North Barrington, Illinois
September 6, 2000 $5,200,000.00
PROMISSORY NOTE
RECITALS
A. Clark/Bardes Holdings, Inc., a Delaware corporation ("Holder"), William
L. MacDonald, Sr., an individual ("Maker"), are parties to that certain
Agreement of Merger and Plan of Reorganization dated as of August 15, 2000 (the
"Agreement"), by and among Holder, Maker and the other parties named therein.
B. In connection with the Agreement, Holder is making a loan to Maker in
the principal amount of $5,200,000 (the "Loan"). Holder advanced to Maker
$1,000,000 of the Loan pursuant to the terms of that certain letter agreement,
dated as of the date of the Agreement, between Holder and Maker (the "Letter
Agreement"). Loan proceeds in an amount equal to the difference between (i)
$5,200,000 and (ii) the Advance and any interest and earning accrued thereon,
will be funded by Holder, contemporaneously with the execution and delivery of
this Promissory Note, of which $250,000 will be immediately deposited into an
escrow account to be established pursuant to the terms of that certain Escrow
Agreement, dated the date hereof, among Holder, Maker and the other parties
named therein.
C. The parties hereto wish to evidence the Loan by this Promissory Note and
to replace the Letter Agreement in its entirety with this Promissory Note, which
Letter Agreement will be deemed terminated contemporaneously with the execution
and delivery of this Promissory Note.
OPERATIVE PROVISIONS
NOW THEREFORE, FOR VALUE RECEIVED, Maker promises to pay to the order
of Holder, the principal amount of Five Million Two Hundred Thousand Dollars
($5,200,000.00) in four equal consecutive annual principal installments of One
Million Three Hundred Thousand Dollars ($1,300,000.00), commencing September 6,
2001 and continuing until September 6, 2004 (each, a "Payment Date"), together
with accrued interest on each such annual principal installment at the annual
rate of 6.3% on such unpaid principal, until such principal and its related
accrued and unpaid interest are paid in full or forgiven pursuant to the
provisions hereof. On each Payment Date, Holder will, if no Event of Default (as
defined below) has occurred (except for an Event of Default that has been waived
in writing by Holder), automatically and without the necessity of any further
action by Holder or Maker, irrevocably waive Maker's obligation to make the
payment of principal and interest thereon due hereunder on such Payment Date,
and forgive and disclaim any interest in such payment of principal and interest.
The principal of this Promissory Note may be pre-paid at any time
(together with the interest accrued on such prepaid amount), in whole or in
part, without premium or penalty.
All payments of principal and interest shall be made by wire transfer
of immediately available funds to the account Holder may designate in writing to
Maker.
At any time after an Event of Default under clauses (i), (ii) or (iii)
below shall have occurred, Holder may declare the remaining outstanding
principal of this Promissory Note, together with accrued interest thereon, due
and payable on the date specified in a written notice of default to Maker, which
date shall not be earlier than 5 business days after such notice is given. At
any time after an Event of Default under clauses (iv) or (v) shall have
occurred, the entire principal of this Promissory Note, together with accrued
interest thereon shall become immediately due and payable without any action on
the part of the Holder. Such notice may be given either (at Holder's option) by
personal delivery to Maker or delivered by U.S. mail certified and return
receipt requested, (but the giving of such a receipt shall not be necessary for
the effectiveness of such notice), addressed to Maker at the address set forth
below (or at such address as Maker may from time to time designate in writing to
Holder) or by overnight courier to such address.
Notice Address:
--------------
William L. MacDonald, Sr.
722 Emerald Bay
Laguna Beach, CA 92651
With a copy to:
Munger, Tolles & Olson LLP
Attention: Simon Lorne and Brian Daly
Thirty-Fifth Floor
355 South Grand Avenue
Los Angeles, CA 90071-1560
An "Event of Default" means any of the following events:
(i) Maker is terminated from his position of employment with
Clark/Bardes, Inc. (including any successor or permitted assign, "CBI") by
CBI for "Corporate Cause" or "Non-Corporate Cause" (as such terms are
defined in Section 10 of the Employment Agreement (the "Employment
Agreement"), dated as of the date hereof, by and between Maker and CBI);
(ii) Maker resigns from his position of employment with CBI, except
for a resignation simultaneous with or subsequent to a Constructive
Termination (as such term is defined in Section 10(d) of the Employment
Agreement), which resignation will not constitute an Event of Default
hereunder;
(iii) Maker dies or suffers a permanent disability (as such term is
defined in Section 10 of the Employment Agreement);
(iv) Maker shall make an assignment for the benefits of creditors,
commencement of any voluntary bankruptcy, reorganization, liquidation,
insolvency or similar proceedings by the Maker, or any admission in writing
by Maker that he is insolvent; or
(v) the commencement and maintenance for at least 30 days of any
bankruptcy, reorganization, liquidation, insolvency or similar proceedings
against Maker.
This Promissory Note shall be governed by and construed in accordance
with the internal laws of the State of Delaware, without regard to principles of
conflict of laws. Maker hereby agrees that the venue for any proceeding
initiated for the purpose of collecting any amounts due under this Promissory
Note may be Cook County, Illinois.
Maker hereby waives grace (except as expressly provided herein),
demand, presentment for payment, notice of demand (except as expressly provided
herein), notice of nonpayment or dishonor, protest and notice of protest and
shall pay all costs of collection when incurred in connection with the
collection of the indebtedness evidenced by this Promissory Note, including
without limitation, reasonable attorneys' fees, costs and other expenses. The
right to plead any and all statutes of limitation as a defense to any demands
hereunder is hereby waived to the fullest extent permitted by law. Neither any
failure to exercise, nor any delay in exercising, any right under this
Promissory Note on the part of Holder shall operate as a waiver thereof; nor
shall any single or partial exercise of any right under this Promissory Note
preclude any other or further exercise thereof or the exercise of any other
right. No waiver or amendment of this Promissory Note shall be effective unless
made in a writing, specifying such waiver or amendment signed by the party
hereto against which such waiver or amendment is being enforced.
Neither this Promissory Note nor any of the rights, interests or
obligations hereunder may be assigned or transferred by Maker without the prior
written consent of Holder, which may withhold such consent in its sole
discretion. Holder may at any time transfer this Promissory Note and its rights
hereunder. This Promissory Note shall be binding upon Maker and Maker's
successors, permitted assigns, legatees, heirs, executors, administrators and
legal representatives, as applicable, and shall inure to the benefit of the
Holder and its successors and assigns.
Signature Page to Promissory Note
IN WITNESS WHEREOF, the undersigned has executed this Promissory Note
as of the date first above shown.
/s/ William L. MacDonald, Sr.
William L. MacDonald, Sr.
