EXHIBIT 4
STOCK PLEDGE AND SECURITY AGREEMENT
THIS STOCK PLEDGE AND SECURITY AGREEMENT (the "Stock Pledge
Agreement"), dated as of April 10, 2004, is executed by and among Racing
Ventures, LLC, a Florida limited liability company, having an address at 0000
X.X. 00 Xxxxxx, Xxxx Xxxxxxxxxx, Xxxxxxx 00000 ("Pledgor"); ALL CAPITAL, LLC, a
Nevada limited liability company having an address at 0000 Xxxx Xxxxxxxxx
Xxxxxx, Xxxxx 000, Xxx Xxxxx, Xxxxxx ("Creditor"); and Xxxxx X. Xxxx, Esq., an
attorney having an address at 0000 Xxxxx Xxxxx Xxxx, Xxxxx X, Xxx Xxxxx, Xxxxxx
00000 ("Pledge Holder").
RECITALS
A. Pledgor owns 469,949 shares of the outstanding common stock of Mid
State Raceway, inc., a New York corporation (the "Company"). Pledgor also owns
warrants to purchase an additional 1,250,000 shares of common stock of the
Company.
B. Pledgor owes Creditor the principal sum of Seven Million Dollars
($7,000,000) (the "Loan"). The Loan represents a purchase money obligation of
Pledgor to Creditor under a Securities Purchase Agreement between Lender and
Borrower of even date herewith (the "Purchase Agreement"). The Loan is evidenced
by two Secured Promissory Notes (the "Notes"), (i) one in the amount of Three
Million Dollars ($3,000,000) and (ii) one in the amount of Four Million Dollars
($4,000,000), both dated of even date hereof and executed by Pledgor.
C. It is a condition precedent to the closing under the Purchase Agreement
that Pledgor pledge and assign the Stock and Warrants (as hereinafter defined)
to Pledge Holder for the benefit of Creditor as security for the Obligations (as
hereinafter defined).
AGREEMENT
NOW, THEREFORE, in consideration of the above recitals and for other good
and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, Pledgor, Creditor and Pledge Holder hereby agree as follows:
1. DEFINITIONS AND INTERPRETATION. When used in this Stock Pledge
Agreement, the following terms shall have the following respective meanings:
"Obligations" shall mean (i) the payment by Pledgor to Creditor of all
indebtedness now or hereafter owed to Creditor by Pledgor in connection with two
Secured Promissory Notes of even date herewith by Pledgor and other parties, as
maker, payable to the order of Creditor, as holder, for the principal sum of
$3,000,000 and $4,000,000 (the "Notes"), the Purchase Agreement, this Stock
Pledge Agreement and all other documents executed by Pledgor and/or any other
makers and/or guarantors of the Notes to evidence or
secure any indebtedness or obligations to Creditor in connection with the Loan
(all of which documents together with the Notes, the Purchase Agreement and this
Pledge Agreement are hereinafter collectively referred to as the "Loan
Documents"), whether at stated maturity, by acceleration or otherwise, together
with interest thereon, fees, late charges, expenses, indemnification or
otherwise, in connection therewith and extensions, modifications and renewals
thereof, and (ii) the performance by Pledgor of all other obligations and the
discharge of all other liabilities of Pledgor to Creditor and Pledge Holder of
every kind and character, whether direct or indirect, absolute or contingent,
due or to become due, now existing or hereafter arising, joint, several and
joint and several, created under this Stock Pledge Agreement or the other Loan
Documents, as any of the same may be amended or supplemented from time to time,
or under any other agreement in connection with the Loan to which Pledgor and
Creditor are parties, (iii) any and all sums advanced by Creditor or Pledge
Holder in order to preserve the Pledged Securities or preserve the security
interest in the Pledged Securities (or the priority thereof) granted hereby, and
(iv) the expenses of retaking, holding, preparing for sale, selling or otherwise
disposing of or realizing on the Pledged Securities, of any proceeding for the
collection or enforcement of any indebtedness, obligations or liabilities owed
by Pledgor to Creditor or Pledge Holder referred to above, or of any exercise by
Creditor or Pledge Holder of any of their respective rights hereunder, together
with reasonable attorneys' fees and disbursements and court costs.
"Pledge Holder" shall mean an attorney or law firm duly licensed to
practice law in the State of Nevada with offices in the State of Nevada.
"Pledged Securities" shall have the meaning given to that term in
Paragraph 2 hereof.
"Stock" shall mean the 469,949 shares of common stock of the Company that
are being pledged and assigned to Pledge Holder under this Agreement; all shares
of common stock of the Company issued upon exercise of the Warrants; and any
additional shares of common stock of the Company that Pledgor may pledge and
assign to Pledge Holder as agent for the benefit of Creditor under this Stock
Pledge Agreement from time to time.
"UCC" shall mean the Uniform Commercial Code as the same may, from time to
time, be in effect in the State of Nevada.
"Warrants" shall mean the warrants to purchase 1,250,000 shares of common
stock of the Company that are being pledged and assigned to Pledge Holder under
this Agreement.
Unless otherwise defined herein, capitalized terms herein which are
defined in the UCC shall have the respective meanings given to those terms in
the UCC. To the extent the meanings given herein are inconsistent with those
given in the UCC, the meanings given herein shall govern.
2. PLEDGE. As security for the Obligations, Pledgor hereby pledges and
assigns to Pledge Holder, as agent solely of Creditor and for the sole benefit
of Creditor, and grants to Pledge Holder and Creditor, for the benefit of
Creditor, a security interest in all right, title and interests of Pledgor in
and to the Stock and Warrants and all proceeds thereof, including,
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without limitation, stock dividends, stock splits and other similar
distributions thereon, all shares, obligations or securities into which said
securities may be changed or which may be issued upon exercise or in lieu
thereof and all amounts paid in cash or other property as ordinary or
liquidating distributions or dividends or any other securities which hereafter
may be pledged hereunder (all of which together with the Stock and Warrants are
hereinafter collectively referred to as the "Pledged Securities"). In addition,
Pledgor hereby assigns to Creditor, as additional collateral for the obligations
and liabilities of the Pledgor to Creditor and Pledge Holder, the rights to
appoint or elect directors of the Company and the exclusive option to provide
financing to the Company which are more particularly described in Exhibit A
attached hereto and hereby incorporated by reference herein.
3. REPRESENTATIONS AND WARRANTIES. Pledgor represents and warrants to
Creditor and Pledge Holder that: (a) the execution, delivery and performance by
Pledgor of this Stock Pledge Agreement are within the properly exercisable
organizational power of Pledgor and have been duly authorized by all necessary
actions on the part of Pledgor; (b) this Stock Pledge Agreement has been duly
executed and delivered by Pledgor and constitutes a legal, valid and binding
obligation of Pledgor, enforceable against it in accordance with its terms,
except as limited by bankruptcy, insolvency or other laws of general application
relating to or affecting the enforcement of creditors' rights generally and
general principles of equity; (c) the execution, delivery and performance of
this Stock Pledge Agreement do not (i) violate any requirement of law,
regulation or statute, (ii) violate any provision of, or result in the breach or
the acceleration of or entitle any Person to accelerate (whether after the
giving of notice or lapse of time or both) any obligation under, any indenture,
mortgage, lien, lease, agreement, license, instrument, guaranty, or other
document to which Pledgor is a party or by which Pledgor or its property is
bound, or (iii) result in the creation or imposition of any lien upon any
property, asset or revenue of Pledgor (except such liens as may be created
pursuant to this Stock Pledge Agreement); (d) no consent, approval, order or
authorization of, or registration, declaration or filing with, any governmental
authority or other Person (including, without limitation, The Company) is
required in connection with the execution, delivery and performance by the
Pledgor of this Stock Pledge Agreement; (e) Pledgor is the beneficial and record
owner of the Stock and Warrants and, in the case of after-acquired Pledged
Securities, at the time Pledgor acquires rights in the Pledged Securities will
be the beneficial and, in the case of capital stock, record owner thereof and no
other Person has (or, in the case of after-acquired Pledged Securities, at the
time Pledgor acquires rights therein, will have) any right, title, claim or
interest (by way of lien or otherwise) in, against or to the Pledged Securities;
(f) all of the Pledged Securities which are shares of capital stock are and such
future Pledged Securities will be validly issued, fully paid and nonassessable
securities of the Company; (g) upon transfer to Pledge Holder of all
certificates representing the Stock and Warrants, Creditor will have a first
priority perfected security interest in the Stock and Warrants; (h) in the case
of all after-acquired Pledged Securities, at the time Pledgor acquires rights
therein, Creditor will have a first priority perfected security interest in all
such other Pledged Securities; and (i) Pledgor's principal place of business is
the address of Pledgor stated at the outset of this Agreement.
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4. COVENANTS. Pledgor hereby agrees: (a) to perform all acts requested by
Pledge Holder or Creditor that are necessary to maintain, preserve, protect and
perfect the Pledged Securities, the lien granted to Pledge Holder hereunder and
the first priority of such lien; (b) promptly deliver to Pledge Holder all
originals of certificates and other documents, instruments and agreements
evidencing the Pledged Securities which are now held or hereafter received by
Pledgor, together with such blank stock powers executed by Pledgor as Pledge
Holder or Creditor may request from time to time; (c) to procure, execute and
deliver from time to time any endorsements, assignments, financing statements
and other documents, instruments and agreements and take other actions deemed
necessary, as Pledge Holder or Creditor may request, to perfect, maintain and
protect the lien on the Pledged Securities hereunder and the priority thereof;
(d) not to vote to enable, or take any other action to permit, the Company to
take any action that would result in a default by Pledgor under this Agreement;
(e) to pay, and to save Pledge Holder and Creditor harmless from, any and all
liabilities with respect to, or resulting from any delay by Pledgor in paying,
any and all stamps, excise, sales or other similar taxes which may be payable or
determined to be payable with respect to any of the Pledged Securities or in
connection with any of the transactions contemplated by this Stock Pledge
Agreement; (f) not to, without the written consent of the Creditor, sell,
dispose of, transfer (directly or indirectly) or further encumber or covenant to
sell, dispose of, transfer (directly or indirectly) or further encumber the
Pledged Securities; (g) to defend Creditor and Pledge Holder against the claims
of all persons claiming any right or interest in the Pledged Securities; (h) to
keep the Pledged Securities free from all security interests and other
encumbrances except for the security interest granted hereby; (i) not to assign,
sell, transfer, deliver or otherwise dispose of the Pledged Securities or any
right or interest therein or thereunder or attempt to do so, so long as the
Pledged Securities are held by the Pledge Holder hereunder; (j) to notify
Creditor and Pledge Holder promptly in writing of any change in Pledgor's
address, specified above; (k) to do or cause to be done all things necessary to
preserve and keep in full force and effect the corporate existence of the
Company; (l) not to permit the Company to sell, lease, transfer or otherwise
dispose of any portion of its assets except worn items of tangible personal
property; (m) to replace any assets or property of the Company that are sold,
leased, transferred or otherwise disposed of with new property or new assets of
equal or greater value and utility; (n) not to permit the Company to subject any
of its assets to any mortgage, deed of trust, security agreement, security
interest or other lien or encumbrance; (o) to cause the Company to pay and
perform all of its obligations to creditors and to third parties as and when
due; (p) not to permit the Company to loan any sums or to guarantee or otherwise
pledge any of its assets or credit as security for any obligations of Pledgor or
any third party; (p) not to permit the Company to incur any indebtedness,
obligations or liabilities except normal "trade" debt in the ordinary course of
its business to the extent required for the continued operation of its business;
(q) not to permit the Company to incur any indebtedness, obligations or
liabilities for borrowed money or on account of any credit with the exception of
credit extended in the normal course of business; (r) not to permit the Company
to incur any indebtedness, obligations or liabilities except for purposes
directly related and necessary for the operation of its business; (s) not to
permit the Corporation to enter into
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any new business or new line of business (excluding video lottery terminal
gaming), or to enter into business at any new location without the prior written
consent of Creditor, which consent may be withheld in the sole and absolute
discretion of Creditor; (t) not to permit the Company to enter into any
contracts, agreements or transactions on terms that are not fair and reasonable
to the Company or on terms that are less favorable to the Company than the terms
that would be arranged in arms-length dealings between parties having equal
bargaining power; (u) not to permit the Company to enter into any agreement,
contract or obligation with the Pledgor, any present or former officer,
director, employee or affiliate of the Pledgor, any spouse or relative within
the third degree of consanguinity of Pledgor or any such officer, director,
employee or affiliate of any such spouse or relative that is not terminable
without notice or penalty by the Boards of Directors of the Company; (v) not to
permit the Corporation to issue any additional shares of capital stock or other
securities, or to issue or enter into any agreement or contract relating to the
issuance of any warrants, options or other agreements of any nature relating to
the issuance by the Company of any shares of capital stock or other securities;
(w) to cause the Company to pay all taxes and other charges due or payable to
federal, state and local taxing authorities, including, without limitation,
those due in respect of its properties, assets, income, franchises, licenses,
sales and payrolls; (x) to execute any and all instruments and do any and all
acts reasonably necessary to effectuate the terms and conditions of this
Agreement; and (y) to pay Pledge Holder's reasonable fees, including attorney's
fees, for acting as Pledge Holder hereunder. In addition, Pledgor shall pay
Pledge Holder reasonable compensation for any unusual or extraordinary services
required on the part of Pledge Holder in connection with this Agreement or the
Pledged Securities. As used herein, the term "affiliate" means an individual,
company, firm, association, partnership, corporation, trust or other legal
entity of any kind whatsoever that directly or indirectly controls, is
controlled by or is under common control with (through ownership or otherwise)
Pledgor, the Company, any officer, director or employee of Pledgor or the
Company, any record or beneficial owner of five (5%) percent or more of the
outstanding equity securities of the Pledgor or Company, and any spouse or
relative of any of the aforementioned persons. As used herein, the term
"relative" means a relative within the third degree of consanguinity of a
designated person.
5. DIVIDENDS AND VOTING RIGHTS. (a) Before and after default, Pledge
Holder shall be entitled to receive all dividends and distributions on or
relating to the Pledged Securities, including, without limitation, all amounts
paid in cash or other property as ordinary or liquidating dividends or
distributions on account of the Pledged Securities and all stock dividends. All
dividends and distributions received by Pledge Holder in accordance herewith
shall become subject to all of the provisions hereof.
(b) So long as no Event of Default hereunder has occurred and is
continuing and so long as the vote to be cast and/or corporate right to be
exercised and/or other action to be taken would not, in the sole and absolute
discretion of Creditor, (i) impair the value of the Pledged Securities, (ii)
impair the liquidity, net worth or liquidation value of the Company, or (iii)
directly or indirectly decrease the proportion of the total voting shares or
equity ownership of the Company represented by the Pledged Securities, then
Pledgor shall be entitled to exercise any and all voting powers relating or
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pertaining to the Pledged Securities or any part thereof.
(c) Pledgor shall notify the Company to pay all dividends and other
distributions to Pledge Holder until further notice from Creditor or Pledge
Holder. Provided, however, that upon demand and presentation of supporting
documentation from Pledgor, Pledge Holder shall remit to Pledgor sufficient
funds from any dividend or other distribution to permit Pledgor to pay
reasonably anticipated Federal Income Tax thereon. Pledge Holder shall remit
such funds to Pledgor on or before March 15 in the year reasonably anticipated
Federal Income Tax is due.
(d) In addition, Pledgor shall execute and deliver to the Company any
additional documents reasonably requested or required by the Company or Creditor
to assure that all payments and distributions are paid or made by the Company
directly to the Pledge Holder. Pledgor shall, upon request of Creditor, execute
and deliver from time to time one or more irrevocable proxies in favor of
Creditor for the Stock and any other Pledged Securities designated by Creditor
from time to time, consistent with this Agreement, all in form and substance
reasonably satisfactory to Creditor.
(e) All cash dividends and other cash distributions received by Pledge
Holder from the Company shall be deposited by the Pledge Holder in an interest
bearing account or in short term direct obligations of, or that are
unconditionally guaranteed by, the United States of America, including
obligations of any Federal agencies but only if unconditionally guaranteed by
the United States of America. All interest earned on such dividends and other
cash distributions shall be added to and treated as part of the Pledged
Securities.
6. DEFAULT AND REMEDIES.
(a) EVENT OF DEFAULT. The occurrence (whether as a result of acts or
omissions by Pledgor, the Company or any other Person) of a default by Pledgor
under any of the Loan Documents and whether it shall be voluntary or involuntary
or be effected by operation of law or pursuant to any judgment, decree or order
of any court or any order, rule or regulation of any administrative or
governmental body, shall constitute an "Event of Default" hereunder.
(b) VOTING RIGHTS. Upon the occurrence and during the continuance of any
Event of Default hereunder, Pledge Holder may, upon notice to Pledgor, register
all of Pledged Securities in the name of Pledge Holder or his nominee, for the
benefit of Creditor, and Pledge Holder or his nominee may thereafter exercise
(i) all voting, corporate and other rights pertaining to the Pledged Securities
at any meeting of shareholders the Company or otherwise and (ii) any and all
rights of conversion, exchange, subscription and any other rights, privileges or
options pertaining to Pledged Securities as if it were the absolute owner
thereof (including, without limitation, the right to exchange at its discretion
any and all of the Pledged Securities upon the merger, consolidation,
reorganization, recapitalization or other fundamental change in the corporate
structure of the Company, or upon the exercise by Pledgor or Pledge Holder of
any right, privilege or option pertaining to the Pledged Securities, and in
connection therewith, the right to deposit and deliver any and all of the
Pledged Securities with any
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committee, depositary, transfer agent, registrar or other designated agency upon
such terms and conditions as it may determine), all without liability except to
account for property actually received by it, but Pledge Holder shall have no
duty to Pledgor to exercise any such right, privilege or option and shall not be
responsible for any failure to do so or delay in so doing.
(c) ADDITIONAL REMEDIES. Upon the occurrence and during the continuance of
an Event of Default, Pledge Holder and Creditor may exercise, in addition to all
other rights and remedies granted in this Stock Pledge Agreement and in any
other instrument or agreement securing, evidencing or relating to the
Obligations, any and all rights and remedies at law, including, without
limitation, all rights and remedies of a secured party under the UCC. Without
limiting the generality of the foregoing, Pledge Holder may, without demand of
performance or other demand, presentment, protest, advertisement or notice of
any kind to or upon Pledgor, The Company or any other Person (except notice of
time and place of sale and any other notice required by law and any notice
referred to below) forthwith collect, receive, appropriate and realize upon the
Pledged Securities, or any part thereof, and/or may forthwith sell, assign, give
option or options to purchase or otherwise dispose of and deliver the Pledged
Securities or any part thereof (or contract to do any of the foregoing), in one
or more parcels at public or private sale or sales, in the over-the-counter
market, at any exchange, broker's board or office of Pledge Holder or elsewhere
upon such terms and conditions as he may deem advisable and at such prices as he
may deem commercially reasonable, for cash or on credit or for future delivery
without assumption of any credit risk. Pledgor agrees that any private sales of
the Pledged Securities may be made from time to time on such terms and
conditions and subject to such restrictions as Creditor or its counsel deems
necessary or desirable to exempt such sale from any registration and/or
prospectus delivery requirement of any federal or state securities laws, rules
or regulations that might otherwise apply to an offer or sale of all or any part
of the Pledged Securities, including, without limitation, drastically limiting
the number of offerees and purchasers, limiting offerees and prospective
purchasers to "accredited investors," requiring "investment letters" from
purchasers, legending any stock certificates with an appropriate restrictive
legend limiting their transferability as restricted securities, and placement of
appropriate stop transfer instructions with the appropriate transfer agent.
Pledgor agrees that all of the terms, conditions and restrictions referred to
above and any additional terms, conditions or restrictions that Lender or its
counsel deem necessary or desirable to assure that any "private placements" of
the Pledged Securities or any part thereof (i.e., offers and sales without
registration or delivery of a prospectus) are made in compliance with all
applicable securities laws, rules and regulations, are and will be commercially
reasonable. Any sale, as provided for herein, of Pledged Securities by Creditor
or Pledge Holder may be adjourned from time to time by announcement at the time
and place appointed for any such sale, and such sale may be made at the time and
place to which the same shall be so adjourned unless otherwise provided by law.
Creditor shall have the right upon any such public sale or sales, and to the
extent permitted by law, upon any such private sale or sales, to have the
Obligations credited toward any bid or bids designated by the Creditor and to
purchase the whole or any part of the Pledged Securities so sold, free of any
right or equity of redemption in Pledgor, which right or equity is hereby waived
and released. Pledge Holder shall apply any proceeds from time to time held by
him and the net proceeds
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of any such collection, recovery, receipt, appropriation, realization or sale,
after deducting all reasonable costs and expenses of every kind incurred by
Pledge Holder or Creditor in respect thereof or incidental to the care or
safekeeping of any of the Pledged Securities or in any way relating to the
Pledged Securities or the rights of Pledge Holder hereunder, including, without
limitation, attorneys' fees and disbursements of counsel of Creditor and/or
Pledge Holder, to the payment in whole or in part of the Obligations, in such
order as Creditor may specify, and only after such application and after the
payment by Pledge Holder of any other amount required by any provision of law,
need Pledge Holder account for the surplus, if any, to Pledgor. To the extent
permitted by applicable law, Pledgor waives all claims, damages and demands it
may acquire against Pledge Holder and Creditor arising out of the exercise of
any rights hereunder except as may arise solely from Pledge Holder's gross
negligence or willful misconduct. If any notice of a proposed sale or other
disposition of Pledged Securities shall be required by law, such notice shall be
deemed reasonable and proper if given at least seven (7) business days before
such sale or other disposition.
7. AUTHORIZED ACTIONS. Pledgor acknowledges that the Obligations hereunder
may be supplemented, augmented and otherwise increased as a result of changes in
the underlying obligations of Pledgor or other parties under the Loan Documents.
In that regard, Pledgor authorizes Creditor and/or Pledge Holder, in their
discretion, without notice to Pledgor, irrespective of any change in the
financial condition of Pledgor, the Company or any other Person, and without
affecting or impairing in any way the liability of Pledgor hereunder, from time
to time to (a) take and hold additional security for the payment or performance
of the Obligations and exchange, enforce, waive or release any such additional
security; (b) apply such additional security and direct the order or manner of
sale thereof; (c) purchase such additional security at public or private sale;
(d) upon the occurrence and during the continuance of an Event of Default, make
any payments and do any other acts Pledge Holder shall deem necessary to protect
the Creditor's security interest in the Pledged Securities, including, without
limitation, pay, purchase, contest or compromise any encumbrance, charge or lien
which in the judgment of Pledge Holder or Creditor appears to be prior to or
superior to the security interest granted hereunder, and appear in and defend
any action or proceeding purporting to affect its security interest in and/or
the value of the Pledged Securities, and in exercising any such powers or
authority, pay all expenses incurred in connection therewith, including
reasonable attorneys' fees, and Pledgor hereby agrees it shall be bound by any
such payment made or act taken by Pledge Holder or Creditor hereunder and shall
reimburse Pledge Holder and/or Creditor for all payments made and expenses
incurred, which amounts shall be secured under this Stock Pledge Agreement;
provided, however, that Pledge Holder and Creditor shall have no obligation to
make any of the foregoing payments or perform any of the foregoing acts; (e)
otherwise exercise any right or remedy either of them may have against Pledgor,
the Company or any guarantor of the Obligations or any part thereof or any
security, including, without limitation, the right to foreclose upon any such
security by judicial or nonjudicial sale; (f) settle, compromise with, release
or substitute any one or more makers, endorsers or guarantors of the
Obligations; and (g) assign the Obligations or this Stock Pledge Agreement in
whole or in part.
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8. WAIVERS. Pledgor waives (a) any right to require Pledge Holder or
Creditor to (i) proceed against the Company or any other Person, (ii) proceed
against or exhaust any security received from Pledgor or any other Person or
(iii) pursue any other remedy in Creditor's or Pledge Holder's power whatsoever;
(b) any defense resulting from the absence, impairment or loss of any right of
reimbursement or subrogation or other right or remedy of Pledgor against any
other Person or any security, whether resulting from an election by Creditor or
Pledge Holder to foreclose upon security by nonjudicial sale, or otherwise; (c)
any setoff or counterclaim of the Company or any other Person or any defense
which results from any disability or other defense of the Company or any other
Person or the cessation or stay of enforcement from any cause whatsoever of the
liability of any other Person; (d) any right to exoneration of sureties which
would otherwise be applicable; (e) except as otherwise prohibited by applicable
law, any right of subrogation or reimbursement and any right of contribution,
and right to enforce any remedy which Pledge Holder or Creditor now has or may
hereafter have against the Company or any other Person, and any benefit of, and
any right to participate in, any security now or hereafter received by Creditor
or Pledge Holder until the Obligations have been paid in full; (f) all
presentments, demands for performance, notices of non-performance, protests,
notice of dishonor, and notices of acceptance of the Stock Pledge Agreement and
of the existence, creation or incurrence of new or additional Obligations; (g)
the benefit of any statute of limitations (to the extent permitted by law) and
(h) any right to be informed by Pledge Holder of the financial condition of any
Person or any change therein or any other circumstances bearing upon the risk of
nonpayment or nonperformance of the Obligations. Pledgor has the ability and
assumes the responsibility for keeping informed of the financial condition of
the Company and all other Persons primarily or secondarily liable for payment or
performance of the Obligations or any part thereof and of other circumstances
affecting such nonpayment and nonperformance risks.
9. LIMITATIONS ON DUTIES AND RESPONSIBILITIES. Pledge Holder's sole duty
with respect to the custody, safekeeping and physical preservation of the
Pledged Securities in his possession, under the UCC or otherwise, shall be to
deal with the Pledged Securities in the same manner as a prudent person in the
reasonable administration of his affairs, and no additional duties shall be
inferred or implied hereby. Neither Pledge Holder nor any of his employees or
agents shall be liable for failure to demand, collect or realize upon any of the
Pledged Securities or for any delay in doing so or shall be under any obligation
to sell or otherwise dispose of any Pledged Securities upon the request of
Pledgor or otherwise. Pledge Holder shall not be responsible for the genuineness
of any certificate or signature and may rely conclusively upon and shall be
protected when acting upon any notice, affidavit, request, consent, instruction,
check or other instrument believed by him in good faith to be genuine or to be
signed or presented by the proper person or duly authorized, or properly made.
No amendment or modification of this Agreement or waiver of its terms shall
affect the right and duties of the Pledge Holder unless his written consent
thereto shall have been obtained. Pledge Holder shall not be required to
institute or defend any action involving any matters referred to herein or which
affects him or his duties or liabilities hereunder unless or until requested to
do so by any party to this Agreement and then only upon receiving full
indemnity, in character satisfactory to Pledge Holder, against any and all
claims,
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liabilities and expenses in relation thereto. In the event of any dispute among
the parties hereto with respect to the Pledge Holder or his duties, (i) Pledge
Holder may refrain from acting in respect of any matter referred to herein in
full reliance upon and by and with the advice of legal counsel selected by him
and shall be fully protected in so refraining from acting upon the advice of
such counsel, or (ii) Pledge Holder may refrain from acting until required to do
so by an order of an arbitration panel or court of competent jurisdiction.
10. TERMINATION. (a) Upon the satisfaction of all obligations, Seller
shall give prompt notice to the Pledge Holder and this Stock Pledge Agreement
shall terminate. (b) Pledge Holder shall promptly thereafter, at Pledgor's
expense, deliver the Stock certificates held by him hereunder to Pledgor and
Creditor, and shall, at Pledgor's expense, execute and deliver to Pledgor such
documents as Pledgor shall reasonably request to evidence such termination;
provided, however, that upon demand by Purchaser and proof of payment, Seller
shall reimburse Purchaser for one-half of the reasonable cost of preparation of
documents evidencing such termination up to the maximum of One Thousand ($1000)
Dollars.
11. POWER OF ATTORNEY. Pledgor hereby appoints and constitutes Pledge
Holder as Pledgor's attorney-in-fact for purposes of (a) collecting any Pledged
Securities, (b) conveying any item of Pledged Securities to any purchaser
thereof, and (c) making any payments or taking any acts under Paragraph 7
hereof. Pledge Holder's authority hereunder shall include, without limitation,
the authority to endorse and negotiate, for Pledge Holder's own account, any
checks or instruments in the name of Pledge Holder, to execute a receipt for any
document, to transfer title to any item of Pledged Securities, and to take any
other actions necessary or incident to the powers granted to Pledge Holder in
this Stock Pledge Agreement. This power of attorney is coupled with an interest
and is irrevocable by Pledgor.
12. MISCELLANEOUS.
(a) NOTICES. Any notice to a party required or permitted hereunder shall
be given in writing. The notice shall be deemed to have been given at the
following times: (a) on the date of service if served personally on the party to
whom notice is to be given; (b) on the first business day after transmission and
receipt if transmitted by electronic facsimile; (c) on the first business day
after deposit if deposited with and accepted by an overnight express courier
service for delivery the next business day; or (d) on the fourth business day
after mailing if mailed to the party to whom notice is to be given by first
class mail, postage prepaid, addressed to the party as follows:
To Creditor: All Capital, LLC
0000 Xxxx Xxxxxxxxx Xxxxxx, Xxxxx 000
Xxx Xxxxx, Xxxxxx 00000
Attention: Xx. Xxxxxxxxx Xxxxxx
Fax: (000) 000-0000
With copy to:
Xxxxxx X. Xxxxxxx, Esq.
Xxxxxxxx & Gersten LLP
00 Xxxxx Xxxx Xxxx
Xxxxxxx, XX 00000
Fax: 000-000-0000
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To: Pledgor: Racing Ventures, LLC
0000 X.X. 00 Xxxxxx, Xxxxx 0
Xxxx Xxxxxxxxxx, Xxxxxxx 00000
Fax: 000-000-0000
With copy to: Xxxxxxx X. Xxxxxxxx, Esq.
000 Xxxxx Xxxxxxxxx Xxxxxx, Xxxxx 000
Xxxx Xxxx Xxxxx, XX 00000
Fax: 000-000-0000
To Pledge Holder: Xxxxx X. Xxxx, Esq.
0000 Xxxxx Xxxxx Xxxx, Xxxxx X
Xxx Xxxxx, Xxxxxx 00000
Fax 000-000-0000
(b) NONWAIVER. No failure or delay on Creditor's or Pledge Holder's part
in exercising any right hereunder shall operate as a waiver thereof or of any
other right nor shall any single or partial exercise of any such right preclude
any other further exercise thereof or of any other right.
(c) AMENDMENTS AND WAIVERS. This Stock Pledge Agreement may not be amended
or modified, nor may any of its terms be waived, except by written instruments
signed by the party or parties against which enforcement thereof is sought. Each
waiver or consent under any provision hereof shall be effective only in the
specific instances for the purpose for which given.
(d) ASSIGNMENT. This Stock Pledge Agreement shall be binding upon and
inure to the benefit of Creditor, Pledge Holder and Pledgor and their respective
heirs, personal representatives, successors and assigns; provided, however, that
Pledgor may not assign its rights or delegate its duties hereunder without the
prior written consent of Creditor.
(e) CUMULATIVE RIGHTS, ETC. The respective rights, powers and remedies of
Pledge Holder and Creditor under this Stock Pledge Agreement shall be in
addition to all rights, powers and remedies given to Pledge Holder and/or
Creditor by virtue of the UCC, any applicable governmental rule or regulation or
any other agreement, all of which rights, powers, and remedies shall be
cumulative and may be exercised successively or concurrently without impairing
Pledge Holder's or Creditor's lien in the Pledged Securities. Pledgor waives any
right to require Pledge Holder to proceed against any Person or to exhaust any
Pledged Securities or to pursue any remedy in Pledge Holder's power.
(f) INITIAL PLEDGE HOLDER. The initial Pledge Holder shall be Xxxxx X.
Xxxx, attorney at Law, Las Vegas, Nevada.
(g) GOVERNING LAW. This Stock Pledge Agreement shall be governed by and
construed in accordance with the laws of the State of Nevada.
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(h) SUCCESSOR PLEDGE HOLDERS. Pledge Holder may resign by the giving of
notice of such resignation in writing to Creditor and Pledgor. If Pledge Holder
shall die, resign or become disqualified from acting in the execution of this
Agreement, Creditor shall have full power to appoint a substitute Pledge Holder
who shall succeed to all the estates, rights, powers and duties of the Pledge
Holder named in this Agreement. Such appointment may be executed by any
authorized agent of Creditor, and such appointment shall be conclusively
presumed to be executed with authority and shall be valid and sufficient without
proof of any action by the members and/or managers of Creditor. Pledgor hereby
ratifies and confirms any and all acts which the Pledge Holder named in this
Agreement, or its successor or successors, shall do lawfully by virtue hereof.
Should any assignment, conveyance or other instrument of any nature be required
from Pledgor by any Pledge Holder or substitute Pledge Holder to more fully and
certainly vest in and confirm to Pledge Holder or substitute Pledge Holder such
estates, rights, powers, and duties, then, upon request by Pledge Holder or
substitute Pledge Holder, any and all such deeds, conveyances and instruments
shall be made, executed and acknowledged by Pledgor. Any substitute Pledge
Holder appointed pursuant to any of the provisions hereof shall, without any
further act, assignment or conveyance, become vested with all the estates,
properties, rights, powers, and trusts of its, his or her predecessor in the
rights hereunder with like effect as if originally named as Pledge Holder
herein; but nevertheless, upon the written request of Creditor or of the
substitute Pledge Holder, the Pledge Holder ceasing to act shall execute and
deliver any instrument transferring to such substitute Pledge Holder, upon the
trusts herein expressed, all the estates, properties, rights, powers, and trusts
of the Pledge Holder so ceasing to act, and shall duly assign, transfer and
deliver all assets and moneys representing the Pledged Securities held by such
Pledge Holder to the substitute Pledge Holder so appointed in such Pledge
Holder's place.
(i) COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be effective only upon delivery and thereafter
shall be deemed an original, and all of which shall be taken to be one and the
same instrument, for the same effect as if all parties hereto had signed the
same signature page. Any signature page of this Agreement may be detached from
any counterpart of this Agreement without impairing the legal effect of any
signatures thereon and may be attached to another counterpart of this Agreement
identical in form hereto but having attached to it one or more additional
signature pages.
(j) FAX SIGNATURES. Facsimiles of the execution pages of this Agreement
shall be considered originals of such signatures. Upon request of a party,
originals of any facsimile signatures shall be mailed by overnight delivery to
the requesting party within one(1)day of such request.
(k) ARBITRATION. (i) Notwithstanding any other provision of this Agreement
to the contrary, any controversy or claim arising under or relating to this
Agreement or any of the documents or transactions referred to herein or
contemplated hereby or the breach thereof shall be settled by binding
arbitration administered by the American Arbitration Association ("AAA") under
its Commercial Arbitration Rules and judgment on the award rendered by the
arbitrators may be entered in any court having jurisdiction thereof. The
arbitration shall be conducted in English and shall occur in Las Vegas,
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Nevada. There shall be three (3) arbitrators; Creditor shall designate one (1)
arbitrator, Pledgor shall designate one (1) arbitrator and the third shall be
chosen by Creditor and Pledgor from a list of neutral arbitrators provided by
the AAA. The arbitrators designated by Creditor and Pledgor are not required to
be neutral arbitrators. Creditor and Pledgor shall bear the costs of the
arbitration in equal shares, subject to the right of the arbitrators to
reallocate the costs in their award as provided in the AAA rules. The parties
shall bear their own attorneys' fees in connection with the arbitration, subject
to the right of the arbitrators to reallocate the attorney's fees in conjunction
with their award. The arbitrators shall render their decision within fourteen
(14) days of the conclusion of the arbitration hearing and shall provide written
reasons with findings of fact and conclusions of law. For the purpose of aiding
the arbitration and/or preserving the rights of the parties during the pendency
of an arbitration, the parties shall have the right to seek preliminary and/or
emergency equitable relief in any court of competent jurisdiction and shall be
entitled to conduct discovery in conformity with the applicable rules of civil
procedure.
(ii) In the event litigation arises concerning this Agreement (such as to
enforce an arbitration award), jurisdiction and exclusive venue for such
litigation shall be in a court of competent jurisdiction located in the Xxxxx
County, State of Nevada; however, the parties shall also have the right to
enforce a judgment in any court of competent jurisdiction located in Xxxxx
County, State of Nevada. The prevailing party in any such litigation shall be
entitled to an award of reasonable attorneys fees and costs.
IN WITNESS WHEREOF, Pledgor, Creditor and Pledge Holder have executed and
delivered this Agreement as of the day and year first above written.
PLEDGOR:
Raceway Ventures, LLC, a Florida
limited liability company
By: /S/ Xxxxxx X. Xxxxx
--------------------
Name: Xxxxxx X. Xxxxx
Title: Authorized Member
CREDITOR:
ALL CAPITAL, LLC, a Nevada
limited liability company
By: /S/ Xxxxx Xxxxx
---------------
Name: Xxxxx Xxxxx
Title: Manager
PLEDGE HOLDER:
/S/Xxxxx X. Xxxx
----------------
Xxxxx X. Xxxx
