Exhibit 10.5
GUARANTY
GUARANTY, dated this 10th day of April, 2004 by Raceway
Ventures, LLC, a Florida limited liability company ("Guarantor") in favor of
Vestin Mortgage, Inc. ("Vestin").
WITNESSETH
WHEREAS, Messrs. Xxxxxx X. Xxxxx, Xxxxxxx Xxxxx and Xxxxx X.
Xxx (collectively the "Members") own all of the membership and/or equity
interests in the Guarantor; and
WHEREAS, Guarantor desires to acquire 19,549 shares of the
Common Stock (the "Common Stock") of Mid-State Raceway, Inc. ("Raceway") and
warrants (the "Warrants") to purchase 1,250,000 shares of Common Stock from All
Capital LLC ("All Capital") and 450,000 shares of Common Stock from Xxxxxxxx
Xxxxx respectively; and
WHEREAS, Raceway and Mid-State Development Corporation
("Development" and Raceway and Development collectively referred to herein as
Borrower") are indebted to Vestin in the amount of up to $26,000,000 ("Existing
Indebtedness") as evidenced by a Consolidated Secured Promissory Note (the
"Note"); and
WHEREAS, All Capital is wholly owned by Xxxxx Xxxxx ("Xxxxx")
and Xxxxx has personally guaranteed the payment of principal and interest on the
Existing Indebtedness ("Xxxxx Guaranty"); and
WHEREAS, the Members have executed a joint and several
guaranty of up to $10,000,000.00 of the Existing Indebtedness ("Member
Guaranty"); and
WHEREAS, as a condition precedent to the sale by All Capital
its shares of Common Stock and Warrants to the Guarantor the Xxxxx Guaranty must
be terminated and rendered null and void and of no further force and effect and
Xxxxx released from any and all liability thereunder; and
WHEREAS, the Guarantor desires to have Vestin execute and
deliver (a) to Xxxxx a termination and release of the Xxxxx Guaranty ("Release")
rendering the Xxxxx Guaranty
null and void and of no further force and effect and (b) its consent to
acquisition by the Guarantor of the Common Stock and Warrants (the "Consent");
and
WHEREAS, as a condition to Vestin executing and delivering the
Release and the Consent, Vestin has requested that the Guarantor execute and
deliver this Guaranty.
NOW THEREFORE, in consideration of the premises, the mutual
agreements herein contained the parties hereto agree as follows:
1. Guaranty of Payment and Performance.
(a) Subject to and in accordance with the provisions of
subparagraphs 1 (b) and (c) hereof, the Guarantor does hereby, absolutely,
unconditionally and irrevocably guaranty to Vestin the full and punctual payment
and performance of the Obligations (as defined). For purposes of this Guaranty
the term "Obligations" shall be and mean the Borrower's obligations under the
Note solely and exclusively for the payment of principal and interest thereon
computed at the rate of 11% per annum, whether now existing or hereafter
arising, when the same shall become due and payable, in accordance with the
terms of the Note.
(b) If any of the Obligations shall not be paid in full as the
same shall become due and payable, either at stated maturity or otherwise, in
accordance with the terms of the Note, then and in that event:
(i) Vestin shall take and
perform such reasonable efforts
(collectively "Collection Efforts") as shall
be reasonably necessary to cause the
Borrower to make payment of the Obligations
then due and payable; and
(ii) Vestin shall,
following the completion of the Collection
Efforts transmit to the Guarantor written
notice ("Vestin Notice") setting forth: (A)
the continued existence of the Borrower's
default in payment of the Obligations, (B)
the amount of the Obligations which are at
such time the subject of Borrower's payment
default prior to any acceleration and/or
imposition of Default Interest ("Current
Default"), (C)the amount of the costs
incurred by Vestin in performing the
Collection Efforts (the "Collection Costs"),
(D)the total amount of the Obligations and
(E) the sum of the Collection Costs and the
Obligations (the "Buy Out Amount"); and
(iii) Subject to the
rights of the Members under the Member
Guaranty, Guarantor shall have the right
during the seven day period following
transmittal by Vestin of the Vestin Notice
to either (A) cure the Borrower's payment
default by making payment to Vestin of the
full amount of the Current Default prior to
the expiration of such seven day period, or
(B)
purchasing, for cash, 100% of the payees'
interest in and to the Note and the proceeds
thereof and all collateral securing the same
(the "Property") for the Buy-Out Amount. If
the Guarantor elect to exercise the purchase
right described above it shall (C) give
Vestin written notice of such election
("Purchase Notice") prior to the expiration
of such seven day period; which Purchase
Notice shall specify a closing date for such
purchase within 14 days following the
transmittal of the Purchase Notice to Vestin
and (D) have the right to transfer, sell
assign and convey their rights to acquire
the Property and/or any agreements with
respect to the acquisition of the Property
to any third party.
(c) If the Guarantor shall fail or refuse to either pay the
full amount of the Current Default or transmit the Purchase Notice within the
seven day period following the transmittal of the Vestin Notice and/or having
transmitted the Purchase Notice failed and/or refused to fully and timely
perform its obligations thereunder, then and in any such event the Guarantor
shall, upon demand, immediately pay to Vestin any such Obligations without
presentment, diligence, protest or other notice of any kind, all of which are
hereby expressly waived. In addition to the foregoing, the Guarantor agrees to
pay any and all reasonable expenses (including without limitation, reasonable
attorney's fees and expenses) which may be paid or incurred by Vestin in
connection with the enforcement by Vestin of the obligations of the Guarantor
with respect to the Obligations. All payments under this Guaranty shall be made
in the place, currency and manner specified for the Obligations as provided in
the Note.
(d) Without limiting the generality of the provisions of
subparagraph 1(a) hereof but expressly subject to the provisions of
subparagraphs 1(b) and (c)hereof:
(i) The liability of the Guarantor under this
Guaranty is primary, absolute, direct and immediate, and not conditional or
contingent upon pursuit by Vestin of any remedies it may have against the
Borrower or any other person or entity, whether pursuant to the terms hereof or
at law, in equity or by statute;
(ii) The Guarantor hereby waives any right it
otherwise might have to require Vestin to make any demand upon and/or proceed
against the Borrower or any other person or entity before seeking enforcement of
this Guaranty, or to pursue any legal, equitable or statutory remedy otherwise
available to Vestin in any particular manner or order;
(iii) The Guarantor hereby expressly authorizes
Vestin, in its sole and absolute discretion, without notice to or further assent
of the Guarantor and without in any way discharging, terminating, releasing,
affecting or impairing the obligations and liabilities of the Guarantor
hereunder, from time to time or at any one or more times to: (A) amend, modify,
renew, extend, accelerate or otherwise change the time or manner of payment for
or performance of, or otherwise change, modify or amend any of the other terms
and conditions of the Obligations, (B) release, discharge or compromise or
settle with the Borrower, (C) waive compliance with or any default under,
forbear from, delay or only partially enforce, or grant any
other indulgences with respect to the Obligations, (D) assign, transfer, pledge,
hypothecate, grant a security interest in or otherwise transfer its interest in
this Guaranty, and (E) otherwise deal in all respects with the Borrower with
respect to the Note as if this Guaranty was not in effect;
(iv) The Guarantors: (A) agrees that the validity
and enforceability of its obligations hereunder shall be unaffected by the
genuineness, validity, regularity or enforceability of the Note or by any other
circumstance which might otherwise constitute a legal or equitable discharge or
defense of a surety or guarantor, (B) expressly waives any defense arising by
reason of laches, the statute of limitations or any incapacity, lack of
authority, or other defense of the Borrower (including, without limitation, the
bankruptcy, reorganization, liquidation, dissolution, release or discharge of
the Borrower or any arrangement, compromise, settlement or other action with
respect to the Borrower's creditors or by reason of the cessation from any cause
whatsoever (other than payment or performance in full) of the liability of the
Borrower), and (C) hereby releases Vestin from any requirement of looking into
such matters.
2. Guarantor's Obligations Not Affected. This Guaranty is an
absolute, unconditional, irrevocable, present and continuing guarantee of
payment and performance and not merely of collection or collectibility, and,
except as expressly provided herein to the contrary, is in no way conditioned or
contingent upon any attempt to collect from the Borrower or any other person any
of the Obligations or upon any other condition or contingency. The obligations
of the Guarantor under this Guarantee shall remain in full force and effect
without regard to, and shall not be impaired or affected by:
(i) any change in the existence, structure or
ownership of the Borrower, or any insolvency, bankruptcy, reorganization,
arrangement, adjustment, composition, liquidation, receivership or similar
proceeding affecting the Borrower;
(ii) the existence of any claim or other rights that
the Guarantor may have at any time against the Borrower, whether in connection
herewith or in any unrelated transactions; provided however that nothing herein
shall prevent the assertion of any such claim by separate suit or compulsory
counterclaim;
(iii) any exercise or non-exercise by Vestin or any
other person of any right, power, privilege or remedy pursuant to or in respect
of this Guaranty, or any waiver of any such right, power, privilege or remedy;
or
(iv) any merger or consolidation of the Borrower
with or into any other person, or any sale, lease or transfer of any or all of
the assets of the Borrower to any other person or the dissolution, termination,
winding up or other discontinuation of the Borrower.
3. Waiver. Except as herein expressly provided to the
contrary, the Guarantors unconditionally waives (i) all notices which may be
required by statute, rule of law or otherwise, notice of acceptance of this
Guaranty as well as (a) presentment, demand for payment and/or performance and
protest of non-payment and/or non-performance, (b) notice of presentment, demand
and protest, (c) notice of any default hereunder and/or under the Note, and
of all indulgences, (d) demand for observance of performance of, or enforcement
of, any terms or provisions of this Guaranty, and (e) all other notices and
demands otherwise required by law or statute which Guarantor may lawfully waive.
Further, to the extent permitted by law, the Guarantor waives the rights to
(f) trial by jury, (g) implead the Borrower or assert a counterclaim against the
Borrower, (h) to consolidate any such action with any proceeding involving the
Borrower, and (ii) any requirement of diligence on the part of Vestin.
4. Termination. This Guaranty and the obligations of the
Guarantor hereunder shall terminate and be of no further force and effect on the
earlier to occur of (a) the date when the Obligations shall be have been
indefeasibly paid in full, or (b) the VLT Commencement Date (as defined). The
"VLT Commencement Date" shall be and mean the date upon which video lottery
terminals ("VLT's") installed on the premises of Xxxxxx Xxxxx Race Track, Vernon
New York, are first activated and available for utilization on a pilot,
temporary or permanent basis.
5. No Waivers. No failure or delay by Vestin in exercising any
right, power or privilege hereunder shall operate as a waiver thereof nor shall
any single or partial exercise thereof preclude any other or further exercise
thereof or the exercise of any other right, power or privilege. The rights and
remedies provided herein shall be cumulative and not exclusive of any rights or
remedies provided by law.
6. Notices. Any and all notices, requests or instructions
desired or required to be given to Vestin or to Guarantors shall be in writing
and shall either be hand delivered or mailed to the recipient first class,
postage prepaid, certified, return receipt requested at the following respective
addresses:
To: Guarantor
Raceway Ventures, LLC
0000 XX 00xx Xxx. Xxxxx 0
Xx. Xxxxxxxxxx, Xxxxxxx 00000
To: Vestin
0000 Xx Xxxxxx Xxxxxx, Xxxxx 000
Xxx Xxxxx, XX 00000
or at such other address as any party hereto shall designate in a writing
complying with the provisions of this Paragraph.
7. Savings Clause. If any provision of this Guaranty is held
to be invalid or unenforceable by any court or tribunal of competent
jurisdiction, the remainder hereof shall not be affected thereby, and such
provisions shall be carried out as nearly as possible according to its original
terms and intent to eliminate such invalidity or unenforceability.
8. General. This agreement sets forth the entire agreement
between the parties hereto with respect to the subject matter herein contained;
shall be governed and construed in accordance with the laws of the State of
Nevada; cannot be altered, amended, modified or terminated except by a writing
executed by both of the parties hereto or as herein expressly otherwise
provided; and shall inure to the benefit of and be binding upon the parties
hereto and their respective successors, transferees, heirs, assigns and
beneficiaries.
IN WITNESS WHEREOF, each of the undersigned has caused this
Guaranty to be executed and delivered as of the day and year first above
written.
Raceway Ventures, LLC
By: /s/ Xxxxxx Xxxxx
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