PROMISSORY NOTE
Hartford, Connecticut
$260,000 September 8, 2000
For value received, MEDIA DROP-IN PRODUCTIONS, INC., a Delaware
corporation (the "Borrower"), hereby promises to pay to the order of Robert R.
Sparacino or his assigns (hereinafter "Lender"), at c/o Sparacino Associates,
Inc., 175 Blackberry Drive, Stamford, CT, the principal sum of TWO HUNDRED SIXTY
THOUSAND DOLLARS ($260,000) together with interest thereon beginning as of the
date hereof, at a fixed rate per annum of fifteen percent (15%) (except in the
event of default as provided herein), computed daily on the basis of a three
hundred sixty (360) day year and actual days elapsed and payable monthly in
arrears on the first of each month, commencing October 1, 2000. The entire
outstanding principal balance shall be due, if not sooner paid, on January 31,
2001 (the "Maturity Date"). All payments shall be applied first to the payment
of interest on the unpaid principal balance of this Promissory Note (including
all renewals, extensions or modifications hereof, the "Note") and then to the
balance of the principal of this Note.
This Note is issued pursuant to the certain Loan Agreement by and among
Lender, Steven R. Saferin, Borrower and MDI Entertainment, Inc. (the
"Guarantor") of even date herewith (the "Loan Agreement"), and is secured by a
security interest in all of Borrower's assets pursuant to a Security Agreement,
of even date herewith, between Borrower and Lender (the "Borrower Security
Agreement"). Pursuant to a Guaranty Agreement ("Guaranty") of even date
herewith, Guarantor has guaranteed all of the obligations of Borrower to Lender,
including Borrower's obligations under this Note. The Guaranty is secured by a
security interest in substantially all of Guarantor's assets pursuant to a
Security Agreement, of even date herewith, between Guarantor and Lender (the
"Guarantor Security Agreement"). The Loan Agreement, the Borrower Security
Agreement, the Guaranty and the Guarantor Security Agreement are sometimes
hereinafter collectively referred to as the "Loan Documents."
Notwithstanding any provisions of this Note, it is the understanding
and agreement of the Borrower and Lender that the maximum rate of interest to be
paid by Borrower to Lender shall not exceed the maximum permissible rate of
interest to be charged by Lender under applicable laws. Any amount paid by
Borrower in excess of such rate shall be deemed to be a payment in reduction of
principal except to the extent that such amount is in excess of the then
outstanding principal amount, in which event such excess shall be returned to
the Borrower.
Lender may collect a "late charge" equal to five (5%) percent of any
installment of interest or principal, or of any taxes, assessments and insurance
paid by Lender, which is not paid or reimbursed by the Borrower within ten (10)
days of the due date thereof to cover the extra expense involved in handling
such delinquent payment.
Borrower may prepay this Note in whole or in part at any time without
penalty. Any and all prepayments shall be credited first to accrued interest to
the date of the prepayment and then to the unpaid principal until the entire
indebtedness has been paid.
Each of the following shall be deemed to be an "Event of Default": (i)
the failure of Borrower to pay (a) any periodic installment of interest when
such installment shall become due and payable hereunder and such default
continues for ten (10) days, or (b) the outstanding principal balance of this
Note, together with accrued and unpaid interest thereon, on the Maturity Date;
and (ii) the occurrence of an event of default or default under any of the Loan
Documents beyond any applicable grace or cure periods set forth therein. Upon
the occurrence of an Event of Default, the entire indebtedness with accrued
interest thereon due under this Note may, at the option of Lender, by written
notice, be accelerated and become immediately due and payable without demand or
other notice of any kind. Failure to exercise such option shall not constitute a
waiver of the right to exercise the same in the event of any subsequent Event of
Default.
In addition to all other rights contained in this Note, if an Event of
Default occurs and as long as such Event of Default continues, the outstanding
principal balance hereof shall bear interest at the rate of thirty percent (30%)
per annum (the "Default Rate"). The Default Rate shall also apply from and after
the Maturity Date or, if earlier, the acceleration of this Note, until the
entire principal balance of this Note, and all accrued interest thereon, is paid
in full. Notwithstanding anything contained herein, if the Borrower fails to pay
the principal balance of this Note, and all accrued and unpaid interest thereon,
on or before the Maturity Date, the Default Rate shall be applied to the
principal balance of this Note retroactive to the date of this Note.
This Note has been executed and delivered in accordance with the Loan
Agreement, which sets forth further terms and conditions upon which the entire
unpaid principal hereof and all interest hereon may become due and payable prior
to the stated maturity hereof, and generally sets forth the rights of Lender and
duties of Borrower with respect hereto.
Borrower agrees to pay all taxes levied or assessed upon this Note and
to pay all costs, expenses and attorneys' fees incurred by Lender in any
proceedings for the collection, defense, preservation, enforcement or protection
of this Note, in realizing on or disposing of collateral given under any
mortgage, chattel mortgage, or other security agreement securing this Note or in
protecting or sustaining the security interest given in said mortgage, chattel
mortgage, or other security agreement. Borrower hereby gives Lender a lien and
right of setoff for all Borrower's liabilities upon and against all the
deposits, credits, collateral and property of Borrower, now or hereafter in the
possession or control of Lender or in transit to it. Lender may, in the event of
a Default, or upon the occurrence of any event or condition which would
constitute such a Default but for the requirement that notice be given or time
elapsed or both, apply or setoff the same, or any part thereof, to any liability
of Borrower, even though unmatured.
BORROWER ACKNOWLEDGES THAT THE LOAN EVIDENCED BY THIS NOTE IS A
COMMERCIAL TRANSACTION AND WAIVES ITS RIGHT TO NOTICE AND HEARING UNDER CHAPTER
903a OF THE CONNECTICUT GENERAL STATUTES, OR AS OTHERWISE ALLOWED BY THE LAW OF
ANY STATE OR FEDERAL LAW WITH RESPECT TO ANY PREJUDGMENT REMEDY WHICH LENDER MAY
DESIRE TO USE. BORROWER IRREVOCABLY WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY
PROCEEDING HEREAFTER INSTITUTED BY OR AGAINST BORROWER IN RESPECT OF THIS NOTE.
Borrower and all guarantors, endorsers and other parties now or hereafter
becoming liable for payment of this Note hereby waive diligence, demand,
presentment for payment, notice of nonpayment, protest and notice of protest,
and notice of any renewals or extensions of this Note, and all rights under any
statute of limitations, and agrees that the time for payment of this Note may be
changed and extended at Lender's sole discretion, without impairing its
liability hereon, and further consents to the release of all or any part of the
security for the payment hereof at the discretion of Lender, or the release of
any party liable for this obligation without affecting the liability of
Borrower. Any delay on the part of Lender in exercising any of its rights or
remedies shall not operate as a waiver of any such right or remedy, and any
waiver granted on one occasion shall not operate as a waiver in the event of any
subsequent Default.
This Note shall bind the successors and assigns of the Borrower and
shall inure to the benefit of Lender, and his heirs, executors, administrators,
successors and assigns.
This Note shall be governed by and construed in accordance with the
laws of the State of Connecticut. Borrower irrevocably consents to the
jurisdiction of the courts of the State of Connecticut with respect to all
matters concerning this Note and any related agreements.
MEDIA DROP-IN PRODUCTIONS, INC.
By: /s/ Kenneth M. Przysiecki
Its Chief Financial Officer
Duly Authorized