Document:

Form of Settlement Agreement between Jackson Hewitt and the Settling Franchisee

 EXHIBIT 10.12 
  
  
 SETTLEMENT AGREEMENT 
  
 This Settlement Agreement is made between Jackson Hewitt Inc. (“JHI”), on the
one hand, and
                                        
         (“the Settling Franchisee”), on the other hand, and serves as a formal amendment to each franchise agreement by and between JHI and Settling Franchisee and to each renewal thereof.
Capitalized terms used and not defined in the body of this Settlement Agreement shall have the meanings set forth in Appendix A. 
  
 WHEREAS, JHI and the Settling Franchisee desire to settle all claims which could be asserted by either of them against the other, as reflected by the terms of this
Settlement Agreement; and 
  
 WHEREAS, the parties have had a full
opportunity to consult with counsel in connection with this Settlement Agreement and have read and understand the contents and are entering into it voluntarily. 
  

NOW THEREFORE, it is hereby stipulated and agreed by and between the undersigned parties upon the foregoing premises and in consideration of the promises, mutual
covenants, and agreements set forth herein, and for other good and valuable consideration, the sufficiency of which is hereby acknowledged, as follows: 

 1. Fixed Volume Rebate. With respect to the 2004 through 2006 Tax Seasons only, the Settling Franchisee
shall receive a volume rebate (the “Volume Rebate”) of Five Dollars ($5.00) for each refund anticipation loan (“RAL”) processed by Settling Franchisee through April 30, provided that the Settling Franchisee has timely submitted
its Gross Volume Report and timely paid all royalties in respect thereof in accordance with the franchise agreement(s). Through Tax Season 2006, JHI will also pay volume rebates to the Settling Franchisee, at not less than the 2003 Tax Season rebate
levels, for each processed ACR, ADD and State ACR. The Volume Rebate and the rebates for each processed ACR, ADD and State ACR shall be paid to Settling Franchisee by electronic funds transfer on or before May 31 immediately following the applicable
Tax Season. Nothing contained in this Section 1, or any other section of this Settlement Agreement, shall be construed to permit Settling Franchisee to exclude the Volume Rebate from its Gross Volume of Business for the purposes of any fees payable
under the franchise agreement(s) between JHI and Settling Franchisee, which fees shall be deducted from the electronic funds transfer to the Settling Franchisee. Settling Franchisee shall have no right to any other volume rebate, in addition to the
Volume Rebate described in this Section 1, including without limitation any additional volume rebate for the 2004-2006 Tax Seasons. 
  
 2. Return-based RAL Incentive. During and for the 2004 through 2006 Tax Seasons only, the Settling Franchisee shall receive a Return-based RAL Incentive of
One Dollar ($1.00) for each RAL processed by Settling Franchisee during the applicable Tax Season and through April 30, provided that the Settling Franchisee (i) has processed at least 4% more tax returns in the applicable Tax Season from January 1
through April 30 than during the same period of the immediately preceding Tax Season and (ii) operated as a franchisee of the Jackson 
  

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 Hewitt System during the immediately preceding Tax Season. In the event that Settling Franchisee has more than one Processing
Center, the 4% increase in tax return volume shall be measured on a per Processing Center basis, and the Return-based RAL Incentive shall be paid only for each RAL processed by a Processing Center that satisfies the 4% increase. “Processing
Center” shall mean any site designated with a three-letter code at which the Settling Franchisee error checks, processes and transmits tax returns. The Return-based RAL Incentive shall be paid to Settling Franchisee by electronic funds transfer
on or before May 31 immediately following the applicable Tax Season, provided that the Settling Franchisee has timely submitted its Gross Volume Report and timely paid all royalties in respect thereof in accordance with the terms of the franchise
agreement(s). Nothing contained in this Section 2, or any other section of this Settlement Agreement, shall be construed to permit Settling Franchisee to exclude the Return-based RAL incentive from its Gross Volume of Business for the purposes of
any fees payable under the franchise agreement(s) between JHI and Settling Franchisee, which fees shall be deducted from the electronic funds transfer to the Settling Franchisee. 
  
 3. Delinquency-based RAL Incentive. During the 2004 through 2006 Tax Seasons only, the Settling Franchisee shall receive a
Delinquency-based RAL Incentive of One Dollar ($1.00) for each RAL processed by Settling Franchisee during the applicable Tax Season, provided that the Settling Franchisee’s delinquency rate as of July 31 immediately following the applicable
Tax Season, is 20 basis points (0.20%) or more below the total delinquency rate of all franchised Offices in the Jackson Hewitt System that participate in the Santa Barbara Bank & Trust (“SBBT”) bank product program or any successor or
replacement program (the “Total Delinquency Rate”). In the event that Settling Franchisee has more than one Processing Center, 
  

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 its delinquency rate shall be measured on a per Processing Center basis, and the Delinquency-based RAL Incentive shall be paid only
for each RAL processed by a Processing Center that satisfies the requirement of a delinquency rate that is 20 basis points or more below the Total Delinquency Rate. JHI shall provide a report of the Settling Franchisee’s Delinquency Rate to
each Settling Franchisee on or before August 15 immediately following the applicable Tax Season. The Delinquency-based RAL Incentive shall be paid to Settling Franchisee by electronic funds transfer on or before August 31 immediately following the
applicable Tax Season, provided that the Settling Franchisee has timely submitted its Gross Volume Report and timely paid all royalties in respect thereof in accordance with the terms of the franchise agreement(s). Nothing contained in this Section
3, or any other section of this Settlement Agreement, shall be construed to permit Settling Franchisee to exclude the Delinquency-based RAL Incentive from its Gross Volume of Business for the purposes of any fees payable under the franchise
agreement(s) between JHI and Settling Franchisee, which fees shall be deducted from the electronic funds transfer to the Settling Franchisee. The Settling Franchisee shall have no right to audit the determination of the Settling Franchisee’s
Delinquency Rate and the Total Delinquency Rate. 
  
 4. Temporary Royalty
Fee Reduction for New Customers in New Offices. JHI shall provide a temporary royalty fee reduction for new customers in a limited number of new Offices. In order to qualify for the temporary royalty reduction, Settling Franchisee must open one
or more new Offices, such Office (or Offices) must be among the first Five Hundred Offices to be opened following the end of the 2003 Tax Season by a franchisee who, at the time the 
  

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 Office is opened, has been a franchisee of the Jackson Hewitt System for at least one year, and to process at least 250 tax returns
in its first Tax Season (each, a “Qualified Office”). 
  
 Each
Qualified Office shall receive a temporary royalty fee reduction during the first Tax Season in which the Qualified Office processes any tax returns (the “Royalty Fee Reduction Tax Season”). The royalty reduction shall be a 50% reduction
on the royalty rate that would otherwise apply to the Qualified Office under the terms of the franchise agreement applicable to the Qualified Office (the “Royalty Reduction”). The Royalty Reduction shall apply only to New Customers at the
Qualified Office. For purposes of this Settlement Agreement only, the term “New Customer” is defined as any customer who did not have his or her tax return processed by any Jackson Hewitt franchised or company-owned Office during the Tax
Season immediately preceding the Royalty Reduction Tax Season. JHI shall pay to the owner of each Qualified Office, via electronic funds transfer on or prior to June 30 immediately following the Tax Season to which a Royalty Reduction applies, the
applicable royalty rebate, together with a detailed report, setting forth the names, addresses and social security numbers of the New Customers serviced at the Qualified Office, to extent permitted by applicable law, and the precise basis on which
such rebate was calculated, provided that the Qualified Office has timely submitted its Gross Volume Report and timely paid all royalties in respect thereof in accordance with the terms of the franchise agreement(s). The Royalty Reduction does not
apply to other fees including, without limitation, advertising and marketing fees that the Qualified Office is obligated to pay to JHI under the franchise agreement. 
  

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 5. Mutual Releases. 
  
 5.1. General Release by Settling Franchisee. Settling Franchisee and Settling Franchisee’s Owners hereby release JHI,
JHI’s Affiliates, their respective owners, officers, directors, employees and agents from any and all claims, demands, causes of action, obligations, whether at law or in equity, which any of them ever had, or have, or have had assigned to
them, or, but for this release, hereafter would or could have, whether known or not known, whether asserted or not including, without limitation, any claims with respect to the Risk Pool, from the beginning of time through the date on which this
Settlement Agreement has been signed by all parties. “Settling Franchisee’s Owners” shall mean each person or entity that has a direct or indirect legal or beneficial ownership interest in Settling Franchisee, if Settling Franchisee
is a business corporation, partnership, limited liability company or other legal entity. Settling Franchisee and Settling Franchisee’s Owners covenant and agree not to bring, commence, institute, maintain, prosecute, or voluntarily aid any
action or proceeding or otherwise prosecute or sue JHI or any of its past or present owners, affiliates, officers, directors, representatives, successors in interest, assigns, agents, servants, and/or employees either affirmatively or by way of
cross complaint, defense, or counterclaim, or in any other manner with respect to the claims herein released. The foregoing sentence shall be construed as a covenant not to sue. Settling Franchisee and Settling Franchisee’s Owners hereby
represent and warrant to JHI that they have not assigned any of the above-described claims released hereunder. The terms of the general release in this Section 5.1 shall specifically exclude the obligations of JHI to Settling Franchisee and Settling
Franchisee’s Owners under this Settlement Agreement [Special Release language for California franchisees, attached]. 
  

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 5.2. General Release by JHI. JHI hereby releases Settling Franchisee and Settling Franchisee’s Owners
from any and all claims, demands, causes of action, obligations, whether at law or in equity, which it ever had, or has, or had assigned to it, or, but for this release, hereafter would or could have, whether known or not known, whether asserted or
not, from the beginning of time through the Effective Date hereof. JHI covenants and agrees not to bring, commence, institute, maintain, prosecute, or voluntarily aid any action or proceeding or otherwise prosecute or sue Settling Franchisee or
Settling Franchisee’s Owners either affirmatively or by way of cross complaint, defense, or counterclaim, or in any other manner with respect to the claims herein released. The foregoing sentence shall be construed as a covenant not to sue. The
terms of the general release in this Section 5.2 shall specifically exclude the obligations of Settling Franchisee and Settling Franchisee’s Owners to JHI under this Settlement Agreement and any amounts which Settling Franchisee or Settling
Franchisee’s Owners owe to JHI or any of JHI’s Affiliates, including, but not limited to, any royalty fees, advertising or other fees, or payments pursuant to promissory notes. 
  
 6. Warranties. Each party represents and warrants to the other that such party has the power and authority to execute and
deliver this Settlement Agreement and to carry out its obligations hereunder. 
  

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 7. Right of Offset. Any payment due to Settling Franchisee from JHI pursuant to this Settlement Agreement,
is subject to offset for any amount then past due to JHI from Settling Franchisee pursuant to its franchise agreement(s) or any promissory note(s) to JHI. 
  
 8. Entire Understanding/ Savings Clause. This Settlement Agreement constitutes the entire understanding and agreement
between the parties respecting the subject of the Settlement Agreement. This Settlement Agreement may not be changed or modified, except by a writing signed by the parties hereto. No new franchise agreements hereafter executed by Settling
Franchisee, no renewal franchise agreement, no Bank Product Agreement, no release executed pursuant to a sale of a territory and no other documents or agreement shall constitute a waiver or a novation of the agreements and undertakings of JHI to
Settling Franchisee hereunder. If any part of this Settlement Agreement is declared invalid, this decision shall not affect the validity of any other part, which shall remain in full force and effect. 
  
 9. Regulatory Changes. If JHI is unable to perform any of its economic
obligations to Settling Franchisee pursuant to this Settlement Agreement by virtue of a change in, or in the interpretation of, any laws, rules, regulations, policies, practices or procedures of any governmental authority, then JHI will provide
comparable economic benefit to Settling Franchisee that is fair to both Settling Franchisee and JHI. 
  
 10. Choice of Law/ Dispute Resolution. This Settlement Agreement will be governed by and construed under the laws of the State of New Jersey. The parties
hereby agree that any and all cases and controversies relating to this Settlement Agreement, including but not 
  

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 limited to its construction, interpretation, validity and enforcement, shall be submitted to binding arbitration in Boston,
Massachusetts before Eric Van Loon, Esq. or, if Mr. Van Loon is unavailable, to such other person as agreed to by the parties. If the parties are unable to agree, JAMS-Endispute, Inc of Boston, Massachusetts shall choose the arbitrator. Unless the
parties agree otherwise, such arbitration shall be conducted in accordance with the then-current Commercial Arbitration Rules of the American Arbitration Association (“AAA”). 
  
 11. Advice of Counsel. The parties acknowledge that each of them has consulted with, or had the opportunity to consult
with, legal counsel of their own selection about this Settlement Agreement. The parties each understand how this Settlement Agreement will affect their legal rights and voluntarily enter into this Settlement Agreement with such knowledge and
understanding. 
  
 12. Successors. This Settlement
Agreement shall inure to the benefit of the parties hereto, and their respective heirs, successors and assigns, including without limitation the assignee of the franchise agreement or agreements that have been properly assigned in accordance with
their terms to which Settling Franchisee is or may hereafter become a party. 
  
 13. Counterparts. This Settlement Agreement may be signed in counterparts and faxed copies of the original signatures may be considered to be as binding as the original signatures themselves. 
  

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 IN WITNESS WHEREOF, the undersigned have hereunder set their hands and seals and caused these presents to be signed
the day and year written below. 
  

					
	 	  	 Jackson Hewitt Inc.
	  	 
		
	  

	  	 By:

	 Witness
	  	 	  	 
		
	 Date:

	  	 Date:

		
	 	  	
  
 Settling Franchisee

		
	  

	  	 By:

			
	 Witness
	  	 JHI Entity No.(s).

	  	 
		
	 Date:

	  	 Date:

  

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 CALIFORNIA RELEASE LANGUAGE 
  
 Settling Franchisee and Settling Franchisee’s Owners are familiar with, have been advised by legal counsel concerning the legal effect of, and
knowingly waive the benefit of Section 1542 of the California Civil Code, which provides: 
  
 “Section 1542. (certain claims not affected by general releases.) A general release does not extend to claims which the creditor does not know or suspect to exist in his favor at the time of executing the release, which if
known by him must have materially affected his settlement with the debtor.” 
  

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 APPENDIX A 
  
 “Accelerated Check Refund” or “ACR” means a method of obtaining a taxpayer’s refund utilizing electronic filing and a temporary bank deposit
account. 
  
 “Assisted Direct Deposit” or “ADD” means a method of
obtaining a taxpayer’s refund utilizing electronic filing and a direct deposit into a temporary bank account and then into the taxpayer’s own bank account. 
  
 “Bank Products” means Refund Anticipation Loans, Accelerated Check Refunds, Assisted Direct Deposits and any other similar or
substitute products offered by JHI. 
  
 “Code” means the Internal Revenue
Service Code of 1986, as amended and all its Treasury regulations, and any replacement federal tax law and related regulations enacted during the term of this Agreement. 
  
 “Franchised Business” means the tax return preparation business with all related services operated under a franchise agreement with
JHI. 
  
 “Franchisee” means the individual or entity authorized to operate
a Franchised Business under a franchise agreement with JHI. 
  
 “Gross Volume of
Business” means the total revenue and other consideration from the Franchised Business, including rebates and incentives payable pursuant to sections 4, 5, and 6 of this Settlement Agreement, revenue from returns prepared for individuals
and other entities, past year returns, electronic transmission only returns, electronic filing, Bank Products, Tax School, and other products or services offered through the Franchised Business, excluding only discounts allowed by the Franchisee and
sales taxes that the Franchisee must collect and pay. Items such as credit card fees and other service fees shall not be considered as a discount. “Bad debt” shall be considered as a discount. 
  
 “Gross Volume Report” or “GVR” means the periodic report submitted to JHI by
a Franchisee that describes its Gross Volume of Business. 
  
 “Kiosk” means
a tax return preparation office, including an Affinity Location, that does not have a distinct postal address and which is imbedded within another business, retail store or retail facility. 
  
 “Office(s)” means the locations where JHI authorizes a Franchisee to prepare tax
returns for customers and includes both Standard Offices and Kiosks. 
  
 “Refund
Anticipation Loan” or “RAL” means an approved and funded loan secured by a taxpayer’s anticipated tax refund. 
  

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 “Risk Pool” means the portion, if any, of any monies remaining at the end of any tax season in a fund established
to offset losses incurred from customer defaults on RALs. 
  
 “Standard Office”
means a tax return preparation office located at a distinct postal address such as a storefront or office that is not imbedded within another business or facility. 
  
 “State ACR” means an ACR processed in connection with a taxpayer’s state tax return. 
  
 “Tax School” means the tax preparation courses JHI may require each Franchisee to
conduct each year that complies with all of JHI’s specifications and with all applicable laws and regulations. 
  
 “Tax Season” means the period beginning January 8 and ending on the last date that personal federal income tax returns are due under the Code without extension or
the next business day if this day falls on a weekend or federal holiday. 
  

 13Exhibit 10.2 

Form of debenture issued by Thoroughbred Interests, Inc. to Compass Capital Group dated November 9, 2003, in the amount of $50,000 and dated November 18, 2003, in the amount of $200,000 

THIS DEBENTURE, AND THE SECURITIES INTO WHICH IT IS CONVERTIBLE (COLLECTIVELY, THE “SECURITIES”), HAVE NOT BEEN REGISTERED WITH THE UNITED STATES SECURITIES EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE.  THE SECURITIES ARE BEING OFFERED PURSUANT TO A SAFE HARBOR FROM REGISTRATION UNDER REGULATION S AND/OR REGULATION D PROMULGATED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”). THE SECURITIES ARE “RESTRICTED” AND MAY NOT BE OFFERED OR SOLD IN THE UNITED STATES OR TO U.S. PERSONS (AS SUCH TERM IS DEFINED IN REGULATION S PROMULGATED UNDER THE ACT) UNLESS THE SECURITIES ARE REGISTERED UNDER THE ACT, PURSUANT TO REGULATION S AND/OR REGULATION D OR PURSUANT TO AVAILABLE EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF THE ACT AND THE COMPANY WILL BE PROVIDED WITH OPINION OF COUNSEL OR OTHER SUCH INFORMATION AS IT MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH EXEMPTIONS ARE AVAILABLE.  FURTHER HEDGING TRANSACTION INVOLVING THE SECURITIES MAY NOT BE MADE EXCEPT IN COMPLIANCE WITH THE ACT.
 

DEBENTURE
 

THOROUGHBRED INTERESTS, INC.
 

8% Convertible Debenture
 

Due ________________________
 

No. ________                 
                   
$___________
 

     
This Debenture is issued by THOROUGHBRED INTERESTS, INC., a Nevada corporation (the “Company”), to _____________________________ (together with its permitted successors and assigns, the “Holder”) pursuant to exemptions from registration under the Securities Act of 1933, as amended.
 

ARTICLE I.
 

     
Section 1.01	Principal and Interest.  For value received on _________, 2003, the Company hereby promises to pay to the order of Holder in lawful money of the United States of America and in immediately available funds the principal sum of $_____________________, together with interest on the unpaid principal of this

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Debenture at the rate of eight percent (8%) per year (computed on the basis of the 365-day year and the actual days elapsed) from the date of this Debenture until paid.  At the Company’s option, the entire principal amount and all accrued interest shall be either (a) paid to the Holder on or before the due date of this Debenture or (b) converted in accordance with Section 1.02 herein.
 

     
Section 1.02	Optional Conversion.  The Holder is entitled, at its option, to convert, at any time and from time to time, until payment in full of this Debenture, all or any part of the principal amount of this Debenture, plus accrued interest, into shares (the “Conversion Shares”) of the Company’s common stock, par value $0.001 per share (“Common Stock”), at a price per share equal to fifty percent (50%) of the closing bid price of the Common Stock on the date that the Company receives notice of conversion. To convert this debenture, the Holder shall deliver written notice (the “Conversion Notice”) thereof, such Conversion Notice containing such information necessary including amount of conversion and number of shares, to the Company at its address set forth herein.  The date upon which the conversion shall be effective (the “Conversion Date”) shall be deemed to be the date set forth in the Conversion Notice.  The Conversion Shares shall be delivered to the Holder at the address indicated herein.
 

     
The Company is entitled, at its option, to convert, at any time and from time to time, until payment in full of this Debenture, all or any part of the principal amount of this Debenture, plus accrued interest, into shares (the “Conversion Shares”) of the Company’s common stock, par value $0.001 per share (“Common Stock”), at a price per share equal to fifty percent (50%) of the closing bid price of the Common Stock on the date that the Company issues such notice of conversion. To convert this debenture, the Company shall deliver written notice (the “Conversion Notice”) thereof, such Conversion Notice containing such information necessary including amount of conversion and number of shares, to the Holder at its address set forth herein.  The date upon which the conversion shall be effective (the “Conversion Date”) shall be deemed to be the date set forth in the Conversion Notice.  The Conversion Shares shall be delivered to the Holder at the address indicated herein.

     
Section 1.03	Reservation of Common Stock.  The Company shall reserve and keep available out of its authorized but unissued shares of Common Stock, solely for the purpose of effecting the conversion of this Debenture, such number of shares of Common Stock as shall from time to time be sufficient to effect such conversion, based on the Conversion Price.  If at any time the Company does not have a sufficient number of Conversion Shares authorized and available, then the Company shall call and hold a special meeting of its stockholders within sixty (60) days of that time for the sole purpose of increasing the number of authorized shares of Common Stock.
 

     
Section 1.04	Registration Rights. The Company is obligated to register the resale of the Conversion Shares under the Securities Act of 1933, as amended.
 

     
Section 1.05	Interest Payments.  The interest so payable will be paid at the time of maturity or conversion to the person in whose name this Debenture is registered.

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At the time such interest is payable, the Company, in its sole discretion, may elect to pay interest in cash or in the form of Common Stock.  If paid in Common Stock, the amount of stock to be issued shall be calculated in accordance with the formula and procedure set forth in Section 1.02 above.
 

     
Section 1.06	Right of Redemption.  The Company shall have the right to redeem, with thirty (30) business days advance notice to the Holder, any or all outstanding Debentures remaining in its sole discretion (“Right of Redemption”).  The redemption price shall be equal to 100% of the face amount of the Debenture redeemed plus all accrued interest (“Redemption Price“)
 

     
Section 1.07	Subordinated Nature of Debenture.  This Debenture and all payments hereon, including principal or interest, shall be subordinated and junior in right of payment to all accounts payable of the Company incurred in the ordinary course of business and/or bank debt of the Company not to exceed $30,000.

ARTICLE II.
 

     
Section 2.01	Amendments and Waiver of Default.  The Debenture may be amended with the consent of Holder.  Without the consent of Holder, the Debenture may be amended to cure any ambiguity, defect or inconsistency, to provide assumption of the Company obligations to the Holder or to make any change that does not adversely affect the rights of the Holder.
 

ARTICLE III.
 

     
Section 3.01	Events of Default.  An Event of Default is defined as follows: (a) failure by the Company to pay amounts due hereunder within fifteen (15) days of the date of maturity of this Debenture; (b) failure by the Company for thirty (30) days after notice to it to comply with any of its other agreements in the Debenture; (c) events of bankruptcy or insolvency; (d) a beach by the Company of its obligations under the Registration Rights Agreement which is not cured by the Company within ten (10) days after receipt of written notice thereof.  The Holder may not enforce the Debenture except as provided herein.
 

     
Section 3.02	Failure to Issue Unrestricted Common Stock. As indicated above, a breach by the Company under its obligation under the Registration Rights Agreement shall be deemed an Event of Default, which if not cured with ten (10) days, shall entitle the Holder accelerated full payment of all debentures outstanding.  The Company acknowledges that failure to honor a Notice of Conversion shall cause hardship to the Holder.
 

ARTICLE IV.
 

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Section 4.01	Anti-dilution.  In the event that the Company shall at any time subdivide the outstanding shares of Common Stock, or shall issue a stock dividend on the outstanding Common Stock, the Conversion Price in effect immediately prior to such subdivision of the issuance of such dividend shall be proportionately decreased and, in the event that the Company shall at any time combine the outstanding shares of Common stock, the Conversion price in effect immediately prior to such combination shall be proportionally increased, effective at the close of business on the date of such subdivision, dividend or combination as the case may be.

ARTICLE V.
 

     
Section 5.01	Notice.  Notices regarding this debenture shall send to the parties at the following addresses, unless a party notifies the other parties, in writing, of a change of address:
 

If to the Company:
 

THOROUGHBRED INTERESTS, INC.
Attn: James Tilton, President
Telephone:
Facsimile:
 

If to the Holder:
 

________________________
________________________
________________________
Telephone:________________
Facsimile:_________________
 

     
Section 5.02	Governing Law.  This Debenture shall be deemed to be made under and shall be construed in accordance with the laws of the State of California without giving effect to the principals of conflict of the laws thereof.  Each of the parties consents to the jurisdiction of the U.S. District Court sitting in the District of the State of California or the state courts of the State of California sitting in Riverside, California in connection with any dispute arising under this debenture and hereby waives, to the maximum extent permitted by law, any objection, including the objection based on forum non conveniens to the bringing of any such proceeding in such jurisdictions.
 

     
Section 5.03	Severability.  The invalidity of any of the provisions of this Debenture shall not invalidate or otherwise affect any of the other provisions of this Debenture, which shall remain in full force effect.
 

     
Section 5.04	Entire Agreement and Amendments.  This Debenture represents the entire agreement between the parties hereto with respect to the subject matter hereof and there are no representations, warranties or commitments, except as set forth herein.  This Debenture may be amended only by an instrument in writing executed by the parties hereto.
 

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Section 5.05	Counterparts.  This Debenture may be executed in multiple counterparts, each of which shall be an original, but all of which shall be deemed to constitute and instrument.
 

IN WITNESS WHEREOF, with the intent to legally bound hereby, the Company has executed this Debenture as of the date first written above.
 

THOROUGHBRED INTERESTS, INC.
 

By:_________________________________________
Name:  JAMES TILTON
Title:  President and Chief Executive
 

  
 

  
 

  
 

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