Document:

exv10w1

 

Exhibit 10.1

THIS SECURED PROMISSORY NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED. NO SALE OR DISPOSITION MAY BE EFFECTED EXCEPT IN
COMPLIANCE WITH RULE 144 UNDER SAID ACT OR AN EFFECTIVE REGISTRATION STATEMENT
RELATED THERETO OR AN OPINION OF COUNSEL FOR THE HOLDER SATISFACTORY TO THE
COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE ACT OR RECEIPT OF A
NO-ACTION LETTER FROM THE SECURITIES AND EXCHANGE COMMISSION.

SECURED PROMISSORY NOTE

	 	 	 
	$2,300,000
	 	November ___, 2004

     FOR VALUE RECEIVED, the undersigned, Boundless Racing, Inc., a Texas
corporation (“Maker”), promises to pay to the order of Helen W. Martin, or her
assignees (“Payee”), at such address as Payee may advise Maker in writing from
time to time, the principal sum of TWO MILLION THREE HUNDRED THOUSAND AND
00/100 DOLLARS ($2,300,000), in lawful currency of the United States of
America, together with interest accrued thereon (calculated on the basis of a
365-day year) at a rate of seven percent (7%) per annum.

     1. Payments. Accrued interest on this Note is due and payable on each
anniversary date of this Note. The entire principal balance of this Note is
due and payable in full on November ___, 2008 (the “Maturity Date”).

     2. Optional Prepayment. Maker may at its sole option prepay all or any
part of the principal of this Note, or interest thereon, before maturity
without penalty or premium. All such prepayments shall first be applied to
accrued interest under this Note, and the remaining balance of any such
prepayments, if any, shall be applied to principal of this Note.

     3. Security. This Note is secured by a Mortgage, a copy of which is
attached hereto as Exhibit A (the “Mortgage”). In addition, the payment
obligations of Maker under this Note are guaranteed by Boundless Motor Sports
Racing, Inc., a Colorado corporation (“Parent”), pursuant to a Guaranty, of
even date herewith, executed by Parent (the “Guaranty”).

     4. Events of Default and Remedies. At the option of Payee the entire
principal balance of, together with all accrued and unpaid interest on, this
Note shall at once become due and payable, without further notice or demand,
upon the occurrence at any time of any of the following events of default
(“Events of Default”):

          (a) Failure of Maker to make any payment of principal or interest when due
hereunder, and such failure continues for a period of 5 days after the receipt
by Maker of written notice from Payee of the occurrence of such failure; or

          (b) Failure of Maker to perform any covenant, agreement or condition
contained herein or in the Mortgage, except the failure of Maker to make any
payment of

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principal or interest when due hereunder, and such failure continues for a
period of 20 days after the receipt by Maker of written notice from Payee of
the occurrence of such failure; or

          (c) Maker or Parent shall (i) become insolvent, (ii) voluntarily seek,
consent to, acquiesce in the benefit or benefits of any Debtor Relief Law (as
hereinafter defined) or (iii) become party to (or be made the subject of) any
proceeding provided by any Debtor Relief Law, other than as a creditor or
claimant, that could suspend or otherwise adversely affect the rights of Payee
granted hereunder (unless in the event such proceeding is involuntary, the
petition instituting the same is dismissed within 90 days of the filing of
same). As used herein, the term “Debtor Relief Law” means the Bankruptcy Code
of the United States of America and all other applicable liquidation,
conservatorship, bankruptcy, moratorium, rearrangement, receivership,
insolvency, reorganization or similar debtor relief laws from time to time in
effect affecting the rights of creditors generally.

     In the event any one or more of the Events of Default specified above
shall have happened, the holder of this Note may (i) enforce its rights, if
any, under this Note, the Guaranty and/or under the Mortgage and/or (ii)
proceed to protect and enforce its rights either by suit in equity and/or by
action at law, or by other appropriate proceedings, whether for the specific
performance of any covenant or agreement contained in this Note, the Guaranty
or in the Mortgage or in aid of the exercise of any power or right granted by
this Note, the Guaranty or the Mortgage, or to enforce any other legal and
equitable right of the holder of this Note, the Guaranty or in the Mortgage.

     [Note: Bob, please provide me reference to the statute (and a copy
thereof) that sets forth your previously requested language.]

     5. Waiver. Except as expressly provided herein, Maker, and each surety,
endorser, guarantor and other party ever liable for the payment of any sum of
money payable on this Note, jointly and severally waive demand, presentment,
protest, notice of non-payment, notice of intention to accelerate, notice of
protest and any and all lack of due diligence or delay in collection or the
filing of suit hereon which may occur.

     6. Cumulative Rights. No delay on the part of the holder of this Note in
the exercise of any power or right under this Note shall operate as a waiver
thereof, nor shall a single or partial exercise of any other power or right.
Enforcement by the holder of this Note of any security for the payment hereof
shall not constitute any election by it of remedies so as to preclude the
exercise of any other remedy available to it.

     7. Notices. Any notice or demand given hereunder by the holder hereof
shall be deemed to have been given and received (i) when actually received by
Maker, if delivered in person or by facsimile transmission, or (ii) if mailed,
on the earlier of the date actually received or (whether ever received or not)
three Business Days (as hereinafter defined) after a letter containing such
notice, certified or registered, with postage prepaid, addressed to Maker, is
deposited in the United States mail. The address of Maker is 2500 McGee Drive,
Suite 147, Norman, Oklahoma 73072, or such other address as Maker shall advise
the holder hereof by certified or registered letter by this same procedure.
“Business Day” means every day which is not a Saturday, Sunday or legal
holiday.

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     8. Successors and Assigns. This Note and all covenants, promises and
agreements contained herein shall be binding upon and inure to the benefit of
the respective legal representatives, personal representatives, devisees,
heirs, successors and assigns of Payee and Maker.

     9. Governing Law. THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE COMMONWEALTH OF PENNSYLVANIA. IN CASE ANY ONE
OR MORE OF THE PROVISIONS CONTAINED IN THIS NOTE SHALL FOR ANY REASON BE HELD
TO BE INVALID, ILLEGAL OR UNENFORCEABLE IN ANY RESPECT, SUCH INVALIDITY,
ILLEGALITY OR UNENFORCEABILITY SHALL NOT AFFECT ANY OTHER PROVISION HEREOF.

     10. Usury Savings Clause. Any provision in this Note or in any other
document executed in connection herewith, or in any other agreement or
commitment, whether written or oral, express or implied, to the contrary
notwithstanding, Payee shall not in any event be entitled to receive or
collect, nor shall or may amounts received hereunder be credited, so that Payee
shall be paid, as interest, a sum greater than the maximum rate of interest
permitted by applicable law. If any construction of this Note, or any and all
other papers, agreements or commitments, indicates a different right given to
Payee to ask for, demand or receive any larger sum as interest, such is a
mistake in calculation or wording, which this clause shall override and
control; it being the intention of the parties that this Note and all other
instruments relating to this Note shall in all things comply with applicable
law, and proper adjustment shall automatically be made accordingly. In the
event Payee ever receives, collects or applies as interest, any sum in excess
of the maximum rate of interest permitted by applicable law, such excess amount
shall be applied to the reduction of the unpaid principal balance of this Note
in the inverse order of maturity, and if this Note is paid in full, any
remaining excess shall be paid to Maker. In determining whether or not the
interest paid or payable, under any specific contingency, exceeds the maximum
rate of interest permitted by applicable law, Maker and Payee shall, the
maximum extent permitted under applicable law (i) characterize any nonprincipal
payment as an expense, fee or premium rather than as interest, (ii) exclude
voluntary prepayments and the effects thereof, and (iii) “spread” the total
amount of interest throughout the entire term of this Note so that the interest
rate is uniform throughout the entire term hereof.

     11. Attorneys’ Fees and Costs. In the event an Event of Default shall
occur, and in the event that thereafter this Note is placed in the hands of an
attorney for collection, or in the event this Note is collected in whole or in
part through legal proceedings of any nature, then and in any such case Maker
promises to pay all costs of collection, including, but not limited to,
reasonable attorneys’ fees incurred by the holder hereof on account of such
collection, whether or not suit is filed.

     12. Headings. The headings of the sections of this Note are inserted for
convenience only and shall not be deemed to constitute a part hereof.

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     EXECUTED as of the day and year first above written.

	 	 	 	 	 
	 	BOUNDLESS RACING, INC.

	 
	 	By:  	 	 
	 	 	Paul A. Kruger, 	 
	 	 	Chief Executive Officer 	 
	 

4exv10w2

 

Exhibit 10.2

GUARANTY

     This
Guaranty (“Guaranty”) is entered into as of November ___, 2004, by
Boundless Motor Sports Racing, Inc., a Colorado corporation (“Guarantor”), for
the benefit of Helen W. Martin (“Martin”).

     WHEREAS, in order to induce Martin to enter into that certain Asset
Purchase Agreement dated as of the date hereof (the “Purchase Agreement”), by
and among Lernerville Speedway, Inc., a corporation organized under the
Commonwealth of Pennsylvania, Martin, Donny Martin-Roenigk, Patty
Martin-Roenigk, Guarantor, and Boundless Racing, Inc., a Texas corporation and
a wholly-owned subsidiary of Guarantor (“BRI”), Martin has required that
Guarantor guaranty the payment of: (i) any and all amounts owed by BRI under
that certain Promissory Note, of even date herewith, in the original principal
amount of $2,300,000, and with BRI as “maker” and Martin as Payee (the “Note”),
which Note was issued by BRI to Martin in connection with the Purchase
Agreement; and (ii) the four $110,000 payment obligations set forth in Sections
2.2(a)(i)-(iv) of the Purchase Agreement (the “Deferred Payments”); and

     WHEREAS, Guarantor will derive a specific benefit from the Purchase
Agreement and desires to guarantee the payment of: (i) any and all amounts owed
by BRI under the Note; and (ii) the Deferred Payments (collectively, the
“Obligations”);

     NOW, THEREFORE, for valuable consideration, the receipt and adequacy of
which are hereby acknowledged, Guarantor hereby guarantees to Martin the
payment of all Obligations, on the following terms:

     1. Continuing Guaranty. Upon the occurrence of an Event of Default (as
defined in the Note) or failure to pay any Deferred Payment when the same
becomes due and payable, Guarantor hereby guarantees and promises to pay on
written demand to Martin, in lawful money of the United States, all of the
Obligations. This Guaranty is given in consideration for credit and other
financial accommodations made by Martin to BRI.

     2. Waivers. Except as provided in Section 1 above, Guarantor hereby
waives:

          (a) presentment for payment;

          (b) notice of dishonor, demand, protest, and notice thereof as to any
instrument, and all other notices and demands to which Guarantor might be
entitled;

          (c) any right to require Martin to institute suit against, or to exhaust
its rights and remedies against, BRI or any other person, or to proceed against
any property of any kind which secures all or any part of the Obligations, or
to exercise any right of offset or other right with respect to any reserves,
credits or deposit accounts held by or maintained with Martin or any
indebtedness of Martin to BRI, or to exercise any other right or power, or
pursue any other remedy Martin may have;

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          (d) any defense arising by reason of any failure of Martin to obtain,
perfect, maintain or keep in force any security interest in, or lien or
encumbrance upon, any property of BRI or any other person;

          (e) any defense based upon any failure of Martin to give Guarantor notice
of any sale or other disposition of any property securing any or all of the
Obligations, or any defects in any such notice that may be given, or any
failure of Martin to comply with any provision of applicable law in enforcing
any security interest in or lien upon any property securing any or all of the
Obligations including, but not limited to, any failure by Martin to dispose of
any property securing any or all of the Obligations in a commercially
reasonable manner;

          (f) any defense based upon or arising out of any bankruptcy, insolvency,
reorganization, arrangement, readjustment of debt, liquidation or dissolution
proceeding commenced by or against BRI or any other guarantor or any endorser,
co-maker or other person, including without limitation any discharge of, or bar
against collecting, any of the Obligations (including without limitation any
interest thereon), in or as a result of any such proceeding; and

          (g) the benefit of any and all statutes of limitation with respect to any
action based upon, arising out of or related to this Guaranty.

If any claim is ever made upon Martin for repayment or recovery of any amount
or amounts received by Martin in payment of or on account of any of the
Obligations, because of any claim that any such payment constituted a
preferential transfer or fraudulent conveyance, or for any other reason
whatsoever, and Martin repays all or part of said amount by reason of any
judgment, decree or order of any court or administrative body having
jurisdiction over Martin or any of its property, or by reason of any settlement
or compromise of any such claim effected by Martin with any such claimant
(including without limitation BRI), then and in any such event, Guarantor
agrees that any such judgment, decree, order, settlement and compromise shall
be binding upon Guarantor, notwithstanding any revocation or release of this
Guaranty or the cancellation of any note or other instrument evidencing any of
the Obligations, or any release of any of the Obligations, and the Guarantor
shall be and remain liable to Martin under this Guaranty for the amount so
repaid or recovered, to the same extent as if such amount had never originally
been received by Martin, and the provisions of this sentence shall survive, and
continue in effect, notwithstanding any revocation or release of this Guaranty.

     3. Consents. Guarantor hereby consents and agrees that, without notice to
or by Guarantor and without affecting or impairing in any way the obligations
or liability of Guarantor hereunder, Martin may, from time to time before or
after revocation of this Guaranty, do any one or more of the following in
Martin’s sole and absolute discretion: (a) accelerate, accept partial payments
of, compromise or settle, renew, extend the time for the payment, discharge, or
performance of, refuse to enforce, and release all or any parties to, any or
all of the Obligations; (b) grant any other indulgence to BRI or any other
person in respect of any or all of the Obligations or any other matter; (c)
accept, release, waive, surrender, enforce, exchange, modify, impair, or extend
the time for the performance, discharge, or payment of, any and all property of
any kind securing any or all of the Obligations or any guaranty of any or all
of the Obligations, or on which Martin at any time may have a lien, or refuse
to enforce its rights or make any compromise or

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settlement or agreement therefor in respect of any or all of such
property; (d) substitute or add, or take any action or omit to take any action
which results in the release of, any one or more endorsers or guarantors of all
or any part of the Obligations, including, without limitation one or more
parties to this Guaranty, regardless of any destruction or impairment of any
right of contribution or other right of Guarantor; (e) amend, alter or change
in any respect whatsoever any term or provision relating to any or all of the
Obligations, including the rate of interest thereon; (f) apply any sums
received from BRI, any other guarantor, endorser, or co-signer, or from the
disposition of any collateral or security, to any indebtedness whatsoever owing
from such person or secured by such collateral or security, in such manner and
order as Martin determines in its sole discretion, and regardless of whether
such indebtedness is part of the Obligation, is secured, or is due and payable;
(g) apply any sums received from Guarantor or from the disposition of any
collateral or security securing the obligations of Guarantor, to any of the
Obligations in such manner and order as Martin determines in its sole
discretion, regardless of whether or not such Obligations is secured or is due
and payable. Guarantor consents and agrees that Martin shall be under no
obligation to marshal any assets in favor of Guarantor, or against or in
payment of any or all of the Obligations. Without limiting the generality of
the foregoing, Martin shall have no obligation to monitor, verify, audit,
examine, or obtain or maintain any insurance with respect to, any property
securing any or all of the Obligations.

     4. Representations and Warranties. Guarantor hereby represents and
warrants that (a) it is in Guarantor’s direct interest to assist BRI in
procuring credit, because BRI is an affiliate of Guarantor and has a direct
business relationship with Guarantor, (b) this Guaranty has been duly and
validly authorized, executed and delivered and constitutes the valid and
binding obligation of Guarantor, enforceable in accordance with its terms, and
(c) the execution and delivery of this Guaranty does not violate or constitute
a default under (with or without the giving of notice, the passage of time, or
both) any order, judgment, decree, instrument or agreement to which Guarantor
is a party or by which it or its assets are affected or bound.

     5. Costs. Whether or not suit be instituted, Guarantor agrees to
reimburse Martin on demand for all reasonable attorneys’ fees and all other
reasonable costs and expenses incurred by Martin in enforcing this Guaranty, or
arising out of or relating in any way to this Guaranty. In the event either
Martin or Guarantor files any lawsuit against the other predicated on a breach
of this Guaranty, the prevailing party in such action shall be entitled to
recover its reasonable attorneys’ fees and costs of suit from the
non-prevailing party.

     6. Notices. Any notice which a party shall be required or shall desire to
give to the other hereunder shall be given as provided in the Purchase
Agreement.

     7. Severability. If any provision of this Guaranty or the application
thereof to any party or circumstance is held invalid, void, inoperative or
unenforceable, the remainder of this Guaranty and the application of such
provision to other parties or circumstances shall not be affected thereby, the
provisions of this Guaranty being severable in any such instance.

     8. General Provisions. Martin shall have the right to seek recourse
against Guarantor to the full extent provided for herein and in any other
instrument or agreement evidencing obligations of Guarantor to Martin, and
against BRI to the full extent of the Obligations. No election in one

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form of action or proceeding, or against any party, or on any obligation,
shall constitute a waiver of Martin’s right to proceed in any other form of
action or proceeding or against any other party. The failure of Martin to
enforce any of the provisions of this Guaranty at any time or for any period of
time shall not be construed to be a waiver of any such provision or the right
thereafter to enforce the same. All remedies hereunder shall be cumulative and
shall be in addition to all rights, powers and remedies given to Martin by law
or under any other instrument or agreement. Time is of the essence in the
performance by Guarantor of each and every obligation under this Guaranty.
This Guaranty is the entire and only agreement between Guarantor and Martin
with respect to the guaranty of the Obligations of BRI by Guarantor, and all
representations, warranties, agreements, or undertakings heretofore or
contemporaneously made, which are not set forth herein, are superseded hereby.
No course of dealings between the parties, no usage of the trade, and no parol
or extrinsic evidence of any nature shall be used or be relevant to supplement
or explain or modify any term or provision of this Guaranty. There are no
conditions to the full effectiveness of this Guaranty. The terms and
provisions hereof may not be waived, altered, modified, or amended except in a
writing executed by Guarantor and a duly authorized officer of Martin. All
rights, benefits and privileges hereunder shall inure to the benefit of and be
enforceable by Martin and its successors and assigns and shall be binding upon
Guarantor and his heirs, executors, administrators, personal representatives,
successors and assigns. Neither the bankruptcy of Guarantor nor notice thereof
to Martin shall terminate this Guaranty, and, notwithstanding such bankruptcy,
this Guaranty shall continue in full force and effect with respect to all
Obligations, including without limitation Obligations incurred or created after
the bankruptcy of Guarantor and notice thereof to Martin. Section headings are
used herein for convenience only. Guarantor acknowledges that the same may not
describe completely the subject matter of the applicable Section, and the same
shall not be used in any manner to construe, limit, define or interpret any
term or provision hereof.

     9. Choice of Law. THIS GUARANTY SHALL BE CONSTRUED IN ACCORDANCE WITH THE
INTERNAL LAWS OF THE COMMONWEALTH OF PENNSYLVANIA, WITHOUT REGARD TO ITS CHOICE
OF LAWS PROVISIONS.

     IN WITNESS WHEREOF, Guarantor has executed this Guaranty as of the date
first above written.

	 	 	 	 	 
	 	BOUNDLESS MOTOR SPORTS RACING, INC.

	 
	 	By:  	 	 
	 	 	Paul A. Kruger, 	 
	 	 	Chief Executive Officer 	 
	 

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