EXHIBIT 10.6
Notice: This Instrument contains a confession of judgment clause.
SENIOR SECURED NOTE
$750,000.00 December 27, 1999
New York, NY
FOR VALUE RECEIVED, GLOBALETUTOR.COM, INC., a Nevada corporation
("Maker"), promises to pay to DIGITAL LAUNCH, INC. or its assigns ("Holder"), or
to order, the principal sum of SEVEN HUNDRED FIFTY THOUSAND DOLLARS ($750,000),
together with interest on the unpaid principal balance hereof from time to time
outstanding at the rate of one percent (1%) over the Prime Rate as reported in
The Wall Street Journal, Eastern Edition, until the Note is paid in full.
The entire unpaid principal balance of this Note, together with all
unpaid interest, shall be paid not later than December 31, 2002, and it may be
prepaid at Maker's option in whole or in part without penalty or premium. Any
amounts due hereunder and not paid when due shall accrue interest at a rate
equal to the greater of the interest rate set forth above and 14% per annum.
Repayment of this Note is secured by a security interest in certain
shares of capital stock (the "Collateral") owned by Thomas McMurrain (the
"Shareholder") pursuant to a security agreement of even date herewith among the
Shareholder and Holder (the "Security Agreement").
Upon the occurrence of an Event of Default the Holder shall have then,
or at any time thereafter, all of the remedies provided in the Investment
Agreement, including accelerating all amounts then owed, and all of the remedies
afforded by the Uniform Commercial Code as from time to time in effect in the
State of New York or afforded by other applicable law. "Event of Default" when
used herein, whatever the reason for such Event of Default and whether it shall
be voluntary or involuntary or be effected by operation of law pursuant to any
judgment, decree, or order of any court or any order, rule, or regulation of any
administration or government body or be caused by the provisions of any
paragraph herein, means any one of the following events:
(a) Default in the payment of any interest on this Note when
it becomes due and payable, and continuance of such default for a
period of 30 days; or
(b) Default in the payment of the principal amount of this
Note when due, whether at maturity, upon prepayment, or otherwise; or
(c) Default in the performance or breach of any covenant or
warranty of Maker in this Note (other than a covenant or warranty the
breach or default in performance of which is elsewhere in this section
specifically dealt with), and continuation of such default or breach
for a period of 60 days after there has been given to Maker by
certified mail, by the holder of this Note, a written notice specifying
such default or breach and requiring it to be remedied and stating that
such notice is a notice of default hereunder; or
(d) The entry of a decree or order by a court having
jurisdiction in the premises adjudging Maker a bankrupt or insolvent
under the Federal Bankruptcy Act or any other applicable federal or
state law, or appointing a receiver, liquidator, assignee, trustee (or
other similar official) of Maker or of any substantial part of its
property, or ordering the winding up or liquidation of its
affairs, and the continuance of any such decree or order unstayed and
in effect for a period of 60 consecutive days; or
(e) The institution by Maker of proceedings to be adjudicated
a bankrupt or insolvent, or the consent by it to the institution of
bankruptcy or insolvency proceedings against it, or a filing by it of a
petition or answer or consent seeking reorganization or relief under
the Federal Bankruptcy Act or any other applicable federal or state
law; or the consent by it to the filing of any such petition or the
appointment of a receiver, liquidator, assignee, trustee (or other
similar official) of Maker or of any substantial part of its property,
or the making by it of any assignment for the benefit of creditors, or
the admission by it in writing of its inability to pay its debts
generally as they become due, or the taking of corporate action by
Maker in furtherance of any such action.
If an Event of Default occurs and is continuing, then, in every such
case, the holder of this Note may declare the principal of this Note to be due
and payable immediately, by a notice in writing to Maker of such default, and
upon any such declaration, such principal shall become immediately due and
payable. At such time after such declaration of acceleration has been made, and
before a judgment or decree for payment of money due has been obtained by the
holder, the holder of this Note, by written notice to Maker, may rescind and
annul such declaration and its consequences, if all Events of Default, other
than the nonpayment of the principal of this Note which has become due solely by
such acceleration, has been cured or waived. No such rescission shall affect any
subsequent default or impair any right consequent thereon.
So long as any amounts remain unpaid and outstanding under this Note,
Maker agrees with Holder as follows, except as otherwise agreed or consented to
in writing by Holder:
(1) INSPECTION. The Maker shall permit the Holder, or any authorized
representative thereof, to visit and inspect the properties of Maker, including
its corporate and financial records, and to discuss its business and finances
with officers of the Maker, without prior notice and as often as may be
reasonably requested.
(2) FINANCIAL STATEMENTS AND OTHER INFORMATION. Maker will deliver to
the Holder:
(a) within 90 days after the end of each fiscal year of the
Maker, a balance sheet of the maker as at the end of such year and statements of
income and of changes in financial condition of the Maker for such year,
reviewed by certified public accountants, and prepared in accordance with
generally accepted accounting principles;
(b) within 45 days after the end of each fiscal quarter of the
Maker, a balance sheet of the maker as at the end of such quarter, and
statements of income and of changes in financial condition of the Maker for such
fiscal quarter and for the current fiscal year to the end of such fiscal
quarter; and
(c) within 30 days after the end of each month, a balance
sheet of the maker as at the end of such month and statements of income of the
Maker for such month and for the current fiscal year to the end of such month,
setting forth in comparative form the Maker's projected financial statements for
the corresponding periods for the current fiscal year.
(3) MATERIAL CHANGES AND LITIGATION. The Maker will promptly notify the
Holder of any material adverse change in the business, properties, assets or
condition, financial or otherwise, of the Maker and of any litigation or
governmental proceeding or investigation pending or, to the best knowledge of
the Maker, threatened against the Maker, or against any officer, director, key
employee or principal stockholder of the Maker materially
affecting or which, if adversely determined, would materially adversely affect
its present or proposed business, properties, assets or condition taken as a
whole.
(4) MERGERS AND OTHER TRANSFERS. The Maker will not merge or
consolidate with any person, firm, association or corporation, (ii) transfer,
sell, assign, lease or otherwise abandon or dispose of (whether in one
transaction or a series of transactions) any material part of its assets except
in the normal course of business, (iii) change the nature of its business, (iv)
create any subsidiaries, or (v) liquidate, dissolve or cease active business
operations.
(5) ARTICLES OF INCORPORATION AND BYLAWS. The Maker will not amend its
Articles of Incorporation or Bylaws.
(6) JUDGMENTS AND LIENS. The Maker shall not create, incur, assume or
permit to exist any mortgage, lien, security interest, charge or encumbrance on
any property or assets now owned or hereafter acquired by it except:
(a) Liens arising out of judgments or awards (A) which have
been in force less than the applicable appeal period so long as execution is not
levied thereunder, or (B) in respect of which the Maker shall in good faith be
prosecuting an appeal or proceedings for review and in respect of which the
Maker shall have secured a subsisting stay of execution pending such appeal or
proceedings for review;
(b) Liens for taxes, assessments or governmental charges or
levies, provided payment thereof shall not at the time be required;
(c) Deposits, liens, bonds or pledges to secure payment of
worker's compensation, unemployment insurance, pensions, regulatory obligations
or other social obligations, surety, stay or appeal bonds, or other similar
obligations arising in the ordinary course of business;
(d) Mechanic's, worker's, repairmen's, warehousemen's,
vendor's, or carrier's liens, or other similar liens arising in the ordinary
course of business and securing sums which are not past due, or deposits or
pledges to obtain the release of any such liens;
(e) Liens arising by operation of law under lease agreements
made in the ordinary course of business and confined to the property rented;
(f) Liens on property securing the purchase price of property
acquired after the date hereof provided that each of such liens (A) is given
solely to secure indebtedness not exceeding one hundred percent (100%) of the
lesser of the cost or fair market value of such property, (B) does not extend to
any other property and (C) is given at the time of acquisition of the property;
(g) Currently outstanding liens; and
(h) Extension, renewal or refunding of indebtedness secured by
liens permitted by the foregoing, provided that the then outstanding amount of
such indebtedness is not increased and such liens do not extend to property not
then encumbered thereby.
(7) PURCHASE OF SECURITIES. The Maker will not purchase the outstanding
equity securities of any other person, firm, association or corporation, except
obligations issued or guaranteed by the United States government or any state or
political subdivision thereof or other short-term instruments normally
marketed by banks and nationally recognized brokerage firms, provided nothing
herein shall restrict the Maker from maintaining accounts with federally insured
banking institutions or money market funds.
(8) DECLARATION OF DIVIDENDS, ETC. The Maker will not (i) make, pay or
declare any distributions or dividends of cash or property with respect to its
issued shares of Common or Preferred Stock; (ii) directly or indirectly redeem,
repurchase or otherwise reacquire any shares of its Common or Preferred Stock;
or (iii) make any other payments outside the ordinary course. The Maker is
further prohibited from declaring or distributing, without the prior written
approval of Holder in its sole discretion, any executive bonus or other form of
additional compensation considered to be unusual or excessive by industry
standards.
(9) PAYMENTS TO OFFICERS. The Maker shall not loan or advance any
amount to, or sell, transfer or lease any properties or assets (real, personal
or mixed, tangible or intangible), to, or enter into any agreement or
arrangement with, any of the Maker's officers or directors, except for
compensation to officers pursuant to existing agreements and reimbursement of
expenses incurred by employees of the Maker in connection with their employment.
The Maker shall not increase the salary or other compensation payable to any
officer, employee or consultant of the Maker without the prior written approval
of the Holder.
(10) INDEBTEDNESS. Except for the existing indebtedness reflected on
the balance sheets delivered previously to Holder, and indebtedness, whenever
incurred, which is subordinate to the Note, provided such subordinated
debtholder has signed an intercreditor agreement acceptable to Holder, the Maker
shall not incur any indebtedness for borrowed money, including pension fund
loans or purchase money indebtedness, or guarantee any such indebtedness or
issue or sell any debt securities of the Maker or guarantee in any manner
(including, without limitation, by agreeing to maintain the financial condition
of another person) any debt securities of others.
(11) EXPENDITURES. The Maker shall deliver to holder a reasonably
detailed written use of proceeds description not later than the date of this
Note, and shall conform its expenditures and investments to such description,
except as the holder may otherwise consent.
The covenants of the Maker contained above shall terminate, and be of
no further force or effect, upon the repayment in full of all amounts due under
the Note.
Maker represents and warrants that this Note evidences one or more
loans made to the Maker for the purpose of carrying on a business or commercial
enterprise.
All parties to the transaction evidenced by this Note, whether Maker,
guarantor, surety or endorser, hereby jointly and severally waive all exemption
rights, whether under any state constitution, homestead exemption or otherwise,
and also severally waive demand, presentment for payment, notice of dishonor,
valuation and appraisement and expressly agree that the maturity date hereof may
be extended from time to time without in any way affecting the liability of
Maker, any guarantor, surety or endorser.
The obligations evidenced by this Note shall be the joint and several
obligations of all makers, sureties, guarantors and endorsers and shall be
binding upon them and their heirs, successors and permitted assigns.
This Note is subject to the express condition that at no time shall
Maker be obligated to pay interest hereunder at a rate which could subject the
Holder to either criminal or civil liability as a result of
being in excess of the maximum rate which Maker is permitted by law to contract
or agree to pay. If, by the terms of this Note, Maker is at any time obligated
to pay interest at a rate in excess of such maximum rate, the rate of interest
under this Note shall be deemed to be immediately reduced to such maximum rate
and interest payable hereunder shall be computed at such maximum rate, and the
portion of all prior interest payments in excess of such maximum rate shall be
applied and shall be deemed to have been payments in reduction of the principal
balance of this Note.
If this Note is not paid when due, Maker hereby irrevocably authorizes
any clerk of any court of record or any attorney to enter in any court of
competent jurisdiction in the State of New York or the State of Georgia, or any
other State or Territory of the United States, judgment by confession against
the Maker and in favor of the holder of this Note for the entire amount of this
Note then remaining unpaid (including principal, accrued interest and late
charges), together with attorney's fees equal to fifteen percent (15%) of the
unpaid balance of this Note and court costs, without issuance or service of
process, stay of execution or right of appeal, and expressly waiving the benefit
of all exemption laws (whether by state constitution, homestead exemption or
otherwise) and all irregularity or error in entering said judgment or the
execution thereon. No single exercise of the foregoing power to confess judgment
shall be deemed to exhaust the power, whether or not any such exercise shall be
held by any court to be invalid, voidable or void, but the power shall continue
undiminished, and it may be exercised from time to time as often as the holder
of this Note shall elect, until such time as the holder of this Note shall have
received payment in full of all indebtedness of the Maker to the holder of this
Note under the terms hereof.
THE MAKER HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES THE
RIGHTS IT MAY HAVE TO A TRIAL BY JURY IN ANY LITIGATION BASED HEREON, OR ARISING
OUT OF, OR IN CONNECTION WITH, THIS NOTE. THIS PROVISION IS A MATERIAL
INDUCEMENT FOR THE HOLDER TO ENTER INTO THE CONTEMPLATED TRANSACTION. THE HOLDER
HEREBY WAIVES ITS RIGHT TO JURY TRIAL TO THE SAME EXTENT AS SUCH RIGHT IS WAIVED
BY THE MAKER.
None of the terms or provisions of this Note may be excluded, modified,
or amended except by a written instrument duly executed on behalf of the Holder
expressly referring hereto and setting forth the provision so excluded, modified
or amended.
This Note shall be governed by the laws of the State of New York.
ATTEST: GLOBALETUTOR.COM, INC.
- ---------------------------- By: /s/ Thomas McMurrain
Name: Title: Vice President
SECURITY AGREEMENT
This SECURITY AGREEMENT is dated as of December 28, 1999, and is
executed by THOMAS MCMURRAIN ("Shareholder"), with an address at
________________________, pursuant to the terms of that certain Senior
Secured Note ("Note"), dated this same date, executed and delivered by
GLOBALETUTOR.COM, INC., a Nevada corporation ("Global"), to DIGITAL LAUNCH,
INC., a Delaware corporation, and pursuant to that certain Agreement and Plan
of Reorganization (the "Acquisition Agreement"), entered into as of this same
date by and among Shareholder, Global and Digital. In consideration of the
promises, covenants and agreements herein and therein, Shareholder hereby
agrees that Digital shall have the rights, remedies and benefits hereinafter
set forth.
1. For the purposes of this Agreement:
(a) The term "Liabilities" shall include any and all
obligations and liabilities of any kind arising in any way of Global to Digital,
now existing or hereafter created, under the Note, the Acquisition Agreement or
otherwise; all liabilities and obligations of Global hereunder; as well as all
costs, expenses, advances and liabilities which may be made or incurred by
Digital in any way in connection with any of the Liabilities or any collateral
security therefor. The term also includes specifically, but not by way of
limitation, any damages, costs or expenses suffered by Digital or to which they
may become subject (1) as a result of the failure of Global to perform any
material obligation or term of the Note or the Acquisition Agreement, (2) in the
event that any of Global's representations in the Note or the Acquisition
Agreement are materially breached or untrue, regardless of when such breach may
be discovered, and (3) in the event of any challenge by any other person or
party to the authority of Global or the Shareholder to enter into the
acquisition transaction contemplated by the Acquisition Agreement or to take any
of the actions contemplated thereunder.
(b) The term "Collateral" shall mean all of the issued and
outstanding shares of capital stock of Global, all of which are owned by
Shareholder effective as of the date of the Note and of closing under the
Acquisition Agreement, consisting of 4,820,000 shares of common stock of Global.
(c) The term "Agent" shall mean such person or firm that shall
be appointed by Digital to take and retain possession of the Collateral in order
to perfect the security interest granted hereunder, and Digital shall promptly
notify the Shareholder of the name and address of the Agent and of any change of
Agent.
2. As security for the payment of all Liabilities, the Shareholder
hereby grants to Digital a continuing security interest in all the Collateral
referenced in 1(b) above and any part thereof.
3. The Shareholder represents, warrants and covenants that:
(a) The Collateral constitutes all of the issued and
outstanding capital stock of Global as of the date hereof, and Global will not,
and Shareholder will take all necessary action such that Global does not, issue
any other shares of capital stock while the Note is outstanding, except with the
prior written approval of Digital.
(b) Shareholder has good title to the Collateral, free and
clear of any liens and encumbrances, excepting the security interests granted
hereby.
(c) This Agreement creates a valid and enforceable security
interest in the Collateral securing the payment of the Liabilities, and upon the
filing of the necessary financing statements, or the
taking of possession of the Collateral which consists of securities, such
security interest will be a valid and perfected first priority security
interest.
(d) No authorization, approval or other action by, and no
notice to or filing with, any governmental authority or regulatory body is
required either (i) for the grant by the Shareholder of the security interest
granted hereby or for the execution, delivery or performance of this Agreement
by the Shareholder or (ii) for the perfection of or the exercise by Digital of
its rights and remedies hereunder except, if required, the filing of financing
statements.
4. At any time and from time to time, upon the request of Digital, the
Shareholder will, at its own expense:
(a) Defend the Collateral against the claims and demands of
all persons.
(b) Deliver and pledge to Digital, endorsed or accompanied by
instruments of assignment or transfer satisfactory to Digital, any instruments,
documents and chattel paper which they may specify.
(c) Give, execute, deliver and file or record in the proper
governmental offices, any instrument, paper or document, including but not
limited to one or more financing statements under the Uniform Commercial Code,
satisfactory to Digital or Agent, or take any action, which Digital or Agent may
deem necessary or desirable in order to create, preserve, perfect, extend,
modify, terminate or otherwise affect any security interest granted pursuant
hereto, or to enable Digital or Agent to exercise or enforce any of the rights
of Digital hereunder.
(d) Keep, and stamp or otherwise mark, any of its documents,
instruments and chattel paper and its individual books and records relating to
any of the Collateral in such manner as Digital or Agent may require.
(e) Pay, or reimburse Digital or Agent in the amount of, all
expenses (including reasonable fees and expenses of attorneys, experts and
agents) incurred in any way in connection with the exercise, defense or
assertion of any rights or interests of Digital hereunder, the enforcement of
any provisions hereof, or the management, preservation, use, operation,
maintenance, collection, possession, disposition or enforcement of any of the
Collateral (all such expenses to be Liabilities hereunder).
5. Without the prior written consent of Digital or Agent, Shareholder
shall not (i) transfer, sell or assign any of the Collateral; (ii) allow or
permit any other security interest or lien to attach thereto; (iii) file, or
authorize or permit to be filed, in any jurisdiction any financing statement
relating to any of the Collateral unless Digital is named as sole secured party;
(iv) permit any of the Collateral to be levied upon under any legal process; or
(v) permit anything to be done that may impair the value of any of the
Collateral or the security intended to be afforded hereby.
6. Agent is hereby appointed Digital's attorney-in-fact to do all acts
and things which Digital may deem necessary to perfect and continue perfected
the security interest created hereby and to protect and preserve the Collateral.
7. With this Agreement and the Collateral, the Shareholder shall
deliver to Digital an executed stock power, duly endorsed in blank, to
facilitate any foreclosure or transfer of the Collateral that may be required.
8. (A) Upon default by Shareholder or Global in the performance of any
covenant or agreement herein, in the Note, or in the Acquisition Agreement, or
any other agreement or document covering any of the Liabilities, or in the
discharge, payment or performance of any of the Liabilities, or if any
representation or warranty herein should prove untrue, or (B) in the event (1)
any of Shareholder's or Global's representations in the Acquisition Agreement
are materially breached or untrue, regardless of when such breach may be
discovered, or (2) there may be any challenge by any other person or party to
the authority of the Shareholder or Global to enter into the acquisition
transaction contemplated by the Acquisition Agreement or to take any of the
actions contemplated thereunder, Digital and the Agent shall have with respect
to the Collateral all of the rights and remedies of a secured party under the
Uniform Commercial Code or any other applicable law and all rights provided
herein or in any other applicable security or other agreement, all of which
rights and remedies shall, to the full extent permitted by law, be cumulative.
Digital or the Agent may sell the Collateral or any part thereof in one or more
parcels at public or private sale, at any place, for cash, on credit or for
future delivery, and at such price or prices and upon such other terms as
Digital may deem commercially reasonable. Any notice of sale, disposition or
other intended action by Digital or the Agent, sent to the Shareholder at the
address specified above, or such other address of Shareholder as Shareholder may
have notified Digital and the Agent from time to time, at least five days prior
to such action, shall constitute reasonable notice to the Shareholder.
9. The powers conferred on Digital and the Agent hereunder are solely
to protect the interest of Digital in the Collateral and shall not impose any
duty upon them to exercise any such powers. Except for the safe custody of any
Collateral in its possession and the accounting for monies actually received by
it hereunder, Digital and the Agent shall have no duty as to any Collateral or
as to the taking of any necessary steps to preserve any right of or against
other parties pertaining to any Collateral. Shareholder agrees to indemnify
Digital and the Agent from and against any and all claims, losses and
liabilities growing out of or resulting from this Agreement (including, without
limitation, enforcement of this Agreement) or Digital's interest in the
Collateral, except claims, losses or liabilities resulting from Digital's or the
Agent's gross negligence or willful misconduct.
10. No provision hereof shall be modified except by a writing signed by
Digital or the Agent, on behalf of Digital, and the Shareholder expressly
referring to the provision hereof so modified.
11. This Agreement shall be binding upon and shall inure to the benefit
of the assigns or successors of the Shareholder and Digital.
12. No delay, failure to enforce, or single or partial exercise on the
part of Digital in connection with any of its rights hereunder shall constitute
an estoppel or waiver thereof, or preclude other or further exercise or
enforcement thereof and no waiver of any default hereunder shall be a waiver of
any subsequent default.
13. This Agreement shall be governed as to its validity, interpretation
and effect in accordance with the laws of the State of New York, except as
required by mandatory provisions of law and except if the validity or perfection
of the security interest hereunder, or remedies hereunder, in respect of any
particular Collateral are governed by the laws of a jurisdiction other than New
York. Unless the context otherwise requires, all terms used herein which are
defined in the Uniform Commercial Code as enacted in New York shall have the
meanings therein stated.
This Agreement has been executed at New York, NY, as of the date first
set forth above.
SHAREHOLDER:
By /s/ Thomas McMurrain