be incurred by Sellers in the enforcement of this
Guaranty or any claim hereunder.
26.6No termination or modification of this Guaranty shall be effective
for any purpose unless it is in writing and executed by Sellers.
26.7This Guaranty shall be binding upon the successors and assigns of
ISC and shall inure to the benefit of Sellers' successors and assigns.
26.8ISC's obligations under this Article 26 shall terminate and be
fully satisfied upon receipt by Sellers of the Initial Installment of the
Purchase Price. ISC's sole obligation under this Agreement shall be to
perform in accordance with the terms of this Article 26.
27. SECURITY
Purchaser's obligation to pay the portion of the Purchase Price in excess of
the Initial Installment of the Purchase Price shall be secured by a first lien
on the Purchased Assets. At the Closing, Purchaser shall execute deeds of
trust, security agreements and financing statements in the form attached as
Exhibit K hereto (the "Security Documents") and take any other actions
reasonably required to implement the terms of this Article and to document the
first lien on the Purchased Assets being granted to the Sellers. The first
lien on the Purchased Assets shall be released by Sellers upon payment of the
full Purchase Price.
28. ADDITIONAL PROVISIONS
28.1Parking Facility Assistance. Sellers and the Principal shall at
Purchaser's expense provide reasonable support for efforts by Purchaser to
acquire, by purchase or lease, land adjacent or proximate to the Real Property
for use as parking facilities for the Complex. Without limiting the
generality of the immediately preceding sentence, Sellers and the Principal
shall at the request of Purchaser cause PIR LLC as the assignee of Sundown
Ranches to participate in any auction held prior to the Closing with respect
to the Application to Purchase State Land (Application No. 53-52414-000) filed
August 5, 1992 by Sundown Ranches to purchase 121.08 acres of State land west
of the Complex (the "State Land"), to bid in accordance with instructions from
Purchaser provided that Purchaser provides the funding for the bid, and to
convey to Purchaser or its assignee in fee any rights to the State Land
obtained in such auction.
28.2Name Change. Promptly after the Closing, each of the Sellers
shall change its name to a name not containing the words "Phoenix",
"International" or "Raceway" or any derivation of any such words or any words
of similar meaning.
29. CONFIDENTIALITY
In anticipation of the transactions contemplated by this Agreement, ISC
and the Principal executed a Confidentiality Agreement dated March, 1997 (the
"Confidentiality Agreement"). The Confidentiality Agreement shall survive the
execution of this Agreement, and the parties hereto shall be subject to the
terms of the Confidentiality Agreement in the same manner as if they were
parties to the Confidentiality Agreement. The Confidentiality Agreement shall
terminate upon the Closing.
30. SEVERABILITY
The provisions of this Agreement are severable, and if any one or more
provisions may be determined to be judicially unenforceable, in whole or in
part, the remaining provisions and any partially unenforceable provisions, to
the extent enforceable, shall nevertheless be binding and enforceable upon the
parties hereto.
IN WITNESS WHEREOF, the parties hereto have executed or caused this
Agreement to be executed by their duly authorized representatives as of the
date first above written.
PHOENIX SPEEDWAY CORP.
By: /s/James C. France, President
INTERNATIONAL SPEEDWAY CORPORATION
By: /s/James C. France, President
PHOENIX INTERNATIONAL RACEWAY, INC.
By: /s/Emmett S. Jobe, Jr., President
PIR/PHOENIX INTERNATIONAL RACEWAY, L.L.C.
By: /s/Emmett S. Jobe, Jr., Manager
PHOENIX INTERNATIONAL RACEWAY LIMITED
PARTNERSHIP
By: /s/Emmett S.Jobe, Jr.
/s/Emmett S. Jobe, Jr.
EMMETT S. JOBE, JR.
ACCEPTANCE BY ESCROW AGENT
Escrow Agent hereby (a) acknowledges receipt of a fully executed copy or
counterpart copy of this Agreement on this 19 day of June, 1997, and (b)
agrees to establish an escrow (Escrow No. 201-800-1062792) and to administer
the same in accordance with the provisions hereof. Escrow Agent further
agrees to immediately deliver to Purchaser and Sellers copies or counterpart
copies of this fully executed Agreement.
FIRST AMERICAN TITLE INSURANCE COMPANY
By: /s/ Carol Peterson
Its: Escrow Office
<PAGE>
[The following is a list briefly identifying the contents of the Schedules and
Exhibits to the Asset Purchase Agreement for Phoenix International Raceway
which are omitted from this filing. The Schedule number indicates the section
in the Agreement which describes the contents of the Schedule. Each Exhibit
listed is referenced to a section of the Agreement where it is described. The
Registrant agrees to furnish supplementally a copy of any omitted schedule to
the Commission upon request.]
LIST OF SCHEDULES
Schedule 1.0 Excluded Assets
Schedule 1.1 Proprietary Rights
Schedule 1.2 Furniture and Equipment
Schedule 1.3 Real Property
Schedule 1.4 Water Rights
Schedule 1.5 Real Property Leases
Schedule 1.6 Equipment Leases
Schedule 1.11 Contracts
Schedule 1.13 Barter Transactions
Schedule 2.1 Purchase Price
Schedule 2.2 Assumed Liabilities
Schedule 2.3 Contracts Among Sellers
Schedule 3 Required Consents
Schedule 5.3(k) Title Exceptions
Schedule 6.2 Subsidiaries and Other Equity Investments
Schedule 6.7 Absence of Certain Changes
Schedule 6.8 Title to Properties and Assets
Schedule 6.9(a) Title Matters
Schedule 6.9(b) Condemnation
Schedule 6.9(i) Building Systems
Schedule 6.9(j) Hazardous materials
Schedule 6.11 Certain Indebtedness
Schedule 6.12 Litigation
<PAGE>
Schedule 6.13 Exceptions to Proprietary Rights
Schedule 6.15 Governmental Authorizations and Regulations
Schedule 6.16 Employee Benefit Plans
Schedule 6.17 Accounts Receivable
Schedule 6.19 Taxes
Schedule 6.20 Insurance
Schedule 6.21 Certain Transactions
Schedule 6.27 Adequacy of the Purchased Assets
Schedule 6.28 Free Tickets
Schedule 8.8(c) Deferred Income and Prepaid Event Expenses
<PAGE>
<PAGE>
LIST OF EXHIBITS
Exhibit A Assumption Agreement (Para. 2.2)
Exhibit B Bill of Sale (Para. 5.3(a))
Exhibit C Assignment (Intangibles) (Para. 5.3(a))
Exhibit D Real Property Deed (Para. 5.3(a))
Exhibit E Employment Agreement (Para. 5.3(h))
Exhibit F Financial Statements (Para. 6.5)
Exhibit G Certificate of Seller (Para. 9.2)
Exhibit H Opinion of Sellers' Counsel (Para. 9.5)
Exhibit I Certificate Of Purchaser (Para. 10.2)
Exhibit J Opinion of Purchaser's Counsel (Para. 10.4)
Exhibit K Security Documents (Para. 27)
International Speedway Corporation Acquires Phoenix
International Raceway
-- Six Motorsports Facilities Owned By International Speedway Corporation
-- In Excess of 400,000 Grandstand Seats with Completion of
Seat Construction at ISC Facilities
DAYTONA BEACH, FLORIDA -- July 15, 1997 -- International Speedway
Corporation (NASDAQ/NM:ISCA and NASDAQ Bulletin Board:ISCB), announced
the acquisition of Phoenix International Raceway ("PIR") in Phoenix, Arizona.
PIR is a 65,000-seat, 1 mile oval located at the base of the scenic Estrella
Mountains outside Phoenix, Arizona, in the seventh largest metropolitan
market in the United States.
International Speedway Corporation's newly created subsidiary, Phoenix
Speedway Corporation, has acquired PIR from Emmett "Buddy" Jobe who had owned
and operated the facility since 1985. The payment to the seller is
approximately $46.1 million, plus applicable federal and Arizona state income
taxes, which will be paid through several installments in 1998 and 1999. The
estimated total amount of all of the payments, including the initial $46.1
million, will be between $60 and $67 million, depending upon the tax treatment
ultimately afforded the transaction.
"This is a significant day in the history of International Speedway
Corporation," said William C. France, President and CEO of International
Speedway Corporation. "The acquisition gives the Company another presence in
one of America's fastest growing and exciting markets. International Speedway
Corporation facilities are now positioned in three of the four corners of the
United States."
PIR currently hosts the annual NASCAR Winston Cup series Dura-Lube 500,
presented by K-Mart as well as an Indy Racing League ("IRL") event and two
NASCAR Craftsman Truck Series events. In recent years Phoenix International
Raceway, which boasts one of the most diverse racing schedules in motorsports,
has experienced capacity crowds. Approximately 25,000 additional seats are
currently planned, as well as the Gila River project, a five-lane bridge that
is being constructed by the State of Arizona which will allow for additional
expansion and development of ISC's latest motorsports facility.
In addition to the NASCAR Winston Cup Series event (Oct.30-Nov. 2, 1997),
the facility's wide variety of racing includes the Skoal Bandit Racing Copper
World Classic (Jan. 30-Feb. 1, 1998), the Cruise America Arizona Superbike
Challenge (Feb. 14-15, 1998), the Indy Racing League Phoenix 200 (March 20-22,
1998), and the Chevy Trucks Desert Star Classic (Spring, 1998).
In addition to Daytona International Speedway (2.5-mile superspeedway) in
Daytona Beach, Fla. and Phoenix International Raceway, ISC owns Talladega
Superspeedway (2.66-mile tri-oval) in Talladega, Ala., Darlington Raceway
(1.366-mile oval) in Darlington, S.C., Watkins Glen International (2.454-mile
road course) in Watkins Glen, N.Y., and Tuscon Raceway Park (3/8-mile oval) in
Tucson, Ariz. With the completion of planned seat construction at all ISC
facilities, including PIR, more than 400,000 grandstand seats will be
available at ISC's five largest motorsports facilities.
ISC also owns approximately 11 percent of Penske Motorsports, Inc., which
owns Michigan Speedway in Brooklyn, Mich., Nazareth Speedway in Nazareth, Pa.,
the recently-opened California Speedway in San Bernardino County, Calif., and
has controlling interest in North Carolina Motor Speedway in Rockingham, N.C.
ISC's non-track holdings include MRN Radio, the nation's largest
independent sports radio network, Americrown Service Corporation, a
wholly-owned catering and souvenir subsidiary and DAYTONA USA, an interactive
motorsports-themed entertainment complex at Daytona International Speedway.
Separately, ISC recently announced the world's largest sports lighting
project for Daytona International Speedway. The 1998 Pepsi 400 will be
contested at night on July 4, 1998.
ISC continues to independently pursue the development of major
motorsports facilities in the Midwest, including Kansas City, as well as on
the West Coast including, Sacramento, Calif. In addition, ISC is partnering
with the Indianapolis Motor Speedway Corporation in the Motorsports Alliance
to investigate the development of a motorsports facility in the Chicagoland
area.
Glenn Padgett, Director of Investor Relations, (904) 947-6465
CONTACT: David Walke/Betsy Brod/Stephanie Giroux
Media: Miriam Adler/Erika Brown
Morgen-Walke Associates, Inc. (212) 850-5600
<PAGE>
