EXHIBIT 10.3
NON-NEGOTIABLE
LIMITED RECOURSE
PROMISSORY NOTE
$535,000.00 JANUARY 1, 2002
FOR VALUE RECEIVED, the undersigned, Allison Amon, Lisa Mehling and Steve Wax,
("Makers"), jointly and severally, hereby promise to pay to iNTELEFILM, Corp.
(the "Holder"), on or before December 31, 2004, , the principal sum of Five
Hundred Thirty-Five Thousand and 00/100 Dollars ($535,000.00), together with
interest, as follows, (i) the first $250,000 of principal to be repaid will bear
interest at the annual rate of 8%, and (ii) the final $285,000 will bear
interest at the generally prevailing prime rate, as reported from time to time
in The Wall Street Journal, adjusted quarterly.
This Note is payable in installments, which shall include principal and
interest, as follows:
March 31, 2002 $ 40,000.00
June 30, 2002 $ 40,000.00
September 30, 2002 $ 40,000.00
December 31, 2002 $190,000.00
March 31, 2003 $ 20,000.00
June 30, 2003 $ 20,000.00
September 30, 2003 $ 20,000.00
December 31, 2003 $ 70,000.00
March 31, 2004 $ 20,000.00
June 30, 2004 $ 20,000.00
September 30, 2004 $ 20,000.00
December 31, 2004 All then unpaid principal and interest
The obligations of the Makers under this Note are secured by a pledge of
shares of the issued and outstanding common stock of Chelsea Pictures, Inc. and
certain issued and outstanding shares of Holder's common stock (collectively,
the "Shares"), pursuant to a Stock Pledge Agreement of even date entered into
between the Makers and the Holder (the "Stock Pledge Agreement").
In the event of a default by the Principals, iNTELEFILM's recourse shall
be limited to $150,000 against the Makers, jointly and severally, and for the
value of the Pledged Shares (as defined in the Stock Pledge Agreement).
If the date set for payment of principal or interest hereunder is a
Saturday, Sunday or legal holiday, then such payment shall be made on the next
succeeding business day.
All payments hereunder shall be made by check, and delivered to the
Holder at such address as to which it shall have notified the Makers from time
to time in writing.
Upon the occurrence of any Default (as defined below), Holder may
declare any or all obligations or liabilities of Makers (including the unpaid
principal hereunder, interest and late charges due thereon), immediately due and
payable without presentment, demand, protest or notice. Following a Default in
payment (as specified in paragraph (a), below, the unpaid principal balance of
this Note will bear interest at the annual rate of 10%.
At the option of the Holder, this Note, including the principal amount
at such time remaining unpaid and interest accrued thereon, shall, without
notice or demand, be declared to be and thereby become immediately due and
payable for any of the following events of default (each a "Default"), if such
default has not been cured. Each of the following shall be a Default unless the
Holder consents to such action in writing, which consent may be withheld for any
reason:
(a) The failure to pay when due any payment of principal or
interest herein required, if such failure continues for twenty
(20) days after written notice of such failure from the Holder
to each of the Principals c/o Chelsea Pictures, Inc. at the
address provided in the Stock Purchase Agreement;
(b) The merger or consolidation of Chelsea Pictures, Inc. with or
into another entity unless the shareholders of Chelsea
Pictures, Inc. prior to the merger or consolidation own more
than fifty percent (50%) of the voting control of the
surviving or resulting entity;
(c) The sale by Chelsea Pictures, Inc. of all or substantially all
of its assets or the liquidation or dissolution of Chelsea
Pictures, Inc.;
(d) The filing of a voluntary petition for an order of relief
under the Bankruptcy Code by Chelsea Pictures, or any filing
for relief under any state or federal insolvency statute by
Chelsea Pictures;
(e) The filing of an involuntary petition for an order of relief
under the Bankruptcy Code against Chelsea Pictures, or any
filing for relief under any other state or federal insolvency
statute against Chelsea Pictures unless discharged or
dismissed within ninety (90) days of the filing; or
(f) Failure to provide financial information as follows:
(i) Company financial statements within 45 days of each
quarter's end; and
(ii) Updated personal financial summaries of the
Principals within 90 days of each calendar year end;
If an Event of Default shall occur hereunder, the Makers shall pay the
costs of collection, including reasonable attorneys' fees, incurred by the
Holder in the enforcement hereof.
The Makers may prepay the whole or any part of the principal of this
note at any time and from time to time without premium or penalty.
The Makers hereby waive demand, presentment, notice of dishonor, protest
and notice of protest, and agree that the Holder hereof may extend the time for
payment or accept partial payment without discharging or releasing the Makers.
This Note shall be governed by and construed in accordance with the laws
of the State of New York.
-2-
The provisions of this Note are severable. If any provision of this Note
or the application thereof to any person or circumstance is held invalid, the
provision or its application shall be modified to the extent possible to reflect
the expressed intent of the parties but in any event, invalidity shall not
affect other provisions or applications of this Note which can be given effect
without the invalid provision or application.
-3-
This Note may be executed in one or more counterparts, each of which
shall be deemed an original and all of which together shall constitute one and
the same Note.
IN WITNESS WHEREOF, the Makers have executed this note under seal as of
the date first set forth above.
/s/ Allison Amon
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ALLISON AMON
/s/ Lisa Mehling
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LISA MEHLING
/s/ Steve Wax
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STEVE WAX