Exhibit 10.1
INTERNATIONAL BUILDING TECHNOLOGIES, CO., LTD.
ASSET SALE AND PURCHASE AGREEMENT
THIS AGREEMENT is made this 8th day of July 2007 by and between Suining
Yinfa Construction and Engineering Co., Ltd., (the "Company"), a China
corporation; and International Building Technologies, Co., Ltd. ("IBT" or the
"Purchaser"), a Hong Kong corporation, and a wholly owned subsidiary of IBT
Group, Inc., FKA, Motorsports Emporium Inc., a US publicly traded company
(OTCBB:MSEM)
WHEREAS, the Company desires to sell to the Purchaser 51% interest in
certain contracts and agreements (the "Company Assets") in return for Company in
order to become part of a US publicly traded company and to potentially gain
certain rights to use and exploit IBT's panel building technology (the
"Technology") either now or in the future.
WHEREAS, the Purchaser desires to purchase the Assets as hereinafter
provided;
NOW, THEREFORE, in consideration of the foregoing and the following mutual
covenants and agreements, the parties hereto agree as follows:
1. Purchase of Assets. At the closing of this Agreement (the "Closing"),
upon the basis of the covenants, warranties and representations of the Purchaser
set forth in this Agreement, the Company will sell, transfer, assign, and
deliver to the Purchaser 51% interest in certain contracts (the "Assets" or
"Company Assets"), as set forth in Exhibit A, clear of all liens, pledges,
rights of third parties and any other encumbrances, except as otherwise may be
permitted hereunder.
2. Compensation. Purchaser agrees to the following:
(a) Note. Payment to Company in the form of a Convertible Promissory Note
in the amount of $350,000 USD attached herein as Exhibit B, and briefly outlined
as follows:
3. Restrictive Legend. All shares of the Stock to be delivered hereunder
shall bear a restrictive legend in substantially the following form:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE
SECURITIES LAWS AND NEITHER SUCH SHARES NOR ANY INTEREST THEREIN MAY BE OFFERED,
SOLD, PLEDGED, ASSIGNED OR OTHERWISE TRANSFERRED UNLESS A REGISTRATION STATEMENT
WITH RESPECT THERETO IS EFFECTIVE UNDER THE SECURITIES ACT AND ANY APPLICABLE
STATE SECURITIES LAWS, OR PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE
SECURITIES ACT."
4. Optional Stock Purchase Agreement.
(a) Upon signing this agreement, both Parties agree to pursue a stock
purchase agreement of the Company by IBT based upon terms and conditions to be
decided between the two parties and to be memorialized in subsequent
documentation.
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(b) Both parties understand that such a Stock Purchase Agreement will be
dependent on an obtaining reliable representation from the Company including an
audit of the Company's financials according to US GAAP standards, the cost of
which will be born by the Company.
5. Management of Assets.
(a) IBT shall provide management personnel to the Assets, including Project
Management, Accounting Supervision and Controller.
(b) All financial books and records for the Assets will be maintained by
IBT.
6. Profit Sharing.
(a) Profits shall be shared between the Parties either on a quarterly basis
or upon completion of the Contract being acquired on the following basis: IBT
51% and Company 49%.
(b) Any potential losses will be shared between the Parties according to
percentage ownership of the Assets; however, the loss share for which IBT will
be responsible will be limited to no more than $100,000 USD.
7. Reversal of Agreement. The Agreement between the Parties may be reversed
and the original Convertible Promissory Note returned to each of the Parties if
one of the following conditions prevails:
(a) IBT is unable to maintain the terms and conditions of the Asset Sale
and Purchase Agreement.
(b) Company is unable to maintain the Assets or continue operations.
(c) Company is unable to obtain approval from the local government
authority for changing registration of shareholders formally in according to
this agreement.
8. Representations and Warranties of the Company. Where a representation
contained in this Agreement is qualified by the phrase "to the best of the
Company's knowledge" (or words of similar import), such expression means that,
after having conducted a due diligence review, the Company believes the
statement to be true, accurate, and complete in all material respects. Knowledge
shall not be imputed nor shall it include any matters which such person should
have known or should have been reasonably expected to have known. The Company
represents and warrants to the Purchaser as follows:
(a) Power and Authority. The Company has full power and authority to
execute, deliver, and perform this Agreement and all other agreements,
certificates or documents to be delivered in connection herewith, including,
without limitation, the other agreements, certificates and documents
contemplated hereby (collectively the "Other Agreements").
(b) Binding Effect. Upon execution and delivery by the Company, this
Agreement and the Other Agreements shall be and constitute the valid, binding
and legal obligations of the Company, enforceable against the Company in
accordance with the terms hereof and thereof, except as the enforceability
hereof or thereof may be subject to the effect of (i) any applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws relating to or affecting
creditors' rights generally, and (ii) general principles of equity (regardless
of whether such enforceability is considered in a proceeding in equity or at
law).
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(c) Effect. Neither the execution and delivery of this Agreement or the
Other Agreements nor full performance by the Company of its obligations
hereunder or thereunder will violate or breach, or otherwise constitute or give
rise to a default under, the terms or provisions of the Articles of
Incorporation or Bylaws of the Company or, of any contract, commitment or other
obligation of the Company or the Company or necessary for the operation of the
Company following the Closing or any other contract, commitment, or other
obligation to which the Company or the Company is a party, or create or result
in the creation of any encumbrance on any of the property of the Company. The
Company is not in violation of its Articles of Incorporation, as amended, it's
Bylaws, as amended, or of any indebtedness, mortgage, contract, lease, or other
agreement or commitment.
(d) No Consents. No consent, approval or authorization of, or registration,
declaration or filing with any third party, including, but not limited to, any
governmental department, agency, commission or other instrumentality, will,
except such consents, if any, delivered or obtained on or prior to the Closing,
be obtained or made by the Company prior to the Closing to authorize the
execution, delivery and performance by the Company of this Agreement or the
Other Agreements which are listed on Schedule A.
(e) Litigation. There is no action, suit, hearing, inquiry, review,
proceeding or investigation by or before any court or governmental body pending,
or threatened against or involving the Company, its affiliates or the Company or
with respect to the activities of any employee or agent of the Company. Neither
the Company nor the Company have received any notice of any event or occurrence
which could result in any such action, suit, hearing, inquiry, review,
proceeding or investigation.
(f) Records. The books of account and minute books of the Company are
complete and correct, and reflect all those transactions involving its business
which properly should have been set forth in such books.
(g) Internal Accounting Controls. The Company maintains a system of
internal accounting controls sufficient, in the judgment of the Company's board
of directors, to provide reasonable assurance that (i) transactions are executed
in accordance with management's general or specific authorizations, (ii)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and to
maintain asset accountability, (iii) access to assets is permitted only in
accordance with management's general or specific authorization and (iv) the
recorded accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences. The books of account, corporate records and minute books of the
Company are complete and correct in all material respects.
(h) The Company's Representations and Warranties True and Complete. All
representations and warranties of the Company in this Agreement and the Other
Agreements are true, accurate and complete in all material respects as of the
Closing.
(i) No Knowledge of the Purchaser's Default. The Company has no knowledge
that any of the Purchaser's representations and warranties contained in this
Agreement or the Other Agreements are untrue, inaccurate or incomplete or that
the Purchaser is in default under any term or provision of this Agreement or the
Other Agreements.
(j) No Untrue Statements. No representation or warranty by the Company in
this Agreement or in any writing furnished or to be furnished pursuant hereto,
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contains or will contain any untrue statement of a material fact, or omits, or
will omit to state any material fact required to make the statements herein or
therein contained not misleading.
(k) Reliance. The foregoing representations and warranties are made by the
Company with the knowledge and expectation that the Purchaser is placing
complete reliance thereon.
9. Representations and Warranties of the Purchaser. Where a representation
contained in this Agreement is qualified by the phrase "to the best of the
Purchaser's knowledge" (or words of similar import), such expression means that,
after having conducted a due diligence review, the Purchaser believes the
statement to be true, accurate, and complete in all material respects. Knowledge
shall not be imputed nor shall it include any matters which such person should
have known or should have been reasonably expected to have known. The Purchaser
hereby represents and warrants to the Company as follows:
(a) Power and Authority. The Purchaser has full power and authority to
execute, deliver and perform this Agreement and the Other Agreements.
(b) Binding Effect. Upon execution and delivery by the Purchaser, this
Agreement and the Other Agreements shall be and constitute the valid, binding
and legal obligations of the Purchaser enforceable against the Purchaser in
accordance with the terms hereof or thereof, except as the enforceability hereof
and thereof may be subject to the effect of (i) any applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws relating to or affecting
creditors' rights generally, and (ii) general principles of equity (regardless
of whether such enforceability is considered in a proceeding in equity or at
law).
(c) Consents. Company has obtained consents from Customers allowing the
assignment of said contract from Company to Purchaser to take place without
penalty or consequence. No consent, approval or authorization of, or
registration, declaration or filing with any third party, including, but not
limited to, any governmental department, agency, commission or other
instrumentality, will, except such consents, if any, delivered or obtained on or
prior to the Closing, be obtained or made by the Purchaser prior to the Closing
to authorize the execution, delivery and performance by the Purchaser of this
Agreement or the Other Agreements.
(d) The Purchaser's Representations and Warranties True and Complete. All
representations and warranties of the Purchaser in this Agreement and the Other
Agreements are true, accurate and complete in all material respects as of the
Closing.
(e) No Knowledge of the Company's Default. The Purchaser has no knowledge
that any of the Company's representations and warranties contained in this
Agreement or the Other Agreements are untrue, inaccurate or incomplete in any
respect or that the Company is in default under any term or provision of this
Agreement or the Other Agreements.
(f) No Untrue Statements. No representation or warranty by the Purchaser in
this Agreement or in any writing furnished or to be furnished pursuant hereto,
contains or will contain any untrue statement of a material fact, or omits, or
will omit to state any material fact required to make the statements herein or
therein contained not misleading.
(g) Reliance. The foregoing representations and warranties are made by the
Purchaser with the knowledge and expectation that the Company is placing
complete reliance thereon.
10. Conditions Precedent to Obligations of the Purchaser. All obligations
of the Purchaser under this Agreement are subject to the fulfillment, prior to
or at the Closing, of the following conditions:
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(a) Representations and Warranties True at the Closing. The representations
and warranties of the Purchaser herein shall be deemed to have been made again
as of the Closing, and then be true and correct, subject to any changes
contemplated by this Agreement. The Purchaser shall have performed all of the
obligations to be performed by it hereunder on or prior to the Closing.
(b) Deliveries at the Closing. The Purchaser shall have delivered to the
Company at the Closing all of the documents required to be delivered hereunder.
11. Conditions Precedent to Obligations of the Company. All obligations of
the Company under this Agreement are subject to the fulfillment, prior to or at
the Closing, of the following conditions:
(a) Contracts and Documents. The Company shall have delivered to the
Purchaser the contracts, agreements, purchase orders and other documents
evidencing the ownership and rights to the Assets described in Exhibit A
attached herein.
(b) Representations and Warranties True at Closing. The representations and
warranties of the Company herein shall be deemed to have been made again at the
Closing, and then be true and correct, subject to any changes contemplated by
this Agreement. The Company shall have performed all of the obligations to be
performed by it hereunder on or prior to the Closing.
(c) Payment of the Compensation. The Purchaser shall have delivered the
Compensation.
12. The Nature and Survival of Representations, Covenants and Warranties.
All statements and facts contained in any memorandum, certificate, instrument,
or other document delivered by or on behalf of the parties hereto for
information or reliance pursuant to this Agreement, shall be deemed
representations, covenants and warranties by the parties hereto under this
Agreement. All representations, covenants and warranties of the parties shall
survive the Closing and all inspections, examinations, or audits on behalf of
the parties, shall expire one year following the Closing.
13. Records of the Company. For a period of five years following the
Closing, the books of account and records of the Company pertaining to all
periods after the Closing shall be available for inspection by the Company for
use in connection with tax audits.
14. Further Conveyances and Assurances. After the Closing, the Company and
the Purchaser will, without further cost or expense to, or consideration of any
nature from the other, execute and deliver, or cause to be executed and
delivered, to the other, such additional documentation and instruments of
transfer and conveyance, and will take such other and further actions, as the
other may reasonably request as more completely to sell, transfer and assign to
and fully vest in the Purchaser ownership of the Assets and to consummate the
transactions contemplated hereby.
15. Closing. The Closing of the sale and purchase contemplated hereunder
shall be on or before July 31, 2007, subject to acceleration or postponement
from time to time as the Company and the Purchaser may mutually agree.
16. Deliveries at the Closing by the Company. At the Closing the Company
shall deliver to the Purchaser:
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(a) Contracts, Agreements, purchase orders, rights assignments and other
evidence of the Assets set forth in Exhibit A with the full consent of the
Customers with whom the Assets are contracted.
(b) Any other document which may be necessary to carry out the intent of
this Agreement.
17. Deliveries at the Closing by the Purchaser. At the Closing, the
Purchaser shall deliver to the Company the following:
(a) Compensation as set forth above.
(b) Convertible Promissory Note in the amount of $350,000 USD attached
herein as Exhibit B.
(c) Any other document which may be necessary to carry out the intent of
this Agreement.
18. No Assignment. This Agreement shall not be assignable by any party
without the prior written consent of the other parties, which consent shall be
subject to such parties' sole, absolute and unfettered discretion.
19. Brokerage. The Company and the Purchaser agree to indemnify and hold
harmless each other against, and in respect of, any claim for brokerage or other
commissions relative to this Agreement, or the transactions contemplated hereby,
based in any way on agreements, arrangements, understandings or contracts made
by either party with a third party or parties whatsoever.
20. Mediation and Arbitration. All disputes arising or related to this
Agreement must exclusively be resolved first by mediation with a mediator
selected by the parties, with such mediation to be held in Alameda, CA. If such
mediation fails, then any such dispute shall be resolved by binding arbitration
under the Commercial Arbitration Rules of the American Arbitration Association
in effect at the time the arbitration proceeding commences, except that (a)
California law and the Federal Arbitration Act must govern construction and
effect, (b) the locale of any arbitration must be in Alameda, California, and
(c) the arbitrator must with the award provide written findings of fact and
conclusions of law. Any party may seek from a court of competent jurisdiction
any provisional remedy that may be necessary to protect its rights or assets
pending the selection of the arbitrator or the arbitrator's determination of the
merits of the controversy. The exercise of such arbitration rights by any party
will not preclude the exercise of any self-help remedies (including without
limitation, setoff rights) or the exercise of any non-judicial foreclosure
rights. An arbitration award may be entered in any court having jurisdiction.
21. Attorney's Fees. In the event that it should become necessary for any
party entitled hereunder to bring suit against any other party to this Agreement
for enforcement of the covenants contained in this Agreement, the parties hereby
covenant and agree that the party or parties who are found to be in violation of
said covenants shall also be liable for all reasonable attorney's fees and costs
of court incurred by the other party or parties that bring suit.
22. Benefit. All the terms and provisions of this Agreement shall be
binding upon and inure to the benefit of and be enforceable by each of the
parties hereto, and his respective heirs, executors, administrators, personal
representatives, successors and permitted assigns.
23. Notices. All notices, requests, demands, and other communications
hereunder shall be in writing and delivered personally or sent by registered or
certified United States mail, return receipt requested with postage prepaid, or
by telecopy or e-mail, if to the Company, addressed to Suining Yinfa
Construction and Engineering Co., Ltd. At ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ PRC,, Telephone number, ▇▇▇.▇▇▇.▇▇▇▇ and Facsimile
number, 825.222.2892 and if to the Purchaser, addressed to IBT Group Inc. c/o
IBT Group Inc., ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇ ▇▇, ▇▇▇, ▇▇▇▇▇
Telephone number, ▇▇▇.▇▇▇.▇▇▇.▇▇▇▇ and Facsimile number, ▇▇▇.▇▇▇.▇▇▇.▇▇▇▇.
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24. Any party hereto may change its address upon 10 days' written notice to
any other party hereto.
25. Construction. Words of any gender used in this Agreement shall be held
and construed to include any other gender, and words in the singular number
shall be held to include the plural, and vice versa, unless the context requires
otherwise.
26. Waiver. No course of dealing on the part of any party hereto or its
agents, or any failure or delay by any such party with respect to exercising any
right, power or privilege of such party under this Agreement or any instrument
referred to herein shall operate as a waiver thereof, and any single or partial
exercise of any such right, power or privilege shall not preclude any later
exercise thereof or any exercise of any other right, power or privilege
hereunder or thereunder.
27. Cumulative Rights. The rights and remedies of any party under this
Agreement and the instruments executed or to be executed in connection herewith,
or any of them, shall be cumulative and the exercise or partial exercise of any
such right or remedy shall not preclude the exercise of any other right or
remedy.
28. Invalidity. In the event any one or more of the provisions contained in
this Agreement or in any instrument referred to herein or executed in connection
herewith shall, for any reason, be held to be invalid, illegal or unenforceable
in any respect, such invalidity, illegality, or unenforceability shall not
affect the other provisions of this Agreement or any such other instrument.
29. Incorporation by Reference. The Attachments and Schedules to this
Agreement referred to or included herein constitute integral parts to this
Agreement and are incorporated into this Agreement by this reference.
30. Controlling Agreement. In the event of any conflict between the terms
of this Agreement or any of the Other Agreements or exhibits referred to herein,
the terms of this Agreement shall control.
31. Law Governing; Jurisdiction. This Agreement shall be governed by and
construed in accordance with the laws of the State of California, without regard
to any conflicts of laws provisions thereof. Each party hereby irrevocably
submits to the personal jurisdiction of the United States District Court for
Alameda County, California, as well as of the Courts of the State of California
over any suit, action or proceeding arising out of or relating to this
Agreement. Each party hereby irrevocably waives, to the fullest extent permitted
by law, any objection which it may now or hereafter have to the laying of the
venue of any such mediation, arbitration, suit, action or proceeding brought in
any such county and any claim that any such mediation, arbitration, suit, action
or proceeding brought in such county has been brought in an inconvenient forum.
32. Multiple Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. A facsimile transmission
of this signed Agreement shall be legal and binding on all parties hereto.
33. Entire Agreement. This instrument and the attachments hereto contain
the entire understanding of the parties and may not be changed orally, but only
by an instrument in writing signed by the party against whom enforcement of any
waiver, change, modification, extension, or discharge is sought.
SIGNATURE PAGE FOLLOWS
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IN WITNESS WHEREOF, this Agreement has been executed on the date first written
above
FOR COMPANY
/s/ Wang Ho
----------------------------------------------------
Suining Yinfa Construction and Engineering Co., Ltd.
Mr. ▇▇▇▇ ▇▇▇
General Manager
Date: July 8, 2007
FOR: PURCHASER
By /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
--------------------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇, CEO
IBT Co., Ltd. of Hong Kong, China.
FOR: IBT Group, Inc., / MotorSports Emporium Inc.
By /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
--------------------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇, CEO
Date: July 8, 2007
By /s/ ▇▇▇▇▇ ▇▇▇▇
------------------------------------------------
▇▇▇▇▇ ▇▇▇▇, Director
Date: July 8, 2007
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EXHIBIT A:
Company Assets (signed contract): $50,000,000. RMB
ROSE BEST PROJECT
CONTRACTS ON UNDERTAKING CONSTRUCTION PROJECTS
GF 1999-0201
Constituted By
Ministry of Construction of the People's Republic of China
State Administration For Industry & Commerce
Printed by the Department of Construction of Sichuan Province
Agreement
The Developer: Sichuan Juren investment Co. Ltd.
The Contractor: Suining Yinfa Construction & Engineering Co., Ltd.
According to "Contract Law of the Peoples Republic of China", "Construction Law
of the Peoples Republic of China" and other relevant laws and administrative
rules, keep to the principles of equality, unconstraint, equitableness and
faithfulness, The developer and the contractor have came to an agreement through
friendly consultation to conclude the following contract for the construction
project.
1. Project Summary
Project name: Rose Best ; Building A, B, C, and D,
Project address: Suining Yinhe Garden Apartment
Project content: Structures above + 0.00 in according to
construction documents as attached as Exhibit A.
Approval number:
Fund sourcing: self-financing
2. Scope of works of the contract
Scope of works of the contract: Structures above + 0.00 (additional works of
aluminum alloy, the lacquer of outer wall, iron balustrade will be signed with
supplementary contracts)
3 Contract date:
Commencement Date: July 28, 2007
Completion Date: December 28, 2008
Total period of the project: 17 months
Quality level
Project quality level: Qualified
Contract Sum:
Total Contract Sum: approximately RMB50 millions
50,000,000.00
RMB50,000,000.00
composing of the contract documents
Include
1. This Contract
2. Contract special clauses
3. Contract common clauses
4. Standard and Norm Technology document
5. Construction documents and drawing sheet
Any minute, agreements or documents in writing automatically become part of this
contract.
The meaning of Relevant terms in the contract, the second part this contract has
defined the same meaning as "general items"
The developer promises contractor to pay in according to the terms and
conditions of this contract for any amount due to the contractor.
Execution of contract
Date of signing contract June 3, 2007
Place of signing contract: Office of Suining Yinfa Construction and Engineering
Co., Ltd.
Contract is effective after both parties signed and chopped
The Developer The Contractor
address address
Legal representative Legal representative
Entrusted agent Entrusted agent
Telephone Telephone
fax fax
Bank Bank
Account number Account number
Post code Post code
EXHIBIT B
CONVERTIBLE PROMISSORY NOTE
$350,000.00 July 8, 2007
FOR VALUE RECEIVED MotorSports Emporium, Inc. (the "Maker"), a Nevada
corporation, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇, ▇▇▇, ▇▇▇▇▇,
Telephone: ▇-▇▇▇-▇▇▇-▇▇▇▇ and Facsimile: ▇-▇▇▇-▇▇▇-▇▇▇▇ hereby promises to pay
to Suining Yinfa Construction and Engineering Co., Ltd., ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ PRC, Telephone: ▇▇▇-▇▇▇-▇▇▇▇ and Facsimile:
▇▇▇-▇▇▇-▇▇▇▇ or its successors and assigns (the "Payee"), at such other address
as Payee shall provide in writing to the Maker for such purpose, a principal sum
of Three Hundred Fifty Thousand Dollars (U.S. $350,000.00) (the "Principal
Amount").
1. Payments and Maturity. The Principal Amount hereunder shall be paid no
later than July 31, 2009 (the "Maturity Date").
2. Interest Rate. Interest shall accrue on the unpaid principal amount of
this Convertible Promissory Note at the rate of 8% per annum.
3. Other Conditions. At any time, Maker may convert this Convertible
Promissory Note into preferred stock of the Maker upon mutually accepted terms
and conditions and with thirty (30) days written notice to Payee.
4. Conversion. On or about July 31, 2009, the Payee may convert all or part
of the remaining principal balance, plus accrued interest, of this Convertible
Promissory Note into the common stock, par value $0.001 per share, of the
Company (the "Common Stock"). In the event of a conversion, the number of shares
of the Common Stock to be issued shall be determined by dividing (i) the unpaid
principal balance of this Convertible Promissory Note, plus any accrued interest
by (ii) eighty percent (80%) of the average of the lowest five closing bid
prices immediately preceding any such conversion. All such Common Stock
conversions shall not exceed 4.99% of the then outstanding Common Stocks of the
Company. If this Convertible Promissory Note is surrendered for conversion, it
shall be duly endorsed, or be accompanied by a written instrument of transfer in
a form satisfactory to the Company duly executed by the holder of this
Convertible Promissory Note. For convenience, the conversion of all or a
portion, as the case may be, of the principal, plus accrued interest, of this
Convertible Promissory Note into the Common Stock is hereinafter sometimes
referred to as the conversion of this Convertible Promissory Note. In the event
that this Convertible Promissory Note is converted in part only, upon such
conversion the Company shall execute and deliver to the Payee, without service
charge, a new Convertible Promissory Note or Convertible Promissory Notes, of
any authorized denomination or denominations as requested by the Payee, in
aggregate principal amount equal to and in exchange for the unconverted portion
of the principal and accrued interest of the Convertible Promissory Note so
surrendered.
5. Mandatory Prepayment Upon Triggering Events. Upon the occurrence of a
Triggering Event (as defined below), the Payee shall have the right, exercisable
at the sole option of the Payee, to require the Maker to prepay all or a portion
of the outstanding principal amount of this Note plus all accrued and unpaid
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interest thereon, which shall be due and payable within fifteen (15) Business
Days of the date on which the notice for the payment therefor is provided by the
Payee. If the Maker fails to pay such payment hereunder in full pursuant to this
Section on the date such amount is due in accordance with this Section, the
Maker will pay interest thereon at a rate of 10% per annum (or such lesser
amount permitted by applicable law), accruing daily from such date until such
amount, plus all such interest thereon, is paid in full.
A "Triggering Event" means any one or more of the following events
(whatever the reason and whether it shall be voluntary or involuntary. or
effected by operation of law or pursuant to any judgment, decree or order of any
court. or any order, rule or regulation of any administrative or governmental
body):
(i) any default in the payment of the principal of interest on or other
payments owing in respect of this Note, free of any claim of subordination, as
and when the same shall become due and payable;
(ii) the Maker or any of its subsidiaries shall commence or there shall be
commenced against the Maker or any such subsidiary a case under any applicable
bankruptcy or insolvency laws as now or hereafter in effect or any successor
thereto; or the Maker commences any other proceeding under any reorganization,
arrangement, adjustment of debt, relief of debtors, dissolution, insolvency or
liquidation or similar law of any jurisdiction whether now or hereafter in
effect relating to the Maker or any subsidiary thereof or there is commenced
against the Maker or any subsidiary thereof any such bankruptcy, insolvency or
other proceeding which remains undismissed for a period of 60 days; or the Maker
or any subsidiary. thereof is adjudicated insolvent or bankrupt; or any order of
relief or other order approving any such case or proceeding is entered; or the
Maker or any subsidiary thereof suffers any appointment of any custodian or the
like for it or any substantial part of its property which continues undischarged
or unstayed for a period of 60 days; or the Maker or any subsidiary thereof
makes a general assignment for the benefit of creditors; or the Maker shall fail
to pay, or shall state that it is unable to pay, or shall be unable to pay, its
debts generally as they become due; or the Maker or any subsidiary thereof shall
call a meeting of its creditors with a view to arranging a composition,
adjustment or restructuring of its debts; or the Maker or any subsidiary thereof
shall by any act or failure to act indicate its consent to, approval of or
acquiescence in any of the foregoing; or any corporate or other action is taken
by the Maker or any subsidiary thereof for the purpose of effecting any of the
foregoing;
(iii) the Maker shall fail to observe or perform any other covenant,
agreement or warranty contained in, and such failure or breach shall not, if
subject to the possibility of a cure by the Maker, have been remedied within
thirty (30) days after the date on which notice of such failure or breach shall
have been given.
6. No Waiver of Payee's Rights, etc. All payments of principal and interest
shall be made without setoff, deduction or counterclaim. No delay or failure on
the part of the Payee in exercising any of its options, powers, or rights, nor
any partial or single exercise of its options, powers or rights shall constitute
a waiver thereof or of any other option, power or right, and no waiver on the
part of the Payee of any of its options, powers or rights shall constitute a
waiver of any other option, power or right. The Maker hereby waives presentment
of payment, protest, and notices or demands in connection with the delivery,
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acceptance, performance, default or endorsement of this Note. Acceptance by the
Payee of less than the full amount due and payable hereunder shall in no way
limit the right of the Payee to require full payment of all sums due and payable
hereunder in accordance with the terms hereof
7. Modifications. No term or provision contained herein may be modified,
amended or waived except by written agreement or consent signed by the party to
be bound thereby.
8. Cumulative Rights and Remedies; Usury. The rights and remedies of the
Payee expressed herein are cumulative and not exclusive of any rights and
remedies otherwise available. If it shall be found that any interest outstanding
hereunder shall violate applicable laws governing usury, the applicable rate of
interest outstanding hereunder shall be reduced to the maximum permitted rate of
interest under such law.
9. Collection Expenses. If this obligation is placed in the hands of an
attorney for collection after default, and provided the Payee prevails on the
merits in respect to its claim of default, the Maker shall pay (and shall
indemnify and hold harmless the Payee from and against), all reasonable
attorneys' fees and expenses incurred by the Payee in pursuing collection of
this Note.
10. Successors and Assigns. This Note shall be binding upon the Maker and
its successors and shall inure to the benefit of the Payee and its successors
and assigns. The term "Payee" as used herein, shall also include any endorsee,
assignee or other holder of this Note.
11. Lost or Stolen Promissory Note. If this Note is lost, stolen, mutilated
or otherwise destroyed, the Maker shall execute and deliver to the Payee a new
promissory note containing the same terms, and in the same form, as this Note.
In such event, the Maker may require the Payee to deliver to the Maker an
affidavit of lost instrument and customary indemnity in respect thereof as a
condition to the delivery of any such new promissory note.
12. Due Authorization. This Note has been duly authorized, executed and
delivered by the Maker and is the legal obligation of the Maker, enforceable
against the Maker in accordance with its terms.
13. Governing Law. This Note shall be governed by and construed and
enforced in accordance with the internal laws of the State of California without
regard to the principles of conflicts of law thereof. Each party hereby
irrevocably submits to the exclusive jurisdiction of the state and federal
courts sitting in the county of Alameda, State of California, for the
adjudication of any dispute hereunder or in connection herewith or with any
transaction contemplated hereby or discussed herein and hereby irrevocably
waives, and agrees not to assert in any suit, action or proceeding, any claim
that it is not personally subject to the jurisdiction of any such court, that
such suit, action or proceeding is improper. Each party hereby irrevocably
waives personal service of process and consents to process being served in any
such suit, action or proceeding by mailing a copy thereof to such party at the
address in effect for notices to it under this Note and agrees that such service
shall constitute good and sufficient service of process and notice thereof.
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Nothing contained herein shall be deemed to limit in any way any right to serve
process in any manner permitted by law.
14. Definitions. For the purposes hereof, the following terms shall have
the following meanings:
"Business Day" means any day except Saturday, Sunday and any day which
shall be a legal holiday or a day on which banking institutions in the State of
California are authorized or required by law or other government action to
close.
"Person" means a corporation, an association, a partnership, limited
liability company an organization, a business, an individual, a government or
political subdivision thereof or a governmental agency.
IN WITNESS WHEREOF, the Maker has caused this Convertible Promissory Note
to be duly executed and delivered as of the date first set forth above.
MotorSports Emporium, Inc.
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
---------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇, President
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