Exhibit 10.46
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "ACT"), AND MAY NOT BE OFFERED, SOLD, PLEDGED,
HYPOTHECATED, ASSIGNED OR TRANSFERRED EXCEPT (i) PURSUANT TO A REGISTRATION
STATEMENT UNDER THE ACT WHICH HAS BECOME EFFECTIVE AND IS CURRENT WITH RESPECT
TO THESE SECURITIES, OR (ii) PURSUANT TO A SPECIFIC EXEMPTION FROM REGISTRATION
UNDER THE ACT BUT ONLY UPON A HOLDER HEREOF FIRST HAVING OBTAINED THE WRITTEN
OPINION OF COUNSEL TO THE CORPORATION, OR OTHER COUNSEL REASONABLY ACCEPTABLE TO
THE CORPORATION, THAT THE PROPOSED DISPOSITION IS CONSISTENT WITH ALL APPLICABLE
PROVISIONS OF THE ACT AS WELL AS ANY APPLICABLE "BLUE SKY" OR SIMILAR STATE
SECURITIES LAW.
URBAN COOL NETWORK, INC.
PROMISSORY NOTE
The Transferability of this Note
is Restricted as Provided in Section 3
N-___ Dated: ____________, 2000
$ New York, New York
FOR VALUE RECEIVED, Urban Cool Network, Inc., a Delaware corporation (the
"Company"), promises to pay to __________ or assigns (the "Holder") the
principal amount of DOLLARS ($ ) (the "Principal
Amount"), in such coin or currency of the United States of America as at the
time of payment shall be legal tender for the payment of public and private
debts, together with simple interest thereon at the rate of ten percent (10%)
per annum (calculated on the basis of a 360-day year of 30-day months), at the
principal office of the Company, upon the earlier of (a) the closing of an
initial public offering of the Company's securities or (b) _____________, 2001,
eighteen months from the date of this note. No payments of principal and/or
interest shall be due until maturity.
Notwithstanding anything to the contrary herein contained, the Principal
Amount of this Note or any interest hereon may be prepaid at any time or from
time to time, prior to the maturity of this Note, in whole or in part, without
prior notice and without penalty or premium. Prepayments shall be applied first
to interest due and then to principal.
1. The Notes: This Note is one of several promissory notes made and issued
by the Company which may aggregate to a maximum principal amount of five hundred
thousand dollars ($500,000) (individually, a "Note," and together, the "Notes")
assuming all Units are sold, pursuant to the terms and subject to the conditions
of Subscription Agreements and Investment Representations (the "Subscription
Agreements"), by and among the Company and certain investors. Reference is made
to the Subscription Agreements for agreements of the parties applicable to this
Note.
-1-
<PAGE>
2. Covenants: The Company covenants and agrees that, so long as any of the
Notes shall be outstanding and unpaid:
2.1 Payment of Notes. The Company will punctually pay or cause to be
paid the Principal Amount and interest on this Note. Any sums required to be
withheld from any payment of Principal Amount 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.
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 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.
2.2 Maintenance of Corporate Existence; Merger and Consolidation.
The Company will at all times cause to be done all things necessary to preserve
and keep in full force and effect its corporate existence and all of its rights
and franchises and shall not be consolidated with or merge into any other
corporation or transfer all or substantially all of its assets to any person
unless (i) the survivor of such consolidation or merger is the Company, (ii) 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 which
expressly assumes all of the obligations of the Company under the Notes, and
(iii) after giving effect to such transaction, no Event of Default (as
hereinafter defined), and no event which, after notice or lapse of time, or
both, would become an Event of Default, shall have occurred and be continuing.
2.3 Maintenance of Properties. The Company will reasonably maintain
in good repair, working order and condition its properties and other assets, and
from time to time make all reasonably necessary or desirable repairs, renewals
and replacements thereto.
2.4 Payment of Taxes. The Company will cause to be paid, set aside
for payment, or cause to be discharged, 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, however, that the
Company shall not be required to cause to be paid or discharged any such tax,
assessment or charge whose amount, applicability or validity is being contested
in good faith by appropriate proceedings.
-2-
<PAGE>
2.5 Compliance with Statutes. The Company will 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 of any
thereof, in respect of the conduct of business, and the ownership of property by
the Company; provided, however, that nothing contained in this Section 2.5 shall
require the Company to comply with any such statute or regulation so long as its
legality or applicability shall be contested in good faith; and provided further
that an unintentional violation of this covenant done in good faith or
inadvertently shall not be deemed an Event of Default under Section 4 hereof.
2.6 Restrictions on Dividends, Redemptions, etc. The Company will
not (i) declare or pay any dividend or make any other distribution on any equity
securities of the Company, except dividends or distributions payable in equity
securities of the Company, (ii) purchase, redeem or otherwise acquire or retire
for value any equity securities of the Company, except equity securities
acquired upon conversion thereof into other equity securities of the Company, or
(iii) permit a subsidiary of the Company to purchase, redeem or otherwise
acquire or retire for value any equity securities of the Company, if, upon
giving effect to such dividend, distribution, purchase, redemption, or other
acquisition or retirement, the net worth of the Company would be reduced to less
than an amount equal to the remaining indebtedness outstanding under the Notes.
2.7 Transactions with Affiliates. The Company will not itself, and
will not permit any subsidiary to, engage in any transaction of any kind or
nature with any affiliate (as such term is used in Rule 405 under the Act) of
the Company, other than a wholly-owned subsidiary, unless such transaction is
upon terms which are fair to the Company or such subsidiary, as the case may be,
and which are reasonably similar to, or more beneficial to the Company or such
subsidiary than the terms deemed likely to occur in similar transactions with
unrelated persons under the same circumstances.
3. Restrictions Upon Transferability. This Note has not been registered
under the Act, and may not be offered, sold, pledged, hypothecated, assigned or
transferred except (i) pursuant to a registration statement under the Act which
has become effective and is current with respect to this Note, or (ii) pursuant
to a specific exemption from registration under the Act but only upon a Holder
hereof first having obtained the written opinion of counsel to the Company, or
other counsel reasonably acceptable to the Company, that the proposed
disposition is consistent with all applicable provisions of the Act as well as
any applicable "blue sky" or other state securities law.
4. Events of Default and Remedies. An "Event of Default" shall occur if:
4.1 Payment of Notes. The Company defaults in the payment of
Principal Amount or interest of this Note, when and as the same shall become due
and payable whether at maturity thereof, or by acceleration or otherwise, which
default shall continue uncured for a period of thirty (30) days from the date
thereof; or
4.2 Performance of Covenants, Conditions or Agreements. The Company
fails to comply with any of the covenants, conditions or agreements set forth in
this Note and such default
-3-
<PAGE>
shall continue uncured for a period of thirty (30) days after receipt of written
notice to the Company from any Holder stating the specific default or defaults;
or
4.3 Bankruptcy, Insolvency, etc. The Company shall file or consent
by answer or otherwise to the entry of an order for relief or approving a
petition for relief, reorganization or arrangement or any other petition in
bankruptcy for liquidation or to take advantage of any bankruptcy or insolvency
law of any jurisdiction, or shall make an assignment for the benefit of its
creditors, or shall consent to the appointment of a custodian, receiver, trustee
or other officer with similar powers of itself or of any substantial part of its
property, or shall be adjudicated a bankrupt or insolvent, or shall take
corporate action for the purpose of any of the foregoing, or if a court or
governmental authority of competent jurisdiction shall enter an order appointing
a custodian, receiver, trustee or other officer with similar powers with respect
to the Company or any substantial part of its property or an order for relief or
approving a petition for relief or reorganization or any other petition in
bankruptcy or for liquidation or to take advantage of any bankruptcy or
insolvency law, or an order for the dissolution, winding up or liquidation of
the Company, or if any such petition shall be filed against the Company and such
petition shall not be dismissed within sixty (60) days.
4.4. Remedies. In case an Event of Default (other than an Event of
Default resulting from the Company's failure to pay the Principal Amount of, or
any interest upon, this Note, when the same shall be due and payable in
accordance with the terms hereof (after giving affect to applicable "cure"
provisions herein) and an Event of Default resulting from bankruptcy, insolvency
or reorganization) shall occur and be continuing, the Holders of the Notes
representing at least fifty-one percent (51%) in the aggregate of the Principal
Amount of all Notes then outstanding, may declare by notice in writing to the
Company all unpaid Principal Amount and accrued interest on all of the Notes
then outstanding to be due and payable immediately. In case an Event of Default
resulting from the Company's nonpayment of Principal Amount of, or interest
upon, this Note shall occur, the Holder may declare all unpaid Principal Amount
and accrued interest on this Note held by such Holder to be due and payable
immediately. In case an Event of Default resulting from bankruptcy, insolvency
or reorganization shall occur, all unpaid principal and accrued interest on the
Notes held by each Holder shall be due and payable immediately without any
declaration or other act on the part of such Holders. Any such acceleration may
be annulled and past defaults (except, unless theretofore cured, a default in
payment of Principal Amount or interest on the Notes) may be waived by the
Holders of a majority in Principal Amount of the Notes then outstanding.
5. Costs of Collection. Should the indebtedness represented by this Note
or any part thereof be collected in any proceeding, or this Note be placed in
the hands of attorneys for collection after default, the Company agrees to pay
as an additional obligation under this Note, in addition to the Principal Amount
and interest due and payable hereon, all costs of collecting this Note,
including reasonable attorneys' fees.
6. Waiver and Amendments. 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
-4-
<PAGE>
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. No delay on
the part of any party in exercising any right, power or privilege hereunder
shall operate as a waiver hereof, nor shall any waiver on the part of any party
of any right, power or privilege or privilege hereunder preclude any other or
further exercise hereof or the exercise of any other right, power or privilege
hereunder. The rights and remedies provided herein are cumulative and are not
exclusive of any rights or remedies which any party may otherwise have at law or
in equity.
7. Loss, Theft, Destruction or Mutilation of Note. Upon receipt by the
Company of evidence reasonably satisfactory to the Company of the loss, theft,
destruction or mutilation of this Note, and of indemnity or security reasonably
satisfactory to the Company, and upon reimbursement to the Company of all
reasonable expenses incidental thereto, and upon surrender and cancellation of
this Note, if mutilated, the Company will make and deliver a new Note of like
tenor, in lieu of this Note. Any Note made and delivered in accordance with the
provisions of this Section 7 shall be dated as of the date to which interest has
been paid on this Note, or if no interest has theretofore been paid on this
Note, then dated the date hereof.
8. Notice. Any notice or other communication required or permitted
hereunder shall be in writing and shall be delivered personally, telegraphed or
sent by certified, registered, or express mail, postage prepaid, and shall be
deemed given when so delivered personally, telegraphed or, if mailed, five (5)
days after the date of deposit in the United States mails, as follows:
(i) if to the Company, to:
Urban Cool Network, Inc.
1401 Elm Street, Suite 1955
Dallas, Texas 75202
Attention: Jacob R. Miles III, Chief Executive Officer
(ii) if to the Holder, to the address of such Holder as shown on the
books of the Company.
9. Governing Law. This Note shall be governed by and construed in
accordance with the laws of the State of New York, without giving effect to its
conflicts of law principles. The Company agrees that any dispute or controversy
arising out of this Note shall be adjudicated in a court located in New York
City, and hereby submits to the exclusive jurisdiction of the courts of the
State of New York located in New York, New York and of the federal courts in the
Southern District of New York, and irrevocably waives any objection it now or
hereafter may have respecting the venue of such action or proceeding brought in
such a court or respecting the fact that such court is an inconvenient forum,
and consents to the service of process in any such action or proceeding by means
of registered or certified mail, return receipt requested.
10. Successors and Assigns. All the covenants, stipulations, promises and
agreements in this Note contained by or on behalf of the Company shall bind its
successors and assigns, whether or not so expressed.
-5-
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Note to be signed in its
corporate name by a duly authorized officer and to be dated as of the date first
above written.
URBAN COOL NETWORK, INC.
By: _____________________________________
Name:
Title:
-6-
