Exhibit 10.2
CONTRIBUTION AGREEMENT
THIS
CONTRIBUTION AGREEMENT
(this "Agreement"),
dated as of November
8,
2005, is entered
into by and among
TrackPower,
Inc., a Wyoming corporation
("TrackPower"),
Southern Tier
Acquisition, LLC, a
New York limited
liability
company ("Southern
Tier"), Nevada Gold & Casinos,
Inc., a Nevada
corporation
("Nevada Gold") and American Racing and Entertainment, LLC, a New York limited
liability company
("American
Racing"). The Parties to this agreement are
collectively referred to as "Parties".
RECITALS
WHEREAS,
the following actions have been taken prior to the date hereof:
1.
TrackPower and Southern Tier formed Tioga Downs Racetrack, LLC
("TDR"),
which
is 50% owned by TrackPower and 50% owned by Southern Tier.
TrackPower
and Southern Tier formed Vernon Downs Acquisition, LLC ("VDA"),
which is
50% owned by TrackPower and 50% owned by Southern Tier.
2. On June
21, 2004, TDR
purchased the assets described in Exhibit "A"
attached
hereto and incorporated herein for all purposes (the "TDR
Assets")
from Tioga Park, LLC, Chapter 11 Debtor in Possession.
3.
On September 13, 2005, VDA submitted a Third Modified Amended
Disclosure
Statement in the
Bankruptcy Court for the Northern District of
New York
relating to the Chapter 11 Petition filed by Mid-State Raceway,
Inc. and
Mid-State Development Corporation, and VDA has paid legal and
consulting
fees in the
amount of $321,360 and has made loans to the
debtor-in-possession of $1,889,000 ($475,000 of which was funded by
a loan
from
Nevada Gold to TDR) (the "VDA Assets").
4. On
September 8, 2005,
Nevada Gold made a
loan to TDR in the amount of
$1,125,000, of which $1,001,550 in principal is currently
outstanding, and
has agreed
to make capital
contributions to
American Racing in an amount
equivalent
to the cash equity
contributed by TrackPower and Southern Tier
to VDA and
TDR as more
particularly provided
in the Operating
Agreement
for
American Racing (the "Nevada Gold Asset").
WHEREAS,
at the Effective Time, each of the following matters shall
occur:
1.
TrackPower will
contribute its 50% ownership interests in TDR and VDA
(the
"TrackPower
Interests")
to American
Racing in exchange
for a 25%
ownership
interest in American Racing to be held by TrackPower or an
affiliate
of TrackPower.
2.
Southern Tier will
contribute its 50%
ownership interests in
TDR and
VDA (the
"Southern Tier
Interests") to American Racing in exchange for a
25%
ownership interest in
American Racing to be
held by Southern Tier or
an
affiliate of Southern Tier.
3. Nevada
Gold will contribute the Nevada Gold Asset to American Racing
in
exchange
for a 50% ownership interest in American Racing to be held by
Nevada
Gold or an affiliate of Nevada Gold.
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<PAGE>
NOW,
THEREFORE,
in consideration of their mutual undertakings and
agreements hereunder, the Parties undertake and agree as
follows:
ARTICLE 1
CONTRIBUTION
Section
1.1 Contribution
by TrackPower to American
Racing. TrackPower
hereby contributes, grants, bargains, conveys, assigns, transfers,
sets over and
delivers to American
Racing, its successors
and assigns, for its
use forever,
all right, title and interest in and to the TrackPower Interests, and American
Racing hereby accepts the TrackPower Interests as a contribution to the
capital
of American Racing.
TO HAVE AND TO HOLD
the TrackPower
Interests unto
American Racing,
its
successors and
assigns, together with all and singular the rights and
appurtenances thereto in anywise belonging, subject, however, to the terms and
conditions stated in this Agreement, forever.
Section
1.2 Contribution
by Southern Tier to
American Racing.
Southern
Tier hereby contributes, grants, bargains, conveys, assigns, transfers, sets
over and delivers to American Racing, its successors and assigns,
for its use
forever, all right,
title and interest in
and to the Southern Tier Interests,
and American Racing
hereby accepts such interests as a contribution to the
capital of American Racing.
TO HAVE
AND TO HOLD the Southern Tier Interests unto American Racing,
its
successors and
assigns, together with all and singular the rights and
appurtenances thereto in anywise belonging, subject, however, to the terms and
conditions stated in this Agreement, forever.
Section
1.3 Contribution by
Nevada Gold to American Racing. Nevada Gold
hereby contributes, grants, bargains, conveys, assigns, transfers,
sets over and
delivers to American
Racing, its successors
and assigns, for its
use forever,
all right, title and
interest in and to the
Nevada Gold Asset,
and American
Racing hereby
accepts such interests as a contribution to the capital of
American Racing.
TO HAVE
AND TO HOLD the Nevada
Gold Asset unto American Racing, its
successors and
assigns, together with all and singular the rights and
appurtenances thereto in anywise belonging, subject, however, to the terms and
conditions stated in this Agreement, forever.
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<PAGE>
ARTICLE 2
FURTHER ASSURANCES
Section
2.1 Further Assurances. From time to time after the
Effective
Time, and without any further consideration, the Parties agree to execute,
acknowledge and deliver all such additional deeds, assignments, bills of sale,
conveyances,
instruments, notices,
releases, acquittances and other documents,
and will do all such other acts and things, all in accordance with applicable
law, as may be
necessary or appropriate (a) more fully to assure that the
applicable Parties own all of the properties, rights, title,
interests, estates,
remedies, powers and privileges granted by this Agreement, or which
are intended
to be so granted,
or (b) more fully effectively to vest in the applicable
Parties and their respective successors and assigns beneficial
and record title
to the interests
contributed and
assigned by this
Agreement or intended to be
and (c) more fully and
effectively to carry out the purposes and intent of this
Agreement.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
Section
3.1 Representations of Parties Other than American Racing. Each
of
the Parties to this
Agreement other than
American Racing (the "Contributing
Parties") hereby
represents
and warrants to American Racing and the other
Parties as follows as of the date of this Agreement:
(a)
Such
Contributing Party has been duly formed or incorporated, as the
case may be, and is validly existing in good standing under the
laws
of its jurisdiction of formation or incorporation, as the case may
be, with all corporate, limited liability company or partnership,
as
the case may be, power
and authority
necessary to own or
hold its
properties and conduct the businesses in which it is engaged and,
to
execute and
deliver this Agreement and to consummate the
transactions
contemplated hereby, and, as applicable, to assume the
obligations and
liabilities
being assumed by it pursuant to this
Agreement.
(b)
Such
Contributing
Party is duly registered or qualified to do
business and is in good standing as a foreign corporation, limited
liability company
or limited
partnership,
as the case may be,
in
each jurisdiction in which its ownership or lease of property or
the
conduct of
its businesses requires such qualification or
registration.
(c)
All corporate,
partnership and
limited liability company action, as
the case may be, required to be taken by such Contributing
Party or
any of their securityholders,
partners
or members for the
authorization,
execution and
delivery of this
Agreement and the
consummation of the transactions contemplated by this Agreement
has
been validly taken.
(d)
This
Agreement has been duly authorized, validly executed and
delivered by such
Contributing Party,
and constitutes a
valid and
legally binding
agreement of such Contributing Party, enforceable
against such Contributing Party in accordance with its terms.
(e)
None of the (i)
the execution,
delivery and performance of this
Agreement by such
Contributing Party, or
(ii) consummation of
the
transaction
contemplated hereby (A) conflicts or will conflict with
or constitutes or will
constitute a violation of the certificate of
limited partnership or agreement of limited partnership,
certificate
of formation or limited liability company agreement, certificate or
articles of
incorporation
or bylaws or other organizational
documents of such Contributing Party, (B) conflicts or will
conflict
with or constitutes or will constitute a breach or violation
of, or
a default (or an event
that, with notice or
lapse of time or both,
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<PAGE>
would constitute
such a default) under,
any indenture,
mortgage,
deed of trust, loan agreement, lease or other agreement or
instrument to which any of such Contributing Party is a party or by
which such Contributing Party or any of its properties may be
bound,
(C) violates or will violate any statute, law or regulation or any
order, judgment,
decree or injunction of any Governmental Authority
or body having
jurisdiction over such Contributing Party, or any of
its properties
or assets,
or (D) results or will result in the
creation or imposition of any lien, charge or encumbrance upon any
property or assets of
such Contributing
Party, which conflicts,
breaches, violations,
defaults or liens, in the case of clauses (B)
or (D), would,
individually
or in the aggregate,
have a material
adverse effect
on (i) the transaction contemplated by this
Agreement, (ii)
the business, properties or prospects of such
Contributing Party,
whether or not arising from transactions in the
ordinary course
of business or (iii) the ownership and use by
American Racing of the
assets and interests
being transferred
to
American Racing
hereunder.
"Governmental
Authority" means (i) the
United States
of America, (ii) any state, province, county,
municipality or other
governmental
subdivision
within the United
States of America,
(iii) any court or any governmental department,
commission, board,
bureau, agency or
other instrumentality
of the
United States
of America, or of any state, province, county,
municipality or
stockholder of the
Contributing Party or
American
Racing or the assets of the Contributing Parties or American
Racing.
Section
3.2 Representations
of TrackPower.
TrackPower hereby
represents
and warrants to American Racing, Southern Tier and Nevada Gold as
follows as of
the date of this Agreement:
(a)
Immediately
prior
to the Effective Time of this Agreement,
TrackPower owns
50% of the issued and outstanding ownership
interests in
each of TDR and VDA;
such membership
interests have
been duly authorized
and validly issued in accordance with the
organizational
documents agreement
of each of TDR and VDA, as
amended and/or
restated on or prior to the Effective Time and
TrackPower owns
such ownership interests free and clear of all
liens, encumbrances,
contracts,
liabilities,
security
interests,
equities, charges or claims (collectively, "Liens").
(b)
The TDR
Assets and the VDA Assets are free and clear of all
Liens
except as set forth in Exhibit "B" hereof.
(c)
As of the
Effective Time,
after giving effect to
the transactions
contemplated by this Agreement, American Racing will own 100% of
the
issued and outstanding
ownership interests in
TDR and VDA free and
clear of all Liens.
Section
3.3 Representations of Southern Tier. Southern Tier hereby
represents and
warrants to American Racing, TrackPower and Nevada Gold as
follows as of the date of this Agreement:
(a)
Immediately
prior to the Effective Time of this Agreement, Southern
Tier owns 50% of the issued and outstanding ownership interests in
each of TDR and in VDA; such ownership interests have been duly
authorized and validly issued in accordance with the organizational
documents of each of TDR and VDA, as amended and/or restated on or
prior to the Effective
Time and Southern Tier owns such membership
interests free and clear of all Liens.
(b)
The TDR
Assets and the VDA Assets are free and clear of all
Liens
excep
