EXHIBIT 1
SECURITIES PURCHASE AGREEMENT
SECURITIES PURCHASE AGREEMENT, dated April 10, 2004 among All
Capital LLC, a Nevada limited liability company ("All Capital"), Xxxxxx, LLC, a
Nevada limited liability company ("Xxxxxx") and Raceway Ventures, LLC, a Florida
limited liability company (the "Purchaser").
WITNESSETH
Whereas, Mid-State Raceway, Inc., a New York corporation
("Raceway") has authorized capital stock consisting of 10,000,000 shares, $.10
par value (the "Common Stock") of which 892,766 shares are issued and
outstanding as of the date hereof; and
Whereas, Xxxxxx is the registered owner of 19,549 shares of
Common Stock ("Capital Shares");
Whereas, Xxxxxx has transferred the Capital Shares to All
Capital but is nevertheless willing to execute and deliver this Agreement as one
of the selling entities;
Whereas, All Capital owns warrants to purchase 1,250,000
shares of Common Stock currently exercisable at the rate of $2.00 per share
("Capital Warrants"); and
Whereas, Xxxxxxxx Xxxxx ("Xxxxxxxx") owns 450,000 shares of
Common Stock ("Victoria Shares") (the Capital Shares and Victoria Shares are
hereinafter collectively referred to as the "Seller Shares" and the Seller
Shares and the Capital Warrants are hereinafter collectively referred to as the
"Securities"); and
Whereas, Xxxxxx and All Capital (hereinafter collectively
referred to as the "Seller") will cause Victoria to transfer all of the Victoria
Shares to Purchaser at the Closing contemplated by this Agreement;
Whereas, Xxxxx Xxxxx ("Xxxxx") has executed and delivered to
Vestin Mortgage, Inc. ("Vestin") a guaranty ("Xxxxx Guaranty") of the payment by
Raceway to Vestin of the principal and interest evidenced by a Consolidated
Secured Promissory Note in the original principal amount of $23,000,000; and
Whereas, Seller has executed and delivered to V.I.P.
Structures, Inc. ("VIP") a guaranty ("Capital Guaranty") of the payment by
Raceway of up to $500,000 pursuant to a certain Financing Agreement; and
Whereas, Seller and Victoria desire to sell the Securities to
the Purchaser and the Purchaser desires to purchase the Securities from the
Seller and Victoria upon and subject to the terms, covenants and conditions
hereinafter set forth.
NOW THEREFORE, in consideration of the premises and the
covenants, terms and conditions hereinafter set forth, the parties hereto do
hereby agree as follows:
1. Subject to the terms and conditions of this agreement (the
"Agreement"), at the Closing (as defined) the Seller and Victoria shall sell to
the Purchaser and the Purchaser shall purchase from the Seller the Securities.
2. In consideration for the conveyance of the Securities to the
Purchaser, the Purchaser shall pay to the Seller and to Victoria the aggregate
amount of $9,000,000 (the "Purchase Price"). The Purchase Price shall be
allocated between the Seller Shares and the Warrants in accordance with the
provisions of Exhibit A annexed hereto and made a part hereof. The Purchase
Price shall be payable to the Seller as follows:
(a) At the Closing (as defined) the Purchaser shall pay to the
Seller, the sum of $2,000,000 (the "Down Payment"), which Down Payment shall be
non-refundable. The Down Payment shall be paid by immediately collectible funds
by wire transfer to the account designated by and for benefit of the Seller.
(b) In addition, at the Closing the Purchaser shall pay to the
Seller the aggregate amount of $7,000,000 (the "Remainder") by the execution and
delivery to the Seller of two full recourse secured promissory 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), in the form of Exhibit B annexed hereto and
made a part hereof (the "Notes"). The Notes shall be secured by a Stock Pledge
and Security Agreement in the form of Exhibit C annexed hereto and made a part
hereof (the "Security Agreement"). The obligations of Purchaser under the Note
and Security Agreement shall be guaranteed by Xxxxxx X. Xxxxx, Xxxxxxx Xxxxx and
Xxxxx X. Xxx by an Unconditional Guarantee in the form of Exhibit D attached
hereto and made a part hereof (the "Guarantee").
3. (a) The Purchaser has had the right to conduct such
investigation of the business, operations, financial condition, licensing status
and pending litigation of and/or affecting Raceway and/or the Securities as
Purchaser deemed necessary or appropriate.
(b) (i) Purchaser does hereby expressly acknowledge and confirm that
any and all of the information and/or materials provided to it or its
representatives, as the case may be, by the Seller and/or Raceway with respect
to the Securities and/or the assets, business and operations of Raceway not
otherwise described in the filings made by the Seller and/or Raceway pursuant to
the Securities Exchange Act of 1934, as amended ("Exchange Act") prior to the
date hereof (hereinafter collectively the "Materials") are the proprietary
business properties and assets of Raceway and/or the Seller, as the case may be,
and have been disclosed to the Purchaser and/or its representatives in a
confidential relationship and solely for the limited purposes and utilization
herein contained;
(ii) Purchaser does hereby expressly represent, warrant, covenant and
agree (which representations, warranties, covenants and agreements shall be and
be deemed to be continuing and survive the execution and delivery of this
Agreement) as follows:
(A) It shall utilize the Materials, any physical
representation of the Materials and/or any of the information contained on or in
the Materials solely in connection with the proposed acquisition by the
Purchaser of the Securities and for no other purpose;
(B) It shall not distribute or make available, or cause or
permit another to distribute or make available to any person or entity any of
the Materials, any physical representations of the Materials and/or any of the
information contained on or in the Materials;
(C) It shall not utilize, or cause or permit another to
utilize any of the Materials (including any physical representation of the
Materials and/or any of the information therein contained) for any purpose other
than in connection with the proposed acquisition of the Securities by the
Purchaser; and
(D) It shall deliver to the Seller and/or Raceway, as the case
may be, any and all of the Materials and/or copies or physical representations
of the Materials and/or the information therein contained received from or with
respect to the Seller and/or Raceway within 24 hours of the request therefor
made by such party if the proposed acquisition of the Securities by the
Purchaser is abandoned by either party hereto and/or not consummated; provided
however that its obligations under this Paragraph 3 hereof shall survive any
such delivery.
(c) Anything in this Agreement, the Exchange Act and/or law to the
contrary notwithstanding, none of the Seller, Xxxxx or Victoria shall: (i) be
deemed to have furnished, distributed or provided to the Purchaser the Materials
and/or any of the information with respect to Raceway therein contained and/or
provided by any of the officers, directors, agents or employees of Raceway; (ii)
have any duty or obligation of any kind, nature or description, to review,
correct and/or supplement the Materials and/or any of the information with
respect to Raceway therein contained and/or provided by any of the officers,
directors, agents or employees of Raceway and/or set forth in any reports or
other filings made by Raceway pursuant to the Exchange Act; and/or (iii) have
any liability to the Purchaser and/or be liable for or with respect to, the
truth, accuracy or completeness of the Materials and/or any information with
respect to Raceway therein contained and/or provided by any of the officers,
directors, agents or employees of Raceway and/or set forth in any reports or
other filing made by Raceway pursuant to the Exchange Act. In furtherance and
not in limitation of the foregoing, the Purchaser shall not, in any forum,
judicial, administrative, arbitral or investigatory, assert or allege any claim,
counterclaim, cross claim or defense which is or may reasonably be construed to
be, inconsistent with or contrary to the provisions of this subparagraph 3(c).
4. (a) The closing (the "Closing") of the sale and purchase of
the Securities shall take place at on March 31, 2004 ("Closing Date"); provided,
however, that the Closing may be accelerated or postponed, on one or more
occasions by written agreement ("Closing Date Agreement") executed by the
Purchaser and Seller to the date, place and time set forth in such Closing Date
Agreement(s).
(b) The Closing shall be effected through an escrow of documents and
funds with Xxxxx X. Xxxx, Esq., 0000 Xxxxx Xxxxx Xxxx, Xxxxx X, Xxx Xxxxx,
Xxxxxx 00000, Telephone (000) 000-0000, Fax (000) 000-0000 (the "Escrow Agent")
as established by this Agreement and any additional written escrow instructions
required by the Escrow Agent and approved by Seller and Purchaser as evidenced
by their signatures thereon. At Closing, so long as such other documents do not
modify, waive or otherwise affect any rights or obligations of the respective
parties under this Agreement or otherwise, both parties shall execute and
deliver all other documents reasonably required by the Escrow Agent to
consummate the transactions contemplated by this Agreement, including a closing
settlement statement setting forth the charges, adjustments and credits to each
party. At Closing, the Escrow Agent shall disburse all funds, and deliver all
original documents and copies thereof to the party or parties entitled thereto.
All proceedings to take place at the Closing and on the Closing Date shall take
place simultaneously, and no delivery shall be considered to have been made
until all such proceedings have been completed and the cash portion of the
Purchase Price (plus or minus any adjustments) has been paid or is available for
immediate unconditional payment to the Seller.
(c) At the Closing each of the following deliveries shall be made by
the parties as hereinafter indicated and each such delivery shall be and be
deemed to be made simultaneously:
(i) The Purchaser shall deliver or cause to be delivered to
the Seller:
(A) the Down Payment and the Notes executed by the
Purchaser and evidencing an indebtedness in the amount of the Remainder;
(B) two counterparts of the Security Agreement
executed by the Purchaser and the Pledge Holder (as therein defined);
(C) two counterparts of the Guarantee executed by
Xxxxxx X. Xxxxx, Xxxxxxx Xxxxx and Xxxxx X. Xxx; and
(D) executed counterparts of the instruments and
documents required to be delivered at the Closing as
set forth in Paragraph 10 hereof.
(ii) The Seller shall deliver or cause to be delivered to the
Purchaser:
(A) certificate(s) representing the Seller Shares
duly endorsed in blank or accompanied by duly
executed stock assignment powers;
(B) the Capital Warrants duly endorsed in blank or
accompanied by duly executed assignments;
(C) two counterparts of the Security Agreement
executed by All Capital; and
(D) executed counterparts of the instruments and
documents required to be delivered at the Closing as set forth in Paragraph 9
hereof.
(iii) The Purchaser shall deliver or cause to be delivered to
the Pledge Holder, as defined in the Security Agreement:
(A) one or more counterparts of the Security
Agreement executed by the All Capital and the Purchaser;
(B) certificate(s) representing the Seller Shares
duly endorsed in blank or accompanied by duly
executed stock assignment powers; and
(C) the Capital Warrants duly endorsed in blank or
accompanied by duly executed assignments.
5. In order to induce the Purchaser to execute and perform this
Agreement, Seller does hereby represent, warrant, covenant and agree (which
representations, warranties, covenants and agreements shall survive the
execution, delivery and performance of this Agreement and the Closing) that
except as otherwise specifically set forth in the Disclosure Schedule prepared
and signed by Seller and delivered to Purchaser simultaneously with the
execution of this Agreement, all of the statements contained in this Section 5
are true as of the date of this Agreement:
(a) (i) Seller owns the Capital Shares free and clear of all liens,
claims, rights and options of others; (ii) Victoria owns the Victoria Shares
free and clear of all liens, claims, rights and options of others and will
transfer the Victoria Shares to Purchaser at the Closing; and (iii) upon the
acquisition by Purchaser of the Seller Shares as herein provided, Purchaser will
acquire all of the right, title and interest of Seller and Victoria in and to
such shares free and clear of all liens, claims, rights and options of others;
(b) (i) Seller owns the Capital Warrants free and clear of all liens,
claims, rights and options of others; and (ii) upon the acquisition by Purchaser
of the Capital Warrants as herein provided, Purchaser
will acquire all of the right, title and interest of Seller in and to such
Warrants free and clear of all liens, claims, rights and options of others;
(c) Each of All Capital and Xxxxxx is a limited liability company duly
organized, validly existing and in good standing under the laws of the State of
Nevada, 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;
(d) (i) Seller has the full power and authority, corporate and
otherwise, to execute, deliver and perform this Agreement, the Security
Agreement and all instruments and documents executed and delivered with respect
thereto (collectively the "Transactional Documents") and to consummate the
transactions contemplated hereby; (ii) the execution, delivery and performance
of Transactional Documents, the consummation by Seller of the transactions
herein contemplated and the compliance by it with the terms of Transactional
Documents have been duly authorized by all necessary action and the execution
and delivery of each of the Transactional Documents has been duly and properly
authorized by Seller; (iii) this Agreement is, and each of the other
Transactional Documents when executed and delivered will be, the valid and
binding obligation of Seller, 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
generally and the discretion of courts in granting equitable remedies; (iv) the
execution, delivery and performance of the Transactional Documents by Seller and
the consummation by Seller of the transactions herein contemplated 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 constituent documents of Seller, (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 Seller pursuant to any indenture,
mortgage, note, contract, commitment or other agreement or instrument to which
Seller is a party or by which it or its properties or assets are or may be bound
or affected; or (C) to the best knowledge of Seller, after due investigation,
violate any existing applicable law, rule, regulation, judgment, order or decree
of any governmental agency or court, domestic or foreign, having jurisdiction
over Seller or its assets. No consent, approval, authorization or order of any
court, governmental agency, authority or body and/or any party to an agreement
to which Seller is a party and/or by which it is bound, is required in
connection with the execution, delivery and performance of the Transactional
Documents, and/or the consummation by Seller of the transactions contemplated by
the Transactional Documents;
(e) Seller is not in violation of, or in default under, (i) any term or
provision of its constituent documents; (ii) any material term or provision or
any financial covenant of any indenture, mortgage, contract, guaranty,
commitment or other agreement or instrument to which it is a party or by which
it or any of its assets is or may be bound or affected; or (iii) to the best
knowledge of Seller, 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 assets;
(f) No action, investigation, audit, review, claim, suit or proceeding
by any federal, state, local or foreign government, political subdivision or
governmental or regulatory authority, agency, board, bureau, commission,
instrumentality or court, or quasi-governmental authority (collectively
"Governmental Authority") or third party is pending or, to the knowledge of the
Seller, threatened against the Seller which would delay or prevent the
consummation of the transactions contemplated by this Agreement or which may
adversely affect or restrict the Seller' ability to consummate the transactions
contemplated hereby except for the Xxxxx Action (as defined in Exhibit G annexed
hereto and made a part hereof). The Seller is not bound by any outstanding
judgments, order, injunction or decree of any
Governmental Authority or any third party which would prevent the Seller from
consummating the transactions contemplated by this Agreement;
(g) Seller agrees to defend, indemnify and hold harmless the Purchaser
in accordance with the terms and conditions contained in paragraph 13 hereof.
(h) Seller agrees to use its best efforts to cause Raceway to file
Raceway's annual report on Form 10-K for the year ended December 31, 2003 with
the Securities and Exchange Commission on or before April 12, 2004.
(i) Seller will not challenge or contest, or permit Xxxxx X. Xxxxx to
challenge or contest, any license issued to Raceway now or at any time in the
future by any licensing authority of or located in the State of New York.
6. In order to induce the Seller to execute and perform this
Agreement, the Purchaser does hereby represent, warrant, covenant and agree
(which representations, warranties, covenants and agreements shall survive the
execution, delivery and performance of this Agreement and the Closing) that all
of the statements contained in this Section 6 are true as of the date of this
Agreement:
(a) Purchaser is a limited liability company duly organized,
validly existing and in good standing under the laws of the State of Florida,
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;
(b) (i) Purchaser has the full power and authority, corporate and
otherwise, to execute, deliver and perform this Agreement, the Note, the
Security Agreement and all instruments and documents executed and delivered with
respect thereto (collectively the "Purchaser's Transactional Documents") and to
consummate the transactions contemplated hereby; (ii) the execution, delivery
and performance of the Purchaser's Transactional Documents, the consummation by
Purchaser of the transactions herein contemplated and the compliance by it with
the terms of Purchaser's Transactional Documents have been duly authorized by
all necessary action, (iii) this Agreement and the execution and delivery of
each of the Purchaser's Transactional Documents have been duly and properly
authorized by Purchaser; (iv) this Agreement is, and each of the Purchaser's
Transactional Documents when executed and delivered will be, the valid and
binding obligation of Purchaser, 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
generally and the discretion of courts in granting equitable remedies; (v) the
execution, delivery and performance of Purchaser's Transactional Documents by
Purchaser and the consummation by Purchaser of the transactions herein
contemplated 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 constitutional
documents of Purchaser, (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 Purchaser pursuant to any indenture, mortgage, note, contract,
commitment or other agreement or instrument to which Purchaser is a party or by
which it or its properties or assets are or may be bound or affected; or (c) to
the best knowledge of Purchaser, after due investigation, violate any existing
applicable law, rule, regulation, judgment, order or decree of any governmental
agency or court, domestic or foreign, having jurisdiction over Purchaser or its
assets. No consent, approval, authorization or order of any court, governmental
agency, authority or body and/or any party to an agreement to which Purchaser is
a party and/or by which it is bound, is required in connection with the
execution, delivery and performance of the Transactional Documents, and/or the
consummation by Purchaser of the transactions contemplated by the Transactional
Documents;
(c) Purchaser is not in violation of, or in default under, (i) any
term or provision of its constituent 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 assets is or may be bound or affected; or (iii) to the best
knowledge of Purchaser, 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 assets;
(d) No action, investigation, audit, review, claim, suit or
proceeding by any federal, state, local or foreign government, political
subdivision or governmental or regulatory authority, agency, board, bureau,
commission, instrumentality or court, or quasi-governmental authority
(collectively "Governmental Authority") or third party is pending or, to the
knowledge of the Purchaser, threatened against the Purchaser which would delay
or prevent the consummation of the transactions contemplated by this Agreement
or which may adversely affect or restrict the Purchaser's ability to consummate
the transactions contemplated hereby. The Purchaser is not bound by any
outstanding judgments, order, injunction or decree of any Governmental Authority
or any third party which would prevent the Purchaser from consummating the
transactions contemplated by this Agreement;
(e) Purchaser: (i) is an "accredited investor" as such term is
defined in the Securities Act of 1933, as amended (the "Act") and the rules and
regulations ("Regulations") promulgated thereunder by the Securities and
Exchange Commission ("Commission"); (ii) has no need for liquidity in its
investment in the Securities and has the financial capacity to bear the economic
risk of any investment in the Securities for an indefinite period of time; (iii)
has sufficient means to bear the economic risk and/or entire loss of its
investment in the Securities; (iv) has sufficient resources to purchase the
Securities without the need, or intention, of borrowing in order to complete
such purchase; and (v) has sufficient knowledge and experience in business
matters to evaluate the merits and risks of an investment in the Securities;
(f) Purchaser has reviewed and understood (i) all reports and
other filings made by Raceway and/or its stockholders prior to the date hereof
with the Commission including, without limitation, Raceway's Annual Report on
Form 10K for each of the years 1999, 2000, 2001 and 2002 (collectively the "SEC
Reports"), and (ii) the complaints in each of the actions described on Exhibit H
annexed hereto and made a part hereof (collectively the "Complaints"); the
receipt of copies of which complaints is hereby acknowledged by Purchaser;
(g) Except as expressly set forth herein, no representations or
warranties, of any kind, nature or description have been made to the Purchaser
by the Seller or any of their agents, employees or affiliates with respect to
Raceway or its business, operations, financial condition, licensing value or
marketability of the Securities; and, in purchasing and/or attempting to
purchase the Securities the Purchaser is not relying upon any information with
respect to Raceway other than that contained in the Materials, the SEC Reports
and the Complaints;
(h) Purchaser has been advised and is aware that the Securities
are "restricted securities" and that there are substantial restrictions on the
transferability of the Securities; any document or certificate evidencing the
Securities shall contain an appropriate legend limiting transfers to those
complying with federal and state Securities and Blue Sky laws. The date and
amount of each acquisition of "restricted securities" by Seller and the dates
upon which the holding period for such securities shall expire after the Closing
are contained in Exhibit 6(h) annexed hereto and made a part hereof;
(i) Purchaser is acquiring the Securities for its own account and
for investment purposes only and without a view towards or agreement with
respect to the transfer, sale, assignment, or other
disposition thereof, and the Purchaser shall not sell, assign, transfer, pledge,
hypothecate or deal in and with the Securities in violation of the Act or the
Regulations promulgated thereunder by the Commission or in violation of any
applicable state securities laws or regulations; and
(j) Purchaser has been advised and is aware of the status of any
and all gaming licenses or application filed and pending, or which are required
to be flied by Mid-State Raceway, Inc. for authorization for a license to
conduct harness racing and to conduct Video Lottery Terminal Gaming at Xxxxxx
Xxxxx Raceway. The status of the foregoing matters is contained in Exhibit 6(j)
annexed hereto and made a part hereof.
7. Intentionally omitted.
8. Intentionally omitted.
9. The obligation of Purchaser to implement this Agreement and
consummate the subject acquisition is, at its election, subject to and
conditioned upon the satisfaction (and/or written waiver) of each of the
following conditions:
(a) No action or proceeding shall have been instituted and be
pending by any private party and/or governmental agency or authority challenging
the legality of this Agreement or the subject acquisition and/or seeking to
prevent or delay consummation of the transactions herein contemplated; which
action or proceeding shall have resulted in preliminary or permanent injunctive
relief prohibiting consummation of this Agreement and/or the subject
acquisition;
(b) Purchaser and the Escrow Agent shall have received all of the
documentation required to be delivered to each of them respectively, pursuant to
the provisions of this Agreement;
(c) The Purchaser shall have received an executed counterpart of
an opinion of legal counsel to the Seller, reasonably acceptable to the
Purchaser and in form reasonably acceptable to the Purchaser with respect to
those matters set forth on Exhibit E annexed hereto;
(d) The Purchaser shall have received an executed counterpart of
an opinion of legal counsel to the Seller, reasonably acceptable to the
Purchaser and in form reasonably acceptable to the Purchaser with respect to the
transferability of the Capital Warrants; and
(e) As at the Closing (i) there shall be no more than 892,766.16
shares of Common Stock issued and outstanding (other than shares issued upon the
exercise of warrants issued prior to the date hereof) and (ii) there shall not
be in existence any warrants, options or rights of any kind, nature or
description to acquire shares of the Common Stock from the Company except as set
forth in Raceway's Annual Report on Form 10K for the year ended 2002.
10. The obligations of the Seller to implement this Agreement and
consummate the subject acquisition is subject to and conditioned upon the
satisfaction (and/or written waiver) of each of the following conditions:
(a) No action or proceeding shall have been instituted and be
pending by any private party and/or governmental agency or authority challenging
the legality of this Agreement or the subject acquisition and/or seeking to
prevent or delay consummation of the transactions herein contemplated; which
action or proceeding shall have resulted in preliminary or permanent injunctive
relief prohibiting consummation of this Agreement and/or the subject
acquisition;
(b) The Seller and the Escrow Agent shall have received all of the
documentation required to be delivered to them respectively pursuant to the
provisions of this Agreement;
(c) The Seller shall have received an executed counterpart of an
opinion of legal counsel to the Purchaser, reasonably acceptable to the Seller
and in form reasonably acceptable to the Seller with respect to those matters
set forth on Exhibit F annexed hereto;
(d) The Seller shall have received a document, in form and content
reasonably acceptable to the Seller, releasing Xxxxx from any liability under
and/or arising out of or relating to, the Xxxxx Guaranty; and
(e) All Capital shall have received a document, in form and
content reasonably acceptable to the Seller, releasing All Capital from any
liability under and/or arising out of or relating to, the Capital Guaranty or,
in the alternative, an indemnity agreement covering claims, losses etc. as a
result of the Capital Guaranty from the Purchaser and the Guarantors in form and
substance reasonably satisfactory to Seller.
11. This Agreement may be terminated by (a) Purchaser if at the
Closing all of the representations and covenants of the Seller set forth in
Paragraphs 5 and 7 hereof and/or the conditions set forth in Paragraph 9 shall
not have been timely and fully satisfied, waived or cured, or (b) the Seller if
at the Closing all of the representations and covenants of Purchaser set forth
in Paragraphs 6 and 8 hereof and/or the conditions set forth in Paragraph 10
hereof, shall not have been timely and fully satisfied, waived and/or cured, or
(c) the Purchaser as provided in subparagraph 3(c) hereof.
12. In the event of any actual or alleged default by Seller under
this Agreement existing and known to Purchaser on or prior to the Closing Date,
Purchaser shall provide written notice to Seller at or prior to the Closing (the
"Default Notice") specifying the default or other matter; setting forth the
Purchaser's claim that the matter constitutes a default or breach by Seller
under this Agreement; and specifying the steps or actions that the Purchaser
believes the Seller should take in order to cure the matter or matters alleged.
The Seller shall have a period of 15 business days after receipt of the Default
Notice (or until the then projected date of Closing, if later) to cure any and
all defaults and other matters alleged in the Default Notice. Seller shall not
have any liability or responsibility for any such actual or alleged default
known at or prior to the Closing that: (i) is not the subject of a Default
Notice that meets all of the preceding requirements of this Paragraph; or (ii)
is cured within any applicable cure period.
13. (a) If the Closing is consummated, Seller agrees to defend,
indemnify and hold harmless the Purchaser from and against any and all
judgments, debts, obligations, liabilities, costs or expenses (including
reasonable out-of-pocket fees, expenses and disbursements in connection with any
action, suit or proceeding) net of insurance proceeds actually received
(collectively, "Damages") suffered, paid or incurred by Purchaser resulting from
or arising out of the claims by Xxxxx and/or other shareholders in the Xxxxx
Action. Seller shall have the right, to assume and control the defense of the
Xxxxx Action, as well as any action for which Purchaser demands defense,
indemnity and to be held harmless under the provision of this paragraph 12(a),
with counsel satisfactory to Seller and at Seller's expense.
(b) The Xxxxx Action seeks payment of sums by Xxxxx Xxxxx and
others to Raceway. Notwithstanding any other provision of this Agreement to the
contrary, in the event any sums are paid by Xxxxx Xxxxx or others to Raceway as
a result of the Xxxxx Action or any similar action filed by one or more of the
plaintiffs in the Xxxxx Action, Purchaser will immediately reimburse Xxxxx Xxxxx
or the other persons or entities paying such sums to Raceway for an amount equal
to 80.267326% of such payment(s) to Raceway.
(c) If the Closing is consummated, Seller agrees to defend,
indemnify and hold harmless the Purchaser from and against any and all Damages
suffered, paid or incurred by Purchaser resulting from or arising out of any
claims by Xxxxxxxx Xxxxx to the Purchase Price or any part thereof.
(d) If the Closing is consummated, Seller agrees to defend,
indemnify and hold harmless Raceway from and against any and all fines and/or
penalties paid or incurred by Raceway resulting from or arising out of any late
filing by Raceway of its annual report on Form 10-K for the year ended December
31, 2003 with the Securities and Exchange Commission.
14. Notwithstanding anything contained in this Agreement to the
contrary, the aggregate of all payments by the Seller in satisfaction for any
and all claims by Purchaser under or arising from this Agreement shall not
exceed the sum of $2,000,000 unless, and then only to the extent, if any, that
Seller is determined to have acted willfully in bad faith in respect to the
breach or failure causing damages in excess of the foregoing limitation.
15. Any and all notices, requests or instructions desired or
required to be given by any party hereto to any other party hereto 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: Seller: 17 Strand
X.X. Xxx 0000
Xxxxxxxxxxxx, Xx. Xxxxx, XXXX 00000
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
To: Purchaser: 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
or to such other address as any party hereto shall designate in a writing
complying with the provisions of this Paragraph 15.
16. Each of the parties hereto may, by written instrument to the
party against whom enforcement is sought (a) extend the time for the performance
of any of the obligations or other acts of any party hereto; (b) waive any
inaccuracies of such other party in the representations and warranties contained
herein or in any document delivered pursuant to this Agreement; (c) waive
compliance with any of the covenants of such other party contained in this
Agreement; (d) waive such other party's performance of any of such party's
obligations set out in this Agreement; and (e) waive any condition to its
obligation to effect the within acquisition.
17. Intentionally deleted.
18. This Agreement may only be modified, altered or amended by a
writing executed by all of the parties hereto. Any waivers, consents or notices
must be in writing.
19. This Agreement shall be governed and construed in accordance
with the internal laws of the State of Nevada applicable to contracts executed
and to be fully performed therein and without regard to principles of conflicts
of laws.
20. This Agreement shall inure to the benefit of and be binding
upon the parties hereto and their respective successors, transferees, heirs,
assigns and beneficiaries.
21. This Agreement (including the Exhibits hereto, the documents
and instruments delivered by the parties hereto and initialed for identification
as herein provided or otherwise, and any other documents executed and delivered
and/or to be executed and delivered pursuant to the provisions of this Agreement
as herein provided) sets forth the entire agreement among the parties hereto
with respect to the subject matter herein contained; and there are no covenants,
promises, agreements, conditions or understandings, either oral or written,
between or among the parties hereto with respect to the subject matter hereof
except as herein and in such ancillary documents provided.
22. This Agreement may be executed in multiple copies, each of which
shall constitute an original, but all of which shall constitute one and the same
agreement.
23. (a) Any dispute or controversy arising out of or relating to
this Agreement and/or any of the Transactional Documents or Purchaser
Transactional Documents shall be submitted to and settled by binding arbitration
to be held in the metropolitan area of Las Vegas, Nevada, in accordance with the
commercial arbitration rules of the American Arbitration Association then
obtaining. Such arbitration shall be held before three arbitrators: one of whom
shall be designated by the Seller, one of whom shall be designated by the
Purchaser and the third shall be chosen by Purchaser and Seller from a list of
neutral arbitrators provided by the AAA. The arbitrators designated by Seller
and Purchaser do not have to be neutral arbitrators. The decision of a majority
of the arbitrators shall be binding and enforceable in any court of competent
jurisdiction. 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.
(b) 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. The prevailing party
in any such litigation shall be entitled to an award of reasonable attorneys
fees and costs.
24. Intentionally omitted.
25. (a) Seller agrees to defend, indemnify and hold Purchaser
harmless for any brokerage or finders' fees or agents' commissions or other
similar payments incurred or owed by Seller and its agents in connection with
this Agreement, including, without limitation, fees due to Vestar Associates,
Xxxxxx X. Xxxxx, Relco Corp. and Xxxxxx Xxxxxxx under their agreement with
Seller.
(b) Purchaser agrees to defend, indemnify and hold Seller
harmless for any brokerage or finders' fees or agents' commissions or other
similar payments incurred or owed by Purchaser and its agents in connection with
this Agreement.
26. TIME IS OF THE ESSENCE WITH RESPECT TO EACH PROVISION OF THIS
AGREEMENT. The parties acknowledge and agree that the preceding sentence is a
crucial element of this Agreement.
27. All representations and warranties of the parties, and all
agreements and undertakings of the parties which have not been fully performed
and satisfied as of or prior to the Closing, including, without limitation, the
indemnification obligations hereunder, shall survive the Closing.
28. All exhibits and schedules to this Agreement shall be treated
as incorporated herein by reference and made a material part hereof.
29. Purchaser and Seller have each read and fully understand the
terms of this Agreement, and each has had the opportunity to have this Agreement
reviewed by its own counsel. The rule of construction providing that ambiguities
in an agreement shall be construed against the party drafting the same shall not
apply.
30. Subsequent to the sale contemplated herein and upon request by
Purchaser, Seller will provide reasonable assistance and cooperation to
Purchaser, at Purchaser's expense, when necessary or helpful to assist the
Purchaser in seeking to accomplish the business transactions reasonably
contemplated or arising out of this Purchase Agreement and the purchase of
Seller's shares.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the day and year first above written.
SELLER:
All Capital, LLC, a Nevada
limited liability company
By: /s/ Xxxxx Xxxxx
------------------------
Xxxxx Xxxxx, its Manager
Xxxxxx, LLC, a Nevada
limited liability company
By: /s/Xxxxx Xxxxx
------------------------
Xxxxx Xxxxx, its Manager
PURCHASER:
Raceway Ventures, LLC, a Florida
limited liability company
By: /s/ Xxxxxx X. Xxxxx
--------------------
Name: Xxxxxx X. Xxxxx
Title: Authorized Member
