Exhibit 10.1
EXECUTION COPY
STOCK PURCHASE
AGREEMENT
This Stock Purchase Agreement
(“Agreement”) dated the 28th day of January, 2009 is
entered into between Midwest Racing, Inc., a California corporation
(“Midwest”), Dover Motorsports, Inc., the ultimate
corporate parent to Midwest (“Dover”, and collectively
with Midwest, “Seller”) and Gulf Coast Entertainment,
L.L.C., a Delaware limited liability company
(“Buyer”).
WITNESSETH
WHEREAS, Seller owns 100% of the
authorized, issued and outstanding stock (hereafter collectively
the “Stock”) of Memphis International Motorsports
Corporation, a Tennessee corporation d/b/a Memphis Motorsports Park
(the “Company”); and
WHEREAS, the Company owns and holds
good and marketable fee title to that certain parcel of real
property and all the buildings and improvements thereon as fully
described in Exhibit A hereto (the “Real Property”) and
good and marketable title to all of its other owned assets and
facilities thereon or as otherwise held or situated (the
“Property”); and
WHEREAS, Seller desires to sell and
Buyer desires to purchase 100% of the Stock on the terms and
conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of
the promises, covenants, warranties and representations herein, the
parties agree as follows:
Section 1. Definitions
.
In addition to the terms elsewhere
defined, the following terms shall have the following
meanings:
1.1 “ Buyer’s LLC
Agreement ” shall mean the Limited Liability Company
Agreement of Buyer.
1.2 “ Cash Purchase
Price ” shall mean the sum of $10,000,000.
1.3 “ Closing Date
” shall be the date on which the closing occurs, which shall
be no more than three days after all the closing conditions set
forth herein have been satisfied, unless otherwise mutually agreed
by the parties. Closing shall be deemed effective, and the events
scheduled for the Closing Date herein shall be deemed to occur
simultaneously, as of 12:01 a.m. on the day on the Closing
Date.
1.4 “ Confidentiality
Agreement ” shall mean that certain confidentiality
agreement dated the 12th day of June, 2008 between Buyer and Dover
Motorsports, Inc.
1.5 “ Interest in Buyer
” shall mean a 2% Special Member interest in
Buyer.
1.6 “ Project Funding
” shall mean funding for the Alabama Motorsports Park, a Dale
Earnhardt, Jr. Speedway has been secured, to Buyer’s
reasonable satisfaction, and Buyer has the ability to draw down on
the funds to pay the Purchase Price.
1.7 “ Purchase Price
” shall mean both the Cash Purchase Price and the Interest in
Buyer.
1.8 “ Special Member
” shall mean a Special Member as defined in Section 1.53
to Buyer’s LLC Agreement attached as
Exhibit B.
1.9 “ Tax(es) ”
shall mean all federal, state or local income, gross receipts,
sales, use, real property or similar taxes, assessments, fees, or
other governmental charges, together with any interest or penalties
thereon.
Section 2. Sale of
the Stock .
2.1 Acquisition of Stock .
Upon Closing, on the Closing Date, Seller hereby agrees to sell the
Stock, free and clear of any and all liens, charges, pledges,
claims, security interests, rights of others, and other
encumbrances, and Buyer agrees to purchase the Stock and to pay the
Purchase Price to Seller. On or before the Closing Date, Seller
shall deliver all stock certificates for the Stock to Buyer
properly endorsed.
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2.2 Cash Purchase Price . The
Cash Purchase Price of $10,000,000 shall be paid to Seller by wire
transfer as follows:
On February 27, 2009, Buyer
will provide Seller a non-refundable deposit of $100,000, which
deposit shall be credited against the Cash Purchase
Price.
Upon Closing, the $9,900,000 balance
of the Cash Purchase Price shall be paid by 5:00 PM EST on the
Closing Date.
2.3 Interest in Buyer . Upon
Closing, Buyer shall deliver to Midwest or Dover on the Closing
Date a Membership Certificate evidencing Midwest’s or
Dover’s Interest in Buyer.
2.4 Environment Assessment .
Buyer shall have until February 27, 2009 to obtain a Phase I
environmental assessment of the Real Property with results that are
satisfactory to it or to otherwise satisfy itself as to the
environmental condition of the Real Property. If the results are
not satisfactory to it, Buyer may terminate this Agreement,
provided that Seller shall be provided with the reason(s) for
dissatisfaction and be afforded a reasonable opportunity to cure or
remediate any environmental deficiency or concern. In such event,
and notwithstanding anything herein to the contrary, Buyer shall
not be required to pay the deposit referenced in Section 2.2
until Seller has made the cure or remediation or otherwise provided
to Buyer adequate assurances that it will do so.
2.5 Project Funding . Should
Project Funding not occur by April 30, 2009, either party may
terminate this Agreement upon written notice to the other party;
provided that upon the request of any party, the parties will
discuss in good faith the extension of the foregoing termination
date. Buyer shall notify Seller when Project Funding occurs and
agrees that it will ensure that the initial draw of funds under
Project Funding must include the Cash Purchase Price. Buyer shall
not be obligated to proceed with the transactions contemplated
herein or pay the $9,900,000 balance of the Cash Purchase Price if
Project Funding does not occur.
2.6 Conditions to Closing .
Buyer’s obligation to pay the Purchase Price and
Seller’s obligation to sell the Stock on the Closing Date is
subject to the fulfillment on or before the Closing
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Date of each of the following conditions: the
conditions set forth in Section 2.4 and 2.5 above; the
representations and warranties set forth in Section 3.1, 3.2,
3.3, 3.4 and 3.7 shall be true and correct as of the date hereof
and the Closing Date; the execution of the Management Agreement, as
defined in Section 4.3, between Buyer and Dover, in form and
substance satisfactory to Buyer and Dover; and all covenants and
agreements contained in this Agreement to be performed by Midwest,
Company, Dover and Buyer shall have been performed and complied
with in all material respects. Buyer’s obligation to close is
further contingent upon the Risk of Loss provision set forth in
Section 8 below. There shall be no other conditions to
Closing. Other than as set forth above, a breach of a
representation or warranty shall give rise to an indemnity claim
under Section 6 but not affect Closing. Buyer shall upon
execution of this Agreement continue to have full and complete
access to all of the books, records, contracts, leases, Tax
returns, and accounts of the Company and may make such examination
and take such excerpts therefrom as Buyer may deem necessary or
desirable. Upon the mutual agreement of the parties, or in the
event the conditions described in this section have not been
satisfied by April 30, 2009, this Agreement may be terminated;
provided that upon the request of any party, the parties will
discuss in good faith the extension of the foregoing termination
date.
Section 3. Representations and
Warranties by Seller and Company .
Seller and Company represent and
warrant to Buyer that as of the date of this Agreement and as of
the Closing Date:
3.1 Corporate Standing .
Company is a corporation duly organized, validly existing and in
good standing under the laws of the State of Tennessee with full
corporate authority to own and operate its Property and conduct its
business. Seller has no knowledge of any jurisdiction where
qualification to do business as a foreign corporation by Company is
necessary or where failure to be so qualified could reasonably be
expected to have a material adverse effect on the Company’s
financial condition or business as now conducted.
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3.2 Authorization . Seller
has all full and complete legal capacity, right, and corporate
power to enter into this Agreement and to consummate the
transactions contemplated hereby, and Seller has taken all action
required to be taken by it by law, its Certificate of Incorporation
or By Laws, or otherwise to authorize or ratify the execution and
delivery of this Agreement and the consummation of the transactions
contemplated hereby. Further, the offer and sale of the Stock to
Buyer does not constitute a violation of any state of federal
securities laws or any Blue Sky laws.
3.3 Capitalization . The
Stock of the Company consists of 1,000 shares of Common Stock, of
which 250 shares are issued and outstanding. The Stock is, and when
delivered and paid for in compliance with the provisions of this
Agreement will be, duly authorized, validly issued in compliance
with all applicable laws, rules, and regulations and fully paid and
nonassessable. There are no outstanding warrants, options,
agreements, convertible or exchangeable securities or other
commitments pursuant to which the Company is or may become
obligated to issue, sell, purchase, return or redeem any shares of
capital stock or other securities, and there are no equity
securities of the Company reserved for issuance for any purpose.
There are no agreements, arrangements, proxies or understandings
that restrict or otherwise affect voting or transfer of any of the
capital stock of the Company. The Company does not own, directly or
indirectly, and has no contract to acquire, any capital stock of or
other direct or indirect equity interest in any Person.
3.4 Title to Stock . Seller
is the owner of, and has good and marketable title in fee simple
absolute to the Stock. Notwithstanding anything in this Agreement
to the contrary, Seller forever warrants its title to the Stock of
the Company to be sold, assigned, and transferred pursuant to this
Agreement, and Seller will forever indemnify and save harmless the
Buyer, its successors and assigns, for and from any and all claims
and demands of any kind or nature whatsoever that may be made to,
under, or against any of such Stock, and against any lien,
execution, or attachment upon any such Stock, made by any person
claiming to hold or have a right to any interest therein by or
through Seller.
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3.5 Material Contracts . A
list of all of the Company’s agreements/contracts in effect
as of the date of this Agreement with a value of $100,000 or more
and all other contracts-material to the Company, including any
sanction agreements with NASCAR and NHRA (hereafter collectively
the “Material Contracts”) along with the current
expiration dates thereof if applicable are set forth in Exhibit C.
The Material Contracts are to the Seller’s and
Company’s knowledge valid, binding and in full force and
effect in all material respects, and except for the sanction
agreements, no consents are required for such Material Contracts to
remain valid, binding and in full force and effect as a result of
the consummation of the transactions contemplated herein. There are
no leases outstanding with respect to the Real Property. Seller and
Company further represent and warrant that all races at the Memphis
Motorsports Park are under contract with Company and not Midwest or
Dover or any other third party. A list of all major sanctioned
races, along with all the other functions and events owned,
sponsored, held, or operated by Company at the Memphis Motorsports
Park, is attached hereto as Exhibit D. If requested by Buyer,
Company and Seller shall provide Buyer prior to Closing with copies
of any agreements relating to the aforementioned races, functions,
or events to the extent material. Dover will guarantee fulfillment
of the obligations of Company under its sanction agreements with
NASCAR for the 2009 season pursuant to the terms of the Management
Agreement, as defined in Section 4.3.
3.6 Financial Statements .
The Company’s balance sheet , statements of income and cash
flows as of December 31, 2008 (the “Financial
Statements”), are attached hereto as Exhibit E, are true and
correct, and fairly present the financial condition of the Company
as of that date as a subsidiary of a larger organization providing
funding and other services described in Section 4.3; they do
not, however, represent the financial condition that the Company
might have had as a stand alone entity.
3.7 Effect of Agreement .
Neither the execution of this Agreement nor the consummation of the
transactions contemplated hereunder, will result in the creation of
any lien, charge or encumbrance
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on the Stock, the Real Property or the Property
of Company. The Stock is presently, and will continue to be through
the Closing Date, free of any and all liens, options, warrants,
calls, subscription rights, security interests, debts, attachments,
executions, commitments of any kind, or other encumbrances
whatsoever and not subject to any preemptive rights or rights of
first refusal. Further, no consent, approval, authorization or
release from any third party is required in connection with the
Seller’s and Company’s valid execution, delivery, and
performance of this Agreement or transfer and assignment of the
Stock to Buyer, other than consent from Seller’s lenders
which will be obtained by Seller at or prior to Closing. Other than
as provided above, no representation or warranty is made as to the
assignability of any agreement to which Company is a party or the
effect that the transactions contemplated hereby will have on the
other parties to such agreements.
3.8 Litigation and Other Legal
Matters . There is no demand, claim, action, suit, litigation,
arbitration, mediation, settlement, order, or other proceeding of
any kind or nature whatsoever pending, or to Seller’s
knowledge threatened or reasonably expected, against Company or its
Real Property or Property or its officers, directors, members,
managers, employees, agents, or servants or the Stock which, if
sustained, would materially adversely affect Company’s
business after the Closing Date, or Buyer’s use and enjoyment
of the Real Property, Property and Stock of Company.
3.9 Judgments . There has
been no decision, order or other holding arising out of any
litigation, arbitration, mediation, order, settlement or other
proceeding involving Company which will materially adversely affect
the continuation by Company or Buyer, after the Closing Date, of
the business as presently operated by Company, or the use and
enjoyment of the Real Property, Property and Stock of
Company.
3.10 Tax Matters . Company
has timely filed all required federal, state, and local Tax returns
and all necessary reports and returns for all other Taxes due to
the federal, state, and local governmental agencies, and it has set
up adequate reserve for, or fully paid and discharged, all
such
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Taxes accrued up to the Closing Date. These
returns are true and correct in all material respects. All Taxes
shown to be due and payable on such returns, any assessments
imposed, and all other Taxes due and payable by the Company on or
before the Closing Date have been paid or will be paid by the
Seller and Company prior to the time they become delinquent. There
are no litigations, proceedings, assessments, reassessments,
charges, fees, or audits arising out of or relating to Taxes
pending, threatened, or anticipated against the Company.
3.11 No Indebtedness .
Company has no indebtedness for borrowed money other than
indebtedness to be discharged on or prior to the Closing Date. As
of the Closing Date, the Company will have no debts of any kind or
nature whatsoever other than those incurred in the ordinary course
of business consistent with past practices, such as trade payables
and vehicle or equipment leases. Further, Seller and Company will
ensure that no mortgages, liens, charges, executions, attachments,
security interests, or other monetary encumbrances exist with
respect to the Real Property, Property, the Stock, or the Company
as of the Closing Date. All inter-company accounts will be
eliminated prior to the Closing Date.
3.12 Conduct of Business .
Company is not prohibited by agreement or by law from conducting
its business. No investigation of Company or its business by any
governmental agency, which could materially adversely affect its
business, is now in process or to the best of its knowledge is
threatened, and Company is not in violation of any law, regulation
or other governmental enactment in the conduct of its business
which could materially adversely affect Company or its
business.
3.13 Labor . Company is not a
party to any collective bargaining agreement with any labor union
and Seller and Company have no knowledge that there is currently
pending or threatened petition by employees of Company for a
representation election. There is no contract of employment with
any officer, director, agent, servant, or employee of the Company
which is not terminable at will.
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3.14 Insurance . Company has
had and will have as of the Closing Date Comprehensive General
Liability, Comprehensive Automobile Liability, Workers
Compensation, Employer’s Liability, and Umbrella Liability
(or other excess liability) insurance policies in force which
provided or provide coverage for all occurrences of bodily injury,
personal injury and/or property damage and workers compensation
that have occurred or will have occurred prior to the Closing Date
for which claims have been or will have been made or will be made
in the future.
3.15 Environmental . To
Seller’s and Company’s knowledge, since July 1,
1998, Company, its operations and facilities, and the Real Property
have been, and will continue to be as of the Closing Date, in
compliance in all material respects with all local, state, and
federal environmental laws, rules, and regulations and no
environmental condition currently exists or, other than as
disclosed in environmental assessments provided to Buyer, has
existed (including the presence, storage, release or disposal of
hazardous substances) related thereto which would constitute a
violation of any local, state, or federal environmental law, rule,
or regulation or result in any environmental penalty, fine, or
liability of any kind or nature whatsoever. Company and Seller have
provided Buyer with copies of any and all environmental reports,
studies, memos, correspondence or other documents whatsoever to
their knowledge or in their possession conducted with respect to,
or in any way relating to, the Real Property, the Company, its
operations, and facilities.
3.16 Real Property . The
Company has valid, good and marketable fee simple title to all the
Real P
