Exhibit 10.5
CAPITAL CONTRIBUTION AGREEMENT
This
Agreement,
dated as of November
14, 2005, between SOUTHERN TIER
ACQUISITIONS, LLC, a New York limited liability company, having an
office at 125
Park Avenue, New York,
NY 10017 (the "Southern Tier") and TRACKPOWER,
INC., a
Wyoming corporation,
having an office at 67
Wall Street,
New York, NY 10005
("TrackPower").
WITNESSETH:
WHEREAS,
a limited liability company was formed in accordance
with the
provisions of the New York Limited Liability Company Law under the
name of Tioga
Downs Racetrack,
LLC (the "Company")
pursuant to the
Articles of Organization
filed on May 26, 2004, with the New York State Department of State.
An Operating
Agreement of the
Company was
entered into as of September 1, 2004, by the
Company's members, Southern Tier and TrackPower.
WHEREAS,
the parties made certain capital contributions to the Company
and
the parties wish to equalize their respective capital
contributions.
WHEREAS,
the parties wish to enter into a certain contribution agreement
(the "Contribution Agreement") among Southern Tier, TrackPower,
Nevada Gold New
York, Inc., a New York
corporation
("Nevada Gold") and American Racing and
Entertainment, LLC, a
New York limited liability company ("American Racing"),
whereby Southern Tier
and TrackPower will
contribute all of their interests in
the Company to American Racing.
NOW,
THEREFORE, the parties hereto hereby agree as follows:
1. The
parties acknowledge
that Southern Tier owns fifty percent (50%) of
the membership
interests of the Company and TrackPower owns fifty percent
(50%)
of the membership interest of the Company.
2. As of
the date hereof,
Southern Tier has made capital contributions to
the Company in the
amount of
$4,337,147.76 and
TrackPower
has made capital
contributions to the
Company in the amount of $2,638,466.85, totaling capital
contributions of $6,975.614.61.
3.
The parties hereto acknowledge that TrackPower, Southern Tier
Acquisition II LLC ("Southern Tier II") and Nevada Gold are
about to enter into
a certain Operating
Agreement of American Racing. Pursuant to the terms of the
Operating Agreement of
American Racing,
TrackPower
shall receive
credit for
capital contributions
in the amount of $3,487,807.30 and Southern Tier II shall
receive credit for capital contributions in the amount of
$3,487,807.30.
4.
TrackPower
acknowledges
that Southern Tier has heretofore made a
capital call in the amount of Eight Hundred Forty Nine Thousand Three Hundred
Forty One Dollars ($849,341) pursuant to the terms of the Operating
Agreement of
the Company.
On or before December 31, 2005, time being of the essence,
TrackPower shall pay
directly to Southern
Tier the sum of Eight
Hundred Forty
Nine Thousand Three Hundred Forty One Dollars ($849,341) by official bank
check
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pursuant to the terms of a certain note (the "Note) attached hereto as Exhibit
A. Southern Tier shall have the sole right to retain the payment
pursuant to the
Note for Southern
Tier's own account and such payment shall not be contributed
to the Company or to American Racing.
5. A. In
the event that TrackPower fails or refuses, for any reason or no
reason, to make the
payment in accordance
with the terms of the Note, then in
such event there shall be a dilution of TrackPower with respect to TrackPower's
membership interests
in American Racing and
TrackPower's
capital account of
American Racing, and such dilution shall be determined as
follows:
TrackPower's
percentage of the
membership interests
of American Racing
shall be decreased by an amount which is arrived at by multiplying one hundred
fifty percent (150%) times a fraction, the numerator of which is the
amount due
by TrackP
