PROMISSORY NOTE
$1,500,000.00 New York, New York
September 15, 2000
FOR VALUE RECEIVED, the undersigned, LIBERTY PROCESSING & DISTRIBUTION,
INC., a Delaware corporation with an address of 11 52nd Street, Brooklyn, New
York, 11232, (hereinafter referred to as "Maker"), hereby promises to pay to the
order of MARVIN N. RAAB, whose address is 429 Coolidge Road, Cherry Hill, New
Jersey 08002 (hereinafter referred to as "Payee") without defalcation or offset,
the principal sum of ONE MILLION FIVE HUNDRED THOUSAND AND 00/100
($1,500,000.00) DOLLARS lawful money in the United States of America, together
with interest calculated at an interest rate as provided hereinafter.
The obligations evidenced by this Note arise pursuant to the terms,
conditions and provisions of that certain Stock Purchase Agreement ("Agreement")
dated September 15, 2000, among Philadelphia Foods, Inc., a New Jersey
corporation ("Philadelphia Foods, Inc."), Maker and Payee for the purchase of
the stock ("Stock") of Philadelphia Foods, which Stock is owned by the Payee.
This Note represents payment for a portion of the cash payment as provided for
in the Agreement. The amount due hereunder shall be due and payable sixty (60)
days from the date hereof. If payment is not made within thirty (30) days of the
date hereof, interest shall accrue on this Note at the rate equal to one (1)
point above the prime rate of Chase Manhattan Bank, N.A. from the 31st day
following the date hereof until all amouts due hereunder are paid in full. All
amounts required to be paid hereunder shall be payable to Payee or his assigns
or designees at 429 Coolidge Road, Cherry Hill, New Jersey, 08002, or at such
other place as Payee may from time to time designate in writing. In the event
Closing (as defined in the Agreement) of the sale of the Stock is held on or
before November 15, 2000, and all amounts due to Payee under the terms of the
Agreement are paid in full, this Note shall automatically be cancelled and of no
further force and effect.
Concurrently with the execution of this Note, Maker is executing an
additional note in the principal amount of Five Hundred Thousand ($500,000.00)
Dollars ("First Deposit Note") for payment of the balance of the cash payment
due under the terms of the Agreement. Said First Deposit Note is secured by
either a Letter of Credit or a security interest in the inventories and accounts
receivable of Liberty Group Holdings, Inc., ("LGHI") the parent company of
Maker, and Liberty Foods Group, LLC, ("LFG") another company owned by LGHI.
All of the agreements, conditions, covenants, provisions and
stipulations contained in the Agreement as to the payment of the First Deposit
Note are to be kept and performed by Maker, and are hereby made a part of this
Note to the same extent and with the same force and effect as if they were fully
set forth herein, and the Maker covenants and agrees to keep and perform them,
or cause them to be kept and performed, strictly in accordance with their terms.
Maker shall have the privilege of pre-paying any sums due under this Note in
whole or in part, at any time and from time to time, without premium or penalty;
provided, however, that such prepayment shall be accompanied by payment of all
accrued interest on the outstanding principal balance then due and owing under
this Note.
The Agreement provides that in the event the Closing on the sale of
the Stock from Payee to Maker does not occur on or before November 15, 2000, as
contemplated by the Agreement, the Agreement will terminate and Payee's sole
remedy shall be to collect under the First Deposit Note by either presenting the
LOC for payment or enforcing his rights under the security interest being
granted by LGHI and LFG. Consequently, if the Agreement terminates as aforesaid
and Closing is not completed, Maker's obligation for payment of this Note shall
terminate and this Note shall have no further force and effect.
Maker hereby waives and releases all errors, defects and
imperfections in any proceedings by Payee under the terms of this Note as well
as all benefit that might accrue to Maker by virtue of any present or future
laws exempting personal property or any part of the proceeds arising from any
sale of such property, from attachment, levy, sale under execution, or providing
for any stay of execution, exemption from civil process or extension of time for
payment; and Maker agrees that any personal property that may be levied upon
pursuant to a judgment obtained by virtue hereof on any writ of execution issued
thereon may be sold upon any such writ in whole or in part in any order desired
by Payee.
Maker and all endorsers, sureties and other guarantors, hereby
jointly and severally waive presentation for payment, demand, notice of demand,
notice of nonpayment or dishonor, protest and notice of protest of this Note,
they agree that the liability of each of them shall be joint and several and
unconditional, without regard to the liability of any other party, and shall not
be affected in any manner by any indulgence, extension of time, renewal, waiver
or modification granted or consented to by Payee. Maker and all endorsers,
sureties and guarantors consent to any and all extensions of time, renewals,
waivers, or modifications that may be granted by Payee with respect to the
payment or other provisions of this Note, and to the release of any collateral
or any part hereof, with or without substitution, and agree that additional
makers, endorsers, guarantors or sureties may become parties hereto without
notice to them or affecting their liability hereunder.
Payee shall not be deemed, by any act of omission or commission, to
have waived any of its rights or remedies hereunder unless such waiver is in
writing and signed by Payee, and then only to the extent specifically set forth
in writing. A waiver on one event shall not be construed as continuing or as a
bar to or waiver of any right or remedy to a subsequent event.
Maker shall pay the cost of any revenue tax or other stamps now or
hereafter required by law at any time to be affixed to this Note.
Whenever used, the singular number shall include the plural and the
plural the singular, the use of any gender shall be applicable to all genders,
and the words "Payee" and "Maker" shall be deemed to include the respective
heirs, personal representatives, successors and assigns of Payee and Maker.
All notices required to be given shall be effectively given only if
in writing and sent by certified mail, return receipt requested, postage
prepaid, and addressed to the party entitled to receive the same at the address
specified on the first page of this Note or at such other address as may be
directed or by personal notice or by such party or by telefax. All notices sent
by mail shall be deemed given and received on the first mail delivery date after
such mailing. All notices given by telefax shall be deemed given and received on
the date the telefax is sent.
Nothing herein contained, nor any transaction related hereto, shall
be construed or so operate as to require Maker, or any other person liable for
repayment of same, to pay interest at a greater rate than is lawful in such case
to contract for, or to make payment, or to do any act contrary to law. Should
any interest or other charges paid by Maker, or parties liable for the payment
of this Note, result in the computation or earning of interest in excess of the
maximum rate of interest which is legally permitted under the laws of the
applicable jurisdiction, then any and all excess shall be and the same is hereby
waived by Payee, and any and all such excess automatically shall be credited
against and in reduction of the balance due under this Note, but such crediting
shall not cure or waive the default occasioning acceleration, and the portion of
said excess which exceeds the balance due under the Note shall be paid by Payee
to Maker and other parties liable for the payment of this Note. If any clause or
provision herein contained shall be unenforceable under applicable law, in whole
or in part, then only such clause or provision or part thereof shall be held
void as though not contained herein and the remainder of this Note shall remain
operative and in full force and effect.
This Note shall be governed by and construed in accordance with the Laws
of the State of New York and the Courts of New York, or the Federal District
Court in New York, shall have jurisdiction for enforcement of this Note and the
Agreement.
IN WITNESS WHEREOF, Maker has caused these presents to be duly
executed the day and year first above written.
LIBERTY PROCESSING AND
DISTRIBUTION, INC.,
a Delaware corporation
By:__________________________
, President
