Exhibit 10.7
PLEDGE AGREEMENT
THIS PLEDGE AGREEMENT (as amended,
restated or otherwise modified, this “Agreement”),
executed February 17, 2004 and effective as of February 19, 2004 is
made by DOVER MOTORSPORTS, INC., a Delaware corporation, formerly
known as Dover Downs Entertainment, Inc. (“Pledgor”) in
favor of MERCANTILE-SAFE DEPOSIT AND TRUST COMPANY, as agent (the
“Agent”) for the ratable benefit of each of the
financial institutions (the “Lenders”) as are, or may
from time to time become, parties to the Credit Agreement (as
defined below).
STATEMENT OF
PURPOSE
The Pledgor, together with Dover
International Speedway, Inc., Gateway International Motorsports
Corporation, Gateway International Services Corporation, Grand Prix
Association of Long Beach, Inc., Memphis International Motorsports
Corporation, M&N Services Corp. and Nashville Speedway USA,
Inc. (collectively, “Borrowers”), the Lenders and the
Agent, as agent for the Lenders, are parties to a Credit Agreement
of even date herewith (as the same may be amended, supplemented or
otherwise modified, the “Credit Agreement”). Pursuant
to the terms of the Credit Agreement the Lenders are providing
credit accommodations to the Borrowers and as a condition of
providing such credit accommodations the Lenders have required that
the Pledgor execute and deliver this Agreement to secure the
obligations of the Borrowers under the Credit Agreement.
The Pledgor is the legal and
beneficial owners of the shares of Pledged Securities (as
hereinafter defined) issued by the issuers (the
“Issuers”) listed on Schedule I
hereto.
NOW, THEREFORE, in consideration of
the promises and mutual covenants contained herein, the parties
hereto hereby agree as follows:
SECTION 1. Defined Terms .
Capitalized terms used and not otherwise defined in this Agreement,
including the preambles and recitals hereof shall have the meaning
assigned thereto in the Credit Agreement. The following terms shall
have the following meanings:
“ Agreement ”
means this Pledge Agreement, as further amended, restated or
otherwise modified.
“ Code ” means
the Uniform Commercial Code from time to time in effect in the
State of Maryland.
“ Collateral ”
means the Stock Collateral.
“ Event of Default
” means an Event of Default (as such term is defined in the
Credit Agreement).
“ Pledged Securities
” means the shares of capital stock of each Issuer listed on
Schedule I hereto, together with all stock certificates,
options or rights of any nature whatsoever that may be issued or
granted by such Issuer to Pledgor while this Agreement is in
effect.
“ Proceeds ”
means all “proceeds” as such term is defined in Section
9-102(65) of the Code on the date hereof and, in any event, shall
include, without limitation, all dividends or other income from the
Pledged Securities, collections thereon, proceeds of sale thereof
or distributions with respect thereto.
“ Secured Obligations
” means the Obligations as that term is defined in the Credit
Agreement.
“ Secured Parties
” means the Agent and the Lenders.
“ Stock Collateral
” means the Pledged Securities and all Proceeds
therefrom.
SECTION 2. Pledge and Grant of
Security Interests . Pledgor hereby delivers to the Agent, for
the ratable benefit of the Secured Parties, all of the Pledged
Securities and hereby grants to the Agent, for the ratable benefit
of the Secured Parties, a first priority security interest in the
Pledged Securities, as collateral security for the prompt and
complete payment and performance when due (whether at the stated
maturity, by acceleration or otherwise) of the Secured
Obligations.
SECTION 3. Stock Powers and
Transfer Instruments . Concurrently with the execution of this
Agreement and delivery to the Agent of each certificate
representing one or more shares of Pledged Securities, (i) Pledgor
shall deliver an undated stock power covering such certificate,
duly executed in blank by Pledgor and (ii) each Pledgor shall cause
each Issuer of such Pledged Securities to, and each such Issuer
shall, acknowledge and consent to this Agreement on the signature
pages hereto.
SECTION 4. Pledgor Remain
Liable . Anything herein to the contrary notwithstanding, (a)
each Pledgor shall remain liable to perform all of its duties and
obligations as an owner of the Issuers, as applicable, to the same
extent as if this Pledge Agreement had not been executed, (b) the
exercise by the Agent of any of its rights hereunder shall not
release Pledgor from any of its duties or obligations as owner of
the Issuers, and (c) neither the Agent nor any other Secured Party
shall have any obligation or liability as an owner of the Issuers,
by reason of this Agreement.
SECTION 5. Representations and
Warranties . To induce the Agent and the Lenders to execute the
Credit Agreement, provide any credit facilities under the Credit
Agreement and accept the security contemplated hereby, Pledgor
hereby represents and warrants that:
(a) Pledgor has the corporate
authority and legal right to execute and deliver, to perform its
obligations under, and to grant the lien on the Collateral pursuant
to, this
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Agreement and has taken all
necessary corporate action to authorize its execution, delivery and
performance of, and grant of the lien on the Collateral pursuant
to, this Agreement;
(b) this Agreement constitutes a
legal, valid and binding obligation of Pledgor enforceable in
accordance with its terms, except as enforceability may be limited
by bankruptcy, insolvency, reorganization, moratorium or similar
laws affecting the enforcement of creditors’ rights generally
and by the availability of equitable remedies;
(c) the execution, delivery and
performance of this Agreement will not violate any provision of any
applicable law or contractual obligation of Pledgor and will not
result in the creation or imposition of any lien on any of the
properties or revenues of Pledgor pursuant to any applicable law or
contractual obligation, except as contemplated hereby;
(d) no consent or authorization of,
filing with, or other act by or in respect of, any arbitrator or
governmental authority and no consent of any other Person is
required in connection with the execution, delivery, performance,
validity or enforceability of this Agreement;
(e) the shares of Pledged Securities
listed on Schedule I constitute all the issued and
outstanding shares of all classes of the capital stock of each of
the Issuers and all the shares of the Pledged Securities have been
duly and validly issued and are fully paid and
non-assessable;
(f) Pledgor is the record and
beneficial owner of, and has good and marketable title to, the
Collateral listed on Schedule I , free of any and all liens
or options in favor of, or claims of, any other Person, except the
lien created by this Agreement;
(g) upon (i) the execution of this
Agreement by the Pledgor and Issuers, (ii) delivery to the Agent of
the stock certificates evidencing the Pledged Securities, and (iii)
the filing of properly completed financing statements in all
necessary jurisdictions, the Lien granted pursuant to this
Agreement will constitute a valid, perfected first priority Lien on
the Collateral and the Proceeds related thereto, enforceable as
such against all creditors of Pledgor and any Persons purporting to
purchase any of the Collateral from Pledgor.
SECTION 6. Certain Covenants
. The Pledgor covenants and agrees with the Agent for the ratable
benefit of the Secured Parties that, from and after the date of
this Agreement until the Secured Obligations are paid in full and
the Commitments are terminated:
(a) Pledgor will, upon request of
the Agent, execute such notices of lien, notices of assignment and
continuations or amendments to any of the foregoing, and other
documents (and pay the costs of filing or recording the same in all
public offices deemed necessary by the Agent) and do such other
acts and things, all as the Agent may from time to time request to
establish and maintain a valid perfected pledge and
first
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priority security interest in the
Collateral. The Pledgor hereby constitutes and appoints the Agent
(and any of its officers) as its attorney-in-fact with full power
and authority to execute and deliver all documents necessary to
perfect and keep perfected the security interests created hereby,
which power of attorney may only be exercised in the event the
Pledgor fails to execute and deliver any document necessary to
perfect or keep perfected the security interest created hereby
within five (5) business days after being requested to do so. This
power of attorney hereby granted is a special power of attorney
coupled with an interest and shall be irrevocable by the
Pledgor.
(b) If Pledgor shall, as a result of
its ownership of the Collateral, become entitled to receive or
shall receive any stock or other certificate (including, without
limitation, any certificate representing a dividend or a
distribution in connection with any reclassification, increase or
reduction of capital or any certificate issued in connection with
any reorganization), option or rights, whether in addition to, in
substitution of, as a conversion of, or in exchange for any portion
of the Collateral, or otherwise in respect thereof, Pledgor shall
accept the same as the agent of the Agent, hold the same in trust
for the Agent and deliver the same forthwith to the Agent in the
exact form received, together with an undated stock power covering
such certificate duly executed in blank by such Pledgor, and with,
if the Agent so requests, signature guaranteed, to be held by the
Agent, subject to the terms hereof, as additional collateral
security for the Secured Obligations. In addition, any sums paid
upon or in respect of the Collateral upon the liquidation or
dissolution of any Issuer shall be held by the Agent as additional
collateral security for the Secured Obligations. If any sums of
money or property so paid or distributed in respect of any
Collateral shall be received by Pledgor, Pledgor shall, until such
money or property is paid or delivered to the Agent, hold such
money or property in trust for the Agent, segregated from other
funds of Pledgor, as additional collateral securing the Secured
Obligations.
(c) Without the prior written
consent of the Agent, Pledgor will not (i) vote to enable, or take
any other action to permit, any Issuer to issue any stock or other
equity securities of any nature or to issue any other securities
convertible into or granting the right to purchase or exchange for
any stock or other equity securities of any nature of such Issuer,
(ii) sell, assign, transfer, exchange, or otherwise dispose of, or
grant any option with respect to, the Collateral, or (iii) create,
incur or permit to exist any Lien or option in favor of, or any
claim of any Person with respect to, any of the Collateral, or any
interest therein, except for the lien provided for by this
Agreement. Pledgor will defend the right, title and interest of the
Agent in and to the Collateral against the claims and demands of
all Persons whomsoever.
(d) At any time and from time to
time, upon the written request of the Agent, and at the sole
expense of the Pledgor, Pledgor will promptly and duly execute and
deliver such further instruments and documents and take such
further actions as the Agent may reasonably request for the
purposes of obtaining or preserving the full benefits of this
Agreement and of the rights and powers herein granted. If any
amount payable under or in connection with any of the Collateral
shall be or become evidenced by any promissory note, other
instrument or chattel paper, such note, instrument or
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chattel paper shall be immediately
delivered to the Agent, duly endorsed in a manner satisfactory to
the Agent, to be held as Collateral pursuant to this
Agreement.
(e) The Pledgor agrees to pay, and
to save the Agent and the Secured Parties harmless from, any and
all liabilities with respect to, or resulting from any delay in
paying, any and all stamp, excise, sales or other similar taxes
which may be payable or determined to be payable with respect to
any of the Collateral or in connection with any of the transactions
contemplated by this Agreement.
SECTION 7. Cash Dividends; Voting
Rights . Unless an Event of Default shall have occurred and be
continuing and the Agent shall have given notice to the Pledgor of
the Agent’s intent to exercise its rights pursuant to Section
8 below, the Pledgor shall be permitted to receive all cash
dividends, distributions or other payments paid in accordance with
the terms of the Credit Agreement in respect of the Pledged
Securities and to exercise all voting and corporate rights with
respect to the Pledged Securities; provided , that no vote
shall be cast or corporate right exercised or other action taken
which would impair the Collateral or which would be inconsistent
with or result in any violation of any provision of this Agreement,
the Credit Agreement or any other Loan Document.
SECTION 8. Rights of the
Agent .
(a) If an Event of Default shall
occur and be continuing and the Agent shall give notice of its
intent to exercise such rights to the Pledgor, (i) the Agent shall
have the right to receive any and all cash dividends, distributions
or other payments paid in respect of the Collateral and make
application thereof to the Secured Obligations, in the manner set
forth in the Credit Agreement and (ii) if applicable, all of the
Collateral shall be registered in the name of the Agent or its
nominee, and the Agent or its nominee may thereafter exercise (A)
all voting, corporate and other rights pertaining to such
Collateral at any meeting of shareholders of the applicable Issuer
or otherwise and (B) any and all rights of conversion, exchange,
subscription and any other rights, privileges or options pertaining
to such Collateral as if it were the absolute owner
there
