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EXHIBIT HH
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, OR UNDER ANY STATE SECURITIES LAWS. THIS
SECURITY MAY NOT BE OFFERED, SOLD OR TRANSFERRED EXCEPT (I)
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND IN COMPLIANCE WITH
APPLICABLE STATE SECURITIES LAWS OR (II) IN A TRANSACTION WHICH,
IN THE OPINION OF COUNSEL REASONABLY SATISFACTORY TO SKYLINE
MULTIMEDIA ENTERTAINMENT, INC., IS EXEMPT FROM REGISTRATION
THEREUNDER AND UNDER APPLICABLE STATE SECURITIES LAWS.
THIS SECURITY IS SUBJECT TO THE TERMS AND CONDITIONS OF THAT
CERTAIN SENIOR SECURED CREDIT AGREEMENT, DATED AS OF May 20,
1998, BY AND AMONG SKYLINE MULTIMEDIA ENTERTAINMENT, INC. AND
THE CO-BORROWERS AND LENDERS NAMED THEREIN, AS SUCH AGREEMENT
MAY BE AMENDED, MODIFIED OR RESTATED FROM TIME TO TIME AND THAT
CERTAIN SECURITY AGREEMENT, DATED AS OF May 20, 1998, BY AND
AMONG SKYLINE MULTIMEDIA ENTERTAINMENT, INC. AND THE
CO-BORROWERS AND LENDERS NAMED THEREIN, AS SUCH AGREEMENT MAY BE
AMENDED, MODIFIED OR RESTATED FROM TIME TO TIME.
SKYLINE MULTIMEDIA ENTERTAINMENT, INC.
Senior Secured Demand Note
$500,000 May 20, ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ No. 1
FOR VALUE RECEIVED, Skyline Multimedia Entertainment, Inc., a
New York corporation (the "Company"), New York Skyline, Inc., a New York
corporation ("NYSI"), Skyline Virtual Reality, Inc., a Delaware corporation
("SVR"), Skyline Chicago, Inc., a Delaware corporation ("SCI"), Skyline Magic,
Inc., a Delaware corporation ("SMI") and Skyline Las Vegas, Inc., a Delaware
corporation ("SLVI"), hereby promise to pay to Bank of New York, as Trustee for
the Employees Retirement Plan of Keyspan Energy Corp., or its registered
successors or assigns (the "Registered Holder"), Five Hundred Thousand U.S.
Dollars ($500,000.00) on demand given on or after July 15, 1998 (the date of
such demand referred to herein as the "Maturity Date") in accordance with the
provisions of this Note. This Note is issued by the Company pursuant to the
Senior Secured Credit Agreement, dated as of May 20, 1998 (as such agreement may
be amended, modified or restated from time to time, the "Credit Agreement"), by
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and among the Company, the Company's subsidiaries, the Registered Holder and
Prospect Street NYC Discovery Fund, L.P. This Note is secured by the collateral
pledged to the Registered Holder pursuant to the Collateral Documents (as
defined herein). All capitalized terms used and not defined herein shall have
the meaning ascribed to such terms in the Credit Agreement.
"Collateral Documents" means the Security Agreement, the
Subordination Agreement, the Subsidiary Stock Pledge Agreement, the Subsidiary
Guarantee, and the Indemnity, Subrogation and Contribution Agreement (in each
case, as the same may be amended, modified or restated from time to time), and
all certificates, schedules, exhibits and other documents required to be
delivered in connection with such agreements.
1. Interest. Interest will accrue on the unpaid principal amount
of this Note from the date hereof at a rate of 14% per annum; provided, however,
that, upon an Event of Default under Section 7.1 of the Credit Agreement, the
rate of interest shall increase to a rate per annum of 21%. Interest accrued on
this Note shall be payable on the earlier of (a) the Maturity Date, and (b) the
date of consummation of an Equity Financing. Interest will be computed on the
basis of a 360-day year of twelve 30-day months.
2. Method of Payment. The Company will pay principal and
interest in money of the United States that at the time of payment is legal
tender for payment of public and private debts. The Company shall pay principal
and interest on this Note by wire transfer of immediately available funds to the
account specified by the Registered Holder in a written notice to the Company
delivered at least three Business Days prior to such payment date. If a payment
date is other than a Business Day, payment shall be made on the next succeeding
Business Day. All payments shall be applied first, to all accrued and unpaid
interest hereon, and second, to principal.
3. Prepayment. At its option, the Company may, from time to
time, prepay all or any portion of the principal amount of this Note in cash.
Written notice of prepayment under this Section 3 shall be given to the
Registered Holder at least 5 days but not more than 30 days before the
prepayment date set forth in such notice at the address provided in or pursuant
to Section 9 herein. Any such prepayment shall be in an amount of at least
$100,000 and in integrals of $10,000, or such lesser amount as equals the then
outstanding principal amount of this Note being prepaid, and shall be
accompanied by the cash payment of all accrued and unpaid interest on the
portion of the principal then being prepaid. Once due notice of prepayment is
given, a portion of the principal amount of this Note (in such amount as the
notice states shall be prepaid) shall become due and payable on the optional
prepayment date.
4. Repayment. The Company will repay this Note in full, in cash
on the Maturity Date at 100% of the then outstanding principal amount of this
Note plus accrued but unpaid interest thereon to such date.
5. Optional Conversion. In the event that an Equity Financing
has been consummated prior to July 15, 1998, the holders of this Note may, at
their option, convert all, but not less than all, of the principal amount of
this Note such that each $1.00 of principal
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amount of this Note shall convert into that number of units of securities
offered in such Equity Financing as are purchaseable for $1.25. Upon such
conversion, accrued and unpaid interest hereon shall be immediately payable to
the Registered Holder in cash.
6. Events of Default; Remedies. Events of Default and the
consequences of Events of Default are set forth in Article VII of the Credit
Agreement. All provisions of Article VII of the Credit Agreement are
specifically hereby incorporated herein in full by this reference.
7. Note Exchangeable for Different Denominations. This Note is
exchangeable, upon the surrender hereof by the Registered Holder at the
principal office of the Company, without expense to the Registered Holder, for a
Note or Notes, dated as of the date to which interest has been paid on the
unpaid principal amount of the Note or Notes so exchanged, or, if no interest
has been paid thereon, then dated as of the date of the Note or Notes so
exchanged, each in the principal amount of $250,000, or any multiple thereof (or
in any such lesser amount as shall equal the then unpaid principal amount of the
Note or Notes so exchanged), for the same aggregate unpaid principal amount as
the Note or Notes so surrendered for exchange and each payable to such Person or
Persons, or order, as may be designated by such Registered Holder (subject to
Section 15 herein); provided, however, that upon any such exchange there shall
be filed with the Company the name and address for all purposes hereof of the
payee of each Note delivered in the exchange for this Note and such exchanged
Note shall in all other respects be in the same form and have the same terms as
this Note.
8. Replacement. Upon receipt of evidence reasonably satisfactory
to the Company (an affidavit of the Registered Holder shall be satisfactory) of
the ownership and the loss, theft, destruction or mutilation of this Note, and
in the case of any such loss, theft or destruction, upon receipt of indemnity
reasonably satisfactory to the Company (provided that if the Registered Holder
is a financial institution or other institutional investor its own sworn or
notarized agreement shall be satisfactory) or, in the case of any such
mutilation upon surrender of this Note, the Company shall (at its expense)
execute and deliver in lieu of such Note, a Note of like kind representing the
same rights represented by such lost, stolen, destroyed or mutilated Note and
dated as of the date to which interest has been paid on the unpaid principal
amount of the Note so lost, stolen, destroyed or mutilated, or, if no interest
has been paid thereon, then dated as of the date of the Note so lost, stolen,
destroyed or mutilated.
9. Securities Act. This Note has not been registered under the
Securities Act of 1933 and applicable state securities laws. Therefore, the
Company may require, as a condition of allowing the transfer or exchange of this
Note, that the Registered Holder furnish to the Company an opinion of counsel
reasonably acceptable to the Company to the effect that such transaction is
allowable under the Securities Act of 1933 and applicable state securities laws.
10. Notices. All notices, requests and other communications
hereunder must be in writing and will be deemed to have been duly given only if
delivered personally against written receipt or by facsimile transmission or
mailed by prepaid first class certified mail, return receipt requested, or
mailed by overnight courier prepaid, to the parties at the following addresses
or facsimile numbers:
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If to the Registered Holder, to:
Bank of New York, as Trustee for the Employees Retirement Plan
of Keyspan Energy Corp.
c/o The Brooklyn Union Gas Company
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
with a copy to:
Cullen & ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
If to the Company, to:
Skyline Multimedia Entertainment, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇., ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: President
with a copy to:
Proskauer Rose LLP
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
All such notices, requests and other communications will (i) if delivered
personally to the address as provided in this Section, be deemed given upon
delivery, (ii) if delivered by facsimile transmission to the facsimile number as
provided in this Section 10, be deemed given upon receipt, (iii) if delivered by
mail in the manner described above to the address as provided in this Section,
be deemed given upon the earlier of the third Business Day following mailing or
upon receipt and (iv) if delivered by overnight courier to the address as
provided in this Section, be deemed given on the earlier of the first Business
Day following the date sent by such overnight courier or upon receipt (in each
case regardless of whether such notice, request other communication is received
by any other Person to whom a copy of such notice is to be delivered pursuant to
this Section). Any party from time to time may change its address, facsimile
number or other information for the purpose of notices to that party by giving
notice specifying such
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change to the other party hereto at least ten days prior to the effective date
of such change.
11. Headings; Governing Law. The headings used in this Note are
for convenience of reference only and do not define or limit the provisions
hereof. THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
DOMESTIC LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO ANY CHOICE OF
LAW OR CONFLICT OF LAW PROVISION OR RULE (WHETHER OF THE STATE OF NEW YORK OR
ANY OTHER JURISDICTION) THAT WOULD CAUSE THE APPLICATION OF THE LAWS OF ANY
JURISDICTION OTHER THAN THE STATE OF NEW YORK.
12. Note Register. The Company shall maintain at its principal
executive offices books for the registration and the registration of transfer of
this Note. The Company may deem and treat the Registered Holder as the absolute
owner hereof (notwithstanding any notation of ownership or other writing thereon
made by anyone) for all purposes and shall not be affected by any notice to the
contrary.
13. Waiver. Subject to the provisions of the Credit Agreement,
any term or condition of this Note may be waived at any time by the party that
is entitled to the benefit thereof, but no such waiver shall be effective unless
set forth in a written instrument duly executed by or on behalf of the party
waiving such term or condition. No waiver by any party of any term or condition
of this Note, in any one or more instances, shall be deemed to be or construed
as a waiver of the same or any other term or condition of this Note on any
future occasion. All remedies, either under this Note or by law or otherwise
afforded, will be cumulative and not alternative.
14. Amendment. This Note may be amended, supplemented or
modified only by a written instrument duly executed by or on behalf the
Registered Holder and the Company and otherwise in accordance with the
provisions of the Credit Agreement.
15. Binding Effect. No obligation of the Company hereunder may
be assigned (by operation of law or otherwise) by the Company or assumed by
another Person without the prior written consent of the Registered Holder and
otherwise in accordance with the provisions of the Credit Agreement and any
attempt to do so will be void. This Note or any portion hereof may be assigned
by the Registered Holder to any Person; provided, however, that the aggregate
principal amount so assigned shall be at least $250,000 (or any such lesser
amount as shall equal the then unpaid principal amount of this Note). Subject to
the foregoing, this Note is binding upon, inures to the benefit of and is
enforceable by the parties hereto and their respective successors and assigns.
Prior to the assignment of this Note or any portion hereof by the Registered
Holder to any other Person, such Person shall be required to make
representations and warranties to the Company substantially similar to those
contained in Section 8.4 of the Credit Agreement and agree to be bound by the
terms of the Credit Agreement applicable to the Lender.
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[Remainder Intentionally Blank]
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IN WITNESS WHEREOF, the Company has executed and delivered
this Note as of the date first above written.
SKYLINE MULTIMEDIA
ENTERTAINMENT, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Executive Director of
Operations and Finance
NEW YORK SKYLINE, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Executive Director of
Operations and Finance
SKYLINE VIRTUAL REALITY, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Executive Director of
Operations and Finance
SKYLINE CHICAGO, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Executive Director of
Operations and Finance
SKYLINE MAGIC, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Executive Director of
Operations and Finance
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SKYLINE LAS VEGAS, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Executive Director of
Operations and Finance