EXHIBIT (v)
Neither this Warrant nor the shares of Common Stock
issuable upon exercise of this Warrant has been
registered under the Securities Act of l933, as
amended (the "Act") and may not be sold, pledged,
hypothecated or otherwise transferred or offered for
sale unless a registration statement has become and
is then effective with respect to such Warrant or
Common Stock or a written opinion of counsel that the
proposed sale, pledge, hypothecation or other
transfer is exempt from registration under the Act
has been provided the Company.
MID-STATE RACEWAY, INC.
WARRANT FOR THE PURCHASE OF SHARES OF COMMON STOCK
No. CAP-1-A 50,000 Shares
FOR VALUE RECEIVED, Mid-State Raceway, Inc. (the "Company"), a
New York corporation, hereby certifies that All Capital, LLC or permitted
assigns (the "Holder") is entitled to purchase from the Company, at any time or
from time to time subsequent to August 1, 2002 (the "Effective Date") and prior
to 5:00 P.M., New York City time then current, on March 31, 2007, Fifty
Thousand (50,000) fully paid and nonassessable shares of the common stock, par
value $.10 per share, of the Company (the "Common Stock") at the rate of Two
($2.00) Dollars per share (the "Exercise Price").
1. EXERCISE OF WARRANT.
(a) This Warrant may be exercised, in whole at any time or in
part from time to time, subsequent to the Effective Date and prior to 5:00
P.M., New York City time then current, on March 31, 2007, by the Holder by the
surrender of this Warrant (with the subscription form at the end hereof duly
executed) at the address set forth in subparagraph 8 (a) hereof, together with
proper payment for shares of Common Stock made by either, at the election of
the Holder: (a) certified or official bank check, drawn on a bank with offices
in the
continental United States, payable in U.S. dollars to the order of the Company
and/or (b) by application of up to all of unpaid principal and/or interest
evidenced by that certain Secured Promissory Note of even date executed by the
Company in favor of All Capital, LLC in the initial principal amount of
$8,500,000 (the "Note"). If this Warrant is exercised in part, this Warrant
must be exercised for a number of whole shares of the Common Stock, and the
Holder is entitled to receive a new Warrant covering the shares of Common Stock
for which this Warrant has not been exercised. Upon such surrender of this
Warrant, the Company will issue or cause to be issued a certificate or certifi-
xxxxx in the name of the Holder for the largest number of whole shares of the
Common Stock to which the Holder shall be entitled.
(b) If at any time during the period commencing on April 1,
2003 and terminating on March 31, 2004, the Company shall be in default in the
payment of interest on the Note, the Holder shall, at the written request of
the Company, exercise this Warrant, for cash, for that number of shares of
Common Stock as shall be necessary to generate the amount necessary to cure the
Company's interest payment default under the Note; provided however that the
full amount of any such exercise shall be applied in payment of interest due on
or with respect to the Note; and provided further, however, that at the time of
any such exercise no other Event of Default (as defined in the Note) shall have
occurred.
(c) Anything herein to the contrary notwithstanding, this
Warrant shall not be exercisable (by the Holder and/or at the request of the
Company) if the stockholders of the Company approve the Exclusive Option
Agreement (as defined in that certain Loan Commitment dated March 22, 2002
executed by the Company and Capital One, LLC) and the transactions therein
described are consummated.
2. RESERVATION OF WARRANT SHARES. The Company agrees that, prior to the
expiration of this Warrant, the Company will at all times have authorized and
in reserve, and will keep available, solely for issuance or delivery upon the
exercise of this Warrant, the shares of the Common Stock as from time to time
shall be receivable upon the exercise of this Warrant, free and clear of all
restrictions on sale or transfer (except as hereinafter provided) and free and
clear of all liens, claims and encumbrances and rights and options of third
parties, including without limitation pre-emptive rights.
3. PROTECTION AGAINST DILUTION. (a) If, at any time or from time to
time after the Effective Date, the Company shall distribute to the holders of
the Common Stock (i) securities, other than shares of Common Stock, or (ii)
property, excluding cash, without payment therefore, with respect to the Common
Stock, then, and in each such case, the Holder, upon the exercise of this
Warrant, shall be entitled to receive the securities and properties which the
Holder would have held on the date of such exercise if, on the Effective Date
the Holder had been the holder of record of the number of shares of Common
Stock subscribed for upon such exercise and, during the period from the
Effective Date to and including the date of such exercise, had retained such
shares and securities and properties receivable by the Holder during such
period. Notice of each such distribution shall be forthwith mailed by the
Company to the Holder.
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(b) In case the Company shall subsequent to the Effective Date (i) pay
a dividend or make a distribution on its capital stock in shares of Common
Stock, (ii) subdivide its outstanding shares of Common Stock into a greater
number of shares, (iii) combine its outstanding shares of Common Stock into a
smaller number of shares, or (iv) issue by reclassification of its Common Stock
any shares of capital stock of the Company, the Exercise Price in effect
immediately prior to such action shall be adjusted so that the Holder of any
Warrant surrendered for exercise immediately thereafter would be entitled to
receive the number of shares of Common Stock or other capital stock of the
Company which he would have owned immediately following such action had such
Warrant been exercised immediately prior thereto. An adjustment made pursuant
to this subparagraph 3 (b) shall become effective immediately after the record
date in the case of any such dividend or distribution and shall become effect-
tive immediately after the effective date in the case of a subdivision,
combination, reconstruction or reclassification. If, as a result of an adjust-
ment made pursuant to this subparagraph 3(b), the holder of any Warrant
thereafter surrendered for exercise shall become entitled to receive shares of
two or more classes of capital stock or shares of Common Stock and other
capital stock of the Company, the Board of Directors (whose determination,
providing the same is applied equally to all holders of Common Stock, shall be
conclusive and shall be described in a written notice to the Holders of the
Warrants promptly after such adjustment) shall determine the allocation
between or among shares of such classes of capital stock or shares of Common
Stock and other capital stock.
(c) In case the Company shall subsequent to the Effective Date issue or
sell any rights, options, warrants or securities convertible into Common Stock
entitling the holders thereof to purchase Common Stock or to convert such
securities into Common Stock at a price per share (the "Price", as defined)
less than the then current Exercise Price in effect on the date of such
issuance or sale, the Exercise Price shall be adjusted as of the date of such
issuance or sale so that the same shall equal to the Price (subject to further
adjustment as herein provided). For purposes of this subparagraph 3(c), the
term "Price" shall be and mean the amount determined by dividing (i) the total
amount, if any, received or receivable by the Company in consideration of the
issuance or sale of such rights, options, warrants or convertible securities
plus the total consideration, if any, payable to the Company upon exercise or
conversion thereof (the "Total Consideration"), by (ii) the number of
additional shares of Common Stock issuable upon exercise or conversion of such
securities. Any property (other than cash) received in consideration for, or
exercise of, any such rights, options, warrants or convertible
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securities shall be valued at fair market value on the date of receipt by the
Company, as determined by the Board of Directors.
(d) If, subsequent to the Effective Date, shares of Common Stock are
issued by the Company for consideration in an amount per share less than the
applicable Exercise Price, then and in that event (and effective as of the date
of issuance of such Common Stock) the Exercise Price shall be reduced by that
amount determined by multiplying the then effective Exercise Price by a
fraction, the numerator of which shall be the number of shares of Common Stock
issued and the denominator of which shall be the sum of (i) the total number of
issued and outstanding shares of Common Stock prior to such issuance plus (ii)
that number of shares of Common Stock issuable upon conversion of all of the
then issued and outstanding preferred stock of the Company by its terms
convertible into Common Stock; provided, however, that in no event shall the
Exercise price be less than the par value of the Common Stock. The determina-
tion of the Exercise Price shall be made as of the Exercise Date which shall be
the date upon which this Warrant is surrendered, in each instance, to the
Company upon exercise pursuant to the provisions of Paragraph 1 hereof. To the
extent permitted by law, each exercise shall be deemed to have been effective
on the Exercise Date, and the person or persons in whose name or names any
certificate or certificates for shares of Common Stock are issuable upon such
exercise shall be deemed to have become holders of record of the shares
represented thereby.
(e) In case, subsequent to the Effective Date, of any consolidation or
merger to which the Company is a party other than a merger or consolidation in
which the Company is the continuing corporation, or in case of any sale or
conveyance to another entity of the property of the Company as an entirety or
substantially as an entirety, or in the case of any statutory exchange of
securities with another corporation (including any exchange effected in
connection with a merger of a third corporation into the Company), the Holder
of a Warrant shall have the right thereafter to convert such Warrant into the
kind and amount of securities, cash or other property which he would have owned
or have been entitled to receive immediately after such consolidation merger,
statutory exchange, sale or conveyance had such Warrant been converted
immediately prior to the effective date of such consolidation, merger, statu-
tory exchange, sale or conveyance and in any such case, if necessary, appropri-
ate adjustment shall be made in the application of the provisions set forth in
this Paragraph 3 with respect to the rights and interests thereafter of the
Holders of the Warrants to the end that the provisions set forth in this
Paragraph 3 shall thereafter correspondingly be made applicable, as nearly as
may reasonably be, in relation to any shares of stock or other securities or
property thereafter deliverable on the conversion of the Warrants. The above
provisions of this subparagraph 3(e) shall similarly apply to successive
consolidations, mergers, statutory exchanges, sales or conveyances. Notice of
any such consolidation, merger, statutory exchange, sale or conveyance and of
said provisions so proposed to be made shall be mailed to the Holder not less
than 30 days prior to such event. A sale of all or substantially all of the
assets of the Company for a consideration consisting primarily of securities
shall be deemed a consolidation or merger for the foregoing purposes.
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(f) No adjustment in the Exercise Price shall be required
unless such adjustment would require an increase or decrease of at least $0.02
per share of Common Stock; provided, however, that any adjustments which by
reason of this subparagraph 3(f) are not required to be made shall be carried
forward and taken into account in any subsequent adjustment; and provided
further, however, that adjustments shall be required and made in accordance
with the provisions of this Paragraph 3 (other than this subparagraph 3(f)) not
later than such time as may be required in order to preserve the tax-free
nature of a distribution to the Holders of Warrants or Common Stock. A
conversion of preferred stock convertible into Common Stock into Common Stock
shall not precipitate an adjustment to the Exercise Price pursuant to this
Paragraph 3. All calculations under this Paragraph 3 shall be made to the
nearest cent or to the nearest 1/100th of a share, as the case may be. Anything
in this Paragraph 3 to the contrary notwithstanding, the Company shall be
entitled to make such reductions in the Exercise Price, in addition to those
required by this Paragraph 3, as it in its description shall deem to be
advisable in order that any stock dividend or subdivision of shares hereafter
made by the Company to its shareholders shall not be taxable.
(g) Whenever the Exercise Price is adjusted as provided in
this Paragraph 3 and upon any modification of the rights of a Holder of
Warrants in accordance with this Paragraph 3, the Company shall promptly mail
to the Holders of the Warrants a certificate of the chief financial officer or
secretary of the Company setting forth the Exercise Price and the number of
shares of Common Stock as to which this Warrant may be exercised after such
adjustment or the effect of such modification, a brief statement of the facts
requiring such adjustment or modification and the manner of computing the
same.
(h) If the Board of Directors of the Company shall declare any
dividend or other distribution with respect to its Common Stock, the Company
shall mail a notice thereof to the Holder not less than 15 days prior to the
record date fixed for determining shareholders entitled to participate in such
dividend or other distribution but in any event not less than 45 days prior to
the date such dividend or distribution is intended to be made by the Company.
4. FULLY PAID STOCK; TAXES. The Company agrees that the shares of the
Common Stock represented by each and every certificate delivered on the
exercise of this Warrant shall, at the time of such delivery, be validly issued
and outstanding, fully paid and non-assessable (except to the extent set forth
in the Business Corporation Law), and not subject to pre-emptive rights, and
the Company will take all such actions as may be necessary to assure that the
par value or stated value, if any, per share of the Common Stock is at all
times equal to or less than the then Exercise Price. The Company further
covenants and agrees that it will pay, when due and payable, any and all
Federal and state stamp, original issue or similar taxes which may be payable
in respect of the issue of any shares of Common Stock or certificate therefor.
5. TRANSFERABILITY. This Warrant and the shares of Common Stock
issuable upon
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the exercise of this Warrant (collectively the "Securities") may not be
transferred, sold, assigned, conveyed, pledged or hypothecated except in
conformity with the provisions of the Securities Act of 1933, as amended (the
"Act") and the rules and regulations ("Regulations") promulgated thereunder by
the Securities and Exchange Commission. Prior to any proposed transfer of any
of the Securities (in the absence of an effective Registration Statement under
the Act with respect to such Securities), the holder of such Securities shall
deliver to the Company a written opinion of counsel to the effect that such
proposed Transfer may be effected without registration under the Act. Each
certificate representing shares of Common Stock (issuable upon exercise of the
Warrants) and the Warrants shall contain the following legend, if in the
Company's reasonable judgment, applicable securities law so require:
"The ______________ represented by this certificate have not
been registered under the Securities Act of 1933, as amended
(the "Act") and may not be sold, pledged, hypothecated or
otherwise transferred or offered for sale unless a
registration statement has become and is then effective with
respect to such _______________ or a written opinion of
counsel that the proposed sale, pledge, hypothecation or other
transfer is exempt from registration under the Act has been
provided to the Company."
In addition, the Company may place stop transfer instructions concerning those
shares in its stock transfer records. The Holder, by accepting this Warrant,
consents and agrees with the Company and every subsequent holder of this Warrant
that until the Warrant is transferred on the books of the Company, the Company
may treat the registered Holder as the absolute owner thereof for all purposes,
notwithstanding any notice to the contrary. The Company agrees to make such
transfer promptly on its books if the transfer is effected consistent with the
terms of this Paragraph 5.
6. LOSS, ETC., OF WARRANT. Upon receipt of evidence satisfactory to the
Company of the loss, theft, destruction or mutilation of this Warrant, and of
indemnity reasonably satisfactory to the Company, if lost, stolen or destroyed,
and upon surrender and cancellation of this Warrant, if mutilated, and upon
reimbursement of the Company's reasonable incidental expenses, the Company
shall execute and deliver to the Holder a new Warrant of like date, tenor and
denomination.
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7. WARRANT HOLDER NOT SHAREHOLDER. Except as otherwise provided herein,
this Warrant does not confer upon the Holder any right to vote or to consent to
or receive notice as a shareholder of the Company, as such, in respect of any
matters whatsoever, or any other rights or liabilities as a shareholder, prior
to the exercise hereof.
8. COMMUNICATION. No notice or other communication under this Warrant
shall be effective unless (but any notice or other communication shall be
effective and shall be deemed to have been given if) the same is in writing and
is mailed by first-class mail, postage prepaid, addressed to:
(a) the Company at P.O. Box 860, Vernon, New York 13476, or
such other address as the Company has designated in writing to the Holder.
(b) the Holder at the address specified on the records of the
Company, or such other address as the Holder has designated in writing to the
Company.
9. ISSUANCE. This Warrant has been issued pursuant to the provisions of
that certain Loan Commitment dated March 22, 2002 (the "Commitment") executed
by Capital One, LLC ("Capital") and the Company and in consideration for the
financial undertakings of Capital therein contained; which undertakings the
Company acknowledges have been satisfied by the provision by All Capital, LLC
of the Loan as defined in the Commitment.
10. REPRESENTATIONS. In order to induce All Capital, LLC to make the
Loan defined in the Commitment to the Company, the Company does hereby
represent, warrant, covenant and agree (which representations, warranties,
covenants and agreements shall be and be deemed to be continuing and survive
the execution, delivery and performance of this Warrant) as follows:
(a) The Company is a corporation duly organized, validly
existing and in good standing under the laws of State of New York, with full
power and authority, corporate and otherwise, and with all licenses, permits,
certifications, registrations, approvals, consents and franchises necessary to
own or lease and operate its properties and to conduct its business as
presently being conducted. The Company is duly qualified to do business and is
in good standing, in each jurisdiction where the conduct of its business or the
ownership of its assets requires such qualification;
(b) (i) The Company has the full power and authority,
corporate and otherwise, to execute, deliver and perform this Warrant and to
consummate the transactions contemplated hereby; (ii) The execution, delivery
and performance of the Warrant and the consummation of the transactions herein
contemplated by the Company have been duly authorized by all necessary
corporate and other action, and the Warrant has been duly and properly
authorized, executed and delivered by the Company; (iii) The Warrant is the
valid and binding obligation of the Company, enforceable in accordance with its
terms, subject, as to enforcement of remedies, to applicable bankruptcy,
insolvency, reorganization, moratorium and other laws affecting the rights of
creditors
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generally and the discretion of courts in granting equitable remedies; (iv) The
execution, delivery and performance of the Warrant does not, and will not, with
or without the giving of notice or the lapse of time, or both, (A) result in
any violation of the Certificate of Incorporation or By-Laws of the Company,
(B) result in a breach of or conflict with any of the terms or provisions of,
or constitute a default under, or result in the modification or termination of,
or result in the creation or imposition of any lien, security interest, charge
or encumbrance upon any of the properties or assets of the Company and/or
pursuant to, any indenture, mortgage, note, contract, commitment or other
agreement or instrument to which the Company is a party or by which the Company
or any of its properties or assets are or may be bound or affected; (C) violate
any existing applicable law, rule, regulation, judgment, order or decree of
any governmental agency or department, domestic or foreign, having jurisdiction
over the Company or any of its properties or businesses; or (D) have any
effect on any permit, certification, registration, approval, consent, license
or franchise necessary for the Company to own or lease and operate its
properties and to conduct its businesses or the ability of the Company to make
use thereof. No consent, approval, authorization or order of any court,
governmental agency, authority or body and/or any party to an agreement to
which the Company is a party and/or by which it is bound, is required in
connection with the execution, delivery and performance of the Warrant, and/or
the consummation of the transactions contemplated by the Warrant;
(c) The Company is not in violation of, or in default under,
(i) any term or provision of its constitutional documents; (ii) any material
term or provision or any financial covenant of any indenture, mortgage,
contract, commitment or other agreement or instrument to which it is a party or
by which it or any or its properties or business is or may be bound or
affected; or (iii) any existing applicable law, rule, regulation, judgment,
order or decree of any governmental agency or court, domestic or foreign,
having jurisdiction over it or any of its properties or business. The Company
owns, possesses or has obtained all governmental and other licenses, permits,
certifications, registrations, approvals or consents and other authorizations
necessary to own or lease, as the case may be, and to operate its properties
and to conduct its business or operations as presently conducted and all such
governmental and other licenses, permits, certifications, registrations,
approvals, consents and other authorizations are outstanding and in good
standing, and there are no proceedings pending or, to the best of its
knowledge, threatened, or any basis therefore existing, seeking to cancel,
terminate or limit such licenses, permits, certifications, registrations,
approvals or consents or authorizations, or related to the breach or failure
to comply of the Company with any law, rule, regulation, judgment, order or
decree;
(d) The Company has not incurred any liability for any
finder's fees or similar payments in connection with the transactions
contemplated in the Commitment ;
(e) Except as set forth on the Exception Schedule annexed
hereto, the Company is not in default, in any material respect, under the terms
of any outstanding agreement relating to the its business and operations
(collectively "Business") or its assets
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(collectively "Operating Assets") or any part thereof, as the case may be; and
to the best knowledge and belief of the Company, there exists no event of
default or event which, with notice and/or the passage of time, or both, would
constitute any such default;
(f) Except as set forth on the Exception Schedule, there are
no claims, actions, suits, proceedings, arbitrations, investigations or
inquiries before any court or governmental agency, court or tribunal, domestic,
or foreign, or before any private arbitration tribunal, pending, or, to the
best of the knowledge of the Company, threatened against the Company. As to
those items listed on the Exception Schedule none, question the validity of the
Warrant or of any action taken or to be taken by the Company pursuant to, or in
connection with, the Warrant; nor, to the best of the knowledge of the Company,
after inquiry, is there any basis for any such claim, action, suit, proceeding,
arbitration, investigation or inquiry to be made by any person and/or entity,
including without limitation any customer, supplier, lender, stockholder,
former or current employee, agent or landlord. Other than as set forth on the
Exception Schedule, there are no outstanding orders, judgments or decrees of
any court, governmental agency or other tribunal specifically naming the
Company and/or enjoining it from taking, or requiring it to take, any action,
and/or by which it or its properties or businesses are bound or subject;
(g) The Company has paid and/or provided for the payment of
all employment related taxes (including withholding taxes) with respect to its
employees;
(h) There are no benefit programs, collective bargaining
agreements, or pension plans applicable to the Company's employees other than
as set forth on the Exception Schedule;
(i) All compensation and benefit payments including vacation,
holiday and sickness payments (but exclusive of accruals required to be paid to
employees of the Company has been paid other than as set forth on the Exception
Schedule;
(j) The Financial Statements described on Exhibit "B" fairly
present the financial position of the Company as of the respective dates
thereof and the results of operations, and changes in financial position of the
Company, for each of the periods covered thereby. The Financial Statements
have been prepared in conformity with generally accepted accounting principles,
applied on a consistent basis throughout the entire periods involved. As of the
date of the balance sheet forming a part of the Financial Statements, and
except as and to the extent reflected or reserved against therein, the
Company has no material liabilities, debts, obligations or claims (absolute
or contingent) asserted against it and/or which should have been reflected
in a balance sheet or the notes thereto; and all assets reflected thereon are
properly reported and present fairly the value of the assets therein stated in
accordance with generally accepted accounting principles;
(k) The financial and other books and records of the Company
(i) are in all material respects true, complete and correct and have, at all
times, been maintained in
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accordance with good business and accounting practices; (ii) contain a complete
and accurate description, and specify the location, of all trucks, automobiles,
machinery, equipment, furniture, supplies, tools, drawings and all other
tangible property (collectively the "Property") owned by, in the possession of,
or used by the Company in connection with the operation of Business; (iii)
except as set forth on the Exception Schedule , none of such Property is leased
or subject to a security agreement, conditional sales contract or other title
retention or security agreement or is other than in the possession of, and
under the control of, the Company, and (iv) the Property reflected in such
books and records constitutes all of the tangible and intangible property
necessary for the conduct of the Business; and all of the same is in normal
operating condition and the use thereof as presently employed conforms to
all applicable laws and regulations;
(l) The Company owns and has good and marketable title in and
to all of its assets, properties and interests in properties, except for leased
assets on the Exception Schedule, (both real and personal) which are reflected
in the balance sheet included in the Financial Statements and/or utilized in
connection with the operation of the Business and/or acquired after that date
(except to the extent any of the same were disposed of since such date in the
ordinary course of business), in all cases, free and clear of all liens,
security interests, claims and encumbrances of every kind, nature and
description and rights and options of others except as expressly set forth
in such balance sheet;
(m) The Exception Schedule contains a schedule setting forth a
description of (i) each parcel of improved or unimproved real property owned by
or leased to the Company; (ii) all buildings, fixtures and other improvements
situated on or affixed to each designated parcel; and (iii) each title
insurance policy, if any, insuring any of such parcels. Such schedule is true
correct and complete in all respects; each of such leases are in full force
and effect with no event of default in existence or event or occurrence which,
with the passage of time and/or giving of notice, would or could mature into
an event of default thereunder;
(n) The Company owns all trademarks, service marks, trade
names, copyrights, similar rights and their registrations, trade secrets,
methods, practices, systems, ideas, know how and confidential materials used or
proposed to be used in the conduct of Business (COLLECTIVELY THE "INTANGIBLES")
free and clear of all liens, claims and encumbrances and rights and options of
third parties (including, without limitation, former or present officers,
directors, shareholders, employees and agents); The Company has not licensed or
leased any of the Intangibles and/or any interest therein to any person and/or
entity; The Company has not infringed, nor is infringing, upon the rights of
others with respect to the Intangibles; and the Company has not received any
notice of conflict with the asserted rights of others with respect to the
Intangibles which could, singly or in the aggregate, materially adversely
affect its business as presently conducted or prospects, financial condition
or results of operations, and the Company knows of any basis therefore; and,
to the best of the knowledge of the Company, no others have infringed upon the
Intangibles;
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(o) The Exception Schedule contains a schedule setting forth
is a true, correct and complete schedule of all insurance policies maintained
by the Company ; and the Company has insured its properties against loss or
damage by fire or other casualty, including liability insurance for acts or
omissions of employees, in an amount sufficient to preclude the Company from
being a co-insurer with respect to any claim;
(p) Except as and to the extent reflected or reserved against
in the Financial Statements, the Company did not have, as at date of such
Financial Statements, any material liabilities, debts, obligations or claims
asserted against it, whether accrued, absolute, contingent or otherwise, and
whether due or to become due, including, but not limited to, liabilities on
account of due and unpaid taxes, other governmental charges or lawsuits;
(q) The Company has filed all federal, state, municipal and
local tax returns (whether relating to income, sales, franchise, withholding,
real or personal property or otherwise) required to be filed under the laws of
the United States and all applicable states, and has paid in full all taxes
which are due pursuant to such returns or claimed to be due by any taxing
authority or otherwise due and owing. No penalties or other charges are or will
become due with respect to the late filing of any such return. To the best of
the knowledge of the Company, after due investigation, each such tax return
heretofore filed by the Company correctly and accurately reflects the amount of
its tax liability thereunder. The Company has withheld, collected and paid all
other levies, assessments, license fees and taxes to the extent required and,
with respect to payments, to the extent that the same have become due and
payable;
(r) Since the date of the Financial Statements, the Company
has not sustained any material loss or interference with its business of any
kind, nature or description including, without limitation, from fire, storm,
explosion, flood or other casualty, whether or not covered by insurance, or
from any labor dispute or court or governmental action, order or decree; nor
have there been any material adverse change in or affecting the general
affairs, management, financial condition, equity, results of operations or
properties of the Company;
(s) Other than as set forth on Exception Schedule, the Company
is not a party (i) to any contract or agreement calling for the payment of more
than $10,000 per annum or $25,000 in the aggregate and/or which cannot be
terminated on not more than 90 days' prior written notice to the other party
thereto; (ii) to any profit sharing, bonus, deferred compensation, pension or
retirement plan, severance policy or other similar agreement or arrangement;
(iii) to any collective bargaining agreement; or (iv) to any agreement not
entered into in the ordinary course of business except those related to the
transactions contemplated by the Warrant;
(t) The authorized and outstanding capitalization of the
Company is as
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set forth on the Exception Schedule. The issued and outstanding shares of the
Company capital stock have been duly authorized and validly issued and are
fully paid and nonassessable. There are no preemptive rights;
(u) The copies of the constitutional documents of the Company
heretofore delivered to the Holder are true, correct and complete in all
respects;
(v) Except as set forth on the Exception Schedule, all
documents heretofore filed by the Company with the Securities and Exchange
Commission were, at the times filed, true, correct and complete in all material
respects; and to the extent requiring correction, have been corrected; and
(w) All shares of Common Stock acquired by, and issued to, the
Holder upon the exercise of this Warrant shall be duly and properly authorized,
validly issued, fully paid and non-assessable.
10. COVENANTS. During the period from the date hereof until the later
of the expiration of this Warrrant, the payment in full of the Note and/or the
conversion of the remaining unpaid balance of the Note into shares of Common
Stock, the Company shall:
(a) Permit the officers and other authorized representatives
of the Holder (i) full and unrestricted access, from time to time and at one or
more times, to the offices and books and records of the Company situated at its
offices during normal business hours, and in connection with such books and
records, such inspection shall be at the offices where such records are
normally maintained, and such parties shall be entitled to make copies of and
abstracts from any of such books and records; (ii) the opportunity to meet,
correspond and communicate with the officers, directors, employees, counsel
and accountants to the Company, and to secure from each such information as
such parties shall deem necessary or appropriate; and (iii) to review and copy
such other, further and additional financial and operating date, materials and
information as to the business as may be requested by such parties, such access
shall not materially interfere with day-to-day operations of the Company;
(b) Take and perform any and all actions necessary to render
accurate and/or maintain the accuracy of, all of the representations and
warranties of the Company herein contained and/or satisfy each covenant or
condition required to be performed or satisfied by the Company;
(c) Not, without the prior written consent of the Investor,
take or perform any action which would or might cause any representation or
warranty made by the Company herein to be rendered inaccurate, in whole or in
part and/or which would prevent, inhibit or preclude the satisfaction, in whole
or in part of any covenant required to be performed or satisfied by the
Company;
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(d) Carry on and maintain the Business in the ordinary course
of business and in substantially the same form, style and manner as heretofore
operated by the Company; perform, in all material respects all of the Company's
obligations under all material agreements, leases and documents; use its best
efforts to preserve, intact, the relationships with its suppliers, customers,
employees and others having business relations with the Company; not
voluntarily engage in any material transaction not in the ordinary course of
business without the prior written consent of the Holder; and not without the
prior written consent of the Holder, amend any benefit plans to increase
benefits or otherwise increase compensation of their employees other than in
the ordinary course of business. Without limiting the generality of the
foregoing the Company shall not without the prior written consent of the
Holder:
(i) change its business, operations or
financial condition, or the manner of
managing or conducting its business and
operations if such changes, if any, have
a material adverse effect on such
business, operations or financial
condition, taken as a whole;
(ii) change its accounting methods or
practices (including, without limitation,
any change in depreciation, amortization
and/or good will policies or rates;
(iii) incur any damage, destruction or loss
(whether or not covered by insurance)
which materially and adversely affects
its assets, business, operations or
financial condition;
(iv) make any declaration, setting, or payment
of a dividend or other distribution with
respect to the capital stock of the
Company, or any direct or indirect
redemption, purchase or other acquisition
by the Company of any of its share of
capital stock;
(v) make any issuance or sale of any shares
of the Company's capital stock of any
class, or any other securities;
(vi) permit any increase in the salary or
other compensation payable or to become
payable to any of their respective
officers, directors, employees or agents,
or the declaration, payment or commitment
or obligation of any kind, nature or
description for the payment by any of
them f a bonus or other additional
salary or compensation to any person;
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(vii) make any loan to any person or entity
and/or issue any guaranty for or with
respect to its own or another's
obligations;
(viii) waive or release any right or claim;
(ix) sell, lease, abandon, assign, transfer,
license or otherwise dispose (including
any agreement and/or option for or with
respect to any of the foregoing) of any
real property or tangible or intangible
assets, property or rights (and/or
interest therein);
(x) incur any material obligation or
liability, absolute or contingent;
(xi) amend, terminate or modify any material
agreement or license to which it is a
party which has or may have a material
affect on its financial condition,
business, assets or prospects;
(xii) enter into any management agreement with
any person and/or entity; and
(xiii) experience any labor problems and/or
other events or conditions of any
character which materially and/or
adversely affect, or which might
materially and/or adversely affect, its
financial condition, business, assets or
prospects;
(e) Use its best efforts in good faith, to obtain and/or
maintain all licenses, consents or approvals (from every governmental or
regulatory body, or other person) required to be obtained and/or held by the
Company for or with respect to its assets, businesses and/or operations;
(f) Immediately advise the Holder of any event, condition or
occurrence which inhibits or limits or is likely to prevent, inhibit or limit
the Company from satisfying, in full and on a timely basis, any covenant, term
or condition herein contained; and
(g) appoint and/or elect to the Board of Directors of the
Company not less that four (4) individuals designated by the Holder.
11. REGISTRATION RIGHTS. The Company does hereby irrevocably give and
grant to the Holder those registration rights set forth in Exhibit "C" annexed
hereto; which
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registration rights are hereby incorporated herein by reference with the same
full force and effect as if set forth herein in full.
12. HEADINGS. The headings of this Warrant have been inserted as a
matter of convenience and shall not affect the construction hereof.
13. APPLICABLE LAW. This Warrant shall be governed by and construed in
accordance with the laws of the State of New York applicable to agreements made
and to be performed in New York.
14. SUCCESSORS AND ASSIGNS. This Warrant shall be binding upon, and
inure to the benefit of, the Company and the Holder and their respective
successors and permitted assigns.
(REMAINDER OF PAGE INTENTIONALLY LEFT BLANK)
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15. ATTORNEYS FEES. In the event of any dispute or controversy arising
out of or relating to this Warrant, the prevailing party shall be entitled to
recover reasonable attorneys fees from the other party hereto.
IN WITNESS WHEREOF, Mid-State Raceway, Inc. has caused this Warrant to
be signed by its President and its corporate seal to be hereunto affixed this
11th day of November, 2003.
Mid-State Raceway, Inc.
By: /s/ XXXXXX XXXX
---------------
Xxxxxx Xxxx, President
{Corporate Seal}
Accepted and Agreed:
All Capital, LLC
By: /s/ XXXXX XXXXX
---------------
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SUBSCRIPTION
The undersigned ___________________________________,
pursuant to the provisions of the foregoing Warrant, hereby agrees to subscribe
for and purchase ____________ shares of the Common Stock of Mid-State Raceway,
Inc., covered by said Warrant, and makes payment therefor in full at the price
per share provided by said Warrant.
Dated:_________________________ Signature_____________________
Address_______________________
ASSIGNMENT
FOR VALUE RECEIVED, ____________________________ hereby sells,
assigns and transfers unto _______________________ the foregoing Warrant and
all rights evidenced thereby, and does irrevocably constitute and appoint
________________________ attorney, to transfer said Warrant on the books of
Mid-State Raceway, Inc.
Dated:________________________ Signature ___________________________
Address_______________________________
PARTIAL ASSIGNMENT
FOR VALUE RECEIVED, _______________________ hereby assigns and
transfers unto __________________________ the right to purchase ____________
shares of the Common Stock of Mid-State Raceway, Inc. by the foregoing Warrant,
and a proportionate part of said Warrant and the rights evidenced hereby, and
does irrevocably constitute and appoint ______________________, attorney, to
transfer that part of said Warrant on the books of Mid-State Raceway, Inc.
Dated: _______________________ Signature__________________________
Address___________________________________
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