EXHIBIT 4
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE OR OTHER SECURITIES
LAWS AND NEITHER THE SECURITIES NOR ANY INTEREST THEREIN MAY BE OFFERED, SOLD,
HYPOTHECATED, PLEDGED, OR OTHERWISE DISPOSED OF IN THE UNITED STATES OR TO U.S.
PERSONS EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT AND SUCH LAWS OR AN EXEMPTION FROM REGISTRATION UNDER THE
SECURITIES ACT AND SUCH LAWS WHICH, IN THE OPINION OF COUNSEL FOR THE HOLDER,
WHICH COUNSEL AND OPINION ARE REASONABLY SATISFACTORY TO COUNSEL FOR THIS
CORPORATION, IS AVAILABLE.
FIRST AMERICAN RAILWAYS, INC.
CONVERTIBLE SUBORDINATED NOTE
$_________ _____ ___, 1997
NEW YORK, NEW YORK
FOR VALUE RECEIVED, First American Railways, Inc., a Nevada corporation
(the "Company"), promises to pay to __________________ (the "Holder") or
registered assigns, the principal amount of ______________________ ($______),
and to pay interest (computed on the basis of a 360-day year) (a) on the unpaid
principal amount at the rate of eight percent (8%) semiannually on June 30th and
December 31st, commencing on December 31, 1997 (each, an "Interest Payment
Date") and (b) to the extent permitted by law on any overdue payment of the
principal amount at the rate of twelve percent (12%) per annum. Principal and
accrued but unpaid interest hereunder shall be due and payable on demand on or
after the Maturity Date (as defined in SECTION 5 hereof), unless converted by
the Holder in accordance with SECTION 6 hereof.
Payments of principal and interest shall be made in lawful money of the
United States of America by check and mailed to the address of the Holder
specified in Section 10(d).
This Note is one of several convertible subordinated notes
(collectively, the "Notes") offered by the Company (the "Offering") to several
holders (collectively, the "Holders") in the form of units along with shares of
common stock of the Company, $.001 par value per share (the "Common Stock"),
pursuant to a Confidential Private Offering Memorandum, dated May 1997, together
with all amendments thereof and supplements and exhibits thereto (the
"Memorandum"). This Note may be held by International Capital Growth, Ltd., the
Company's placement agent in connection with the Offering, any sub-placement
agents or their respective officers, employees and affiliates.
This Note is subject to the following terms and conditions:
1. NOTE SUBORDINATION
The indebtedness evidenced by this Note is subordinate and subject in
right of payment as to principal and interest to the prior payment in full of
all principal, premium, if any, and interest on all indebtedness of the Company,
regardless of when incurred, including indebtedness incurred after the date
hereof, for money borrowed from any person or entity ("Senior Debt"). Upon
maturity of any Senior Debt, payment in full must be made on such Senior Debt
before any payment is made on or in respect of this Note. During the continuance
of any default with respect to any Senior Debt entitling the holder thereof to
accelerate the maturity thereof, or if any such default would be caused by any
payment upon or in respect of this Note, no payment may be made by the Company
upon or in respect of the Notes. Upon any distribution of assets of the Company
in any dissolution, winding up, liquidation or reorganization of the Company,
payment of the principal of and premium, if any, and interest on the Notes will
be subordinated to the prior payment in full of all Senior Debt. (Such
subordination will not prevent the occurrence of any event of default, as set
forth in section 2 below.) The holder of this Note, by accepting the same,
agrees to and shall be bound by the subordination provisions hereof and invites
each present and any future holder of Senior Debt now or hereafter outstanding
to rely thereon.
2. DEFAULT
(a) DEFAULT. The occurrence of any one or more of the following events
shall constitute an event of default (an "Event of Default") hereunder:
(i) if the Company shall default in the punctual payment
of any sum payable with respect to, or in the
observance or performance of any of the agreements,
promises, covenants, terms and conditions of any of,
the Notes.
(ii) if any warranty, representation or statement of
fact made herein by the Company is false or
misleading in any material respect when made;
(iii) if the Company or any significant subsidiary, as
defined in Rule 405 of the Rules and Regulations
under the Securities Act of 1933, as amended
("Significant Subsidiary") shall be dissolved or
liquidated or any proceeding for dissolution or
liquidation of the Company or any Significant
Subsidiary is commenced or the Company or any
Significant Subsidiary fails to maintain its
corporate existence;
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(iv) if the Company or any Significant Subsidiary
becomes insolvent (however defined or evidenced) or
makes an assignment for the benefit of creditors;
(v) if there shall be filed by or against the Company
or any Significant Subsidiary any petition for any
relief under the bankruptcy laws of the United
States now or hereafter in effect or any proceeding
shall be commenced with respect to the Company or
any Significant Subsidiary under any insolvency,
readjustment of debt, reorganization, dissolution,
liquidation or similar law or statute of any
jurisdiction now or hereafter in effect (whether at
law or in equity), provided that in the case of any
involuntary filing or the commencement of any
involuntary proceeding against the Company or any
Significant Subsidiary such proceeding or petition
shall have continued undismissed and unvacated for
at least 60 days;
(vi) if the usual business of the Company or any
Significant Subsidiary shall cease or be terminated
or suspended;
(vii) if any proceeding, procedure or remedy
supplementary to or in enforcement of judgment
shall be commenced against, or with respect to any
property of, the Company or any Significant
Subsidiary; or
(viii) if any petition or application to any court or
tribunal, at law or in equity, be filed by or
against the Company or any Significant Subsidiary
for the appointment of any receiver or trustee for
the Company or any Significant Subsidiary or any
part of the property of the Company or any
Significant Subsidiary, provided that in the case
of any involuntary filing against the Company or
any Significant Subsidiary, such proceeding or
appointment shall have continued undismissed and
unvacated for at least 60 days.
(b) REMEDIES UPON DEFAULT. If any Event of Default shall occur for any
reason, then and in any such event, in addition to all rights and remedies of
the Holder under applicable law or otherwise, all such rights and remedies being
cumulative, not exclusive and enforceable alternatively, successively and
concurrently, the Holder may, at its option, declare any or all amounts owing
under this Note, to be due and payable, whereupon the then unpaid balance
hereof, together with all interest accrued thereon, shall forthwith become due
and payable, together with interest accruing thereafter at the then applicable
interest rate
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stated above until the indebtedness evidenced by this Note is paid in full, plus
the costs and expenses of collection hereof, including, but not limited to,
attorney's fees and legal expenses.
(c) THE COMPANY'S WAIVERS. The Company (i) waives diligence, demand,
presentment, protest and notice of any kind, (ii) agrees that it will not be
necessary for the Holder to first institute suit in order to enforce payment of
this Note and (iii) consents to any one or more extensions or postponements of
time of payment, release, surrender or substitution of collateral security, or
forbearance or other indulgence, without notice or consent. The pleading of any
statute of limitations as a defense to any demand against the Company is hereby
expressly waived by the Company.
(d) CERTAIN OBLIGORS. The Holder may proceed against the Company and
any guarantors or endorsees hereof in such order and manner as the Holder may
choose. None of the rights of the Holder shall be waived or diminished by any
failure or delay in the exercise thereof.
3. COVENANTS. The Company covenants and agrees that, so long as
this Note is outstanding and unpaid:
(a) PAYMENT OF NOTE. The Company will punctually pay or cause to be
paid the principal, premium, if any, and Interest on this Note at the dates and
places and in the manner specified herein. Any sums required to be withheld from
any payment of principal, premium, if any, or Interest on this Note by operation
of law or pursuant to any order, judgment, execution, treaty, rule or regulation
may be withheld by the Company and paid over in accordance therewith. In the
event any restriction is placed upon payment of principal, premium, if any, or
Interest by virtue of a currency or monetary control law, rule or regulation of
the United States Federal Government, as set forth in a written notice delivered
to the Holder within thirty (30) days after the imposition of such a
restriction, such payments shall be deposited to the account of the payee in a
bank, trust company or other financial institution, as directed by the payee.
Such payment or deposit will be deemed payment to the Holder.
Nothing in this Note or in any other agreement between the Holder and
the Company shall require the Company to pay, or the Holder to accept, interest
in an amount which would subject the Holder to any penalty or forfeiture under
applicable law. In the event that the payment of any charges, fees or other sums
due under this Note or provided for in any other agreement between the Company
and the Holder are or could be held to be in the nature of interest and would
subject the Holder to any penalty or forfeiture under applicable law, then IPSO
FACTO the obligations of the Company to make such payment to the Holder shall be
reduced to the highest rate authorized under applicable law and, in the event
that the Holder shall have ever received, collected, accepted or applied
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as interest any amount in excess of the maximum rate of interest permitted to be
charged by applicable law, such amount which would be excess interest under
applicable law shall be applied first to the reduction of principal then
outstanding, and, second, if such principal amount is paid in full, any
remaining excess shall forthwith be returned to the Company.
(b) MAINTENANCE OF CORPORATE EXISTENCE; MERGER AND CONSOLIDATION. The
Company will at all times cause to be done all things necessary or appropriate
to preserve and keep in full force and effect its corporate existence and the
corporate existence of any Significant Subsidiary and all of its rights and
franchises and shall not consolidate with or merge into any other corporation or
transfer all or substantially all of its assets to any person unless (i) the
corporation formed by such consolidation or into which the Company is merged or
to which the assets of the Company are transferred is a corporation that
expressly assumes all of the obligations of the Company under this Note and (ii)
after giving effect to such transaction, no Event of Default and no event which,
after notice or lapse of time, or both, would become an Event of Default, shall
have occurred and be continuing.
(c) MAINTENANCE OF PROPERTIES. The Company will reasonably maintain in
good repair, working order and condition, reasonable wear and tear excepted, its
properties and other assets, and those of its Significant Subsidiaries, and from
time to time make all necessary or desirable repairs, renewals and replacements
thereto.
(d) PAYMENT OF TAXES. The Company will use its best efforts to pay or
discharge or cause to be paid, set aside for payment or discharge, before the
same shall become delinquent, all taxes, assessments and governmental charges
levied or imposed upon the Company or upon its income, profits or property;
provided, that the Company shall not be required to pay or discharge or cause to
be paid or discharged any such tax, assessment, charge or claim whose amount or
validity is being contested in good faith by appropriate proceedings.
(e) COMPLIANCE WITH STATUTES. The Company will and will cause its
Significant Subsidiaries to comply in all material respects with all applicable
statutes and regulations of the United States of America and of any state or
municipality, and of any agency thereof, in respect of the conduct of business
and the ownership of property by the Company and its Significant Subsidiaries;
provided, that nothing contained in this SECTION 3(e) shall require the Company
or a Significant Subsidiary to comply with any such statute or regulations so
long as its legality or applicability shall be contested in good faith.
(f) REPORTS; FINANCIAL STATEMENTS; NO ADVERSE CHANGE. The
financial statements included in the Memorandum did not contain any
untrue statement of a material fact or omit to state a material
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fact required to be stated therein or necessary to make the statements made
therein, in light of the circumstances in which they were made, not misleading.
The financial statements included in the Memorandum (including the related notes
and schedules) fairly present, as of December 31, 1996, the financial position
and results of operations for the periods set forth therein (subject, in the
case of unaudited statements, to the omission of certain notes not ordinarily
accompanying such unaudited financial statements, and to normal year-end audit
adjustments which are not material in amount or effect), in each case in
accordance with generally accepted accounting principles consistently applied
during the period involved. Since December 31, 1996, there has been no material
adverse change in the Company's or a Significant Subsidiary's business,
properties, financial condition or results of operations, except as disclosed in
the Memorandum.
(g) RESTRICTIONS ON DIVIDENDS, REDEMPTIONS, ETC. The Company will not
(i) declare or pay any dividend or make any other distribution of the Company,
except dividends or distributions payable in equity securities of the Company,
or (ii) purchase, redeem or otherwise acquire or retire for value any equity
securities of the Company, except (A) equity securities acquired upon conversion
thereof into other equity securities of the Company and (B) any equity security
issued to employees, directors of others performing services in accordance with
agreements providing for such repurchase at original cost upon termination of
employment, membership on the Board of Directors or other affiliation with the
Company.
(h) TRANSACTIONS WITH AFFILIATES. Neither the Company nor any of its
Significant Subsidiaries will itself, and will not permit any of their
respective officers or directors, or holder of 5% or more of the Company's
Common Stock, to engage in any transaction of any kind or nature with any
affiliate of the Company or any Significant Subsidiary, other than transactions
with any wholly-owned subsidiary of the Company or any Significant Subsidiary or
pursuant to the terms of any agreement existing as of the date hereof between
the Company or any Significant Subsidiary and any affiliate of the Company or
any Significant Subsidiary, unless such transaction, or in the case of a course
of related or similar transactions or continuing transactions, such course of
transactions or continuing transactions is or are upon terms which are fair to
the Company or any Significant Subsidiary and which are reasonably similar to,
or more beneficial to the Company or any Significant Subsidiary than the terms
deemed likely to occur in similar transactions with unrelated persons under the
same circumstances.
4. NO PREPAYMENT. This Note may not be prepaid in whole or in part.
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5. MATURITY
If this Note is not converted at the option of the Holder in accordance
with SECTION 6 hereof, the principal amount of this Note, together with accrued
but unpaid interest, shall be due and payable on demand on ____________, 2002
(the "Maturity Date").
6. CONVERSION
All, but not less than all, of the principal amount of this Note,
together with accrued but unpaid interest, may be converted into shares of
Common Stock (the "Note Shares") at the option of the Holder at any time on or
prior to the Maturity Date, subject to the terms and conditions set forth in
this SECTION 6. Upon conversion into Note Shares, the principal amount and
accrued but unpaid interest on this Note shall be discharged.
(a) CONVERSION PRICE. The number of Note Shares into which this Note
may be converted shall be determined by dividing the aggregate amount of
principal and accrued but unpaid interest outstanding on this Note on the
Conversion Date (as defined below) by three dollars and fifty cents ($3.50)
(subject to adjustment under certain circumstances) (the "Conversion Price").
(b) METHOD OF CONVERSION. Before the Holder shall be entitled to
receive Note Shares upon the conversion of this Note, the Holder shall surrender
this Note and deliver a Notice of Conversion (in the form attached hereto as
EXHIBIT A) to the office of the Company or its designated agent. The Notice of
Conversion shall state therein the amount(s) in which the certificate(s) for
Note Shares are to be issued. The time of conversion (the "Conversion Date")
shall be the close of business on the first business day following the date on
which the Company receives the Notice of Conversion. Interest on Notes converted
ceases to accrue on and after the date of the Notice of Conversion.
(c) ISSUANCE OF NOTE SHARES. The Company shall, as soon as practicable
after surrender of this Note and receipt of the Notice of Conversion, but in no
event more than three (3) business days thereafter, issue and deliver to the
Holder, a certificate(s) for the number of Note Shares to which the Holder shall
be entitled as aforesaid.
(d) NO FRACTIONAL SHARES. No fractional Note Shares shall be issuable
upon conversion of this Note. If the conversion of this Note would result in the
issuance of a fractional share of Common Stock, such fractional share shall be
rounded up to the nearest whole share and issued to the Holder.
(e) ADJUSTMENT OF CONVERSION PRICE; MERGER.
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(i) If the Company at any time or from time to time
while this Note is issued and outstanding shall
declare or pay, without consideration, any dividend
on the Common Stock payable in Common Stock, or
shall effect a subdivision of the outstanding
shares of Common Stock into a greater number of
shares of Common Stock (by stock split,
reclassification or otherwise than by payment of a
dividend in Common Stock or in any right to acquire
Common Stock), or if the outstanding shares of
Common Stock shall be combined or consolidated, by
reclassification or otherwise, into a lesser number
of shares of Common Stock, then the Conversion
Price in effect immediately before such event
shall, concurrently with the effectiveness of such
event, be proportionately decreased or increased,
as appropriate. If the Company shall declare or
pay, without consideration, any dividend on the
Common Stock payable in any right to acquire Common
Stock for no consideration, then the Company shall
be deemed to have made a dividend payable in Common
Stock in an amount of shares equal to the maximum
number of shares issuable upon exercise of such
rights to acquire Common Stock.
(ii) If the Common Stock shall be changed into the same
or a different number of shares of any other class
or classes of stock, whether by capital
reorganization, reclassification or otherwise
(other than a subdivision or combination of shares
provided for in SECTION 6(e)(i)), the Conversion
Price then in effect shall, concurrently with the
effectiveness of such reorganization or
reclassification, be proportionately adjusted so
that the Note Shares shall be convertible into, in
lieu of the number of shares of Common Stock which
the Holder would otherwise have been entitled to
receive, a number of shares of such other class or
classes of stock equivalent to the number of shares
of Note Shares that would have been subject to
receipt by the Holder upon payment of Note Shares
on this Note immediately before that change.
(iii) In case of any consolidation or merger of the
Company with any other corporation, limited
liability company or any other entity (each such
transaction, a "Merger"), the corporation formed by
the Merger shall succeed to the covenants,
stipulations, promises and the agreements contained
in this Note. In the event of a Merger, the
Company shall make appropriate provisions so that
the Holder shall have the right thereafter to
8
convert this Note into the kind and amount of
securities receivable upon such Merger by a Holder of
the number of securities into which this Note might
have been converted immediately prior to a Merger.
The above provisions shall similarly apply to
successive Mergers.
(iv) Upon the occurrence of each adjustment or
readjustment of any Conversion Price pursuant to
this SECTION 6(e), the Company at its expense shall
promptly compute such adjustment or readjustment in
accordance with the terms hereof and prepare and
furnish to the Holder a notice setting forth such
adjustment or readjustment and showing in detail
the facts upon which such adjustment or
readjustment is based.
(f) RESERVATION OF STOCK. The Company shall at all times reserve and
keep available out of its authorized but unissued shares of Common Stock, solely
for the purpose of effecting the conversion of this Note into Note Shares, such
number of its shares of Common Stock as shall from time to time be sufficient to
effect the conversion of all of the Notes; and if at any time the number of
authorized but unissued shares of Common Stock shall not be sufficient to effect
the conversion of all of the Notes then, the Company will take such corporate
action as may be necessary to increase its authorized but unissued shares of
Common Stock to such number of shares as shall be sufficient for such purpose,
including without limitation, engaging in best efforts to obtain the requisite
stockholder approval of any necessary amendment to its Articles of
Incorporation.
(g) ISSUE TAXES. The Company shall pay any and all issue and other
taxes that may be payable in respect of any issue or delivery of Note Shares;
provided, that the Company shall not be obligated to pay any transfer taxes
resulting from any transfer requested by the Holder in connection with any such
conversion.
7. REGISTRATION: REGISTRATION OF TRANSFER AND EXCHANGE OF THIS
NOTE
(a) The Company shall keep or cause to be kept a note register (the
"Note Register") for the Notes in which, subject to such reasonable regulations
as it may prescribe, the Company shall provide for the registration of the Notes
and the registration of transfers of the Notes.
(b) Subject to the restrictions on transfer set forth herein, this Note
may be exchanged, at the option of each Holder, for other Notes in any
authorized denominations, of a like aggregate principal amount, upon surrender
of this Note to be exchanged at
9
the offices of the Company or its designated agent (either, the "Registrar").
(c) All Notes issued upon any registration of transfer or exchange of
this Note shall be valid obligations of the Company, evidencing the same debt,
and entitling the Holder to the same benefits under this Note.
(d) Every Note presented or surrendered for registration of transfer or
exchange shall be duly endorsed by, or be accompanied by a written instrument of
transfer in form satisfactory to the Registrar, duly executed by the Holder
thereof or such Holder's attorney duly authorized in writing.
(e) No charge shall be made to a Holder for any registration of
transfer or exchange of Notes.
(f) Prior to due presentment for registration of transfer of any Note,
the Company may treat the person in whose name any Note is registered (as of the
day of determination) as the Holder for the purpose of receiving payments of
principal of and interest on such Note and for all other purposes, and neither
the Company nor any agent of the Company shall be affected by notice to the
contrary.
8. OTHER PROVISIONS RELATING TO RIGHTS OF THE HOLDER OF THIS NOTE
(a) RIGHTS OF THE HOLDER OF THIS NOTE. This Note shall not entitle the
Holder to any of the rights of a shareholder of the Company, including, without
limitation, the right to vote, to receive dividends and other distributions, or
to receive any notice of, or to attend, meetings of shareholders or any other
proceedings of the Company. This SECTION 8(a) shall not affect the rights of the
Holder in its capacity as a shareholder of the Company upon conversion of this
Note and issuance to the Holder of Note Shares pursuant to SECTION (6) hereof.
(b) LOST, STOLEN, MUTILATED OR DESTROYED NOTE. If this Note shall be
mutilated, lost, stolen, or destroyed, the Company shall execute and deliver, in
exchange and substitution for and upon cancellation of a mutilated Note, or in
lieu of or in substitution for a lost, stolen, or destroyed Note, a new Note for
the principal amount of this Note so mutilated, lost, stolen, or destroyed but
only upon receipt of evidence (which may consist of a signed affidavit of the
Holder), of such loss, theft, or destruction of such Note, and of the ownership
thereof, and indemnity, if requested, all reasonably satisfactory to the
Company.
9. SECURITIES LAW COMPLIANCE; REGISTRATION RIGHTS
(a) RESTRICTIONS ON TRANSFER. The Holder and the Company understand
that each of (i) the Holder's right to convert this Note
10
and (ii) the ability of the Company to issue the Note Shares and are subject to
full compliance with the provisions of all applicable securities laws and the
availability thereunder of an exemption from registration, and that the
certificates evidencing the Note Shares, shall bear a legend substantially to
the effect of the legend on the first page hereof.
(b) COMPLIANCE WITH LAWS. The Holder agrees to comply with all
applicable laws, rules and regulations of all federal and state securities
regulators, including but not limited to, the Securities and Exchange
Commission, the National Association of Securities Dealers, Inc., and applicable
state securities regulators with respect to disclosure, filings and any other
requirements resulting in any way from the issuance of this Note.
10. OTHER MATTERS
(a) BINDING EFFECT; ASSIGNMENT. The provisions of this Note shall be
binding upon and inure to the benefit of the parties hereto and the successors
and assigns of the Company.
(b) FURTHER ACTIONS. At any time and from time to time, the Company and
the Holder agree, without further consideration, to take such actions and to
execute and deliver such documents as the other may reasonably request to
consummate the transactions contemplated in this Note.
(c) MODIFICATION; WAIVER. This Note sets forth the entire understanding
of the Company and the Holder with respect to the subject matter hereof and
supersedes all existing agreements between them concerning such subject matter.
This Note may be amended, modified, superseded, canceled, renewed or extended,
and the terms hereof may be waived, only by a written instrument signed by the
Company and Holders of at least fifty-one percent (51%) in principal amount of
the Notes at the time outstanding; provided, however, that the consent of a
Holder shall be required to modify the terms of this Note affecting the payment
of principal amount of, or interest on, such Holder's Note or the term of such
Holder's Note. Any waiver by the Company or the Holder of a breach of any
provision of this Note shall not operate as or be construed to be a waiver of
any other breach of such provision or of any breach of any other provision of
this Note. The failure of the Company or the Holder to insist upon strict
adherence to any term of this Note on one or more occasions shall not be
considered a waiver or deprive that party of the right thereafter to insist upon
strict adherence to that term or any other term of this Note. No delay on the
part of any party in exercising any right, power or privilege hereunder shall
operate as a waiver thereof or hereof, nor shall any waiver on the part of any
party of any right, power or privilege hereunder preclude any other or further
exercise hereof or the exercise of any other right, power or privilege
hereunder. Any waiver must be in writing. The rights and remedies provided
herein are cumulative
11
and are not exclusive of any rights or remedies which any party may
otherwise have at law or in equity.
(d) NOTICES. Any notice or other communication required or permitted to
be given hereunder shall be in writing and shall be mailed by certified mail,
return receipt requested, or delivered against receipt if to (i) the Company, to
First American Railways, Inc., 3700 North 29th Avenue, Suite 202, Hollywood,
Florida 33020, and (ii) the Holder to such Holder at their last address as shown
on the Note Register (or to such other address as the party shall have furnished
in writing in accordance with the provisions of this SECTION 10(d)). Any notice
or other communication given by certified mail shall be deemed given at the time
of certification thereof, except for a notice changing a party's address which
shall be deemed given at the time of receipt thereof.
(e) SEVERABILITY. If any provision of this Note is invalid, illegal, or
unenforceable, the balance of this Note shall remain in effect, and if any
provision is inapplicable to any person or circumstance, it shall nevertheless
remain applicable to all other persons and circumstances. The rate of interest
on this Note is subject to any limitations imposed by applicable usury laws.
(f) HEADINGS. The headings in this Note are solely for convenience of
reference and shall be given no effect in the construction or interpretation of
this Note.
(g) GOVERNING LAW. This Agreement shall be governed by and construed in
all respects under the laws of the State of New York, without reference to its
conflict of laws rules or principles. Any suit, action, proceeding or litigation
arising out of or relating to this Agreement shall be brought and prosecuted in
such federal or state court or courts located within the State of New York as
provided by law. The parties hereby irrevocably and unconditionally consent to
the jurisdiction of each such court or courts located within the State of New
York and to service of process by registered or certified mail, return receipt
requested, or by any other manner provided by applicable law, and hereby
irrevocably and unconditionally waive any right to claim that any suit, action,
proceeding or litigation so commenced has been commenced in an inconvenient
forum.
(h) DUE AUTHORIZATION. The execution and delivery of this Note and the
consummation of the transactions contemplated herein have been authorized by the
Board of Directors of the Company and by any necessary vote or with the consent
of the shareholders of the Company.
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IN WITNESS WHEREOF, the Company has caused this Note to be executed on
its behalf by its Chairman of the Board of Directors thereunto duly authorized.
FIRST AMERICAN RAILWAYS, INC.
BY:____________________________
ALLEN C. HARPER
CHAIRMAN OF THE BOARD OF DIRECTORS
ATTEST:
- -----------------------------
RAYMOND MONTELEONE, PRESIDENT
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EXHIBIT A
NOTICE OF CONVERSION
The undersigned being the holder of the attached Convertible
Subordinated Note(s) (the "Note(s)") due the Maturity Date (as defined in the
Note) of First American Railways, Inc. (the "Corporation"), hereby exercises the
option to convert the Note(s) into Note Shares (as defined in the Note(s)) in
accordance with the terms of the Note(s).
The undersigned directs that the Note Shares be issued in the name of
the Holder of the attached Note and delivered as soon as practicable and in
accordance with the provisions of the Note(s) to:
Full address: ________________________________________
________________________________________
________________________________________
________________________________________
Date: ________________________
By: ________________________
Name:
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