Exhibit 10.16
(CONFIDENTIAL PORTIONS HAVE BEEN OMITTED, AS INDICATED BY "*", AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION)
MANAGEMENT AGREEMENT
BY AND BETWEEN
SPEEDWAY MOTORSPORTS, INC.
AS OWNER
AND
LEVY PREMIUM FOODSERVICE LIMITED PARTNERSHIP,
AS MANAGER
DATED: November 29, 2001
TABLE OF CONTENTS
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MANAGEMENT AGREEMENT
RECITALS...................................................................... 1
1. Representations........................................................ 2
(a) Owner's Representations to Manager............................... 2
(b) Manager's Representations to Owner............................... 3
2. Management Services.................................................... 4
(a) Foodservice Facilities........................................... 4
(b) Manager's Rights in the Foodservice Facilities................... 4
(c) Services.:....................................................... 5
3. Projections of Gross Receipts; Capital Budget.......................... 5
4. Conduct of the Operations.............................................. 6
(a) General.......................................................... 6
(b) Sufficiency...................................................... 6
(c) Sponsorship...................................................... 6
(d) Compliance with Laws, Policies and Programs...................... 6
(e) Manager's Vendors................................................ 7
(f) Third-Party Concessions.......................................... 7
5. Equipment.............................................................. 7
(a) Owner's Equipment; Las Vegas Equipment........................... 7
(b) Transport........................................................ 7
(c) Manager's Equipment.............................................. 7
6. Employees and Agents................................................... 8
(a) Conduct and Supervision of Employees and Agents.................. 8
(b) Cooperation with Other Employees................................. 8
(c) Hiring and Employment Practices.................................. 8
(d) Owner's Sales and Marketing Services............................. 8
(e) Labor Relations.................................................. 9
7. Licenses and Permits................................................... 9
8. Collections and Payments of Taxes and Other Items...................... 9
(a) Payment of Taxes; Filing of Sales Tax Returns.................... 9
(b) Billing Practices and Procedures................................. 9
(c) Cash Handling and Cash Management Policies....................... 9
(d) Monthly Settlement............................................... 9
(e) Group Packages................................................... 9
(f) Guarantee of Owner's Meals...................................... 10
9. Use of Facilities..................................................... 10
(a) Access to Facilities............................................ 10
(b) Signs, Displays and Advertising................................. 10
(c) Parking......................................................... 10
(d) Office Space and Equipment...................................... 10
(e) Utilities....................................................... 10
10. Definition of Gross Receipts.......................................... 10
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11. Commissions........................................................... 11
12. Acounting Payment of Commissions...................................... 11
13. Scope; Duration; Termination; Default................................. 12
14. Indemnity............................................................. 17
15. Ownership in Foodservice Facilities; Authority of Manager............. 19
16. Taxes and Contributions............................................... 19
17. Severability.......................................................... 19
18. Consents; Waiver...................................................... 20
19. Governing Law......................................................... 20
20. Time of Essence....................................................... 20
21. Force Majeure......................................................... 20
22. Assignment and Subcontracts........................................... 20
23. Modification of Agreement............................................. 22
24. Headings.............................................................. 22
25. Interpretation........................................................ 22
26. Notices............................................................... 22
27. Confidentiality; Marks................................................ 23
28. Security.............................................................. 25
29. Insurance............................................................. 25
(a) Liability Insurance............................................. 25
(b) Property Damage Insurance....................................... 25
(c) Property Damage Insurance....................................... 25
(d) Additional Insureds............................................. 25
30. Administrators........................................................ 25
(a) Manager Administrator........................................... 25
(b) Owner Administrator............................................. 25
Exhibits and Schedules
EXHIBIT "A" THE TRACKS
EXHIBIT "B" 2000 GROSS RECEIPTS
EXHIBIT "C" FACILITIES
EXHIBIT "D" MANAGER'S EQUIPMENT
EXHIBIT "E-1" *
EXHIBIT "E-2" *
SCHEDULE 2(b) Certain Limited Suite Holders Supplying Food and Beverage
SCHEDULE 4(b) Sponsorship Agreements
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* Confidential portion has been omitted and filed separately with the
Commission.
Page ii
MANAGEMENT AGREEMENT
--------------------
This Management Agreement ("Agreement") is entered into as of this
29/th/ day of November, 2001 by and between, Speedway Motorsports, Inc., a
Delaware corporation on behalf of its wholly-owned subsidiaries, including, but
not limited to, Speedway Systems LLC, a North Carolina limited liability
company, Charlotte Motor Speedway, LLC, a Delaware limited liability company,
Texas Motor Speedway, Inc., a Texas corporation, and Bristol Motor Speedway,
Inc., a Tennessee corporation (collectively, the "Owner") and Levy Premium
Foodservice Limited Partnership, an Illinois limited partnership ("Levy"), and
Levy Premium Foodservice Limited Partnership of Texas, a Texas limited
partnership ("Levy Texas;" "Levy" and "Levy Texas" are hereinafter collectively
referred to as "Manager").
RECITALS
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1. Owner and Levy have entered into that certain Asset Purchase
Agreement, dated November, 29, 2001, (the "Asset Purchase Agreement") wherein
Owner agreed to sell and Levy agreed to purchase certain assets as detailed
therein.
2. Owner owns six (6) facilities currently used as motor speedway
race tracks, each of which has associated and adjacent real property
(individually, the "Track;" collectively, the "Tracks"), which does or may host
numerous events, including, but not limited to, NASCAR racing. The Tracks are
identified on Exhibit "A", which is attached hereto and incorporated herein.
-----------
3. The Tracks currently include: (a) general concessions (the
"Concessions"), (b) luxury skybox suites (the "Suites"), (c) hospitality
villages and tents (the "Hospitality Villages"), (d) Third-Party Concessions
(the "Third-Party Concessions"), and (e) restaurants, clubs (but not health
clubs), and banquets/catering serviced from such restaurants and clubs (the
"Clubs"). The Concessions, the Suites, the Hospitality Villages, the Third-Party
Concessions, and the Clubs shall hereinafter be collectively referred to as the
"Food Service Areas."
4. Owner owns the exclusive right to determine who shall provide
and operate the food and beverage services throughout the Tracks and other
associated areas.
5. Manager and its affiliated and related entities are in the
business of developing, owning and managing restaurants and other food service
facilities.
6. Manager desires to render certain management and operational
services for the Food Service Areas, all as more fully described in this
Agreement.
7. Owner desires to engage Manager, and Manager desires to be
engaged by Owner, pursuant to the terms of this Agreement, to provide and
operate, on an exclusive basis, the entire food and beverage service operations
of, for, and at each of the Tracks throughout the Term of this Agreement.
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NOW, THEREFORE, for good and valuable consideration, the receipt and
legal sufficiency of which are hereby acknowledged, the parties hereto,
intending to be legally bound hereby, hereby agree as follows:
1. Representations
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(a) Owner's Representations to Manager. Owner hereby
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represents to Manager as follows:
(i) that it has been validly formed and duly
exists as a Corporation under the laws of the State of
Delaware, and that it or the wholly-owned subsidiaries through
which it operates is/are, and that it is duly qualified to do
business in all of the states in which each of the Tracks are
located;
(ii) that it has the full right, power, and
authority to grant the exclusive right to provide and operate
the food and beverage service operations throughout all the
Tracks, including, but not limited to, the right to engage
Manager to provide management and operational services
described in this Agreement;
(iii) that it is not prevented from entering into
this Agreement or complying with its commitments hereunder by
its corporate charter;
(iv) that it is duly authorized to enter into
this Agreement and is not prevented from entering into this
Agreement or complying with its commitments hereunder by any
statute, regulation, order of, or agreement with, any
governmental or quasi-governmental authority, or by any
license, debt instrument, mortgage, lease, contract, or other
agreement or instrument binding it or any of its property;
(v) that it is duly authorized to enter into
this Agreement and has taken all necessary corporate action to
obtain such authorization and that no consent of, or notice
to, any other individual, private entity, governmental or
quasi-governmental authority, or NASCAR (and any other similar
organization or association) is required in connection with
the execution, delivery, and performance of this Agreement;
(vi) that this Agreement, when properly executed
by both parties, will constitute a legal, valid, and binding
agreement, enforceable by Manager in accordance with its
terms;
(vii) that the party executing this Agreement on
behalf of Owner has full right, power, and authority to
execute this Agreement and to bind Owner to the terms hereof;
(viii) that, in the event Manager extends credit to
patrons of the Food Service Areas (it being understood that
Manager will extend credit to the extent it
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is commercially reasonable), Owner shall use its good faith,
reasonable, and diligent efforts to assist Manager in
minimizing any uncollectible amounts from such patrons, which
efforts may include, for example, and not by way of
limitation:
(a) including a provision in all agreements
governing the patrons' rights to utilize
certain areas of the Tracks requiring that
the patron provide, at all times, a valid
credit card on file upon which Manager shall
be entitled to charge outstanding balances
(but not requiring a security deposit); and
(b) Owner withholding patrons' tickets for
future events and allowing Manager to
suspend or withhold the delivery of any food
and beverage products to any patron who has
an outstanding balance that has not, after
due notification, been substantially paid in
full.
(ix) that it shall use its good faith,
reasonable, and diligent efforts at all times to cooperate
with and assist Manager in (A) providing quality food and
beverage services to patrons of the Food Service Areas, and
(B) achieving maximum Gross Receipts (as that term is defined
below) for the Operations (as that term is defined below); and
(x) that Gross Receipts for the Tracks for
fiscal year 2000 are as set forth on Exhibit "B", which is
-----------
attached hereto and incorporated herein.
(b) Manager's Representations to Owner. Manager hereby
----------------------------------
represents to Owner as follows:
(i) that Levy has been validly formed and duly
exists as a limited partnership under the laws of the State of
Illinois, and that it is duly qualified to do business in all
of the states in which each of the Tracks are located and that
Levy Texas has been validly formed and duly exists as a
limited partnership under the laws of the State of Texas, and
that it is duly qualified to do business in the State of
Texas;
(ii) that it is duly authorized to enter into
this Agreement and is not prevented from entering into this
Agreement or complying with its commitments hereunder by its
by-laws, by any statute, regulation, or order of any
governmental or quasi-governmental authority, or by any
license, debt instrument, mortgage, lease, contract, or other
agreement or instrument binding upon it or any of its
property;
(iii) that it is duly authorized to enter into
this Agreement and has taken all necessary action to obtain
such authorization, and that no consent of, or notice to, any
other individual, private entity, or governmental authority is
required in connection with the execution, delivery, and
performance of this Agreement;
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(iv) that this Agreement, when properly executed
by both parties, will constitute a legal, valid, and binding
agreement, enforceable by Owner in accordance with its terms;
(v) that the party executing this agreement on
behalf of Manager has full right, power, and authority to
execute this Agreement and to bind Manager to the terms
hereof; and
(vi) that it shall use its good faith,
reasonable, and diligent efforts at all times to cooperate and
assist Owner in (A) providing quality food and beverage
services to patrons of the Food Service Areas, and (B)
achieving maximum Gross Receipts from the Operations.
2. Management Services.
-------------------
(a) Foodservice Facilities. Owner hereby retains Manager
----------------------
to provide and operate, and Manager hereby agrees to provide and
operate, on an exclusive basis, the entire food and beverage service
operations (collectively, the "Operations") of, for, and at each and
all of the Tracks (including, but not limited to, all Food Service
Areas) for all events held or conducted at the Tracks during the Term
(as that term is defined below), including, but not limited to, all
concerts, car and truck racing and NASCAR events. In order to provide
the services required of Manager hereunder, Manager shall also have the
exclusive right to use all of the kitchens, pantry areas, and other
foodservice related areas of the Tracks described on Exhibit "C"
-----------
attached hereto and made a part hereof (collectively, the
"Facilities"). The Food Service Areas, together with the Facilities,
shall hereinafter be referred to as the "Foodservice Facilities."
(b) Manager's Rights in the Foodservice Facilities. In
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order to enable Manager to fulfill its responsibilities under this
Agreement, Owner hereby grants Manager the exclusive right to use all
of the Foodservice Facilities without hindrance from Owner, or any
individuals or entities claiming by, from, through or under Owner. In
order to control the quality of the products and services sold at the
Tracks, to ensure the safety of the patrons, and to protect Manager's
exercise of the exclusive rights granted hereunder, Owner shall prevent
any other entities or individuals from: (i) utilizing all or any
portion of the Foodservice Facilities, and (ii) selling, anywhere at
the Tracks (including the Food Service Areas), any Food and Beverage
Items (as that term is defined below); provided, however, Owner may
allow sponsors to offer sample-sized portions (i.e., under 2 ounces) of
Food and Beverage Items, but not alcoholic beverages. Furthermore,
Owner and Manager hereby agree that certain limited Suite holders, as
detailed on Schedule 2(b), have the right to supply their own food and
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beverage to their respective Suites. In addition, Owner shall prevent
patrons from bringing any food, beverages, beverage containers, or
alcoholic beverages into the Clubs, the Suites, the Hospitality
Villages and the Facilities; provided, however, patrons may bring food
and alcoholic beverages into the General Concessions areas of the
Tracks (as is consistent with Track policies and security and state and
local laws).
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(c) Services. The operational and management services
--------
(collectively, the "Services") to be provided by Manager shall include,
without limitation, the following:
(i) Administration, management, and direction of
the day-to-day Operations in accordance with, and subject to,
the further terms and conditions of this Agreement;
(ii) Subject to Paragraph 4(b) below, procurement
of all supplies, services, and personnel which are necessary
for the Operations, including personnel for the maintenance
and operation of the Foodservice Facilities and preparation
and service of such food and beverage items as shall be
proposed by Manager and reasonably approved by Owner ("Food
and Beverage Items"), which Food and Beverage Items shall
consist of, but not necessarily be limited to, food, alcoholic
and non-alcoholic beverages, tobacco, candy and confections,
but only to the extent that any of the foregoing may now or
hereafter be legally sold at the Tracks, in accordance with
applicable laws, ordinances, rules, and regulations;
(iii) Establishment and review and/or modification
of all menus, portions, and prices of the Food and Beverage
Items, all of which shall be proposed by Manager and
reasonably approved by Owner; provided, however, that: (A)
Owner shall not unreasonably withhold, condition or delay its
approval of such menus, portions, and prices, and (B) in the
event that Owner fails to deliver to Manager within fifteen
(15) days after submission of such menus, portions, and prices
written approval or denial, such submitted menus, portions,
and prices shall be deemed approved;
(iv) Consultation with Owner at such times as
shall be reasonably appropriate for the purpose of eliminating
operational problems and improving the Operations;
(v) Arranging for the removal of all trash from
the Facilities to various centralized collection points at the
Tracks, whereupon Owner shall be responsible for arranging for
such trash to be properly and lawfully discarded, the cost of
which shall be exclusively borne by Owner, except for trash
that is not related to an event; and
(vi) Any and all other services which Owner or
Manager, in their joint reasonable discretion, deem
appropriate in order for Manager to effectively manage and
operate the Operations in a manner at least consistent with
Manager's performance of comparable services at facilities
similar to the Food Service Areas.
(d) Lowes Club. Notwithstanding anything in this
----------
Agreement to the contrary, the Owner shall retain the right to operate
the Club at the Lowes Motor Speedway (the "Lowes Club"); provided,
however, in the event Owner no longer desires to operate the Lowes
Club,
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Owner shall: (i) transfer to Manager the exclusive rights to operate
the Lowes Club and (ii) shall provide Manager no less than thirty (30)
days prior written notice of such transfer. Such transfer shall be
effective upon the date specified in such notice of transfer by Owner,
which effective date shall be at least thirty (30) days from the date
of such notice. Until such time as Owner shall transfer the operation
of the Lowes Club to Manager, the terms "Clubs," "Food Service Areas,"
"Foodservice Facilities" and "Operations," as used herein shall be read
so as to exclude the Lowes Club therefrom.
3. Projections of Gross Receipts; Capital Budget. Prior to the
---------------------------------------------
commencement of each Contract Year during the Term (or such other period upon
which Owner and Manager shall mutually agree), Manager shall supply Owner with a
copy of Manager's projections for anticipated Gross Receipts for the ensuing
Contract Year together with a budget (the "Capital Budget") for any recommended
capital expenditures (the cost of which shall be borne exclusively by Owner) to
be made during such year to maintain, repair, or replace, any of Owner's
Equipment to be included in the Foodservice Facilities, which Capital Budget
shall be subject to Owner's reasonable approval, which approval shall not be
unreasonably withheld, conditioned, or delayed, so long as such maintenance,
repair or replacement is consistent with Finish Line Event's past practices. Not
less than once each month, Manager shall provide Owner with a statement of the
actual Gross Receipts for the prior month in comparison to the applicable sales
projection, together with a brief explanation about any significant variances
between the projected Gross Receipts and the actual Gross Receipts.
4. Conduct of the Operations.
-------------------------
(a) General. Manager agrees that all Food and Beverage
-------
Items sold by Manager, and the manner of serving and selling the Food
and Beverage Items, shall be of a high quality, which shall be at least
equal to or better than both (A) past practices of Finish Line Events
and (B) that which is provided by comparable facilities.
(b) Sponsorships. Owner and Manager recognize the value
------------
of securing sponsorship relationships (e.g., official sponsors,
exclusive supplies of products, suppliers of official products) for the
Tracks. Although Manager agrees to use Owner's sponsors, Owner and
Manager will ensure that such sponsorship agreements do not impair the
quality of Manager's Food and Beverage Items (as compared to comparable
items served at other venues in which Manager, or its affiliates
provides food and beverage service) or increase Manager's costs (again,
as compared to the prices for comparable items used at other venues in
which Manager or its affiliates provides food and beverage service) for
such items. In the event that Owner determines to enter into a
sponsorship agreement (or enters into any other relationship) that
increases the costs that Manager incurs, then Owner shall fully
reimburse Manager for such cost increases; provided, however, for those
existing sponsorship agreements, as detailed on Schedule 4(b), Owner
-------------
shall not have such reimbursement obligation, but shall use its
reasonable, good faith and diligent efforts to have sponsors institute
Manager's national pricing programs.
(c) Compliance with Laws, Policies, and Programs. In
--------------------------------------------
connection with the conduct of the Operations, Manager shall promptly
comply with and observe all federal,
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Page 6
state, and local laws, ordinances, regulations, orders, or directions
(including, without limitation, alcoholic beverage, fire, building,
health and sanitation codes and regulations) with respect to the
sanitation and purity of the Food and Beverage Items, provided that
nothing herein shall be interpreted to hold Manager responsible for
such compliance as it relates to areas of the Tracks other than the
Foodservice Facilities.
(d) Condition of the Foodservice Facilities. Manager
---------------------------------------
agrees to conduct the Operations in such a manner so as to reasonably
preserve the condition of all areas of the Foodservice Facilities to
which Manager shall have access in the course of the performance of its
obligations hereunder. Manager agrees to keep the Foodservice
Facilities and all other areas to be utilized by Manager, neat, clean
and in a sanitary condition, and to follow all reasonable and
appropriate directions of Owner with respect thereto and with respect
to storage of food and beverage supplies.
(e) Manager's Vendors. In connection with Services
-----------------
provided hereunder and subject to Paragraph 4(b) above, Manager from
time to time purchases products, equipment, and services from various
vendors selected by Manager at its sole discretion (each a "Vendor").
Purchases from Vendors shall be made under such terms Manager deems in
its sole discretion as acceptable ("Vendor Terms"). All Vendor Terms
are the exclusive obligation and property of Manager. Owner does not
have any liability under, or any right to, any Vendor Terms.
(f) Third-Party Concessions. Manager shall oversee the
-----------------------
services provided by Third-Party Concessions (e.g., Wendy's). The
selection of such Third-Party Concessions shall be made by Manager,
subject to Owner's approval, which shall not be unreasonably withheld,
conditioned or delayed. Subject to Paragraph 4(b) above, Owner shall
have the right to propose changes to the Third-Party Concessions, which
Manager shall accept, so long as it is not economically disadvantageous
for Manager.
5. Equipment.
---------
(a) Owner's Equipment; Las Vegas Equipment. Owner shall
--------------------------------------
provide to Manager, at Owner's sole and exclusive cost and expense, all
fixed assets, including, but not limited to, leasehold improvements,
fixtures, kitchen appliances, fixed equipment, carts (e.g., motorized
golf carts), and radio equipment, used in connection with the
Operations (and such replacement items to the foregoing from
time-to-time), all as is consistent with past practices of Finish Line
Events (the "Owner's Equipment"), but specifically excluding Manager's
Equipment (as that term is defined below). Owner hereby agrees that it
shall be exclusively responsible for the repair, maintenance,
replacement and taxes of the Owner's Equipment; provided, however, with
regard to Owner's Equipment at the Las Vegas Motor Speedway similar in
type and nature to that of Manager's Equipment, Manager shall be
responsible for the repair and maintenance while Owner shall be
responsible for the replacement thereof (the "Las Vegas Equipment"). In
the event that Manager becomes the exclusive operator of the Lowes
Club, pursuant to Paragraph 2(d), Owner shall transfer to Manager, free
and clear of all liens and encumbrances and at no additional charge to
Manager, those fixed assets at the
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Lowes Club which, but for the retention by Owner of the right to
operate the Lowes Club hereunder, would have been transferred to
Manager pursuant to the Asset Purchase Agreement, and such fixed assets
shall thereafter be included in "Manager's Equipment" for all purposes
of this Agreement. Owner shall also transfer to Manager, in a manner
and upon terms (including price and payment) consistent with the Asset
Purchase Agreement, such other assets and liabilities as would have
been transferred to Manager in accordance with the Asset Purchase
Agreement but for the retention by Owner of the right to operate the
Lowes Club hereunder.
(b) Manager's Equipment. Except as provided elsewhere in
-------------------
this Agreement to the contrary, Manager shall provide for its sole and
exclusive use and at its sole and exclusive cost and expense, all
moveable equipment, transportation vehicles (not including carts) to
transport prepared food from the Facilities to the Food Service Areas,
pots, pans, dishes, glasses, flatware, paper and plastic ▇▇▇▇, linens,
and smallwares, all of which shall be collectively referred to as
"Manager's Equipment" and which shall be detailed on Exhibit "D", which
-----------
is attached hereto and incorporated herein. Manager hereby agrees that
it shall be exclusively responsible for the repair, maintenance,
replacement and taxes of Manager's Equipment.
(c) Transport. Owner hereby agrees that it shall, at its
---------
sole cost and expense, transport Manager's Equipment and Owner's
Equipment between or among the Tracks, all as is consistent with past
practices of Finish Line Events and as is necessary to operate a
high-quality operation. By way of example and not by way of limitation,
Owner shall transport in semi-trucks, at no cost to Manager or the
Operations, all heating and cooling equipment, including portable
kitchens.
6. Employees and Agents.
--------------------
(a) Conduct and Supervision of Employees and Agents.
-----------------------------------------------
Manager agrees that it shall hire, train, supervise, and regulate all
persons employed by it in the conduct of the Operations so that they
are aware of, and continuously practice, a high standard of
cleanliness, courtesy, and service required and customarily followed in
the conduct of similar operations. Manager, and not Owner, shall be the
sole employer of Manager's employees and shall, therefore, be
exclusively responsible to pay its employees' compensation (e.g.,
salaries and benefits). Manager shall use its reasonable, good faith,
and diligent efforts to assure that its employees shall (i) observe the
rules and regulations of the Tracks , (ii) be neatly and cleanly
uniformed, (iii) maintain personal cleanliness, (iv) be polite and
courteous, (v) be staffed at adequate levels, and (vi) with respect to
non-management employees, wear identification badges that are (A)
reasonable in light of identification and security concerns and (B)
unobtrusive and consistent with the uniforms worn by the Manager's
employees.
(b) Cooperation with Other Employees. Manager agrees to
--------------------------------
cause its employees to reasonably cooperate in the use of each Track's
facilities that are common to the Foodservice Facilities and to other
operations at each such Track. In this regard, Manager agrees to cause
its employees to cooperate in all other reasonable manners with
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Page 8
all employees and agents of Owner and with third parties performing
services at each Track.
(c) Hiring and Employment Practices. Manager agrees that
-------------------------------
in the conduct of the Operations it will not discriminate or permit
discrimination in its hiring or employment practices on the basis of
any federal, state, or local impermissible grounds. Upon receipt of
notice from Owner of any reasonable and significant objection to any of
Manager's employees, the employment of such person will be discontinued
and a suitable person will be promptly substituted; provided, however,
the Owner acknowledges that its right to require replacement of an
employee employed by Manager is expressly subject to considerations and
restrictions imposed upon Manager by any federal, state or local
statute, law, code, regulations, or ordinance by any collective
bargaining agreement or other contract affecting such employee.
(d) Owner's Sales and Marketing Services. Notwithstanding
------------------------------------
the terms and conditions of this Agreement, Owner shall, at its sole
cost and expense, provide all sales and marketing services as it
relates to the Suites, Clubs, and Hospitality Villages, all as is
consistent with past practices and is necessary to operate a
first-class operation. Owner and Manager agree that such services will
be conducted in accordance with the pricing determinations made
pursuant to Paragraph 2(c)(iii) above. Notwithstanding the foregoing,
Owner and Manager agree to explore opportunities for Manager to
participate in marketing efforts in a mutually agreeable manner.
(e) Labor Relations. Notwithstanding anything in this
---------------
Agreement to the contrary, Manager shall have the sole and exclusive
right and authority to implement all matters relating to labor
relations with Manager's employees in the Foodservice Facilities and
with respect to the Operations, including, but not limited to, the
determination of (i) the degree and methods of opposition (if any) to
any union organizing efforts, (ii) all terms and provisions of any
collective bargaining agreement, and (iii) counsel and consultants to
be utilized in such efforts.
7. Licenses and Permits. Manager shall, at its sole expense,
--------------------
maintain in force during the Term, all required food, liquor, and other licenses
and permits and renewals thereof and shall cause to be paid all fees and taxes
which may be due and owing from time to time to federal, state, or municipal
authorities incidental to the Operations. Manager shall be the named licensee
under all such licenses and permits. Owner shall do all acts or things that are
reasonably necessary in order for Manager to maintain all such licenses and
permits. Manager shall have in place alcohol service policies and training
programs for its employees. Throughout the Term, Owner shall, at its sole cost
and expense, maintain all licenses and permits which may be required for the
operation of each of the Tracks. At all times, Owner shall comply with, the
restrictions, rules, and conditions of all such licenses and permits.
8. Collections and Payments of Taxes and Other Items.
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(a) Payment of Taxes. Manager agrees to pay timely, from
----------------
Gross Receipts, all sales, excise, employment, and similar taxes
relating to the Operations.
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Page 9
(b) Billing Practices and Procedures. In accordance with
--------------------------------
the terms of Paragraph 1(a)(viii) above, the practices and procedures
for the invoicing and the extension of credit to customers of the
Foodservice Facilities shall be subject to the reasonable approval of
Owner.
(c) Cash Handling and Cash Management Policies. In
------------------------------------------
connection with the conduct of the Operations, Manager agrees to employ
reasonable and appropriate internal control procedures to protect
against the misappropriation of cash funds. Owner hereby agrees that it
shall provide cash collections services at each Track and shall ensure
that all monies are wire transferred into Manager's account upon
Owner's receipt of funds, but in all cases in no more than five (5)
days, subject to verification by Owner's bank of receipt of such funds.
(d) Monthly Settlement. Owner and Manager will meet
------------------
monthly to determine funds owed to each respective party and shall
exchange checks to settle any such outstanding amounts.
(e) Group Packages. Owner sells packages for Suites and
--------------
other locations at each Track that include a food and beverage
component. The appropriate food and beverage portion of any payment
received by Owner for any such package shall be transmitted monthly to
Manager. Owner and Manager hereby agree to work together, in good
faith, in order to mutually agree on changes to existing group packages
and creation of new group packages (including pricing and allocation to
the Operations consistent with past practices).
9. Use of Facilities.
-----------------
(a) Access to Facilities. Access to the Foodservice
--------------------
Facilities shall be limited to the authorized representatives of, and
other persons designated by, Owner and Manager for the purpose of the
reasonable exercise of Owner's and Manager's rights and obligations
hereunder.
(b) Signs, Displays and Advertising. Manager agrees that
-------------------------------
all signs and displays, and the content and graphics thereof, to be
utilized by Manager at the Tracks shall be subject to the prior
reasonable approval of Owner. Manager may use its name and logo and
that of any affiliate of Manager and Manager may, with the reasonable
approval of Owner, use the name and logo of Owner and the name by which
a Track is known in the signage, displays, menus, and similar items
used in connection with the Operations. In addition, Manager may, in a
reasonable and tasteful fashion and with the reasonable approval of
Owner, promote its affiliation with the Tracks, Owner, each Track, and
the services provided by Manager under this Agreement in Manager's and
its affiliates' corporate stationery, brochures, web sites, and similar
promotional material.
--------------------------------------------------------------------------------
Page 10
(c) Parking. Owner shall provide to Manager, free of
-------
charge, sufficient parking spaces, located reasonably proximate to each
of the Tracks and the Foodservice Facilities, for all of Manager's
employees and vendors. Manager acknowledges and agrees that for events,
such parking may be offsite with bussing to the Track, consistent with
past practices.
(d) Office Space and Equipment. Owner shall provide to
--------------------------
Manager, at Owner's sole and exclusive cost and expense (and not as a
landlord), adequate office space and equipment for Manager's employees
(e.g., chefs, sous chefs, Director of Operations, General Manager,
accounting and human resources staff) to manage the Operations, which
shall include, but not be limited to, furniture, phone systems and
switches, HVAC, electricity, and lighting.
(e) Utilities. Owner and Manager hereby agree that
---------
Manager shall not pay any occupancy, utility, or common area charges;
provided, however, that Manager shall pay for its own local and long
distance service, but may use Owner's telephone equipment at no cost.
Manager shall pay for all utilities to the extent that, consistent with
past practices, they are separately metered.
10. Definition of Gross Receipts. As used in this Agreement, the
----------------------------
term "Gross Receipts" shall mean the sum of (i) total gross revenues, in
accordance with generally accepted accounting principles, from the Operations
pursuant to the terms of this Agreement sold in or from the Foodservice
Facilities, and (ii) service charges or gratuities not paid to employees;
provided, however, that Gross Receipts shall not include: (a) any service
charges or gratuities paid to employees, (b) any city, county, state, or federal
use, excise, or similar tax imposed on the sale or use of the Food and Beverage
Items collected and paid to applicable taxing authorities by Manager, or (c) any
tax imposed on the resale of any Owner's or Manager's Equipment. Notwithstanding
anything in this Agreement to the contrary, the definition of Gross Receipts
shall not include any revenues derived from the Boston Concessions Agreement,
---
pursuant to Section 3.1(e) of the Asset Purchase Agreement.
11. Commissions.
-----------
(a) As further consideration for Owner's grant of the
exclusive rights and privileges to Manager pursuant to this Agreement,
and as the sole compensation due and owing from Manager to Owner
hereunder, Manager agrees to pay Owner or to such of Owner's
subsidiaries, as Owner shall from time to time direct, the following
percentages of Gross Receipts generated in the following areas of the
Tracks during each Contract Year during the first (1st) ten (10)
Contract Years of the Term (collectively, the "Commissions"):
--------------------------------------------------------------------------------
Page 11
Source of Gross Receipts Percentage of Gross Receipts
------------------------ ----------------------------
(i) Concessions *
(ii) Suites *
(iii) Hospitality Villages *
(iv) Third-Party Concessions *
(v) Clubs *
(b) To the extent that this Agreement is extended for ten
(10) additional Contract Years beyond the initial ten (10) year Term,
Manager agrees to pay Owner or to such of Owner's subsidiaries, as
Owner shall from time to time direct, Commissions according to the
following percentages of Gross Receipts generated in the following
areas of the Tracks during each Contract Year:
Source of Gross Receipts Percentage of Gross Receipts
------------------------ ----------------------------
(i) Concessions *
(ii) Suites *
(iii) Hospitality Villages *
(iv) Third-Party Concessions *
(v) Clubs *
(c) Lowes Club. If Manager is not the exclusive operator of the
----------
Lowes Club on or before the commencement of the fourth (4th) Contract Year, the
amount of Commissions that Manager pays to Owner shall be reduced by
*
each Contract Year thereafter until Manager is the exclusive operator of the
Lowes Club, which amount shall be reduced on a pro rata basis for any partial
Contract Years.
(d) Prepayment. On the Commencement Date, Manager shall pay to
----------
Owner * , which amount shall be a prepayment of commissions owing from
Manager to Owner under this Agreement (the "Commission Prepayment"). Manager
shall retain all Commissions otherwise owing to Owner pursuant to this Agreement
until the outstanding amount of the Commission Prepayment, plus an * percent
(*%) per annum commission charge, compounded monthly, has been retained by
Manager, at which time Manager shall commence payment of Commissions to Owner
pursuant to the terms of this Agreement. Such commission charge shall accrue on
the outstanding amount of the Commission Prepayment. For this purpose, the
Commission Prepayment, or portion thereof, shall be outstanding until such time
as it is repaid. Such repayment shall be deemed made as and when the applicable
retained Commissions would have been paid in accordance with Paragraph 12 below.
(e) Special Additional Commission. *
-----------------------------
--------------------------------------------------------------------------------
*Confidential portion has been omitted and filed separately with the Commission.
Page 12
*
12. Accountings; Payment of Commissions. Within thirty (30) days
-----------------------------------
following the last day of each month during the Term, Manager shall provide
Owner with a statement detailing all Gross Receipts from the Operations
generated during such month, separated by department and event, together with a
statement of the applicable Commissions due for such Gross Receipts
(collectively, the "Statement"). When Manager delivers the Statement, Manager
shall also pay to Owner the appropriate Commissions for such month, unless such
Commissions are retained by Manager pursuant to Section 11(d) hereof. Within
sixty (60) days following the conclusion of each calendar year during the Term,
Manager shall provide Owner with a complete accounting (collectively, the "Final
Statement"), setting forth the calculation of the annual Gross Receipts,
separated by department and event, and the total Commissions due for the
applicable period. At any time during the Term, and for a period of one (1)
calendar year thereafter, Owner and its designated representatives (including
outside accountants) shall have the opportunity, at their sole cost and expense
(subject to the provisions set forth below), to inspect the books and records of
Manager to verify the figures contained in each Statement or Final Statement, as
the case may be. In the event that Owner disputes such figures, Owner shall
deliver a written notice of such dispute to Manager ("Dispute Notice"). If Owner
and Manager are unable to resolve such dispute within ninety (90) days following
the delivery of the Dispute Notice, Owner and Manager shall immediately submit
the dispute for resolution to a nationally recognized public accounting firm to
be mutually agreed to by Owner and Manager (the "Accounting Firm"). The
determination of Gross Receipts and Commissions in accordance with the terms
hereof made by the Accounting Firm after a full and complete inspection of
Manager's books and records shall be final and binding upon the parties. If the
Accounting Firm determines that the computation of Gross Receipts or Commissions
contained in any Statement or the Final Statement as the case may be, is
inaccurate, then either Owner shall promptly pay to Manager, or Manager shall
promptly pay to Owner, such amount as is necessary to reflect the adjustment of
Gross Receipts or
--------------------------------------------------------------------------------
*Confidential portion has been omitted and filed separately with the Commission.
Page 13
Commissions based upon the Accounting Firm's determinations (the
"Adjusted Amount"). If the Accounting Firm determines that the computation of
Gross Receipts or Commissions contained in any Statement or the Final Statement,
as the case may be, is understated by five percent (5%) or more, then, in
addition to the Adjusted Amount (which will increase by interest at the
prevailing prime rate), Manager shall pay the entire cost of the Accounting
Firm's engagement. In all other events, the cost of the Accounting Firm's
engagement and the costs of Owner's inspection of the books and records of
Manager shall be borne by Owner.
13. Scope; Duration; Termination; Default.
-------------------------------------
(a) The term of this Agreement shall be for a period of
ten (10) years, commencing on the Closing Date, as that term is defined
in Section 1.6 of the Asset Purchase Agreement (the "Commencement
Date") and, unless otherwise extended by Owner pursuant to the terms of
this Agreement, expiring on December 31, 2011 (the "Term"). For
purposes of this Agreement, the term "Contract Year" shall mean the
twelve (12) month period commencing on January 1st and expiring on the
next ensuing December 31st; provided, however, the first (1st) Contract
Year shall commence on the Commencement Date and terminate on December
31, 2002. Manager, at its sole option, may extend the Term of this
Agreement for an additional ten (10) Contract Years. Thereafter, the
Term of this Agreement shall automatically renew on a year-to-year
basis unless sooner terminated by either party upon one hundred eighty
(180) days' written notice prior to the expiration of the then current
term.
(b) To the extent that Owner (and any of its affiliated
or related entities) owns or manages (whether by acquisition or
development) any other facilities, in addition to the Tracks (the
"Future Facility"), Owner shall offer to Manager the exclusive right to
provide and operate the food and beverage services to each such Future
Facility under the same terms and conditions as detailed herein.
(c) Owner shall have the right to terminate this
Agreement upon the occurrence of any default by Manager upon thirty
(30) days prior written notice to Manager specifying the nature of such
default. A default shall be defined as the occurrence of any one (1) or
more of the following:
(i) Manager shall file a voluntary petition in
bankruptcy, or shall be adjudicated bankrupt or insolvent, or
shall file any petition or answer seeking any reorganization,
arrangement, composition, readjustment, liquidation,
dissolution, or similar relief under any present or future
statute or law relating to bankruptcy, insolvency or other
relief for debtors, whether federal or state, or shall seek,
consent to or acquiesce in the appointment of any trustee,
receiver, conservator, or liquidator of Manager or of all or
any substantial part of its properties (the term "acquiesce,"
as used herein, being deemed to include, but not be limited
to, the failure to file a petition or motion to vacate or
discharge any order, judgment, or decree providing for such
appointment within the time specified by law); or a court of
competent jurisdiction shall enter an order, judgment, or
decree
--------------------------------------------------------------------------------
Page 14
approving a petition filed against Manager seeking any
reorganization, arrangement, composition, readjustment,
liquidation, dissolution or similar relief under any present
or future statute or law relating to bankruptcy, insolvency,
or other relief for debtors, whether federal or state, and
Manager shall consent to or acquiesce in the entry of such
order, judgment, or decree, or the same shall remain unvacated
and unstayed for an aggregate of sixty (60) days from the day
of entry thereof; or any trustee, receiver, conservator, or
liquidator of Manager or of all or any substantial part of its
properties shall be appointed without the consent of or
acquiescence of Manager and such appointment shall remain
unvacated and unstayed for an aggregate of sixty (60) days; or
(ii) Manager fails to perform any of its service
or obligations in the manner or within the time required under
this Agreement, or commits or permits a breach of, or default
in, any of its duties, liabilities, or obligations hereunder,
which in all cases causes (or could reasonably and in good
faith be expected to cause) a material and adverse effect in
the conduct of the Operations or the maximization of Gross
Receipts, and fails to fully cure or remedy such material
failure, breach, or default prior to the next major event,
after written notice from Owner to Manager specifying, in
sufficient detail, the nature of such material failure,
breach, or default, or, if such material breach or default
cannot reasonably be cured prior to the next major event, due
to third-party approval or Force Majeure, and fails to
diligently prosecute such cure or remedy to completion as soon
as is reasonably possible thereafter.
(iii) Upon termination of this Agreement pursuant
to subparagraphs (i) or (ii) above, Manager shall only be
obligated to pay the Commissions for Gross Receipts prior to
termination in accordance with Paragraph 11 above, subject to
other remedies available to Manager and Owner.
(d) In the event that all of Manager's services are
terminated as provided in this Paragraph 13, Manager shall, at the
request of Owner, continue to serve as manager of the Operations until
a successor is selected and commences work in the Foodservice
Facilities or until such earlier date as Owner shall specify; provided
that Manager shall not be obligated to so continue as manager for a
period in excess of thirty (30) days. The terms and conditions of this
Agreement shall continue to be fully applicable during such period as
if no termination had occurred.
(e) Manager shall have the right to terminate this
Agreement upon the occurrence of any of the following events of default
by Owner and upon written notice to the Owner specifying the nature of
such default:
(i) Owner shall file a voluntary petition in
bankruptcy, or shall be adjudicated bankrupt or insolvent, or
shall file any petition or answer seeking any reorganization,
arrangement, composition, readjustment, liquidation,
dissolution, or similar relief under any present or future
statute or law relating to bankruptcy, insolvency, or other
relief for debtors, whether federal or state, or shall seek,
--------------------------------------------------------------------------------
Page 15
consent to, or acquiesce in the appointment of any trustee,
receiver, conservator, or liquidator of Owner or of all or any
substantial part of its properties (the term "acquiesce," as
used herein, being deemed to include, but not be limited to,
the failure to file a petition or motion to vacate or
discharge any order, judgment, or decree providing for such
appointment within the time specified by law); or a court of
competent jurisdiction shall enter an order, judgment, or
decree approving a petition filed against Owner seeking any
reorganization, arrangement, composition, readjustment,
liquidation, dissolution, or similar relief under any present
or future statute or law relating to bankruptcy, insolvency,
or other relief for debtors, whether federal or state, and
Owner shall consent to or acquiesce in the entry of such
order, judgment, or decree, or the same shall remain unvacated
and unstayed for an aggregate of sixty (60) days from the day
of entry thereof; or any trustee, receiver, conservator, or
liquidator of Owner or of all or any substantial part of its
properties shall be appointed without the consent or
acquiescence of Owner and such appointment shall remain
unvacated and unstayed for an aggregate of sixty (60) days;
(ii) Owner fails to timely perform any of its
obligations under this Agreement which in all cases causes (or
could reasonably and in good faith be expected to cause) a
material and adverse effect in the conduct of the Operations
or the maximization of Gross Receipts, and fails to fully cure
or remedy such material failure, breach, or default prior to
the next major event after written notice from Manager to
Owner specifying, in sufficient detail, the nature of such
material failure, breach, or default, or, if such material
breach or default cannot reasonably be cured prior to the next
major event, due to third-party approval or Force Majeure, and
fails to diligently prosecute such cure or remedy to
completion as soon as is reasonably possible thereafter.
(f) Manager's Termination Payment with Cause. In the
----------------------------------------
event that this Agreement is terminated prior to its scheduled
expiration for any reason, other than a termination by Owner for
convenience, pursuant to Paragraph 13(g), Owner hereby agrees, as a
condition precedent to such earlier termination, to pay Manager in a
single lump-sum payment, a termination payment (the "Caused Termination
Payment") in an amount equal to
* . Upon Manager's receipt of the Caused
Termination Payment, Manager shall immediately transfer all right,
title and interest to Owner in: the Purchased Assets, *
and Manager's exclusive rights hereunder, all of which shall be
transferred free and clear of all liens and encumbrances.
(i) *
--------------------------------------------------------------------------------
*Confidential portion has been omitted and filed separately with the Commission.
Page 16
(ii) *
(g) Manager's Termination Payment for Convenience. Owner
---------------------------------------------
shall have the right to terminate this Agreement without cause (i.e.,
for Owner's convenience) at any time prior to its scheduled expiration.
In the event that this Agreement is terminated prior to its scheduled
expiration, pursuant to this Paragraph 13(g), then the following terms
and conditions shall apply:
(i) Such termination shall not occur earlier
than the * annual anniversary of the Commencement Date and no
later than the * annual anniversary of the Commencement Date;
and
(ii) Owner shall pay to Manager in a single lump-sum
payment a termination payment (the "Convenience Termination Payment")
in an amount equal to the Caused Termination Payment plus * .
Upon Manager's receipt of the Convenience Termination Payment, Manager
shall immediately transfer all right, title and interest to Owner in:
the Purchased Assets, * and Manager's exclusive rights
hereunder, all of which shall be transferred free and clear of all
liens and encumbrances.
(aa) *
(bb) *
(h) Notwithstanding anything in this Agreement to the
contrary, neither Owner nor Manager shall be entitled to seek, claim,
or collect punitive damages. Accordingly, Owner and Manager hereby
expressly waive any right to seek, claim, or collect any punitive
damages in connection with, or related to, a breach or violation of
this or any other agreement entered into between Owner and Manager. *
--------------------------------------------------------------------------------
*Confidential portion has been omitted and filed separately with the Commission.
Page 17
*
(i) Owner hereby expressly agrees that, during the Term
(including any extensions thereof) and for a period of twenty four (24)
months following either the expiration or earlier termination of this
Agreement, none of Owner, nor any other food or beverage service
operator or concessionaire providing food and beverages in, to, or for
any areas of the Tracks, nor any of their respective affiliates,
related entities, or individuals, shall directly or indirectly solicit,
hire, offer to hire, or employ any current salaried or management-level
employee of Manager (including, but not limited to, Manager's current
or former general manager, chefs, sous chefs, and the managers of the
various areas of the Foodservice Facilities) to work in or in
connection with the Tracks or the Foodservice Facilities as a
consultant, employee, independent contractor, or otherwise in any other
capacity, without Levy's prior written approval, which approval can be
granted or denied in Levy's sole and absolute discretion.
Notwithstanding the terms and conditions of this Paragraph 13(i), all
existing Finish Line Events employees are exempted from this Paragraph
13(i). Furthermore, those employees who are hired by Manager to work at
the Operations during the * Contract Years and are not
already employees of Manager, shall be exempted from this Paragraph
13(i), but only through the * Contract Year; thereafter the
terms and conditions of this Paragraph 13(i) shall be in full force and
effect. With regard to Manager's former employees, the prohibitions in
this Paragraph shall last for a period of twelve (12) months from their
termination. The provisions of this Paragraph 13(i) shall survive the
termination of this Agreement for any reason.
(j) Any public announcements made upon the expiration or
earlier termination of this Agreement shall be reasonably agreed upon
in advance by Owner and Manager.
14. Indemnity.
---------
(a) To the fullest extent permitted by law, Manager hereby
indemnifies, defends, protects, and forever holds Owner, its respective
shareholders, officers, directors, partners, members, employees, agents
and representatives (collectively, the "Owner's Indemnitees") harmless
from and against any and all claims, demands, losses, liabilities,
actions, lawsuits and other proceedings, judgments, awards, costs and
expenses (including reasonable attorneys' fees, paraprofessional fees
and court-related costs), such indemnity covering, but not being
limited to, business interruption claims, bodily injury, sickness,
disease, death or injury to or destruction of tangible property, but in
all events, except as expressly provided below, only to the extent
arising directly or indirectly, in whole or in part, out of the (i)
gross negligence or any willful misconduct, omission, or breach of its
obligations under this Agreement by Manager or by any of its officers,
directors, agents or employees, in connection with this Agreement or
Manager's
--------------------------------------------------------------------------------
*Confidential portion has been omitted and filed separately with the Commission.
Page 18
performance of its duties or authority hereunder or (ii) breach of any
representation, warranty or covenant contained in this Agreement. The
indemnification obligation contained in this Paragraph 14(a) shall
expressly include, but will not be limited to, damage which occurs as a
result of the consumption of Food and Beverage Items sold by Manager at
the Tracks. Notwithstanding the foregoing, this Paragraph 14(a) does
not require Manager to indemnify, defend, protect, or hold Owner or
Owner's Indemnitees harmless for claims, demands, losses, liabilities,
actions, lawsuits or other proceedings, judgments, awards, costs and
expenses to the extent caused by (i) the willful or negligent acts or
omissions of Owner or any of Owner's Indemnitees or any contractors
hired or retained by any of them, (ii) the willful or negligent acts or
omissions of a Track's construction contractor, any construction
subcontractors, a Track architect or any other persons involved in the
design, construction, renovation, or modification of a Track
(including, but not limited to, the Foodservice Facilities), or (iii)
any damages, claims, or liabilities caused by any part of a Track other
than the Foodservice Facilities. If any action or proceeding (including
any governmental investigation) shall be brought or asserted against
Owner or Owner's Indemnitees, in respect of which indemnity may be
sought from Manager, Owner or Owner's Indemnitees, as the case may be,
shall promptly notify Manager in writing; provided, however, failure to
give such notice promptly shall not diminish Owner's right to
indemnification hereunder unless such failure materially prejudices
Manager. Provided that the matter for which indemnity is sought is
solely for monetary damages and provided Manager first unconditionally
acknowledges in writing its indemnification obligations hereunder with
respect to such matter, Manager shall have the right to assume the
defense thereof, including the employment of counsel reasonably
satisfactory to Owner and Owner's Indemnitees, as the case may be, and
the payment of all expenses. Manager shall not settle any such matter
without the prior consent of the Owner unless such settlement includes
a complete release and discharge (with prejudice, if applicable) of the
Owner and the Manager pays such settlement in full. If Manager assumes
the defense of such action or proceeding, any such indemnified party
shall have the right to employ separate counsel in any such action and
to participate in the defense thereof, but the fees and expenses of
such separate counsel shall be at the expense of such indemnified party
unless (A) Manager, in its sole and absolute discretion, has agreed in
advance and in writing to pay such fees and expenses, or (B) Manager
has failed to assume the defense of such action or proceeding or employ
counsel reasonably satisfactory to the indemnified party in any such
action or proceeding. If Manager has failed to assume the defense of
such action, Manager shall not be liable for any settlement of any such
action or proceeding effected without its written consent, which
consent shall not be unreasonably withheld or delayed, but if there be
a final judgment for the plaintiff in any such action or proceeding, or
if any such action or proceeding shall be settled and Manager shall
have consented to such settlement, Manager agrees to indemnify,
protect, defend, and hold harmless both Owner and Owner's Indemnitees
from and against any loss or liability by reason of such judgment or
settlement.
(b) To the fullest extent permitted by law, Owner hereby
indemnifies, defends, protects and forever holds Manager, its partners,
each of its and their respective shareholders, officers, directors,
employees, agents and representatives (collectively, the
--------------------------------------------------------------------------------
Page 19
"Manager's Indemnitees") harmless, from and against any and all claims,
demands, losses, liabilities, actions, lawsuits and other proceedings,
judgments, awards, costs and expenses (including reasonable attorneys'
fees, paraprofessional fees and court-related costs), such indemnity
covering, but not limited to, business interruption claims, bodily
injury, sickness, disease, death or injury to or destruction of
tangible property, but in all events, except as expressly provided
below, only to the extent arising directly or indirectly, in whole or
in part, out of the (i) gross negligence or any willful misconduct or
omission or breach of its obligations hereunder by Owner or by any of
its officers, directors, agents or employees, in connection with this
Agreement or (ii) breach of any representation, warranty or covenant
contained in this Agreement.. Notwithstanding the foregoing, this
Paragraph 14(b) does not require Owner to indemnify, defend, protect or
hold Manager or Manager's Indemnitees harmless for claims, demands,
losses, liabilities, actions, lawsuits or other proceedings, judgments,
awards, costs and expenses to the extent caused by the willful or
negligent acts or omissions of Manager or any of Manager's Indemnitees
or any of the Manager's contractors or agents. If any action or
proceeding (including any governmental investigation) shall be brought
or asserted against Manager or Manager's Indemnitees, in respect of
which indemnity may be sought from Owner, Manager or Manager's
Indemnitees, as the case may be, shall promptly notify Owner in
writing; provided, however, failure to give such notice promptly shall
not diminish Manager's right to indemnification hereunder unless such
failure materially prejudices Owner. Provided that the matter for which
indemnity is sought is solely for monetary damages and provided Owner
first unconditionally acknowledges in writing its indemnification
obligations hereunder with respect to such matter, Owner shall have the
right to assume the defense thereof, including the employment of
counsel reasonably satisfactory to Manager and Manager's Indemnitees,
as the case may be, and the payment of all expenses. Owner shall not
settle any such matter without the prior consent of the Manager unless
such settlement includes a complete release and discharge (with
prejudice, if applicable) of the Manager and the Owner pays such
settlement in full. If Owner assumes the defense of such action or
proceeding, any such indemnified party shall have the right to employ
separate counsel in any such action and to participate in the defense
thereof, but the fees and expenses of such separate counsel shall be at
the expense of such indemnified party unless (i) Owner, in its sole and
absolute discretion, has agreed in writing to pay such fees and
expenses, or (ii) Owner has failed to assume the defense of such action
or proceeding or employ counsel reasonably satisfactory to the
indemnified party in any such action or proceeding. If Owner has failed
to assume the defense of such action, Owner shall not be liable for any
settlement of any such action or proceeding effected without its
written consent, which consent shall not be unreasonably withheld or
delayed, but if there be a final judgment for the plaintiff in any such
action or proceeding, or if any such action or proceeding shall be
settled and Owner shall have consented to such settlement, Owner agrees
to indemnify, protect, defend and hold harmless both Manager and
Manager's Indemnitees from and against any loss or liability by reason
of such judgment or settlement.
(c) Any monetary liability indemnified under subparagraph
(a) or (b) above shall be reduced by the proceeds of insurance received
by the indemnified party.
--------------------------------------------------------------------------------
Page 20
(d) The provisions of this Paragraph 14 shall survive the
termination of this Agreement.
(e) The indemnification obligations of Manager hereunder
shall be the joint and several obligations of Levy and Levy Texas.
15. Ownership in Foodservice Facilities; Authority of Manager.
---------------------------------------------------------
Manager shall have no ownership rights in the Foodservice Facilities (other than
Manager's Equipment), nor any claim of ownership with respect thereto, arising
out of this Agreement or the performance of its services hereunder. This
Agreement shall in no way be construed to authorize Manager to engage in any
brokerage services or activities of any similar nature relating to the
Foodservice Facilities.
16. Taxes and Contributions. Manager assumes full and exclusive
-----------------------
responsibility and liability for withholding and paying, as may be required by
law, all federal, state, and local taxes and contributions with respect to,
assessed against, or measured by Manager's earnings hereunder, or salaries or
other contributions or benefits paid or made available to any persons retained,
employed, or used by or for Manager in connection with its services, and any and
all other taxes and contributions applicable to its services for which Manager
may be responsible under any laws or regulations, and shall make all returns
and/or reports required in connection with any and all such laws, regulations,
taxes, contributions and benefits.
17. Severability. Each provision of this Agreement is intended to
------------
be severable. If any term or provision hereof shall be determined by a court of
competent jurisdiction to be illegal or invalid for any reason whatsoever, such
provision shall be deemed to be severed from this Agreement and shall not affect
the validity of the remainder of this Agreement.
18. Consents; Waiver. Owner and Manager hereby expressly
----------------
acknowledge and agree that, unless otherwise expressly stated to the contrary in
this Agreement, all of the consents and approvals that are necessary or required
from either Owner or Manager hereunder shall not be unreasonably conditioned,
delayed, withheld, or denied. The granting of any consent or approval in any one
instance by or on behalf of either Owner or Manager shall not be construed to
waive or limit the need for such consent in any other or subsequent instance. No
waiver, express or implied, by either Owner or Manager to or of any breach or
default by the other party in the performance by the other of its obligations
hereunder shall be valid unless in writing, and no such waiver shall be deemed
or construed to be a consent or waiver to or of any other breach or default in
the performance by such other party of the same or any other obligations of such
party hereunder. Failure on the part of either party to complain of any act or
failure to act of the other party or to declare the other party in default,
irrespective of how long such failure continues, shall not constitute a waiver
by such party of its rights hereunder.
19. Governing Law. This Agreement is entered into in the State of
-------------
North Carolina and shall be governed by the internal laws thereof.
20. Time of Essence. Subject only to the provisions of Paragraph
---------------
21 below, time is of the essence in the performance of this Agreement.
--------------------------------------------------------------------------------
Page 21
21. Force Majeure. A delay in or failure of performance by Owner
-------------
or Manager shall not constitute a default, nor shall Owner or Manager be held
liable for loss or damage, if and to the extent that such delay, failure, loss,
or damage is caused by occurrences beyond the reasonable control of such party,
and its agents, employees, contractors, subcontractors, and consultants,
including but not limited to, acts of God or the public enemy, expropriation or
confiscation of facilities, compliance with any order or request of any
governmental authority or person purporting to act therefor, acts of declared or
undeclared war, weapon of war employing atomic fission or radioactive force,
whether in the time of peace or war, public disorders, rebellion, sabotage,
revolution, earthquakes, tornadoes, floods, riots, strikes, labor or employment
difficulties, delays in transportation, inability of a party to obtain necessary
materials or equipment or permits due to existing or future laws, rules, or
regulations of governmental authorities, or any other causes, whether direct or
indirect, and whether or not of the same class or kind as those specifically
above named, not within the reasonable control of such party, or its agent,
employees, contractors, subcontractors and consultants, and which by the
exercise of reasonable diligence said party is unable to prevent. Neither Owner
nor Manager shall be entitled to the benefits of this Paragraph 21 unless it
gives reasonably prompt written notice to the other of the existence of any
event, occurrence, or condition which it believes permits a delay in the
performance of its obligations pursuant to this Paragraph 21; provided, however,
if the other party is already aware of such event causing the Force Majeure, no
such written notice shall be required.
22. Assignment and Subcontracts.
---------------------------
(a) Manager shall have no right, power, or authority to
assign this Agreement, or any portion hereof or any monies due or to
become due hereunder, or to delegate any duties or obligations arising
hereunder, either voluntarily, involuntarily, or by operation of law,
without the prior written approval of Owner, which approval shall not
be unreasonably withheld, conditioned, or delayed; provided, however,
that a sale, transfer, assignment, delegation, or sub-contract of this
Agreement or duties or obligations arising hereunder to any
wholly-owned subsidiary or affiliate (that is controlled by Levy) of
Levy shall not a constitute sale, transfer, assignment, delegation, or
sub-contract of this Agreement and, therefore, shall not require
Owner's approval. No such sale, transfer, assignment, delegation, or
sub-contract of this Agreement to a subsidiary or controlled affiliate
of Levy shall release Manager from its duties or obligations hereunder.
Notwithstanding the foregoing, to the extent Owner incurs marketing
expenses as a result of such sale, transfer, assignment, delegation, or
sub-contract, Manager shall reimburse Owner for its reasonable
marketing expenses. For purposes of this Paragraph 22, an affiliate
that is controlled by a person means a corporation, limited liability
company or partnership in which such person holds more than fifty
percent (50%) of the voting stock, membership interests or partnership
interest, as the case may be, such that such person has the power to
direct the management and policies of such affiliate.
(b) In the event that (1) Owner either sells or transfers
its ownership interest in any Track or Future Facility, or (2) Owner
sells or transfers its rights to grant the right to sell food and
beverage items in any Track or Future Facility, Owner shall use its
best
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Page 22
reasonable efforts to transfer and assign this Agreement, subject to
Manager's approval, which approval shall not be unreasonably withheld,
conditioned, or delayed, provided that prior to the consummation of
such sale, assignment, or transfer, such purchaser(s), assignee(s), or
transferee(s) expressly assumes in writing the terms and conditions of
this Agreement and agrees to be bound by all of the obligations of
Owner contained in this Agreement. Without waiver of the foregoing
provisions, all of the rights, benefits, duties, liabilities, and
obligations of the parties hereto shall inure to the benefit of, and be
binding upon, their respective successors and assigns. Failure of
Manager to approve the assignment of this Agreement, as aforesaid,
shall not prevent Owner from completing any sale or transfer
contemplated by clauses (1) or (2) above and, in the absence of such
approval by Manager, this Agreement shall automatically terminate upon
the completion of such sale or transfer by Owner. If Manager has
approved of such transfer or assignment and if Owner, after utilizing
its best reasonable efforts to transfer and assign this Agreement is
unable to do so: (i) and such sale, transfer or assignment is of all
Tracks and then-existing Future Facilities, then the provisions of
Paragraph 13(g) shall apply, or (ii) and such sale, transfer or
assignment is of less than all of the Tracks and then-existing Future
Facilities, then the Convenience Termination Payment shall be the sum
of (a) * for such Tracks and then-existing Future
Facilities so sold or transferred, plus (b) * for such
Tracks and then-existing Future Facilities so sold or transferred, plus
(c) * for such Tracks and then-existing Future Facilities
relative to total Gross Receipts for the previous Contract Year of all
Tracks and then-existing Future Facilities so sold or transferred.
(c) Manager hereby agrees that a Change In Control (as
that term is defined below) shall constitute an assignment of this
Agreement. "Change In Control" shall mean an acquisition, directly or
indirectly, of (i) substantially all of the assets of Levy, (ii) more
than fifty percent (50%) of the partnership interests of Levy or (iii)
more than fifty percent (50%) of the voting securities or other
interest of the general partner of Levy, in any case by another person,
group or entity, but specifically excluding an acquisition by Compass
Group USA, Inc. (or entities which are controlled by Compass Group USA,
Inc.) or ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇ (or entities which are controlled by ▇▇▇▇▇▇▇▇
▇. ▇▇▇▇).
23. Modification of Agreement. This Agreement constitutes the
-------------------------
entire agreement between the parties hereto. To be effective, any modification
of this Agreement must be in writing and signed by the party to be charged
thereby.
24. Headings. The headings of the Paragraphs of this Agreement are
--------
inserted for convenience of reference only and shall not in any manner affect
the construction or meaning of anything contained therein or govern the rights
or liabilities of the parties hereto.
25. Interpretation. Whenever the context requires, all words used
--------------
in the singular number shall be deemed to include the plural and vice versa, and
each gender shall include any other gender. The use herein of the word
"including," when following any general statement, term, or matter, shall not be
construed to limit such statement, term, or matter to the specific items or
matters set forth immediately following such word or to similar items or
matters,
--------------------------------------------------------------------------------
*Confidential portion has been omitted and filed separately with the Commission.
Page 23
whether or not non-limiting language (such as "without limitation," or "but not
limited to," or words of similar import) is used with reference thereto, but
rather shall be deemed to refer to all other items or matters that could
reasonably fall within the broadest possible scope of such general statement,
term, or matter.
26. Notices.
-------
(a) All notices, requests, and communications required or
permitted hereunder shall be in writing and shall be sufficiently
given, and deemed to have been received, upon personal delivery or, if
mailed, upon the first to occur of (i) actual receipt as evidenced by
written receipt for certified or registered mail or a nationally
recognized overnight courier service, or (ii) refusal of delivery or
notification by the United States Postal Service (or nationally
recognized overnight courier service) to the sending party that the
notice, request, or communication is not deliverable at the address of
the receiving party set forth below:
If to Owner: Speedway Motorsports, Inc.
▇.▇. ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Vice President and Chief Financial Officer
With a copy to: Speedway Systems LLC
▇▇▇▇-▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Executive Vice President
If to Manager: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Chairman
Levy Restaurants
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
--------------------------------------------------------------------------------
Page 24
With a copy to: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
President
Levy Restaurants
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
With a copy to: Levy Restaurants
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
With a copy to: Manager's Director of Operations at his/her
offices at the applicable Track
(b) Notice of a change in address of one of the parties
shall be given in writing to the other parties as provided above, but
shall be effective only upon actual receipt.
27. Confidentiality; Marks.
----------------------
(a) Any financial statements or other financial
information that may be provided by either party to the other prior to
the execution of, or pursuant to the requirements contained in, this
Agreement, whether provided voluntarily or in satisfaction of an
obligation to do so, and the terms of this Agreement, shall be kept
strictly confidential by the party receiving the same, except and only
to the extent that such information may be required to be reported for
purposes of the receiving party's financial statements or public
reporting requirements to or by any duly constituted governmental
authorities or a securities exchange or to any bank or other financial
institution providing financing to Manager, Owner, or any of their
respective affiliated or related entities or owners.
(b) During the course of the performance of Manager's
services pursuant to this Agreement, Manager and Owner may each utilize
certain information that relates to its past, present, or future
research, development, business activities, products, services,
technical knowledge, and knowledge capital ("Confidential
Information"). Furthermore, during the course of Manager's Services
hereunder, Manager may utilize certain proprietary materials, tools,
and methodologies including but not limited to software, programs, and
systems (including modifications and adaptations thereto),
documentation, training manuals, and procedures (hereinafter
collectively referred to as "Service Solution Tools"). Service Solution
Tools shall be deemed to be included as part of Manager's Confidential
Information.
(c) Owner and Manager hereby acknowledge and recognize
the competitive advantage and value associated with the Confidential
Information and hereby agrees to
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Page 25
use its best efforts to, at all times, protect and preserve the
confidentiality of each other's Confidential Information. Owner and
Manager hereby agrees that it shall not have or retain any right,
title, or interest in the Confidential Information of the other, except
to use it during the term of this Agreement as expressly authorized
from time-to-time and solely for the purpose of furthering Manager's
services pursuant to this Agreement. Nothing in this Agreement shall
restrict, prohibit, or limit in any way Manager's use of the Service
Solution Tools in any manner or for any purpose whatsoever.
(d) Owner and Manager hereby agrees that all Confidential
Information, including, but not limited to, Service Solution Tools and
all copies thereof, shall be returned to the originating party, or at
the originating party's election may be removed by the originating
party, upon the first of the following to occur: (a) the expiration or
earlier termination of this Agreement or (b) originating party's
request.
(e) If Manager, in its sole discretion, authorizes Owner
to use any its Service Solution Tools, the Service Solution Tools may
only be used for its internal business purposes only and may not be
used or shared for the benefit of any other party. The Service Solution
Tools are made available "AS IS" without express or implied warranties
of any kind. If this Agreement expires or is terminated, Owner's right,
if any, to use the other's Service Solution Tools shall cease as of
such expiration or termination.
(f) Proprietary Marks. Owner and Manager each acknowledge
-----------------
that the names, logos, service marks, trademarks, trade dress, trade
names, and patents, whether or not registered, now or hereafter owned
by or licensed to them respectively (or their affiliated and parent
partners and companies) [collectively, "Marks"] are the proprietary
Marks of such party, and the other party will not use the Marks for any
purpose except as expressly permitted in writing. Upon termination of
this Agreement, the using party shall (a) immediately and permanently
discontinue the use and display of any Marks (collectively,
"De-Image"), and (b) immediately remove and deliver to the other party
all goods bearing any Marks. If the using party shall fail to De-Image
the Foodservice Facilities within thirty (30) days of the termination
or expiration date, then the other party and its agents shall have the
right to enter the Tracks and Foodservice Facilities and De-Image the
Premises, without prejudice to other rights and remedies.
(g) Owner and Manager hereby expressly acknowledge and
agree that the terms and provisions of this Paragraph 27 shall survive
the expiration or earlier termination of this Agreement.
28. Security. Owner shall be exclusively responsible for providing
--------
adequate security throughout the entire Track, including the Foodservice
Facilities. Manager acknowledges that Owner shall be responsible for public
order and safety and shall have the right and authority to eject individuals
from the Foodservice Facilities as necessary.
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Page 26
29. Insurance.
---------
(a) Liability Insurance. Manager shall obtain and maintain, at all
-------------------
times throughout the Term, the following coverages and minimum limits:
Coverage Minimum Limits
(i) Workers Compensation & *
Employers Liability
(ii) General Liability *
*
(iii) Liquor Liability *
(iv) Automobile Liability *
General liability insurance provided by Manager shall be on an occurrence basis
and shall include customary coverages, such as, but not limited to, bodily
injury, property damage, and contractual liability insurance. A Certificate of
Insurance shall be provided by Manager to Owner evidencing the Coverages and
Minimum Limits listed in this Paragraph 29(a), as well as the property damage
insurance detailed below, within fifteen (15) days of the commencement of the
Term of this Agreement and annually thereafter. The Certificate shall include
the Owner as an Additional Insured for all coverages other than the Workers
Compensation & Employers Liability and shall also include a Waiver of
Subrogation naming Owner under all policies. Manager or its representatives
shall provide a thirty-day notice of cancellation or material change or any
coverages required in this Paragraph 29(a).
(b) Property Damage Insurance. Throughout the Term, Owner
-------------------------
shall be responsible for maintaining all insurance for Owner's
Equipment (including the Las Vegas Equipment and the Lowes Club
Equipment) utilized in connection with the Operations against property
damage for ninety percent (90%) of the replacement value of such
assets.
(c) Property Damage Insurance. Throughout the Term,
-------------------------
Manager shall be responsible for maintaining all insurance for all
Manager's Equipment utilized in connection with the Operations against
property damage for one hundred percent (100%) of the replacement value
of such assets.
--------------------------------------------------------------------------------
*Confidential portion has been omitted and filed separately with the Commission.
Page 27
30. Administrators.
--------------
(a) Manager Administrator. Manager shall appoint a
---------------------
Manager Administrator, subject to Owner's reasonable approval, to work
with the Owner Administrator in managing all aspects of this Agreement.
The Manager Administrator shall act as the sole point of contact for
the Owner Administrator. Any issues that the Owner may have during the
Term of this Agreement shall be addressed to Owner through the Manager
Administrator. The Owner Administrator and the Manager Administrator
shall schedule monthly meetings, and hold emergency special meetings as
needed, which may be held in person or via telephonic conference, to
discuss any issues that come to their attention during the course of
the previous month, including, without limitation, general day-to-day
operations, customer satisfaction, and financial performance.
(b) Owner Administrator. Owner shall appoint an Owner
-------------------
Administrator, subject to Manager's reasonable approval, to work with
the Manager Administrator in managing all aspects of this Agreement.
The Owner Administrator shall act as the sole point of contact for the
Manager Administrator. The Owner Administrator and the Manager
Administrator shall schedule monthly meetings, and hold emergency
special meetings as needed, which may be held in person or via
telephonic conference, to discuss any issues that come to their
attention during the course of the previous month, including, without
limitation, general day-to-day operations, customer satisfaction and
financial performance.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
Speedway Motorsports, Inc.,
a Delaware corporation
By: /s/ O. ▇▇▇▇▇▇ ▇▇▇▇▇
----------------------------------------
Its: CEO
----------------------------------------
Levy Premium Foodservice Limited Partnership,
an Illinois limited partnership
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
----------------------------------------
Its: Treasurer of its General Partner
----------------------------------------
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Page 28
Levy Premium Foodservice Limited Partnership
of Texas,
a Texas limited partnership
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
----------------------------------------
Its: Treasurer of its General Partner
----------------------------------------
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Page 29
EXHIBIT "E-1"
-------------
*
--------------------------------------------------------------------------------
*Confidential portion has been omitted and filed separately with the Commission.
Page 30
EXHIBIT "E-2"
-------------
*
--------------------------------------------------------------------------------
*Confidential portion has been omitted and filed separately with the Commission.
Page 31