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PROMISSORY NOTE
$4,999,999 August 30, 2000
FOR VALUE RECEIVED, Marketing Specialists Corporation, a Delaware
corporation (the "Borrower"), hereby promises to pay on demand (subject to
paragraph 2 below) to the order of Richmont Capital Partners I, L.P., a
Delaware limited partnership (the "Lender") or its assigns, in U.S. dollars,
in immediately available funds, the sum principal amount of FOUR MILLION NINE
HUNDRED NINETY-NINE THOUSAND NINE HUNDRED NINETY-NINE DOLLARS ($4,999,999),
with interest thereon as provided below, at such location as the Lender may
designate.
1. INTEREST.
(a) The unpaid principal balance of this Note, along with any
accrued and unpaid interest, will bear interest at a fluctuating rate equal
to the "Floating Rate" (as hereinafter defined). The Floating Rate will be
equal to the sum of (i) 2.75% (the "Interest Margin") plus (ii) the interest
rate quoted as the "Prime Rate" in the Money Rates Section of the WALL STREET
JOURNAL on the last business day of the immediately preceding calendar
quarter. The Floating Rate will change at 12:01 a.m. on the first day of
each calendar quarter to reflect any changes in the interest rate quoted as
the Prime Rate in the Money Rates Section of the WALL STREET JOURNAL. If
more than one Prime Rate is published, the Prime Rate to be used in
calculating the Floating Rate will be the lowest published Prime Rate. If the
Prime Rate is no longer published in the WALL STREET JOURNAL, Lender will
choose a new comparable, independently published interest rate index based
upon a comparable survey of bank published rates and will provide Borrower
with notice of this choice. For the purpose of computing interest on the
debt evidenced hereby, interest shall be calculated on the basis of a year
consisting of three hundred sixty-five (365) days and shall be charged on the
basis of the actual number of calendar days elapsed.
(b) Subject to the terms of Section 9 of this Note, interest
shall be payable in arrears quarterly, commencing on November 20, 2000, and
continuing on the day that is fifty (50) days after the final day of each
successive calendar quarter until all amounts due hereunder shall have been
repaid in full.
(c) Following the occurrence and during the continuance of
any period during which default rates of interest are being charged under the
First Union Facility and the Chase Facility (as each such term is defined
below), the Lender may, at its discretion, increase the Interest Margin by
two percentage points if Borrower fails to pay any interest payable hereunder
when due or fails to comply with all covenants and requirements set forth in
(i) the Second Amended and Restated Credit Agreement, dated as of March 30,
2000, by and among the Borrower, the Lenders named therein and First Union
National Bank, as Agent for the Lenders (as the same may be amended,
restated, refinanced, supplemented or otherwise modified from time to time,
the "First Union Facility"); (ii) the Credit Agreement, dated as of March 30,
2000, by and among the Borrower, certain of its subsidiaries, the lenders
named therein and The Chase Manhattan Bank, as Agent (as the same may be
amended, restated, refinanced, supplemented or otherwise modified from time
to time, the "Chase Facility"); and (iii) the Indenture, dated as of December
19, 1997, among the Borrower (as successor by merger to Richmont Marketing
Specialists, Inc.), the subsidiaries of the Borrower party thereto as
Guarantors and Chase Bank of Texas, N.A. (as successor-in-interest to Texas
Commerce Bank National Association) as trustee (as the same may be amended,
restated, refinanced, supplemented or otherwise modified from time to time,
the "Indenture"). The covenants and requirements set forth in the First
Union Facility, the Chase Facility and
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the Indenture will be referred to herein as the "Loan Covenants". Borrower's
issuance to Lender of a certificate indicating compliance with such
provisions will be prima facie evidence of Borrower's compliance with the
Loan Covenants. Borrower will provide Lender with a certificate of
compliance within 45 days following the last business day of each calendar
quarter during the year and within 120 days following the last business day
of the calendar year.
(d) Notwithstanding anything in this Note to the contrary,
the Floating Rate will never exceed the maximum nonusurious interest rate
allowed by applicable law.
2. REPAYMENT.
(a) Subject to the provisions of paragraph 9 hereof, the
principal amount (or so much as may be outstanding) and all accrued and
unpaid interest thereon, shall be due and payable in full, without any
offset, reduction, counterclaim, or recoupment whatsoever, in immediately
available U.S. Dollars, on demand by Lender; provided, however, Borrower
shall not be permitted to (i) repay the principal amount hereof on demand
unless, at the time of such demand for repayment, and after giving effect
thereto, (A) the Aggregate Borrowing Availability under the Chase Facility
for the 30 day period prior to the payment (calculated as if such payment had
been made on the first day of such period) is equal to or greater than the
greater of (1) $10,000,000 or (2) the quotient obtained by dividing by four
(4) the aggregate sum of the Borrowers' (as defined in the Chase Facility)
payroll (including payroll taxes) paid over the last 4 pay periods occurring
immediately prior to the payment (the requirement set forth in this clause
(A) is herein the "REQUIRED AVAILABILITY TEST") and (B) no default or event
of default under the terms of any Senior Debt (as defined in paragraph 9 (b)
hereof) of the Borrower has occurred and is continuing or (ii) repay any
accrued and unpaid interest on demand unless, at the time of such demand for
payment, and after giving effect thereto, no default or event of default
under the terms of any Senior Debt of the Borrower has occurred and is
continuing; provided further, that failure by the Borrower to repay upon
demand any amount hereunder by reason of the previous proviso shall not
relieve Borrower of its obligations to repay amounts owing hereunder.
(b) Notwithstanding the provisos contained in the final
sentence of paragraph (a), but subject to the provisions of paragraph 9
hereof, all unpaid principal and interest on this Note shall become
immediately due and payable, without presentment, demand or notice of any
kind (x) upon the commencement of any bankruptcy, reorganization,
arrangement, adjustment of debt, relief of debtors, dissolution, insolvency
or liquidation or similar proceeding of any jurisdiction relating to the
Borrower or (y) on the second anniversary of the date of this Note.
(c) Prepayment of all or part of this Note may be made at any
time without penalty; provided, however, Borrower shall not be permitted to
prepay any amount owing hereunder unless, at the time of such prepayment, and
after giving effect thereto, (i) the Borrower shall have satisfied the
Required Availability Test and (ii) no default or event of default under the
terms of any Senior Debt of the Borrower has occurred and is continuing.
3. COSTS OF COLLECTION. In the event counsel is employed by the Lender
to enforce the provisions of this Note, or any of the Documents, Borrower
shall pay upon demand all reasonable attorneys' fees so incurred by Lender,
and all other costs and expenses connected with such enforcement.
4. APPLICATION OF PAYMENTS. All payments received shall be applied as
follows: first, to the Lender's costs of collection (including, without
limitation, reasonable attorneys' fees and expenses), if any; second, to
accrued and unpaid interest; and third, to the reduction of principal.
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5. NOTICES. All notices and demands for payment hereunder shall be
given in writing and shall be effective (a) when personally delivered or when
transmitted by telecopy; (b) three (3) days after being mailed by first class
or certified or registered mail, with proper postage prepaid or (c) one (1)
business day after being delivered to an established overnight delivery
service, with costs for "next day" delivery prepaid, addressed in any such
case, if to the Borrower at 17855 North Dallas Parkway, Dallas, Texas 75287,
and if addressed to the Lender at Richmont Capital Partners I, L.P., 16251
Dallas Parkway, 7th Floor, Addison, Texas 75001, or in either case to such
other address as such party may from time to time designate to the other by
like written notice given at least ten (10) days prior to the date such
change becomes effective.
6. SUCCESSORS AND ASSIGNS. This Note shall apply to and bind the
Borrower and the Lender and each of their respective successors and assigns.
7. ENTIRE AGREEMENT. This Note represents the entire agreement between
Borrower and Lender as to this matter and may not be contradicted by evidence
of prior, contemporaneous, or subsequent oral agreements of the parties.
There are no unwritten oral agreements between Borrower and Lender related to
the subject matter of this Note.
8. GOVERNING LAW. For convenience, notwithstanding any forum in which
this Note may be considered, the parties agree that the validity and
construction of this Note and all matters pertaining thereto are to be
determined and construed according to the laws of the State of Texas and the
Borrower consents to the jurisdiction of the courts of competent jurisdiction
sitting in Dallas County, Texas.
9. SUBORDINATION.
(a) This Note is and at all times hereafter will be junior and
subordinate in right of payment and exercise of remedies to the indefeasible
prior payment in full in cash of all obligations owed in respect of the
Senior Debt. The subordination of the obligations under this Note is for the
benefit of all holders of Senior Debt from time to time, whether such Senior
Debt is outstanding on the date hereof or incurred, created or arising
hereafter. Upon the occurrence and during the continuance of any default or
event of default under any Senior Debt, Borrower will have no obligation to
make, and the Lender will not accept or receive or take any action to
collect, any payment of any portion of the obligations under this Note until
all obligations with respect to such Senior Debt have been indefeasibly
discharged in full in cash. Borrower will have no obligation to make, and
the Lender will not accept or receive or take any action to collect, any
payment of any portion of the principal amount of the obligations under this
Note unless at the time such amount is paid to the Lender, and after giving
effect thereto, the Borrower shall have satisfied the Required Availability
Test. Should any payment, distribution, security, or proceeds thereof be
received by the Lender contrary to the terms hereof, the Lender shall
immediately deliver the same to the holders of the Senior Debt in precisely
the form received (except for endorsement or assignment of such Lender where
necessary), for application on or to secure the Senior Debt, whether it is
due or not due, and until so delivered the same shall be held in trust by the
Lender as property of the holders of the Senior Debt. Nothing in this
section shall prohibit the Lender from receiving and retaining: (i) principal
amounts due to the Lender hereunder, provided that at the time such amount is
paid to the Lender, and after giving effect thereto, (A) the Borrower shall
have satisfied the Required Availability Test and (B) no default or event of
default under the terms of any Senior Debt of the Borrower has occurred and
is continuing; or (ii) interest amounts paid to the Lender hereunder,
provided that at the time such amount is paid to the Lender, and after giving
effect thereto, no default or event of default under the terms of any Senior
Debt of the Borrower has occurred and is continuing.
(b) For purposes hereof, "Senior Debt" means (i) all indebtedness
and obligations of the Borrower in favor of any bank, trust company,
insurance company or other institutional lender
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providing financing to the Borrower under the First Union Facility and all
Senior Obligations as defined in the First Union Facility and (ii) all
indebtedness and obligations of the Borrower in favor of any bank, trust
company, insurance company or other institutional lender providing financing
to the Borrower under the Chase Facility.
10. LIMITATIONS ON INTEREST. It is the intention of the parties hereto
to comply with all applicable usury laws, whether now existing or hereinafter
enacted. Accordingly, notwithstanding any provision to the contrary in this
Note or any other document evidencing, securing, guaranteeing or otherwise
pertaining to indebtedness of the Borrower to the Lender, in no contingency
or event whatsoever, whether by acceleration of the maturity of the
indebtedness of the Borrower to the Lender or otherwise, shall the interest
contracted for, charged or received by the Lender exceed the maximum amount
permissible under applicable law. If from any circumstances whatsoever
fulfillment of any provision of this Note or any other document evidencing,
securing, guaranteeing or otherwise pertaining to indebtedness of the
Borrower to the Lender, at the time performance of such provision shall be
due, shall involve transcending the limit of validity prescribed by law,
then, ipso facto, the obligation to be fulfilled shall be reduced to the
limit of such validity, and if from any such circumstances the Lender shall
ever receive anything of value as interest or deemed interest by applicable
law under this Note or any other document evidencing, securing, guaranteeing
or otherwise pertaining to indebtedness of the Borrower to the Lender or
otherwise in an amount that would exceed the highest lawful amount, such
amount that would be excessive interest shall be applied to the reduction of
the principal amount owing in connection with this Note or on account of any
other indebtedness of the Borrower to the Lender, and not to the payment of
interest, or if such excessive interest exceeds the unpaid balance of
principal owing in connection with this Note and such indebtedness, such
excess shall be refunded to the Borrower. In determining whether or not the
interest paid or payable with respect to indebtedness of the Borrower to the
Lender, under any specific contingency, exceeds the maximum nonusurious rate
permitted under applicable law, the Borrower and the Lender shall, to the
maximum extent permitted by applicable law, (a) characterize any
non-principal payment as an expense, fee or premium rather than interest, (b)
exclude voluntary prepayments and the effects thereof, (c) amortize, prorate,
allocate and spread the total amount of interest throughout the full term of
such indebtedness so that the actual rate of interest on account of such
indebtedness does not exceed the maximum amount permitted by applicable law,
and/or (d) allocate interest between portions of such indebtedness, to the
end that no such portion shall bear interest at a rate greater than that
permitted by law. The terms and provisions of this paragraph shall control
and supersede any other conflicting provision of this Note.
IN WITNESS WHEREOF, the Borrower has executed this Note on the date
first written above.
MARKETING SPECIALISTS CORPORATION
By:
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Name:
Title:
Witness:
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Name:
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