EXHIBIT 10.2
ASSET PURCHASE
AGREEMENT
This Asset Purchase Agreement (this
“Agreement”) is entered into as of the
day of May, 2008, between Kentucky
Speedway, LLC, a Kentucky limited liability company
(“Seller”), and Speedway Motorsports, Inc., a Delaware
corporation (“Buyer”).
WHEREAS, the parties hereto desire
for Seller to sell, and Buyer to purchase, the Assets on the terms
and subject to the conditions set forth below;
WHEREAS, capitalized terms used and
not otherwise defined herein shall have the meanings set forth in
paragraph 13 hereof; and
WHEREAS, the members of Seller
(individually "Member" and collectively "Members") are: Jerry
Carroll, the RLD-C Bloodline Trust U/A/D 12/1/94, the RLD-D
Bloodline Trust U/A/D 12/1/94, the RLD-B Bloodline Trust UA/D
12/1/94, the RLD-K Bloodline Trust U/A/D 12/1/94, Summer Hill
Speedway, LLC, OSI Restaurant Partners, LLC, The Blue Water Trust
dated as of August 1, 2002, and Carroll Speedway Investments,
LLC. (The Members are parties to this Agreement only to the extent
expressly provided in the Member Consent and Agreement set forth at
the end of this Agreement.)
NOW, THEREFORE, in consideration of
the mutual covenants and conditions set forth in this Agreement,
the payment of a $10,000 non-refundable deposit (the
“Deposit”) by Buyer to Seller, to be paid within three
(3) business days following the execution and delivery of this
Agreement by Buyer to Seller, and other good and valuable
consideration, Seller, Members and Buyer agree as
follows:
1. Sale and Purchase of Assets;
Assumption of Liabilities .
a. Upon the terms and subject to the
conditions of this Agreement, at the Closing, Seller shall sell,
transfer, assign, convey and deliver the Assets to Buyer, and Buyer
shall purchase, accept, assume and receive the Assets from Seller,
free and clear of all Encumbrances, other than Permitted
Encumbrances, for the consideration set forth in this Agreement.
The sale, transfer, assignment and conveyance of the Assets shall
be made by the execution and delivery at Closing of a bill of sale
substantially in the form of Exhibit A attached
hereto (the “Bill of Sale”), an Assignment of
Seller’s leasehold estate (containing approximately 816
acres) substantially in the form of Exhibit B
attached hereto (the “Assignment of Leasehold”), and
such other instruments of assignment, transfer and conveyance as
the Buyer shall reasonably request with respect to any other Real
Property.
b. Notwithstanding anything in this
Agreement to the contrary, the Excluded Assets shall be excluded
from the transactions contemplated by this Agreement and shall not
be sold, transferred, conveyed, assigned or delivered by Seller or
purchased, accepted, assumed or received by Buyer by virtue of this
Agreement.
c. Upon the terms and subject to the
conditions of this Agreement, at the Closing, (i) Seller shall
assign to Buyer and Buyer shall assume and agree to satisfy and
discharge, pursuant to an Assignment and Assumption Agreement
substantially in the form attached hereto as Exhibit
C (the “Assignment and Assumption Agreement”),
(A) the Assumed Indebtedness and (B) the rights and
obligations of Seller arising after the Closing under the
Contracts, but not as a result of a breach of such Contracts by
Seller prior to the Closing, and (ii) Seller shall assign to
Buyer and Buyer shall assume and agree to satisfy and discharge,
pursuant to the Assignment of Leasehold, the obligations of Seller
arising after the Closing under the Existing Lease for the Gallatin
County Leased Real
Property and any other Existing Lease approved
of in writing by Buyer, but not as a result of a breach of such
Existing Leases by Seller prior to the Closing (all as defined in
paragraph 4.f(ii)) pursuant to separate Lease Assignment Agreements
substantially in the form attached hereto as Exhibit
D (the “Lease Assignments”). The obligations of
Seller referred to in clauses (i) and (ii) of this
paragraph 1(c) shall hereinafter be referred to as the
“Assumed Liabilities.”
d. Except for the Assumed
Liabilities, Buyer shall not assume, and Seller shall retain and
shall satisfy and discharge, when and as due, any liabilities or
obligations of Seller of any nature whatsoever, whether past,
current or future, whether accrued or contingent, known or unknown,
liquidated or unliquidated, arising now or in the future (the
“Excluded Liabilities”).
2. Purchase Price for the Assets;
Allocation of Purchase Price .
a. The purchase price for the Assets
(the “Purchase Price”) shall be: (i) the Deposit;
plus (ii) Buyer’s assumption or satisfaction of the
Assumed Indebtedness; plus (iii) the sum of $7,500,000 payable
in sixty (60) equal monthly installments of $125,000 due
beginning on the date which is thirty (30) days following the
Closing Date; plus (iv) the Contingent Amount (as hereinafter
defined), if any.
b. In the event (i) an
extension is obtained for an additional twenty (20) years of
the sales tax rebate contemplated by the Tourism Attraction
Agreement as amended, by and between Seller and the Commonwealth of
Kentucky (the “Sales Tax Incentives Agreement”), as
assigned to Buyer, through specific authorizing resolution on or
before June 1, 2010, and (ii) a Sprint Cup Race or
successor series event is scheduled at Kentucky Speedway, then
Buyer shall pay to Seller additional consideration in the amount of
$7,500,000 (the “Contingent Amount”) payable in sixty
(60) equally monthly installments in the amount of $125,000
commencing on the first day of the month following the date on
which the above contingencies are satisfied.
c. The Purchase Price shall be
allocated among the Assets as of the Closing Date in accordance
with Schedule 2(c) pursuant to and consistent with
Internal Revenue Code Section 1060 (26 U.S.C. 1060) and as
shown on Internal Revenue Service Form 8594 which each party hereto
agrees to sign and provide within ninety (90) days following
the Closing. For all tax purposes, Buyer and Seller agree to report
the transactions contemplated by this Agreement in a manner
consistent with the terms of this Agreement, including the
allocation under Schedule 2(c) , and that neither of
them will take any position inconsistent therewith in any tax
return, refund claim, litigation or otherwise.
d. If any installment of the
Purchase Price is not paid within thirty (30) days following
written demand of Seller (a "Default"), Seller may, at its option,
accelerate the due date of all remaining installments such that
same shall be immediately due and payable. Interest shall accrue
and be due and payable from Buyer to Seller on the remaining
balance of the Purchase Price from Default until paid at the rate
of twelve percent (12%) per annum (the Kentucky rate of
interest on judgments). In addition, Buyer shall reimburse Seller
for all collection costs of Seller incurred after a Default
including, but not limited to, court costs and Seller's attorneys
fees and expenses. Notwithstanding anything to the contrary Seller
agrees that Buyer may offset from any installment of the Purchase
Price or Contingent Amount an amount sufficient to satisfy any
indemnity or payment obligation of Seller arising under this
Agreement, including but not limited to Seller’s failure to
pay any sales or use tax owed by Seller as a result of the
transactions herein, and that such offset shall not be a
Default.
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3. Closing .
a. Subject to paragraph 8 of this
Agreement, the consummation of the sale of the Assets pursuant to
this Agreement (the “Closing”) shall take place at
11:00 a.m., Buyer’s local time, within ten (10) days
following satisfaction of the conditions in paragraph 6 of this
Agreement and expiration or earlier termination of the Due
Diligence Period (the “Closing Date”). Notwithstanding
anything to the contrary, Closing shall not take place prior to
October 1, 2008 without Buyer’s consent.
b. At Closing, Seller shall deliver
or cause to be delivered the following documents to
Buyer:
(i) the certificate contemplated by
paragraphs 8(a)(i) and 8(a)(ii), duly executed by Seller and the
Members
(ii) the Bill of Sale, the
Assignment of Leasehold, the Assignment and Assumption Agreement
and the Lease Assignments, each duly executed by Seller;
(iii) a certificate of the president
of Seller, dated the Closing Date, in form and substance reasonably
satisfactory to Buyer, certifying as to (A) the resolutions of
the Board of Managers and Members of Seller authorizing the
execution, delivery and performance of this Agreement and approving
the transactions contemplated hereby and (B) the incumbency
and signatures of the officers of Seller executing this
Agreement;
(iv) certificates of title or origin
(or like documents) with respect to any vehicles or other equipment
included in the Assets for which a certificate of title or origin
is required in order to transfer title;
(v) a lien and possession affidavit,
duly executed by Seller, acceptable to Buyer’s title
insurance company, and all other documents, title indemnities, and
affidavits reasonably required by such title company in order for
the title company to issue an owner’s leasehold title
insurance policy without exceptions on Schedule B thereto other
than the Permitted Encumbrances;
(vi) affidavits, duly executed by
Seller, (A) to satisfy federal and state tax reporting
requirements and (B) to confirm that Seller is not a
“foreign person” within the meaning of the Foreign
Investment in Real Property Tax Act;
(vii) all consents, waivers and
approvals required to be set forth on Schedule 4(b) attached
hereto and all other consents, waivers or approvals, if any,
obtained by Seller with respect to the Assets or the consummation
of the transactions contemplated by this Agreement;
(viii) documents in form and
substance reasonably satisfactory to Buyer whereby Seller shall
amend its Articles of Organization and take all other actions
necessary to change its name to one sufficiently dissimilar to
Seller’s present name; and
(ix) such other bills of sale,
deeds, assignments and other instruments of transfer or conveyance,
including without limitation, a domain name assignment and any
applicable trademark, service mark and trade name assignments, duly
executed by Seller, as may be reasonably requested by Buyer to
effect the sale, conveyance and delivery of the Assets to
Buyer.
c. At Closing, Buyer shall execute
and deliver the following documents to Seller: (i) the
certificate contemplated by paragraphs 8(b)(i) and 8(b)(ii);
(ii) the Assignment and Assumption Agreement; and
(iii) the Lease Assignments.
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d. At Closing, the Assumed
Indebtedness shall either be fully satisfied or Seller and all
guarantors on behalf of Seller shall receive a full release of any
further obligations with respect to the Assumed Indebtedness
(except for Excluded Liabilities as defined in paragraph 7e.) and
the original guaranties shall be cancelled and returned.
4. Representations and Warranties
of Seller . Seller represents and warrants to Buyer as
follows:
a. Organization of Seller;
Authorization .
(i) Seller is a limited liability
company duly organized, validly existing and in good standing under
the laws of the Commonwealth of Kentucky. Seller has all necessary
limited liability company power and authority to carry on its
business as now conducted. Seller is not qualified to transact
business as a foreign corporation in any jurisdiction, and the
ownership or leasing of the assets used in the Business and the
conduct of the Business do not require Seller to be qualified to
transact business as a foreign corporation. All of the outstanding
membership interests of Seller are owned of record and beneficially
by the Members.
(ii) Seller has the necessary
limited liability company power and authority to execute, deliver
and perform this Agreement and consummate the transactions
contemplated hereby. The execution, delivery and performance of
this Agreement by Seller have been duly and validly authorized by
the board of managers and members of Seller and by all other
necessary limited liability company action on the part of Seller.
The Members have the capacity to execute, deliver and perform this
Agreement and consummate the transactions contemplated hereby. This
Agreement constitutes the legal, valid and binding obligation of
Seller and the Members, enforceable against Seller and the Members
in accordance with its terms except as such enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium and
other similar laws and equitable principles relating to or limiting
creditors’ rights generally.
b. No Breach . Except as set
forth on Schedule 4(b) attached hereto, the
execution, delivery and performance of this Agreement by Seller and
the Members does not and will not (i) violate the provisions
of, or constitute a breach or default (whether upon lapse of time
and/or the occurrence of any act or event or otherwise) under
(A) the charter documents or operating agreement of Seller,
(B) any law, judgment or court order to which Seller or any
Member is subject, (C) any Material Agreement (defined below)
to which Seller or any Member is a party or (D) any contract
or agreement to which the Members are individually or collectively
a party; (ii) other than filings and notices under the HSR Act
(defined below), require the approval, consent, authorization or
act of, or the making by Seller or any Member of any declaration,
filing or registration with, any Person; and (iii) require the
obtainment by Seller or any Member of any permits or orders of any
governmental entity or any other Person.
c. Financial Statements
.
(i) Seller shall deliver to Buyer,
within thirty (30) business days following Buyer’s
execution of this Agreement, the audited financial statements of
Seller for the year ended 2007, and the unaudited financial
statements of Seller for the three (3) month period ended
March 31, 2008 (the “Interim Financial
Statements”), in each case including the balance sheet as of
each such date and the related consolidated statements of income
and retained earnings and cash flows for each of the respective
periods then ended (collectively, the “Financial
Statements”). Except as noted therein, and except that the
Interim Financial Statements do not include footnote disclosures,
as required by generally accepted accounting principles
(“GAAP”), and are subject to normal year end
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adjustments (which will not be material,
individually or in the aggregate) consistent with past practice,
such Financial Statements (A) have been prepared from the
books and records of Seller, (B) are in accordance with GAAP
consistently applied throughout and among the periods covered
thereby, and (C) fairly present the financial condition,
results of operations and cash flows of Seller as of the respective
dates and for the respective periods thereof.
(ii) Seller does not have any
material debts, liabilities or obligations whether accrued,
absolute, contingent or otherwise and whether or not due or become
due, except those (A) set forth in the Financial Statements
not materially exceeding the amounts set forth therein,
(B) incurred since the date of the Interim Financial
Statements in the ordinary course of business consistent with past
practice and in accordance with this Agreement, or (C) set
forth in Schedule 4(c)(ii) attached
hereto.
d. Permits/Approvals/Licenses
. Schedule 4(d) attached hereto contains a complete
and accurate list of all permits, approvals and licenses held by
Seller which to Seller’s Knowledge are the only permits,
approvals or licenses necessary to carry on the Business. Except as
described on Schedule 4(d) , all such permits,
approvals and licenses shall be transferable to Buyer in connection
with the transactions contemplated hereby and no notice or
additional filings must be made in connection therewith.
e. Tax Matters . Seller has
(i) timely filed in accordance with all applicable laws
(taking into account valid extensions), all tax returns required to
be filed by it, (ii) paid all taxes shown to have become due
pursuant to such tax returns, and (iii) paid all taxes (other
than those being contested in good faith) for which a notice of, or
assessment, or demand for, payment has been received or which are
otherwise due and payable. All tax returns filed by Seller with
respect to taxes were true, correct and complete in all material
respects as of the date on which they were filed or as subsequently
amended to the date hereof. Except as set forth in Schedule
4(e) attached hereto, (A) Seller has not been notified
by any taxing authority that any tax return will be examined,
(B) there is no litigation or assessment pending or proposed
with respect to any liability for tax due from Seller, (C) all
amounts required to be collected or withheld by Seller with respect
to taxes have been duly collected or withheld and any such amounts
that are required to be remitted to any taxing authority have been
duly remitted, (D) no extension of time within which to file
any tax return that relates to Seller has been requested, which tax
return has not since been filed, and (E) there are no waivers
or extensions of any applicable statute of limitations for the
assessment or collection of taxes with respect to any tax return
which remains in effect. Seller is, and has always been, taxed as a
partnership for Federal and state income tax purposes.
f. Real Property .
(i) Schedule 4(f)(i)
attached hereto contains an accurate legal description, street
address and tax parcel identification number of the real property
owned by Seller (the “Owned Real Property”). Seller is
the sole owner of the Owned Real Property and holds the Owned Real
Property in fee simple or its equivalent under local law, free and
clear of all exceptions, variances, limitations or title defects of
any nature whatsoever, except for the Permitted Encumbrances. True,
correct and complete copies of all deeds, surveys and environmental
reports respecting the Owned Real Property shall be delivered to
Buyer within three (3) business days following Buyer’s
execution of this Agreement. There are no leases affecting the
Owned Real Property. Use of the Owned Real Property for the various
purposes for which it is presently being used is permitted as of
right under all applicable zoning legal requirements and is not
subject to “permitted nonconforming” use or structure
classifications. All improvements located on the Owned Real
Property are in compliance with all applicable legal requirements,
including those pertaining to zoning, building and the
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disabled, are in good repair and in good
condition, ordinary wear and tear excepted, and are free from
latent and patent defects. No part of any improvement located on
the Owned Real Property encroaches on any real property not
included in the Owned Real Property, and there are no buildings,
structures, fixtures or other improvements primarily situated on
adjoining property which encroach on any part of the Owned Real
Property. The Owned Real Property abuts on and has direct vehicular
access to a public road or has access to a public road via a
permanent, irrevocable, appurtenant easement benefiting and
comprising a part of the Owned Real Property, is supplied with
public or quasi-public utilities and other services appropriate for
the operation of the facilities locate thereon and is not located
within any flood plain or area subject to wetlands regulation or
any similar restriction. There is no existing or proposed plan to
modify or realign any street or highway or any existing or proposed
eminent domain proceeding that would result in the taking of all or
any part of the Owned Real Property or that would prevent or hinder
the continued use of the Owned Real Property as heretofore used in
the conduct of the Business. None of the Owned Real Property
constitutes tax-exempt bond financed property or tax-exempt use
property within the meaning of Section 168 of the Internal
Revenue Code of 1986, as amended (the
“Code”).
(ii) Schedule 4(f)(ii)
attached hereto, lists, identifies by address and provides a legal
description of the real property currently leased by Seller located
in Gallatin County, Kentucky (the “Gallatin County Leased
Real Property”) and all other real property currently leased
by Seller (the “Other Leased Real Property” and
together with the Gallatin County Leased Real Property,
collectively the “Leased Real Property”). True, correct
and complete copies of each lease (an “Existing
Lease”), and any survey and environmental report with respect
to the Gallatin County Leased Real Property and the Other Leased
Real Property shall be delivered to Buyer within five
(5) business days following Buyer’s execution of this
Agreement. To Seller’s Knowledge, no event or condition
currently exists which would give rise to a material repair or
restoration obligation if an Existing Lease were to terminate. To
Seller’s Knowledge, no event or condition currently exists
which would create a legal or other impediment to the use of the
Leased Real Property as currently used, or would increase the
additional charges or other sums payable by the tenant under any
Existing Lease (including, without limitation, any pending tax
reassessment or other special assessment affecting the Leased Real
Property). To Seller’s Knowledge, the Leased Real Property
conforms in all material respects with all laws.
g. Operations . Seller owns
and operates Kentucky Speedway, which (among other things) hosted
one NASCAR Busch Series race, one NASCAR Craftsman Truck Series
race, and one ARCA Series race in 2007. Seller has executed
sanction agreements with NASCAR to host one NASCAR Nationwide
Series race and one NASCAR Craftsman Truck Series race in 2008 (the
“2008 Sanction Agreements”).
h. Assets . Seller has good
and marketable title to all of the Assets, free and clear of all
Encumbrances, except for Permitted Encumbrances. Upon delivery to
Buyer on the Closing Date of the Bill of Sale and the Assignment of
Leasehold, Seller will thereby transfer to Buyer good and
marketable title to the Assets, subject to no Encumbrances except
for Permitted Encumbrances. All of the Assets are located on the
Real Property.
i. Litigation . Except as set
forth in Schedule 4(i) : (i) there are no legal
actions, proceedings or arbitrations pending or, to Seller’s
Knowledge, threatened (A) against Seller or affecting the
Business or any of the Assets or (B) which seek to prohibit,
restrict or delay consummation of the transactions contemplated by
this Agreement or any of the conditions to consummation of such
transactions and, (ii) there is no order outstanding
(A) against Seller or affecting the Business or any of the
Assets, or (B) which seeks to prohibit, restrict or delay
consummation of the transactions contemplated by this Agreement or
any of the conditions to
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consummation of such transactions. To
Seller’s Knowledge, no facts exist and no event has occurred
that, in either case, forms the basis for any claim against Seller
for products liability, whether in tort or strict liability or on
account of any express or implied warranty.
j. Environmental . To
Seller’s Knowledge, (i) Seller and its business,
operations and the Assets are and have been in compliance in all
material respects with all Environmental Laws and (ii) no
environmental condition exists (including, without limitation, the
presence, release, threatened release or disposal of Hazardous
Substances) related to the Real Property or to Seller’s past
or present operations, which would constitute a violation of any
Environmental Law or otherwise give rise to costs, liabilities or
obligations under any Environmental Law.
k. Employee Benefits .
Schedule 4(k) attached hereto contains a complete
list of plans consisting of each: (i) “employee welfare
benefit plan,” as defined in Section 3(1) of ERISA, to
which Seller contributes or is required to contribute, including
each multi-employer welfare plan (“ Welfare Plan
”), and sets forth the amount of any liability of Seller for
payments more than thirty (30) days past due with respect to
each Welfare Plan as of the Closing;
(ii) “multi-employer plan,” as defined in
Section 4001(a)(3) of ERISA, to which Seller (or any Person
which is, or at any time in the prior six (6) years has been,
a member of a “controlled group of corporations” with
or is under “common control” with Seller as defined in
Section 414(b) or (c) of the Code (“ Common
Control Entity ”)) has contributed or been obligated to
contribute at any time after September 25, 1980 (“
Multi-employer Plan ”); (iii) “employee
pension benefit plan,” as defined in Section 3(2) of
ERISA (other than a Multi-employer Plan) to which Seller or any
Common Control Entity contributes, is required to contribute, or
has been obligated to contribute at any time after
December 31, 1991; (iv) deferred compensation plan, bonus
plan, stock option plan, employee stock purchase plan and any other
employee benefit plan, agreement, arrangement or commitment, other
than normal payroll practices but including policies concerning
holidays, vacations and salary continuation during short absences
for illness or other reasons, maintained by Seller; and
(v) any plan, agreement or arrangement providing for
“fringe benefits” or perquisites to employees,
officers, directors or agents of Seller, including but not limited
to benefits relating to automobiles, clubs, vacation, child care,
parenting, sabbatical or sick leave.
l. Intellectual Property .
Schedule 4(l) attached hereto sets forth a complete
and accurate list and description of (i) all United States
federal, state and foreign patents, trademarks, trade names,
service marks, copyrights (including any registrations and
applications therefor) and all trade secrets, technology,
processes, inventions and other intellectual property owned by or
developed by or for the benefit of Seller (the “
Intellectual Property Rights ”) and (ii) all
United States federal, state and foreign patents/trademarks, trade
names, service marks, copyrights (including any registrations and
applications therefor) and all technology, processes, inventions
and other intellectual property licensed to Seller (the “
Licensed Rights ”). Seller (A) owns and has the
full and exclusive right to use the Intellectual Property Rights
and the Intellectual Property Rights are free of any encumbrances,
are not subject to any license (royalty-bearing or royalty-free)
and are not subject to any other arrangement requiring any payment
to any Person or entity or the obligation to grant rights to any
Person or entity, (B) the Intellectual Property Rights and the
Licensed Rights are all those rights necessary to conduct the
business of Seller as currently being conducted by
Seller.
m. No Brokers or Finders . No
agent, broker, finder or investment or comme
