EXHIBIT (iv)
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
