EXHIBIT 4.2
THIS NOTE AND THE COMMON SHARES ISSUABLE UPON CONVERSION OF THIS NOTE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE
SECURITIES LAWS. THIS NOTE AND THE COMMON SHARES ISSUABLE UPON CONVERSION OF
THIS NOTE MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THIS NOTE UNDER SAID ACT
AND ANY APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO FAST XXXXX RACING STABLES, INC. THAT SUCH REGISTRATION IS NOT
REQUIRED.
SECURED CONVERTIBLE TERM NOTE
FOR VALUE RECEIVED, FAST XXXXX RACING STABLES, INC., a Florida corporation
(the "Borrower"), hereby promises to pay to LAURUS MASTER FUND, LTD., c/o M&C
Corporate Services Limited, P.O. Box 309 GT, Xxxxxx House, South Church Street,
Xxxxxx Town, Grand Cayman, Cayman Islands, Fax: 000-000-0000 (the "Holder") or
its registered assigns or successors in interest, on order, the sum of Three
Million Dollars ($3,000,000), together with any accrued and unpaid interest
hereon, on March 9, 2008 (the "Maturity Date") if not sooner paid. The original
principal amount of this Note subject to amortizing payments pursuant to Section
1.2 hereof is hereinafter referred to as the "Amortizing Principal Amount" and
the remaining original principal amount of this Note is hereinafter referred to
as the "Non-Amortizing Principal Xxxxxx." The Amortizing Principal Xxxxxx and
the Non-Amortizing Principal Amount are collectively referred to herein as the
"Principal Amount".
Capitalized terms used herein without definition shall have the meanings
ascribed to such terms in that certain Securities Purchase Agreement dated as of
the date hereof between the Borrower and the Holder (the "Purchase Agreement").
The principal amount of this Note that is contained in the Restricted
Account (as defined in the Restricted Account Agreement referred to in the
Purchase Agreement) on the date of the issuance of this Note is Two Million Five
Hundred Thousand Dollars ($2,500,000).
The following terms shall apply to this Note:
ARTICLE I
INTEREST & AMORTIZATION
1.1 (a) Interest Rate. Subject to Sections 1.1(b), 4.12 and 5.6 hereof,
interest payable on this Note shall accrue at a rate per annum (the "Interest
Rate") equal to the "prime rate" published in The Wall Street Journal from time
to time, plus three percent (3%). The prime rate shall be increased or decreased
as the case may be for each increase or decrease in the prime rate in an amount
equal to such increase or decrease in the prime rate; each change to be
effective as of the day of the change in such rate. Interest shall be calculated
on the basis of a 360 day year. Interest shall accrue but not be payable during
the period commencing on the date hereof and ending on March 31, 2005.
Interest on the Amortizing Principal Xxxxxx shall be payable monthly, in
arrears, commencing on April 1, 2005 and on the first day of each consecutive
calendar month thereafter (each, a "Repayment Date") and on the Maturity Date,
whether by acceleration or otherwise. Accrued interest on the Non-Amortizing
Principal Amount shall be payable only on the Maturity Date or, in the event of
the redemption or conversion of all or any portion of the Non-Amortizing
Principal Amount, accrued interest on the amount so redeemed or converted shall
be paid on the date of redemption or conversion, as the case may be.
1.1 (b) Interest Rate Adjustment. The Interest Rate shall be subject to
adjustment on the last business day of each month hereafter until the Maturity
Date (each a "Determination Date"). If on any Determination Date (i) the
Borrower shall have registered under the Securities Act of 1933, as amended (the
"Securities Act"), the shares of Common Stock underlying each of the conversion
of this Note and the exercise of the Warrant issued on a registration statement
declared effective by the Securities and Exchange Commission (the "SEC"), and
(ii) the market price (the "Market Price") of the Common Stock as reported by
Bloomberg, L.P. on the Principal Market (as defined below) for the five (5)
consecutive trading days immediately preceding such Determination Date exceeds
the then applicable Fixed Conversion Price by at least twenty five percent
(25%), the Interest Rate for the succeeding calendar month shall automatically
be reduced by 25 basis points (25 b.p.) (0.25%) for each incremental twenty five
percent (25%) increase in the Market Price of the Common Stock above the Fixed
Conversion Price, after giving effect to adjustments set forth herein.
Notwithstanding the foregoing (and anything to the contrary contained in
herein), in no event shall the Interest Rate be less than zero percent (0%).
1.2 Minimum Monthly Principal Payments. Amortizing payments of the
outstanding principal amount of this Note not contained in the Restricted
Account (as defined in the Restricted Account Agreement) shall begin on July 1,
2005 and shall recur on each succeeding Repayment Date thereafter until the
Amortizing Principal Amount has been repaid in full, whether by the payment of
cash or by the conversion of such principal into Common Stock pursuant to the
terms hereof. Subject to Section 2.1 and Article 3 below, on each Repayment
Date, the Borrower shall make payments to the Holder in the amount of $14,705.88
(the "Monthly Principal Amount"), together with any accrued and unpaid interest
then due on such portion of the Amortizing Principal Amount plus any and all
other amounts which are then owing under this Note that have not been paid (the
Monthly Principal Amount, together with such accrued and unpaid interest and
such other amounts, collectively, the "Monthly Amount") ; provided that,
following a release of an amount of funds from the Restricted Account (as
defined in the Restricted Account Agreement) for the purposes set forth in the
Restricted Account Side Letter (other than with respect to a release that occurs
as a result of a conversion of any Principal Amount) (each, a "Release Amount")
each Monthly Principal Amount due on any Repayment Date occurring on or after
the 90th day following any such release shall be increased by an amount equal to
(x) such Release Amount divided by (y) the sum of (I) the number of Repayment
Dates occurring on or after the 90th day following any such release and
remaining until the Maturity Date plus (II) one (1). Any Principal Amount that
remains outstanding on the Maturity Date shall be due and payable on the
Maturity Date.
ARTICLE II
CONVERSION REPAYMENT
2.1 (a) Payment of Monthly Amount in Cash or Common Stock. If the Monthly
Amount (or a portion thereof of such Monthly Amount if such portion of the
Monthly Amount would have been converted into shares of Common Stock but for
Section 3.2) is required to be paid in cash pursuant to Section 2.1(b), then the
Borrower shall pay the Holder an amount equal to the Monthly Amount due and
owing to the Holder on the Repayment Date in cash. If the Monthly Amount (or a
portion of such Monthly Amount if not all of the Monthly Amount may be converted
into shares of Common Stock pursuant to Section 3.2) is required to be paid in
shares of Common Stock pursuant to Section 2.1(b), the number of such shares to
be issued by the Borrower to the Holder on such Repayment Date (in respect of
such portion of the Monthly Amount converted into in shares of Common Stock
pursuant to Section 2.1(b)), shall be the number determined by dividing (x) the
portion of the Monthly Amount converted into shares of Common Stock, by (y) the
then applicable Fixed Conversion Price. For purposes hereof, the initial "Fixed
Conversion Price" means $0.83.
(b) Monthly Amount Conversion Guidelines. Subject to Sections
2.1(a), 2.2 and 3.2 hereof, the Holder shall convert into shares of Common Stock
all or a portion of the Monthly Amount due on each Repayment Date according to
the following guidelines (collectively, the "Conversion Criteria"): (i) the
average closing price of the Common Stock as reported by Bloomberg, L.P. on the
Principal Market for the five (5) consecutive trading days immediately preceding
such Repayment Date shall be greater than or equal to 120% of the Fixed
Conversion Price and (ii) the amount of such conversion does not exceed twenty
five percent (25%) of the aggregate dollar trading volume of the Common Stock
for the twenty two (22) day trading period immediately preceding the applicable
Repayment Date. If the Conversion Criteria are not met, the Holder shall convert
only such part of the Monthly Amount that meets the Conversion Criteria. Any
part of the Monthly Amount due on a Repayment Date that the Holder has not been
able to convert into shares of Common Stock due to failure to meet the
Conversion Criteria, shall be paid by the Borrower in cash within three (3)
business days following the applicable Repayment Date.
(c) Application of Conversion Amounts. Any amounts converted by the
Holder pursuant to Section 2.1(b) shall be deemed to constitute payments of, or
applied against, (i) first, outstanding fees, (ii) second, accrued interest on
the Amortizing Principal Xxxxxx, and (iii) third, the Amortizing Principal
Xxxxxx.
2.2 No Effective Registration. Notwithstanding anything to the contrary
herein, no amount payable hereunder may be converted into Common Stock unless
(a) either (i) an effective current Registration Statement (as defined in the
Registration Rights Agreement) covering the shares of Common Stock to be issued
in satisfaction of such obligations exists, or (ii) an exemption from
registration of the Common Stock is available pursuant to Rule 144 of the
Securities Act, and (b) no Event of Default hereunder exists and is continuing,
unless such Event of Default is cured within any applicable cure period or is
otherwise waived in writing by the Holder in whole or in part at the Holder's
option.
2.3 Optional Redemption of Amortizing Principal Amount. The Borrower will
have the option of prepaying the outstanding Amortizing Principal Xxxxxx
("Optional Amortizing
Redemption"), in whole or in part, by paying to the Holder a sum of money equal
to (i) one hundred twenty five percent (125%) of the Amortizing Principal Amount
to be redeemed, together with accrued but unpaid interest thereon and (ii) any
and all other sums due, accrued or payable to the Holder arising under this
Note, the Purchase Agreement or any Related Agreement (the preceding clauses (i)
and (ii), collectively, the "Amortizing Redemption Amount") on the Amortizing
Redemption Payment Date (as defined below). The Borrower shall deliver to the
Holder a notice of redemption (the "Notice of Amortizing Redemption") specifying
the date for such Optional Amortizing Redemption (the "Amortizing Redemption
Payment Date"), which date shall be not less than seven (7) business days after
the date of the Notice of Amortizing Redemption (the "Redemption Period"). A
Notice of Amortizing Redemption shall not be effective with respect to any
portion of the Amortizing Principal Amount for which the Holder has a pending
election to convert pursuant to Section 3.1, or for conversions initiated or
made by the Holder pursuant to Section 3.1 during the Redemption Period. The
Amortizing Redemption Amount shall be determined as if such Xxxxxx's conversion
elections had been completed immediately prior to the date of the Notice of
Amortizing Redemption. On the Amortizing Redemption Payment Date, the Amortizing
Redemption Amount shall be paid in good funds to the Holder. In the event the
Borrower fails to pay the Amortizing Redemption Amount on the Amortizing
Redemption Payment Date as set forth herein, then such Notice of Amortizing
Redemption will be null and void.
2.4 Optional Redemption of Non-Amortizing Principal Amount. The Borrower
will have the option of repaying the outstanding Non-Amortizing Principal Amount
("Optional Non-Amortizing Redemption"), in whole or in part, by paying the
Holder a sum of money equal to one hundred twenty percent (120%) of the
Non-Amortizing Principal Amount to be redeemed, together with accrued but unpaid
interest thereon (the "Non-Amortizing Redemption Amount") on the Non-Amortizing
Redemption Date (as defined below). The Borrower shall deliver to the Holder a
written notice of redemption (the "Notice of Non-Amortizing Redemption")
specifying the date for such Optional Non-Amortizing Redemption (the
"Non-Amortizing Redemption Date"), which date shall be not less than seven (7)
business days after the date of the Notice of Non-Amortizing Redemption (the
"Non-Amortizing Redemption Period"). A Notice of Non-Amortizing Redemption shall
not be effective with respect to any portion of the Non-Amortizing Principal
Amount for which the Holder has a pending election to convert pursuant to
Section 3.1, or for conversions initiated or made by the Holder pursuant to
Section 3.1 during the Non-Amortizing Redemption Period. The Non-Amortizing
Redemption Amount shall be determined as if the Holder's conversion elections
had been completed immediately prior to the date of the Notice of Non-Amortizing
Redemption. On the Non-Amortizing Redemption Date, the Non-Amortizing Redemption
Amount shall be paid (i) in good funds to the Holder, (ii) by furnishing the
Holder written direction to notify the bank holding the Restricted Account to
release from the Restricted Account and deliver to the Holder a sum of money
equal to the Non-Amortizing Redemption Amount, or (iii) if the amount on deposit
in the Restricted Account is less than the Non-Amortizing Redemption Amount, by
furnishing the Holder written direction to notify the bank holding the
Restricted Account to release all amounts on deposit in the Restricted Account
to the Holder and delivering to the Holder good funds in an amount equal to the
balance of the Non-Amortizing Redemption Amount.
ARTICLE III
CONVERSION RIGHTS
3.1. Holder's Conversion Rights. Subject to Section 2.2, the Holder shall
have the right, but not the obligation, to convert all or any portion of the
then aggregate outstanding Principal Amount of this Note, together with interest
and fees due hereon, into shares of Common Stock, subject to the terms and
conditions set forth in this Article III. The Holder may exercise such right by
delivery to the Borrower of a written Notice of Conversion pursuant to Section
3.3. The shares of Common Stock to be issued upon such conversion are herein
referred to as the "Conversion Shares."
3.2 Conversion Limitation. Notwithstanding anything contained herein to
the contrary, the Holder shall not be entitled to convert pursuant to the terms
of this Note an amount that would be convertible into that number of Conversion
Shares which would exceed the difference between 4.99% of the issued and
outstanding shares of Common Stock and the number of shares of Common Stock
beneficially owned by such Holder or issuable upon exercise of Warrants held by
such Holder. For the purposes of the immediately preceding sentence, beneficial
ownership shall be determined in accordance with Section 13(d) of the Exchange
Act and Regulation 13d-3 thereunder. The Holder may void the Conversion Share
limitation described in this Section 3.2 upon 75 days prior notice to the
Borrower or without any notice requirement upon an Event of Default.
3.3 Mechanics of Xxxxxx's Conversion. (a) In the event that the Holder
elects to convert any amounts outstanding under this Note into Common Stock, the
Holder shall give notice of such election by delivering an executed and
completed notice of conversion (a "Notice of Conversion") to the Borrower, which
Notice of Conversion shall provide a breakdown in reasonable detail of the
Principal Amount, accrued interest and fees being converted. On each Conversion
Date (as hereinafter defined) and in accordance with its Notice of Conversion,
the Holder shall make the appropriate reduction to the Principal Amount, accrued
interest and fees as entered in its records and shall provide written notice
thereof to the Borrower within two (2) business days after the Conversion Date.
Each date on which a Notice of Conversion is delivered or telecopied to the
Borrower in accordance with the provisions hereof shall be deemed a "Conversion
Date". A form of Notice of Conversion to be employed by the Holder is annexed
hereto as Exhibit A.
(b) Pursuant to the terms of a Notice of Conversion, the Borrower
will issue instructions to the transfer agent accompanied by an opinion of
counsel, if so required by the Borrower's transfer agent, within two (2)
business days of the date of the Borrower's receipt of the Notice of Conversion
and shall cause the transfer agent to transmit the certificates representing the
Conversion Shares to the Holder by crediting the account of the Holder's
designated broker with the Depository Trust Corporation ("DTC") through its
Deposit Withdrawal Agent Commission ("DWAC") system within three (3) business
days after receipt by the Borrower of the Notice of Conversion (the "Delivery
Date"). In the case of the exercise of the conversion rights set forth herein
the conversion privilege shall be deemed to have been exercised and the
Conversion Shares issuable upon such conversion shall be deemed to have been
issued upon the date of receipt by the Borrower of the Notice of Conversion. The
Holder shall be treated for all purposes as the record holder of such shares of
Common Stock, unless the Holder provides the Borrower written instructions to
the contrary.
3.4 Conversion Mechanics.
(a) The number of shares of Common Stock to be issued upon each
conversion of this Note pursuant to this Article III shall be determined by
dividing that portion of the Principal Amount and interest and fees to be
converted, if any, by the then applicable Fixed Conversion Price. In the event
of any conversions of outstanding obligations under this Note in part pursuant
to this Article III, such conversions shall be deemed to constitute conversions
(i) first, of the Monthly Amount for the current calendar month, (ii) then of
the accrued interest on the Principal Amount, (iii) then of outstanding
Amortizing Principal Amount, by applying the conversion amount to Monthly
Principal Amounts for the remaining Repayment Dates in chronological order and
(iv) then, of outstanding Non-Amortizing Principal Amount.
(b) The Fixed Conversion Price and number and kind of shares or
other securities to be issued upon conversion is subject to adjustment from time
to time upon the occurrence of certain events, as follows:
A. Stock Splits, Combinations and Dividends. If the shares of
Common Stock are subdivided or combined into a greater or smaller number
of shares of Common Stock, or if a dividend is paid on the Common Stock in
shares of Common Stock, the Fixed Conversion Price or the Conversion
Price, as the case may be, shall be proportionately reduced in the case of
subdivision of shares or stock dividend or proportionately increased in
the case of combination of shares, in each such case by the ratio which
the total number of shares of Common Stock outstanding immediately after
such event bears to the total number of shares of Common Stock outstanding
immediately prior to such event.
B. During the period the conversion right exists, the Borrower
will reserve from its authorized and unissued Common Stock a sufficient
number of shares to provide for the issuance of Common Stock upon the full
conversion of this Note. The Borrower represents that upon issuance, such
shares will be duly and validly issued, fully paid and non-assessable. The
Borrower agrees that its issuance of this Note shall constitute full
authority to its officers, agents, and transfer agents who are charged
with the duty of executing and issuing stock certificates to execute and
issue the necessary certificates for shares of Common Stock upon the
conversion of this Note.
C. Share Issuances. Subject to the provisions of this Section
3.4, if the Borrower shall at any time prior to the conversion or
repayment in full of the Principal Amount issue any shares of Common Stock
or securities convertible into Common Stock to a person other than the
Holder (except (i) pursuant to Subsections A or B above; (ii) pursuant to
options, warrants or other obligations to issue shares outstanding on the
date hereof as disclosed to Holder in writing; or (iii) pursuant to
options that may be issued under any employee incentive stock option
and/or any non-qualified employee stock option plan or agreement adopted
by the Borrower) for a consideration per share (the "Offer Price") less
than the Fixed Conversion Price in effect at the time of such issuance,
then the Fixed Conversion Price shall be immediately reset to such lower
Offer Price at the time of issuance of such securities. For purposes
hereof, the issuance of any security of the Borrower convertible into or
exercisable or exchangeable for Common Stock shall result in an
adjustment to the Fixed Conversion Price at the time of issuance of such
securities.
D. Reclassification, etc. If the Borrower at any time shall,
by reclassification or otherwise, change the Common Stock into the same or
a different number of securities of any class or classes, this Note, as to
the unpaid Principal Amount and accrued interest thereon, shall thereafter
be deemed to evidence the right to purchase an adjusted number of such
securities and kind of securities as would have been issuable as the
result of such change with respect to the Common Stock immediately prior
to such reclassification or other change.
3.5 Issuance of Replacement Note. Upon any partial conversion of this
Note, a replacement Note containing the same date and provisions of this Note
shall, at the written request of the Holder, be issued by the Borrower to the
Holder for the outstanding Principal Amount of this Note and accrued interest
which shall not have been converted or paid. Subject to the provisions of
Article IV, the Borrower will pay no costs, fees or any other consideration to
the Holder for the production and issuance of a replacement Note.
ARTICLE IV
EVENTS OF DEFAULT
Upon the occurrence and continuance of an Event of Default beyond any
applicable grace period, the Holder may make all sums of principal, interest and
other fees then remaining unpaid hereon and all other amounts payable hereunder
immediately due and payable. In the event of such an acceleration, the amount
due and owing to the Holder shall be one hundred twenty percent (120%) of the
outstanding principal amount of the Note (plus accrued and unpaid interest and
fees, if any) (the "Default Payment"). The Default Payment shall be applied
first to any fees due and payable to Holder pursuant to this Note, the Purchase
Agreement or the Related Agreements, then to accrued and unpaid interest due on
the Note and then to outstanding principal balance of the Note.
The occurrence of any of the following events set forth in Sections 4.1
through 4.10, inclusive, is an "Event of Default":
4.1 Failure to Pay Principal, Interest or other Fees. The Borrower fails
to pay when due any installment of principal, interest or other fees hereon in
accordance herewith, or the Borrower fails to pay when due any amount due under
any other promissory note issued by Borrower to the Holder, and in any such
case, such failure shall continue for a period of three (3) days following the
date upon which any such payment was due.
4.2 Breach of Covenant. The Borrower breaches any covenant or any other
term or condition of this Note or the Purchase Agreement in any material
respect, or the Borrower or any of its Subsidiaries breaches any covenant or any
other term or condition of any Related Agreement in any material respect and,
any such case, such breach, if subject to cure, continues for a period of thirty
(30) days after the occurrence thereof.
4.3 Breach of Representations and Warranties. Any representation or
warranty made by the Borrower in this Note or the Purchase Agreement, or by the
Borrower or any of its Subsidiaries in
any Related Agreement, shall, in any such case, be false or misleading in any
material respect on the date that such representation or warranty was made or
deemed made.
4.4 Receiver or Trustee. The Borrower or any of its Subsidiaries shall
make an assignment for the benefit of creditors, or apply for or consent to the
appointment of a receiver or trustee for it or for a substantial part of its
property or business; or such a receiver or trustee shall otherwise be
appointed.
4.5 Judgments. Any money judgment, writ or similar final process shall be
entered or filed against the Borrower or any of its Subsidiaries or any of their
respective property or other assets for more than $100,000, and shall remain
unvacated, unbonded or unstayed for a period of thirty (30) days.
4.6 Bankruptcy. Bankruptcy, insolvency, reorganization or liquidation
proceedings or other proceedings or relief under any bankruptcy law or any law
for the relief of debtors shall be instituted by or against the Borrower or any
of its Subsidiaries and, in the case of any such proceeding instituted against
the Borrower or any of its Subsidiaries, shall not be vacated or dismissed
within sixty (60) days.
4.7 Stop Trade. An SEC stop trade order or Principal Market trading
suspension of the Common Stock shall be in effect for five (5) consecutive days
or five (5) days during a period of ten (10) consecutive days, excluding in all
cases a suspension of all trading on a Principal Market, provided that the
Borrower shall not have been able to cure such trading suspension within thirty
(30) days of the notice thereof or list the Common Stock on another Principal
Market within sixty (60) days of such notice. The "Principal Market" for the
Common Stock shall include the NASD OTC Bulletin Board, NASDAQ SmallCap Market,
NASDAQ National Market System, American Stock Exchange, or New York Stock
Exchange (whichever of the foregoing is at the time the principal trading
exchange or market for the Common Stock).
4.8 Failure to Deliver Common Stock or Replacement Note. The Borrower
shall fail (i) to timely deliver Common Stock to the Holder pursuant to and in
the form required by this Note, and Section 9 of the Purchase Agreement, if such
failure to timely deliver Common Stock shall not be cured within two (2)
business days or (ii) to deliver a replacement Note to Holder within ten (10)
business days following the required date of such issuance pursuant to this
Note, the Purchase Agreement or any Related Agreement (to the extent required
under such agreements).
4.9 Default Under Related Agreements or Other Agreements. The occurrence
and continuance of any Event of Default (as defined in the Purchase Agreement or
any Related Agreement) or any event of default (or similar term) under any other
indebtedness of the Company and/or any of its Subsidiaries that equals or
exceeds $25,000 in outstanding principal amount in the aggregate for all such
indebtedness.
4.10 Change in Control. (i) Any "Person" or "group" (as such terms are
defined in Sections 13(d) and 14(d) of the Exchange Act, as in effect on the
date hereof) is or becomes the "beneficial owner" (as defined in Rules 13(d)-3
and 13(d)-5 under the Exchange Act), directly or indirectly, of 35% or more on a
fully diluted basis of the then outstanding voting equity interest of the
Borrower (other than a "Person" or "group" that beneficially owns 35% or more of
such outstanding voting equity interests of the Company on the date hereof) or
(ii) the Board of Directors of the Borrower shall cease to consist of a majority
of the Board of Directors of the Borrower on the date hereof (or directors
appointed by a majority of the Board of Directors in effect immediately prior to
such appointment).
DEFAULT RELATED PROVISIONS
4.11 Default Interest Rate. Following the occurrence and during the
continuance of an Event of Default, the Borrower shall pay additional interest
on this Note in an amount equal to two percent (2%) per month, and all
outstanding obligations under this Note, including unpaid interest, shall
continue to accrue such additional interest from the date of such Event of
Default until the date such Event of Default is cured or waived.
4.12 Conversion Privileges. The conversion privileges set forth in Article
III shall remain in full force and effect immediately from the date hereof and
until this Note is paid in full.
4.13 Cumulative Remedies. The remedies under this Note shall be
cumulative.
ARTICLE V
MISCELLANEOUS
5.1 Failure or Indulgence Not Waiver. No failure or delay on the part of
the Holder hereof in the exercise of any power, right or privilege hereunder
shall operate as a waiver thereof, nor shall any single or partial exercise of
any such power, right or privilege preclude other or further exercise thereof or
of any other right, power or privilege. All rights and remedies existing
hereunder are cumulative to, and not exclusive of, any rights or remedies
otherwise available.
5.2 Notices. Any notice herein required or permitted to be given shall be
in writing and shall be deemed effectively given: (a) upon personal delivery to
the party notified, (b) when sent by confirmed telex or facsimile if sent during
normal business hours of the recipient, if not, then on the next business day,
(c) five business days after having been sent by registered or certified mail,
return receipt requested, postage prepaid, or (d) one business day after deposit
with a nationally recognized overnight courier, specifying next day delivery,
with written verification of receipt. All communications shall be sent to the
Borrower at the address provided in the Purchase Agreement executed in
connection herewith, and to the Holder at the address provided in the Purchase
Agreement for such Holder, with a copy to Xxxx X. Xxxxxx, Esq., 000 Xxxxx
Xxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, facsimile number (000) 000-0000,
or at such other address as the Borrower or the Holder may designate by ten days
advance written notice to the other parties hereto. A Notice of Conversion shall
be deemed given when made to the Borrower pursuant to the Purchase Agreement.
5.3 Amendment Provision. The term "Note" and all reference thereto, as
used throughout this instrument, shall mean this instrument as originally
executed, or if later amended or supplemented, then as so amended or
supplemented, and any successor instrument issued pursuant to Section 3.5
hereof, as it may be amended or supplemented.
5.4 Assignability. This Note shall be binding upon the Borrower and its
successors and assigns, and shall inure to the benefit of the Holder and its
successors and assigns, and may be assigned by the Holder in accordance with the
requirements of the Purchase Agreement. This Note shall not be assigned by the
Borrower without the consent of the Holder.
5.5 Governing Law. This Note shall be governed by and construed in
accordance with the laws of the State of New York, without regard to principles
of conflicts of laws. Any action brought by either party against the other
concerning the transactions contemplated by this Agreement shall be brought only
in the state courts of New York or in the federal courts located in the State of
New York in New York County. Both parties and the individual signing this Note
on behalf of the Borrower agree to submit to the jurisdiction of such courts.
The prevailing party shall be entitled to recover from the other party its
reasonable attorney's fees and costs. In the event that any provision of this
Note is invalid or unenforceable under any applicable statute or rule of law,
then such provision shall be deemed inoperative to the extent that it may
conflict therewith and shall be deemed modified to conform with such statute or
rule of law. Any such provision which may prove invalid or unenforceable under
any law shall not affect the validity or enforceability of any other provision
of this Note. Nothing contained herein shall be deemed or operate to preclude
the Holder from bringing suit or taking other legal action against the Borrower
in any other jurisdiction to collect on the Borrower's obligations to Holder, to
realize on any collateral or any other security for such obligations, or to
enforce a judgment or other court in favor of the Holder.
5.6 Maximum Payments. Nothing contained herein shall be deemed to
establish or require the payment of a rate of interest or other charges in
excess of the maximum permitted by applicable law. In the event that the rate of
interest required to be paid or other charges hereunder exceed the maximum
permitted by such law, any payments in excess of such maximum shall be credited
against amounts owed by the Borrower to the Holder and thus refunded to the
Borrower.
5.7 Security Interest and Guarantee. The Holder has been granted a
security interest (i) in certain assets of the Borrower and its Subsidiaries as
more fully described in the Master Security Agreement dated as of the date
hereof and (ii) pursuant to the Stock Pledge Agreement dated as of the date
hereof. The obligations of the Borrower under this Note are guaranteed by
certain Subsidiaries of the Borrower pursuant to the Subsidiary Guaranty dated
as of the date hereof.
5.8 Construction. Each party acknowledges that its legal counsel
participated in the preparation of this Note and, therefore, stipulates that the
rule of construction that ambiguities are to be resolved against the drafting
party shall not be applied in the interpretation of this Note to favor any party
against the other.
5.9 Cost of Collection. If default is made in the payment of this Note,
the Borrower shall pay to Holder reasonable costs of collection, including
reasonable attorney's fees.
[Balance of page intentionally left blank; signature page follows.]
IN WITNESS WHEREOF, the Borrower has caused this Note to be signed in its
name effective as of this 9th day of March, 2005.
FAST XXXXX RACING STABLES, INC.
By:
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Name:
Title:
WITNESS:
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