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EXHIBIT 4.17
SENIOR NOTE
$_______________ ___________, 1997
PPN: ___________
FOR VALUE RECEIVED, N2K Inc. ("Maker"), hereby a Pennsylvania
corporation, promises to pay to the order of ______________, a _______________,
with its principal place of business at ______________,
______________________________________________________ (together with its
successors and assigns, the "Holder"), the principal sum of ___________________
Dollars ($_______________) in legal and lawful money of the United States of
America, together with accrued interest thereon as set forth in Section 1
hereof, which interest shall accrue on the outstanding unpaid principal from
and including the date hereof, but excluding the date on which the principal
and all accrued interest are paid in full. The principal of this Note,
together with all accrued interest thereon, shall be due and payable on the
date (the "Maturity Date") on which the first of the following events occurs:
(i) consummation of an initial public offering of the common stock of
N2K Inc., (ii) Change in Control (as hereinafter defined), or (iii) March 31,
1998. For purposes hereof "Change in Control" means (a) a merger or
consolidation of Maker in which holders of the common stock of Maker receive
cash, securities or other proper property from one or more third parties, (b) a
sale by Maker of all or substantially all of the assets of Maker (c) at any
time, the failure of Xxxxxxxx X. Xxxxx, Xxxxxx Xxxxx Xxxxxx or Xxxxxxxx X.
Xxxxxxx (the "Management Stockholders") to collectively own, directly or
indirectly, beneficially and of record, at least 20% (by number of votes) of the
voting stock of Maker outstanding at such time, or (d) the transfer of other
disposition of the voting stock of the Maker by any one or more of the
Management Stockholders such that immediately after such transfer or other
disposition the Management Stockholders fail to collectively own, directly or
indirectly, beneficially and of record at least 25% (by number of votes) of the
voting stock of the Maker outstanding at such time.
This Note is issued to fund critical working capital needs of
N2K Inc. and is being issued in connection with a certain letter agreement by
and between Maker as Holder of even date herewith (the "Letter Agreement").
Section 1. Interest. This Note shall accrue interest on the
unpaid principal amount hereof at the rate of 14% per annum, compounded
quarterly. Interest shall be computed on the basis of a 360-day year of 12
thirty-day months and shall be payable on the Maturity Date.
Section 2. Prepayments. Maker may, at its option, prepay the
principal amount of this Note, and all accrued interest thereon, at any time and
from time to time, in whole or in
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part and without penalty.
Section 3. Events of Default and Remedies. Any of the
following events shall be an "Event of Default":
(a) Maker shall fail to pay the amount due under this Note on
or preceding the Maturity Date;
(b) Maker shall fail to perform, observe and comply with any
covenant, agreement, or condition (other than the covenant to pay amounts of
principal or interest thereon due under this Note) contained in this Note and
such failure continues for a period of ten (10) days following written notice to
Maker from Holder of the continuation of such failure; or
(c) Maker (i) shall generally not, or be unable to, or shall
admit in writing its inability to, pay its debts as such debts become due; (ii)
shall make an assignment for the benefit of creditors, petition or apply to any
tribunal for the appointment of a custodian, receiver or trustee for itself or a
substantial part of its assets; (iii) shall commence any proceeding under any
bankruptcy, reorganization, arrangement or readjustment of debt law or statute
of any jurisdiction, whether now or hereafter in effect; (iv) shall have had any
such petition or application filed or any such proceeding shall have been
commenced, against it, in which an adjudication or appointment is made or order
for relief is entered, or which petition, application or proceeding remains
undismissed or unstayed for a period of thirty (30) days or more; (v) or shall
be the subject of any proceeding under which its assets may be subject to
seizure, forfeiture or divestiture; (vi) by any act or omission shall indicate
its consent to, approval of or acquiescence in any such petition, application or
proceeding or order for relief or the appointment of a custodian, receiver or
trustee for all or any substantial part of its property; or (vii) shall suffer
any such custodianship, receivership or trusteeship to continue undischarged for
a period of thirty (30) days or more.
(d) Any warranty, representation or other statement by or on
behalf of Maker contained in the Letter Agreement or in any instrument furnished
in compliance with or in reference thereto shall have been false or misleading
in any material respect when made.
(e) Maker shall have defaulted with respect to any payment
obligation in respect of any indebtedness of Maker (other than trade payables)
or under any agreement securing or relating to such indebtedness, or any event
shall occur and be continuing or any condition shall exist in respect of any
indebtedness (other than trade payables), or under any agreement securing or
relating to such indebtedness, that causes such indebtedness, or a portion
thereof, to become due prior to its stated maturity or prior to its regularly
scheduled date or dates of payment (and the holder of such indebtedness has
caused such to become due).
Upon the occurrence of an Event of Default described in
paragraph (c) of Section 3 hereof, the outstanding principal amount of this Note
shall automatically become immediately due and payable. Upon the existence of an
Event of Default (other than pursuant to paragraph (c) of Section 3 hereof),
Holder may declare the outstanding principal amount of the Note, to be forthwith
due and payable. Upon the outstanding principal amount of this Note becoming due
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and payable under this Section 3, whether automatically or by declaration, the
outstanding principal amount of the Note, all interest thereon, and all other
amounts due under this Note shall become and be forthwith due and payable,
without presentment, demand, protest, or further notice of any kind, all of
which are hereby expressly waived by Maker; and in addition thereto, Holder may
exercise any rights and remedies provided by law.
Section 4. Covenants of Maker. At all times prior to the
Maturity Date and so long as any amount remains outstanding under this Note:
(a) Financial Reporting: Business Information. Maker shall
deliver to Holder:
(i) Monthly Financial Statements -- prior to the date
(the "IPO Date") Maker first offers for sale its common stock pursuant to an
effective registration statement filed under the Securities Act of 1933, as
amended, as soon as practicable after the end of each monthly fiscal period in
each fiscal year of Maker, and in any event within 30 days thereafter:
(A) a consolidated balance sheet as at the
end of such month;
(B) a consolidated income statement for such
month and for the portion of such fiscal year ending with such month;
and
(C) consolidated statements of changes
in stockholders' equity and cash flows for such months and for the
portion of such fiscal year ending with such month;
for Maker, setting forth in each case in comparative form the
figures for the corresponding month in the previous fiscal year of Maker, all in
reasonable detail, and certified by a senior financial officer of Maker as
fairly presenting, in all material respects, the financial position of Maker and
its results of operations and cash flows (subject to changes resulting from
year-end adjustments);
(ii) Post Initial Public Offering Information --
from and after the IPO Date, promptly upon their becoming available, a copy of
each financial statement, report, notice or proxy statement sent by Maker to
stockholders generally, and of each regular or periodic report (including,
without limitation, each Form 10-Q and Form 10-K) and any registration
statement, prospectus or written communication (other than transmittal letters),
and each amendment thereto, in respect thereof filed by Maker with, or received
by Maker in connection therewith from, the National Association of Securities
Dealers, any securities exchange or the Securities and Exchange Commission or
any successor agency; and
(iii) Annual Financial Statements -- in the event
that the IPO Date does not occur before March 31, 1998, as soon as practicable
after the end of each fiscal year of the Maker, and in any event within one
hundred twenty (120) days thereafter,
(i) consolidated balance sheets as at the
end of such year, and
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(ii) consolidated statements of income,
changes in shareholders' equity and cash flows for such year, for the Maker and
its consolidated subsidiaries, setting forth in comparative form the financial
statements for the previous fiscal year, all in reasonable detail and
accompanied by an audit report thereon of independent certified public
accountants of recognized national standing, which report shall state without
qualification (including, without limitation, qualifications related to the
scope of the audit, the compliance of the audit with generally accepted auditing
standards, or the ability of the Maker or a material subsidiary thereof to
continue as a going concern), that such financial statements have been prepared
and are in conformity with GAAP.
(iv) Requested Information -- with reasonable
promptness, such other data and information as from time to time may be
reasonably requested by Xxxxxx;
(b) Inspection. Maker will permit officers and designated
representatives of Holder, at the expense of Maker at any time when an Event of
Default exists, and otherwise at the expense of Holder, to visit and inspect any
of its properties, and to examine its books of account and to make copies and
extracts therefrom, and discuss its affairs, finances and accounts with, and be
advised as to the same by, its officers and its independent accountants (and by
this provision Maker authorized said accountants to discuss the finances and
affairs of Maker), all upon reasonable notice and at such reasonable times and
intervals and to such reasonable extent as Holder may reasonably request.
(c) Negative Pledge. Maker will not grant in the future (upon
the happening of a contingency or otherwise), any of its property, whether now
owned or hereafter acquired, at any time to be subject to a lien securing
indebtedness of Maker except for renewals or extensions of a loan agreement with
CoreStates Bank in an amount up to $2 million.
(d) Distributions. Maker will not:
(i) make or declare, or incur any liability to make
or declare, any dividends or other distributions on the
capital stock of Maker; and
(ii) make any optional or mandatory redemption,
retirement, purchase or other acquisition, direct or indirect,
of any shares of capital stock of Maker, or of any warrants,
rights, or options to acquire any shares of such capital stock
of Maker other than the "put" of Rocktropolis, LLC as
described in Maker's S-1 Registration Statement.
(e) Line of Business. Maker will not engage, directly or
indirectly, in any line of business other than the music entertainment business.
Section 5. Costs and Expenses. Maker shall pay when billed the
reasonable out-of-pocket costs and expenses (including reasonable attorney's
fees) incurred by Xxxxxx in connection with the consideration, negotiation,
preparation or execution of any amendments,
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waivers, consents, standstill agreements or other similar agreements with
respect to this Note (whether or not any such amendments, waivers, consents,
standstill agreements or other similar agreements are executed). At any time
when Maker and Holder are conducting restructuring or workout negotiations in
respect hereof, or an Event of Default exists, Maker shall pay when billed the
reasonable out-of-pocket costs and expenses (including reasonable attorneys'
fees and the fees of professional advisors) incurred by Holder in connection
with the assessment, analysis or enforcement of any rights or remedies that are
or may be available to Holder and in connection with inspections made pursuant
to Section 4(b) (provided that at all other times inspections will be at the
expense of Holder). If Maker shall fail to pay when due any principal of, or
interest on, this Note, Maker shall pay to Holder, to the extent permitted by
law, such amounts as shall be sufficient to cover the out-of-pocket costs and
expenses, including but not limited to reasonable attorneys' fees, incurred by
Holder in collecting any sums due on this Note.
Section 6. Payments on this Note. Maker shall pay all amounts
payable with respect to this Note (without any presentment of this Note and
without any notation of such payment being made thereon) by crediting, by
federal funds bank wire transfer, the account of Holder designated on Annex 1
hereto or as the Holder may hereafter direct in writing. Any payment to be made
to the Holder hereunder shall be deemed to have been made on the business day
such payment actually becomes available at the Holder's bank prior to the close
of business of such bank, provided that interest for one day shall be due on the
amount of any such payment that actually becomes available to such bank after
1:00pm (local time of such bank).
SECTION 7. GOVERNING LAW. THIS NOTE SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK (WITHOUT GIVING
EFFECT TO ITS CONFLICT OF LAW PRINCIPLES).
Section 8. Waiver and Amendment. Maker hereby waives
presentment, demand for payments, notice of dishonor, protest and notice of
protest and any and all other notices or demands in connection with this Note.
No delay or omission on the part of Holder in exercising any right hereunder
shall operate as a waiver of such right or of any other right under this Note. A
waiver on one occasion shall not be construed as a bar to or waiver of any such
right and/or remedy on any future occasion. Any provision of this Note may be
amended upon the express written agreement thereto of Maker, Xxxxxx and the
holder of the Note at the time of such amendment.
Section 9. Headings; Construction. The headings of the
sections of this Note are inserted for convenience only and shall not be deemed
to constitute a part hereof; words used herein of any gender shall be construed
to include any other gender where appropriate, and words used herein that are
either singular or plural shall be construed to include the other where
appropriate.
Section 10. Lost Note. Upon receipt by Maker of evidence
satisfactory to it of the loss, theft, destruction or mutilation of this Note,
and (in case of loss, theft or destruction) of indemnity satisfactory to it
(provided that if Holder is an institutional investor or a nominee of an
institutional investor, such institutional investor's own unsecured agreement of
indemnity shall be deemed to be satisfactory for such purpose), and upon
reimbursement to Maker of all reasonable
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expenses incidental thereto, and upon surrender and cancellation of such Note,
if mutilated, Maker will deliver in lieu of such Note a new note for the unpaid
principal amount thereof and carrying the same rights to interest on the unpaid
principal.
IN WITNESS WHEREOF, the undersigned has executed this Note on
the date first above written.
N2K Inc.
By: ____________________________
Xxxxx Xxxxxxx
Vice President, Secretary and Treasurer
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