EXHIBIT 10.5
PROMISSORY NOTE
---------------
$865,000 JUNE 21, 1996
FOR VALUE RECEIVED, the undersigned, MSH ENTERTAINMENT CORPORATION, a Utah
corporation maintaining a place of business at 00000 Xxxxx Xxxxxx, X.X, Xxx 000,
Xxxxx Xxxxxx, Xxx Xxxxxx 00000 (hereinafter call the "Maker"), promises to pay
to the order of Xxxxxxxxxxx Xxxxx, at San Francisco, California (hereinafter
called the "Payee"), at the Payee's aforementioned address, or at such other
place as the Payee may designate in writing to the Maker, in lawful money of the
United States of America, the principal sum of EIGHT HUNDRED AND SIXTY-FIVE
THOUSAND ($865,000) DOLLARS, together with 10% simple interest calculated on the
basis of a 365-day year and the actual number of days elapsed, which principal
along with accrued interest thereon shall be paid in one balloon payment on
December 1, 1996.
Within 10 days of receipt by Maker of the full offering amount of a public
offering of Maker's common shares, Maker shall apply 60% of the net proceeds
from the sale of its common shares to reduce the principal due under this Note.
If Maker fails to make the required balloon payment due under this Note on
or before December 1, 1996, then the Intellectual Property rights as defined in
the Asset Purchase Agreement, dated as of even date herewith, shall be
transferred back to Payee; provided, however that Maker shall be granted a one
year extension to make the balloon payment due hereunder if it pays (i) all
accrued and outstanding interest due under the Note on or before January 1,
1997, and (ii) pays accrued interest to Payee each month on the outstanding
principal balance of the Note beginning on February 1, 1997.
If this Note is collected by suit or legal proceeding, the Maker agrees to
pay the holder hereof the costs and reasonable attorneys fees incurred in the
collection hereof.
It is the intention of the parties hereto to comply with applicable usury
laws (now or hereafter enacted); accordingly, notwithstanding any provision to
the contrary in this Note, or in any of the documents securing payment hereof or
otherwise relating hereto, in no event shall this Note or such documents require
the payment or permit the collection of interest in excess of the maximum amount
permitted by such laws. If any such excess of interest is contracted for,
charged, taken, reserved or received under this Note or under the terms of any
of the documents securing payment hereof or otherwise relating hereto, or in the
event that all or part of the principal or interest of this Note shall be
prepaid, so that under any of such circumstances the amount of interest
contracted for, charged, taken, reserved or received under this Note or under
any of the instruments securing payment hereof or otherwise relating hereto,
this Note or otherwise relating hereto, on the amount of principal actually
outstanding from time to time under this Note shall exceed the maximum amount of
interest permitted by applicable usury laws, now or hereafter enacted, then in
any such event (i) the provisions of this paragraph shall govern and control,
(ii) any such excess which may have been collected at final maturity of said
indebtedness either shall be applied as a credit against the then unpaid
principal amount hereof or refunded to the Maker at the Payee's option, and
(iii) upon such final maturity, the effective rate of interest shall be
automatically reduced to the maximum lawful rate allowed under applicable usury
laws as now or hereafter construed by the courts having jurisdiction thereof.
Without limiting the foregoing, all calculations of the rate of interest
contracted for, charged, taken, reserved or received under this Note or under
such other documents which are made for the purpose of determining whether such
rate exceeds the maximum lawful rate, shall be made, to the extent permitted by
law, by amortizing, prorating, allocating and spreading in equal parts during
the period of the full stated term of the loan evidenced hereby, all interest at
any time contracted for, charged, taken, reserved or received from the Maker or
otherwise by the Payee in connection with such indebtedness.
Any check, draft, money order or other instrument given in payment of all
or any portion hereof may be accepted by the holder hereof and handled in
collection in the customary manner, but the same shall not constitute payment
hereunder or diminish any rights of the holder hereof except to the extent that
actual cash proceeds of such instrument are unconditionally received by the
holder and applied to this indebtedness in the manner elsewhere herein provided.
1
There shall be no penalty for prepayment or for late payment hereunder, or
like defaults; provided, however, that the foregoing shall not be construed as a
limitation upon any amounts otherwise due hereunder.
The legality, enforceability and construction of this Note and the
obligations evidenced hereby shall be governed by the law of the State of
California without regard to its law of conflicts of law, or choice of law and,
to the extent applicable, by the laws of the United States of America.
MSH ENTERTAINMENT CORPORATION,
a Utah corporation
By: /s/ XXXXXX XXXXX
----------------
2
