Exhibit 10.3

 

SECURED PROMISSORY NOTE

 

$1,100,000.00

 

February         , 2004

 

 

 

 

FOR VALUE RECEIVED, the undersigned, CLIVE CORPORATION, INC., a Pennsylvania
corporation and 1903 WEST MAIN STREET REALTY MANAGEMENT, LLC, a Pennsylvania
limited liability company, jointly and severally referred to herein as
“Borrower,” promise to pay to the order of BEYOND THE WALL, INC., a Delaware
corporation, its successors and assigns (“Lender”), the principal sum of ONE
MILLION ONE HUNDRED THOUSAND DOLLARS ($1,100,000.00), together with interest on
the principal sum, in lawful money of the United States of America, payable
pursuant to the terms and conditions provided for herein.  This secured
promissory note (this “Note”) is being issued pursuant to that certain Asset
Purchase Agreement, dated February         , 2004 (the “Purchase Agreement”), to
which both Borrower and Lender are parties, as well as Lender’s parent company,
YouthStream Media Networks, Inc. (“Parent”) and is secured by the Collateral, as
such term is defined in the Security Agreement, dated of even date herewith (the
“Security Agreement”), to which both Borrower and Lender are parties, and is
further secured by a Mortgage against certain Real Property purchased from
Seller pursuant to an Agreement of Sale and Assignment, dated February         ,
2004 (“Real Property Agreement”).  Any terms capitalized but not defined shall
have the meanings given to them in the Purchase Agreement and the Security
Agreement.

 

1.                                       Payment Terms.  Borrower shall make
payments on this Note in three (3) installments of principal in the amount of
$366,666.67, plus accrued interest. The payments are due on October 31, 2004,
October 31, 2005 and October 31, 2006 (subject to a credit of $150,000.00 as
described below and subject to adjustment based on any accelerated principal
reduction of at least $400,000.00 pursuant to paragraph 3 below).  Except as
otherwise specified, all principal and interest shall be due and payable on
October 31, 2006. The payment of principal and interest under this Note shall be
made to Lender in immediately available funds, at such address or location as
Lender shall designate.  All or any part of (i) the unpaid principal balance
and/or (ii) accrued but unpaid interest may be prepaid by Borrower at any time
without penalty.  Except for any accelerated principal reduction made pursuant
to paragraph 3 below, any such prepayments shall be applied first to accrued but
unpaid interest and then to the unpaid principal balance.  With regard to any
accelerated principal reduction made pursuant paragraph 3 below, such payments
shall be applied only to principal.  Borrower shall be entitled to a credit in
the sum of One Hundred Fifty Thousand Dollars ($150,000.00), to be applied
against the payment due on October 31, 2006, provided that (a) there is no
uncured default by Borrower under this Note at any time prior to, on or after
October 31, 2006, and (b) there has been an accelerated principal reduction of
at least Four Hundred Thousand Dollars ($400,000.00) on or before June

 

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30, 2004 pursuant to paragraph 3 below.  If the conditions specified in
sub-clauses (a) and (b) above are not satisfied, the $150 000.00 credit shall be
null and void.

 

2.                                       Interest.   Interest shall accrue on
the unpaid principal balance at the rate of ten percent (10%) per annum, until
paid in full.

 

3.                                       Accelerated Principal Reduction.  If
Borrower pays down the principal in a lump sum payment of at least Four Hundred
Thousand Dollars ($400,000.00) on or before March 31, 2004, then Lender agrees
to reduce the principal owing on the Note by 130% of the lump sum payment.  If
such payment is made after March 31, 2004 but on or before April 30, 2004, then
Lender agrees to reduce the principal owing on the Note by 126.7% of the lump
sum payment.   If such payment is made after April 30, 2004 but on or before May
31, 2004, then Lender agrees to reduce the principal owing on the Note by 123.3%
of the lump sum payment.  If such payment is made after May 31, 2004 but on or
before June 30, 2004, then Lender agrees to reduce the principal owing on the
Note by 120% of the lump sum payment.  Any such principal reduction on the Note
will reduce the principal payments due on October 31, 2004, October 31, 2005 and
October 31, 2006 by one-third of such principal reduction.  An example of such
principal reduction is as follows:  If the Borrower pays exactly $400,000.00 on
March 31, 2004, then the principal balance owing on this Note would be reduced
by $520,000.00 effective as of March 31, 2004, and the principal payment due on
October 31, 2004, October 31, 2005 and October 31, 2006 would be reduced by
$173,333.33.  The provisions of this paragraph shall not be applicable to any
payments made after June 30, 2004.

 

4.                                       Negative Covenants.   Until such time
as the principal amount of this Note, and all interest thereon, has been paid in
full, Borrower shall not:

 

(a)                                  enter into any transactions with its
affiliates without obtaining Lender’s prior written consent, which will not be
unreasonably withheld; and

 

(b)                                 enter into any transaction that would
materially impair, limit or otherwise diminish the economic interests of Lender.

 

5.                                       Right to Offset.  Pursuant to Section
13.1 of the Purchase Agreement, Lender and Parent are obligated to jointly and
severally indemnify Borrower from and against any Indemnified Losses (as defined
in Section 13.1 of the Purchase Agreement) that Borrower may incur subject to
certain limitations set forth in the Purchase Agreement.  To that end, Borrower
shall have the right to offset any sums which are due to it under Article 13 of
the Purchase Agreement on a dollar-for-dollar basis against any amounts owed to
Lender under this Note.

 

6.                                       Events of Default; Acceleration. 
Borrower shall be in default under this Note upon the occurrence of any of the
following events of default (“Default”):

 

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(a)                                  Borrower fails to pay principal and/or
interest under this Note, when due;

 

(b)                                 Borrower becomes insolvent or bankrupt; or
if Borrower suffers a receiver or trustee for it or substantially all of its
properties to be appointed and, if appointed without its consent, not discharged
within sixty (60) days; or if Borrower makes an assignment for the benefit of
its creditors; or

 

(c)                                  Borrower breaches any provision of this
Note or the Security Agreement securing this Note.

 

7.                                       Remedies Upon Default.  Upon the
occurrence of any Default, the principal balance hereof together with all
accrued interest shall become immediately due and payable without notice or
demand.  In addition, upon the occurrence of any Default, Borrower shall pay all
of Lender’s reasonable costs of collection, including actual and reasonable
attorneys’ fees and disbursements.

 

8.                                       Subordination.  So long as Borrower is
not in default under this Note, Lender agrees to subordinate this Note to any
secured debt incurred by Borrower, provided that the proceeds of such debt were
or are used to finance Borrower’s purchase of the Assets of Lender or are used
to fund the operations of the Business acquired from Lender, the terms and
conditions of the subordinated debt is commercially reasonable, and the maximum
amount of subordinated debt does not exceed Seven Hundred Thousand Dollars
($700,000.00) in principal amount.  Lender agrees to take any and all actions,
and to execute any and all documents, reasonably requested by Borrower and
reasonably acceptable to Lender, to effect Lender’s agreement to subordinate as
set forth in this Note.

 

9.                                       Due on Sale.  All principal and
interest under this Note shall become immediately due and payable in the event
that (a) more than fifty percent (50%) of the Assets sold and/or transferred to
Borrower pursuant to the Purchaser Agreement or the Real Property Agreement, are
sold, transferred or hypothecated, in one or more transactions, or (b) more than
fifty percent (50%) of the ownership interests of any Borrower (each, a
“Borrower’s Sale”) are sold, transferred or hypothecated, in one or more
transactions; without the prior written consent of Lender. Not later than ten
(10) days before any Borrower’s Sale, Borrower shall give written notice to
Lender giving the details of Borrower’s Sale and the expected date of closing.
Upon Borrower’s Sale, all outstanding principal and interest shall be
immediately due and payable.

 

10.                                 NOTICES.  ALL NOTICES, REQUESTS, DEMANDS AND
OTHER COMMUNICATIONS REQUIRED OR PERMITTED UNDER THIS NOTE SHALL BE IN WRITING
AND SHALL BE DEEMED TO HAVE BEEN DULY GIVEN, MADE AND RECEIVED THE SAME DAY WHEN
PERSONALLY DELIVERED OR SENT BY TELECOPY WITH RECEIPT CONFIRMATION, THE NEXT
BUSINESS DAY WHEN DELIVERED BY OVERNIGHT COURIER,  OR THREE (3) BUSINESS

 

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DAYS AFTER MAILING, IF SENT IN THE UNITED STATES BY REGISTERED OR CERTIFIED
MAIL, POSTAGE PREPAID, RETURN RECEIPT REQUESTED, ADDRESSED AS SET FORTH BELOW:

 

IF TO LENDER:

 

BEYOND THE WALL, INC.

c/o YouthStream Media Networks, Inc.

244 Madison Avenue, PMB #358,

New York, New York 10016

Attn:  President

 

with a copy to:

 

Ronald J. Grant, Esquire

Tilles, Webb, Kulla & Grant, ALC

433 North Camden Drive, Suite 1010

Beverly Hills, CA  90210

Facsimile:  310-888-3433

 

If to Borrower:

 

Clive Corporation, Inc.

 

 

 

 

 

 

 

1903 West Main Street Realty Management, LLC

 

 

 

 

 

 

 

with a copy to:

 

Eugene C. Kelly, Esq.

Hoegen, Hoegen & Kelley, LLP

152 South Franklin Street

P.O. Box 346

Wilkes-Barre, PA 18703-0346

Facsimile:

 

 

 

or at such other address or addresses as either Lender or Borrower may from time
to time designate by notice to the other party, in writing.

 

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11.                                 Waivers of Presentment, Etc.    BORROWER
EXPRESSLY WAIVES PRESENTMENT, PROTEST, DEMAND, NOTICE OF DISHONOR, NOTICE OF
NON-PAYMENT, NOTICE OF MATURITY, NOTICE OF PROTEST, PRESENTMENT FOR THE PURPOSE
OF ACCELERATING MATURITY, AND DILIGENCE IN COLLECTION.

 

12.                                 Waivers and Amendments: Non-Contractual
Remedies: Preservation of Remedies. This Note may be amended, superseded,
canceled, renewed or extended and the terms hereof may be waived, only by a
written instrument signed by Lender and Borrower or, in the case of a waiver, by
Lender. The failure of Lender to insist, in any one or more instances, upon
performance of the terms or conditions of this Note shall not be construed as a
waiver or relinquishment of any right granted hereunder or of the future
performance of any such term, covenant or condition. No waiver on the part of
Lender of any right, power or privilege, nor any single or partial exercise of
any such right, power or privilege, shall preclude any further exercise thereof
or the exercise of any other such right, power or privilege. The rights and
remedies herein provided are cumulative and are not exclusive of any rights or
remedies that Lender may otherwise have at law or in equity.

 

13.                                 Headings.  The headings in this Note are for
reference only and shall not affect the interpretation of this Note.

 

14.                                 Severabilitv.  Whenever possible, each
provision of this Note shall be interpreted in such manner as to be effective
and valid under applicable law, but if any provision of this Note is held to be
prohibited by or invalid under applicable law, such provision shall be
ineffective only to the extent of such prohibition or invalidity without
invalidating the remainder of such provision or the remaining provisions of this
Note.

 

15.                                 Time of Essence.  Time is of the essence for
each and every provision of this Note.

 

16.                                 Mutilated, Lost Stolen or Destroyed Note. 
In case this Note shall be mutilated, lost, stolen or destroyed, Borrower shall
issue and deliver, in exchange and substitution for and upon cancellation of the
mutilated Note, or in lieu of and substitution for this Note lost, stolen or
destroyed, a new Note of like tenor, but only upon receipt of evidence
satisfactory to Borrower of

 

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such loss, theft, or destruction of such Note and reasonable indemnity or bond,
if requested, also satisfactory to Borrower.

 

17.                                 Further Assurances.  Borrower shall execute
such documents and other papers and take such further actions as may be
reasonably required or desirable to carry out the provisions hereof and the
transactions contemplated hereby.

 

18.                                 Legal Fees.  In the event legal action is
instituted to enforce or interpret this Note, the prevailing party shall be
entitled to reasonable attorneys’ fees and all costs incurred.

 

19.                                 Miscellaneous.  This Note shall bind the
parties and their respective successors, and the benefits hereof shall inure to
the benefit of Lender and its successors and assigns.  Borrower may not assign
this Note to any third party.  All references herein to “Borrower” and “Lender”
shall be deemed to apply to the Borrower and Lender, and their respective
successors and assigns. Borrower waives all applicable statutes of limitations.
This Note and any other documents delivered in connection herewith and the
rights and obligations of the parties hereto and thereto shall for all purposes
be governed by and construed and enforced in accordance with the substantive law
of the Commonwealth of Pennsylvania without giving effect to its conflicts of
law principles. Each party signing this Note shall be jointly and severally
liable hereunder. Any individual signing this Note on behalf of an entity
represents and warrants to the Lender that such individual has the right and
authority to so execute this Note, and that this Note will be enforceable
against such entity in accordance with its terms.

 

IN WITNESS WHEREOF, this Note has been executed and delivered on the date first
written above.

 

Borrower:

 

 

CLIVE CORPORATION, INC., a Pennsylvania corporation

 

 

By:

 

 

Name:

 

 

Title

 

 

 

 

1903 WEST MAIN STREET REALTY MANAGEMENT, LLC,

a Pennsylvania limited liability company

 

 

By:

 

 

Name:

 

 

Title:

 

 

 

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