SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): November 8, 2005
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TRACKPOWER, INC.
(Exact name of registrant as specified in its charter)
Wyoming 000-28506 13-3411167
(State or other jurisdiction of (Commission file number) (I.R.S. employer
incorporation or organization) identification no.)
67 Wall Street, Suite 2211
New York, New York 10005
(Address of principal (Zip code)
executive offices)
Registrant's telephone number, including area code: (212) 804-5704
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any
of the following provisions (see General Instruction A.2. below):
|_| Written communications pursuant to Rule 425 under the Securities Act (17
CFR 230.425)
|_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
|_| Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
|_| Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
Item 1.01. Entry into a Material Definitive Agreement.
On November 8, 2005, TrackPower, Inc. (the "Registrant" or the Company) entered
into a series of agreements with Nevada Gold & Casinos, Inc. ("Nevada Gold"),
Nevada Gold NY, Inc. ("Nevada Gold NY"), an affiliate of Nevada Gold, Southern
Tier Acquisitions, LLC ("Southern Tier") and Southern Tier Acquisition II LLC, a
New York limited liability company ("Southern Tier II"), an affiliate of
Southern Tier, pursuant to which American Racing and Entertainment, LLC
("American Racing"), a New York limited liability company, was formed for the
purpose of developing two horseracing facilities known as Tioga Downs and Vernon
Downs into racing and gaming complex, including video lottery terminals ("VLT").
On November 8, 2005, Nevada Gold NY, Southern Tier II and Company, hereinafter
referred to collectively as the "Members") entered into an Operating Agreement
effective August 24, 2005 under which the Members became 50%, 25% and 25%
members of American Racing, respectively. Pursuant to the terms of the Operating
Agreement the Board of Directors would operate the business and the initial
members of the Board of Directors were H. Thomas Winn and Jon Arnesen (on behalf
of Nevada Gold NY), Edward M. Tracy (on behalf of TrackPower) and Jeffery Gural
(on behalf of Southern Tier II). The Members also acknowledged that they would
participate in arranging senior note financing of $70 million for the purpose of
developing the two properties and it was further acknowledged that Nevada Gold
NY would provide an approximately $5 million guarantee to the senior lender if
required, and if collateral is required by the senior lender with respect to
such guarantee, then Nevada Gold NY agrees to provide cash or a letter of credit
to the senior lender to the extent required to collateralize such guarantee. The
Members further acknowledged that in the event American Racing was unsuccessful
in acquiring the Vernon Downs facility, American Racing would still pursue the
development of Tioga Downs, but the initial debtor in possession financing ("DIP
Financing") of $1,414,000 contributed by Southern Tier and TrackPower would be
returned to these parties, subject to certain limitations, that the senior debt
financing would be reduced to approximately $25 million and the guarantee on the
senior debt provided by Nevada Gold NY, if required, would be reduced to
approximately $2.5 million. Pursuant to the Operating Agreement the Members
agreed to distribute 100% of excess cash flow as follows: first to TrackPower
and Southern Tier II up to $2.5 million each, and thereafter to each Member in
proportion to their respective percentages. Excess cash flow is defined as
earnings before interest, taxes, depreciation and amortization less management
fees, capital expenditures, tax distributions to Members, scheduled principal
payment on debt of the Company and Reserves, defined as working capital set
aside to pay taxes, insurance, debt service, repairs, capital replacements,
capital improvements, contingent liabilities or other costs and expenses
incident to the ownership or operation of the Company's properties.
In addition, on November 8, 2005, Nevada Gold, Southern Tier and the Company
entered into a Contribution Agreement pursuant to which Southern Tier and
Company each contributed their 50% membership interest in Tioga Downs Racetrack,
LLC ("TDR") and Vernon Downs Acquisition, LLC ("VDA") to American Racing.
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On November 15, 2005, the Company executed a non-interest bearing $849,341
promissory note (the "Note") to Southern Tier. TrackPower is obligated to repay
the Note on or before December 31, 2005. Due date of such note was extended on
January 3, 2006 to January 15, 2006 by way of letter agreement between Southern
Tier and TrackPower. The Note is secured by a Pledge Agreement pursuant to which
the Company pledged its membership interest in American Racing as security on
the Note to Southern Tier. On November 14, 2005, the Company and Southern Tier
entered into a Capital Contribution Agreement pursuant to which both parties
acknowledged that Southern Tier had made capital contributions to TDR in the
amount of $4,337,147.76 and the Company had made capital contributions of
$2,638,466.85, totaling capital contributions of $6,975,614.61. The parties also
acknowledged that TrackPower and Southern Tier II, LLC ("Southern Tier II"),
pursuant to the American Racing Operating Agreement, each would received a 25%
membership interest in American Racing and both TrackPower and Southern Tier II
would receive credit for capital contributions in the amount of $3,487,807.30.
As the Company had only made contributions of $2,638,466.85, but received credit
for $3,487,807.30, TrackPower agreed to issue the Note to Southern Tier,
representing the difference in these two amounts.
Forward-Looking Statements
Certain information included in this Form 8-K contains forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as amended.
These statements can be identified by the fact that they do not relate strictly
to historical or current facts. Statements that include the words "may,"
"could," "should," "would," "believe," "expect," "anticipate," "estimate,"
"intend," "plan," or other words or expressions of similar meaning, may identify
forward-looking statements. We have based these forward-looking statements on
our current expectations about future events. Although we believe that the
assumptions underlying these forward-looking statements are reasonable, any or
all of the forward-looking statements in this report may prove to be incorrect.
This may occur as a result of inaccurate assumptions or as a consequence of
known or unknown risks and uncertainties. Consequently, actual events and
results may differ materially from those that might be anticipated from
forward-looking statements. In light of these and other uncertainties, you
should not regard the inclusion of a forward-looking statement in this report or
other public communications that we might make as a representation by us that
our plans and objectives will be achieved, and you should not place undue
reliance on such forward-looking statements. We undertake no obligation to
publicly update or revise any forward-looking statements, whether as a result of
new information, future events or otherwise. Any further disclosures made on
related subjects in the Company's subsequent reports filed with the Securities
and Exchange Commission should be consulted.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits
Exhibit No. Description
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10.1 Operating Agreement of American Racing and
Entertainment, LLC between the Registrant, Southern
Tier Acquisition II, LLC and Nevada Gold NY, Inc.
dated November 8, 2005.
10.2 Contribution Agreement between the Registrant,
Southern Tier Acquisition, LLC, American Racing and
Entertainment, LLC and Nevada Gold and Casinos, Inc.
dated November 8, 2005.
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10.3 Promissory Note issued by Registrant to Southern
Tier Acquisitions, LLC dated November 15, 2005.
10.4 Pledge and Security Agreement between the Registrant
and Southern Tier Acquisitions, LLC dated November
15, 2005.
10.5 Capital Contribution Agreement between the
Registrant and Southern Tier Acquisitions, LLC dated
November 14, 2005.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
Trackpower, Inc. has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: January 5, 2005
TRACKPOWER, INC.
By: /s/ Gary N. Hokkanen
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Name: Gary N. Hokkanen
Title: Chief Financial Officer
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INDEX OF EXHIBITS
Exhibit No. Description
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10.1 Operating Agreement of American Racing and
Entertainment, LLC between the Registrant, Southern
Tier Acquisition II, LLC and Nevada Gold NY, Inc.
dated November 8, 2005.
10.2 Contribution Agreement between the Registrant,
Southern Tier Acquisition, LLC, American Racing and
Entertainment, LLC and Nevada Gold and Casinos, Inc.
dated November 8, 2005.
10.3 Promissory Note issued by Registrant to Southern
Tier Acquisitions, LLC dated November 15, 2005.
10.4 Pledge and Security Agreement between the Registrant
and Southern Tier Acquisitions, LLC dated November
15, 2005.
10.5 Capital Contribution Agreement between the
Registrant and Southern Tier Acquisitions, LLC dated
November 14, 2005.
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