Exhibit 10(pp)
SANDBOX ENTERTAINMENT CORPORATION
SUBORDINATED PROMISSORY NOTE
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November 26, 1997 $36,166.16
For value received, subject to the terms and conditions of this Subordinated
Promissory Note (the "Note"), Sandbox Entertainment Corporation, a Delaware
corporation (the "Company"), hereby promises to pay to the order of ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, or his/her/its permitted assigns (the "Holder") the principal sum
of Thirty-Six Thousand One Hundred Sixty-Six and 16/100 dollars ($36,166.16)
plus simple interest accrued on unpaid principal from the date hereof until
paid, at the interest rates set forth hereafter: Twelve percent (12%) per annum
for the period from the date hereof through December 10, 1997; eighteen percent
(18%) per annum for the period after December 10, 1997, through January 1, 1998;
and twenty-five percent (25%) for the period after January 1, 1998. Subject to
the terms and conditions of this Note, the unpaid principal amount of this Note
and the unpaid interest accrued thereon shall be payable in full at the
principal office of the Company within thirty (30) days after written demand
from Holder for payment thereof, provided that no such demand shall be made
until the Registration Statement of the Company on Form SB-2 initially filed
with the Securities and Exchange Commission on September 30, 1997, File No.
333-36787 has been declared effective under the Securities Act of 1933, as
amended.
The following is a statement of the rights of the holder of this Note
and the terms and conditions to which this Note is subject, and to which the
holder hereof, by the acceptance of this Note, agrees:
1. Definitions. Unless the context otherwise requires, as used in this
Note, the following terms shall have the following meanings:
1.1 "Company" includes any corporation or other entity that
shall succeed to or assume the obligations of the Company under this Note.
1.2 "Noteholder," "Holder," or similar terms, when the context
refers to a holder of this Note, shall mean any person who shall at the time be
the registered holder of this Note.
1.3 "Senior Indebtedness" shall mean the principal of and
unpaid accrued interest on: (i) all indebtedness of the Company to commercial
banks or other financial institutions regularly engaged in the business of
lending money, which is for money borrowed by the Company now or hereafter
(whether or not secured), (ii) all indebtedness and obligations of the Company
that are secured by any portion of the assets of the Company, and (iii) any such
indebtedness or any debentures, notes or other evidence of indebtedness issued
in exchange for
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such Senior Indebtedness, or any indebtedness arising from the satisfaction of
such Senior Indebtedness by a guarantor.
2. Subordination. The indebtedness evidenced by this Note is hereby
expressly subordinated, to the extent and in the manner hereinafter set forth
herein, in right of payment to the prior payment in full of all the Company's
Senior Indebtedness.
2.1 Default on Senior Indebtedness. Upon any receivership,
insolvency, assignment for the benefit of creditors, bankruptcy, reorganization
or arrangements with creditors (whether or not pursuant to bankruptcy or other
insolvency laws), dissolution, liquidation or other marshaling of the assets and
liabilities of the Company (i) no amount shall be paid by the Company in respect
of the principal of or interest on this Note at the time outstanding, unless and
until any defaults on the Senior Indebtedness have been cured or waived or shall
have ceased to exist and principal and interest on such obligations has been
paid current, and (ii) no claim or proof of claim shall be filed with the
Company by or on behalf of the Holder which shall assert any right to receive
any payments in respect of principal or interest on this Note except in the
event that any defaults on the Senior Indebtedness have been cured or waived or
shall have ceased to exist. If there occurs an event of default that has been
declared in writing with respect to any Senior Indebtedness, or in the
instrument under which it is outstanding, permitting the holder of such Senior
Indebtedness to accelerate the maturity thereof, then, unless and until such
event of default shall have been cured or waived or shall have ceased to exist,
or all Senior Indebtedness shall have been paid in full, no payment shall be
made in respect of the principal of or interest on this Note without the
approval of the holders of the Senior Indebtedness.
2.2 Undertaking. By its acceptance of this Note, the Holder
agrees to execute and deliver such documents as may be reasonably requested from
time to time by the Company or the lender of any Senior Indebtedness in order to
implement the foregoing provisions of this Section 5.
3. No Impairment. The Company will not willfully avoid or seek to avoid
the observance or performance of any of the terms of this Note, but will at all
times in good faith assist in the carrying out of all such terms and in the
taking of all such action as may be necessary or appropriate in order to protect
the rights of the Noteholder against impairment.
4. Prepayment. The Company may at any time, without penalty, prepay in
whole or in part the principal amount, and/or any accrued interest outstanding
under this Note. Any prepaying shall be applied first to unpaid accrued interest
until all such interest has been paid, and then to unpaid principal.
5. Event of Default. The principal amount due hereunder together with
all accrued interest to date will accelerate and become due if an Event of
Default (as hereinafter defined) occurs. An "Event of Default" shall exist under
this Note if the Company: (i) petitions or applies to any tribunal for or
consents to the appointment of a receiver, (ii) admits in writing its inability
to pay its debts as they mature, (iii) makes a general assignment for the
benefit of its creditors,
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(iv) is adjudicated bankrupt or insolvent, or (v) files voluntarily or has filed
against it a petition in bankruptcy or a petition or an answer seeking
reorganization or an arrangement with creditors or to take advantage of any
bankruptcy, reorganization, insolvency, readjustment of debts, dissolution or
liquidation law or statute.
6. Amendment; Waiver. Any term of this Note may be amended, and the
observance of any term of this Note may be waived (either generally or in a
particular instance and either retroactively or prospectively) only by the
written consent of the Company and Noteholder.
7. Assignment. This Note may be assigned by the holder only with the
Company's prior written consent, and only if the assignee of this Note
acknowledges in writing to the Company that it is bound by all the terms and
conditions of this Note. Any attempted assignment in violation of this Section
shall be void.
8. Headings; References. The headings in this Note are for purposes of
convenience of reference only, and shall not be deemed to constitute a part of
this Note. Unless otherwise expressly noted, all references to Sections in this
Note refer to Sections of this Note.
9. Notices. Any notice or other document required or permitted to be
given or delivered to Noteholder shall be delivered at, or sent by certified or
registered mail to, Noteholder at the address on file with the Company, or to
such other address as shall have been furnished to Company in writing by
Noteholder. Any notice or other document required or permitted to be given or
delivered to Company shall be delivered at or sent by registered or certified
mail to, Company at ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, or
to such other address as shall have been furnished in writing to Noteholder by
Company. Any notice so addressed and mailed by registered or certified mail
shall be deemed to be given when so mailed. Any notice so addressed and
otherwise delivered shall be deemed to be given when actually received by the
addressee.
10. Law Governing. This Note shall be construed and enforced in
accordance with, and governed by, the internal laws of the State of Arizona,
excluding the body of law applicable to conflicts of law.
11. Attorneys' Fees; Waiver of Presentment. The Company promises to pay
the holder hereof, without demand, all reasonable attorneys fees, costs and
other expenses incurred by such holder in enforcing any provision of this Note
and hereby waives presentment, notice of nonpayment, notice of dishonor,
protest, demand and diligence.
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12. Terms Binding. By acceptance of this Note, the holder of this Note
(and each subsequent holder of this Note) accepts and agrees to be bound by all
the terms and conditions of this Note.
IN WITNESS WHEREOF, the Company has caused this Note to be signed in
its name the date first written above.
SANDBOX ENTERTAINMENT CORPORATION
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇
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Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇
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Title: Chief Financial Officer
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