[EXHIBIT 20.1]
SECURED PROMISSORY NOTE
$1,675,000.00
April __, 2004 ___________, Ohio
FOR VALUE RECEIVED, the undersigned, Giant Motorsports,
Inc., a Nevada corporation and Chicago Cycle, Inc., a Nevada
corporation (collectively, the "Maker"), hereby promises to pay
to King's Motorsports, Inc. d/b/a Chicago Cycle, an Illinois
corporation (the "Holder"), the principal sum of One Million Six
Hundred Seventy Five Thousand and No/100 Dollars ($1,675,000.00),
together with interest thereon, compounded monthly, accruing from
the date hereof at annual rate equal to six percent (6%) per
annum. The principal and interest shall be payable as follows:
(i) Five Hundred Thousand Dollars ($500,000) of principal will be
paid on July __, 2004, (ii) Two Hundred Fifty Thousand Dollars
($250,000) of principal will be paid on October __, 2004, and
(iii) all remaining amounts of principal and interest owed
hereunder will be due on April __, 2005.
The annual rate of interest stated herein shall apply to a
three hundred sixty (360) day period, and amounts of interest
due hereunder shall be computed upon the basis of thirty (30)
day months. The Maker shall have the right to prepay the
principal amount due on this Note, or any portion thereof, from
time to time during the term hereof without premium or penalty
thereon. The amount of any such payment shall be applied first
to principal and then to reducing the accrued and unpaid
interest owed on this Note.
Payments on this Note are to be made in lawful money of the
United States of America in immediately available funds at such
location as the Holder shall designate to the Maker. Failure to
exercise any right contained in this Note by the Holder shall not
constitute a waiver of the right to exercise such right in the
event of any subsequent default.
Notwithstanding any of the foregoing, if (i) the Maker shall
be in default of the payment of this Note for more than ten (10)
business days after the receipt by the Maker of written notice of
such default by Xxxxxx, or if the Maker shall file a voluntary
petition in bankruptcy, or shall be adjudicated as bankrupt or
insolvent, or shall file any petition or answer seeking for the
Maker any arrangement, composition, readjustment, or similar
relief under any present or future statute, law or regulation, or
shall file any answer admitting the material allegations of a
petition filed against it, in any such proceeding, or if a decree
or order by a court having jurisdiction in the premises shall
have been entered adjudging the Maker to be bankrupt or insolvent
under the federal bankruptcy laws or any applicable law of the
United States of America or any state law, or appointing a
receiver or trustee or assignee in bankruptcy or insolvency of
the Maker, or if the Maker shall make an assignment for the
benefit of creditors, the unpaid balance of said principal sum
with all accumulated interest thereon and all other sums due
hereunder shall, at the option of the Holder hereof, become
immediately due and payable without notice, presentment or demand
of any kind, such notice, presentment and demand being hereby
expressly waived by the Maker and shall thereafter bear interest
at the rate equal to twelve percent (12%) per annum.
This Note is being delivered by Maker pursuant to Section
7.2.3 of that certain Asset Purchase Agreement of even date
herewith among Maker, Holder and certain other parties (the
"APA") and Maker has the right to set off any amounts that it
owes hereunder in accordance with Section 9.4(a) of the APA on
written notice to Holder and subject to the opportunity to cure
specified in the APA.
The obligations of Maker owed under this Note are hereby
secured by Maker's interest in and title to the Acquired Assets
as such term is defined in the APA and Maker hereby grants such
security interest to Holder. This security interest is evidenced
by that certain Commercial Security Agreement among Maker and
Holder of even date herewith (the "Security Agreement"). As is
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set forth in the Security Agreement, this security interest is
subordinate to the interest in the Acquired Assets that is held
by Ducati, Honda, Suzuki and Yamaha.
The undersigned understands and agrees that this Note is
subject to and shall be construed according to the laws of the
State of Illinois. This Note is not assignable or transferable
by Maker or Holder.
Giant Motorsports, Inc.
By: ______________________________
Its:______________________________
Chicago Cycle, Inc.
By: ______________________________
Its:______________________________
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