Exhibit 10.2
NOTE
$10,000,000.00 New York, New York
May 17, 1999
FOR VALUE RECEIVED, the undersigned, MARKETING SERVICES GROUP, INC.,
a Nevada corporation ("Company"), hereby PROMISES TO PAY to the order of GENERAL
ELECTRIC CAPITAL CORPORATION, a New York corporation ("GE Capital"), at 000 Xxxx
Xxxxx Xxxx, Xxxxxxxx, Xxxxxxxxxxx 00000, or at such other place as the holder
(GE Capital and any other holders being hereinafter referred to collectively as
"Holder") of this Note (the "Note") may designate from time to time in writing,
in lawful money of the United States of America and in immediately available
funds, the principal amount of TEN MILLION DOLLARS ($10,000,000) on November 17,
1999 (the "Maturity Date"), together with interest on the unpaid principal
amount of this Note outstanding from time to time from the date hereof, at the
rate provided for herein.
1. Interest.
(a) Company shall pay interest to Xxxxxx in arrears on August 17, 1999 and on
the Maturity Date (each, an "Interest Payment Date"), at a rate equal to twelve
percent (12%) per annum, based on a year of 360 days for the actual number of
days elapsed, and based on the amounts outstanding from time to time under this
Note. Interest on any overdue principal and (to the extent permitted by law) any
overdue interest shall be paid from the due date thereof (whether by
acceleration or otherwise) at a rate of fourteen percent (14%) per annum.
(b) If any payment on this Note becomes due and payable on a day other than a
business day, the maturity thereof shall be extended to the next succeeding
business day and, with respect to payments of principal, interest thereon shall
be payable at the then applicable rate during such extension. All references in
this Note to "business day" shall mean any day other than a Saturday, Sunday or
any day on which banking institutions in New York City are required or
authorized by law or by local proclamation to close.
2. Events of Default. The occurrence of any one or more of the following events
(regardless of the reason therefor) shall constitute an "Event of Default"
hereunder:
(a) Company shall fail to make any payment of principal of, interest on or any
other amount owing in respect of, this Note when the same becomes due and
payable or declared due and payable.
(b) Any indebtedness for borrowed money (including, without limitation, any
indebtedness to Xxxxxxx Factors, Inc.) or the deferred purchase price of
property or services (other than trade payables arising in the ordinary course
of business) of Company or any of its subsidiaries in an aggregate principal
amount of at least $1,000,000 shall not be paid when due or any default shall
occur pursuant to any of the agreements, documents, or instruments evidencing
such indebtedness which causes (or permits any holder thereof to cause) such
indebtedness to become due prior to its stated maturity or prior to its
regularly scheduled dates of payment.
(c) Any representation or warranty contained in this Note shall be untrue or
incorrect in any material respect, as of the date when made.
(d) Company shall be liquidated or dissolved.
(e) A case or proceeding shall have been commenced against Company or any of its
significant subsidiaries (as defined in Regulation S-X of the Securities
Exchange Act of 1934, as amended) in a court having competent jurisdiction
seeking a decree or order in respect of Company or any of its significant
subsidiaries (i) under title 11 of the United States Code, as now constituted or
hereafter amended, or any other applicable federal, state or foreign bankruptcy
or other similar law, (ii) appointing a custodian, receiver, liquidator,
assignee, trustee or sequestrator (or similar official) of Company or any of its
significant subsidiaries or of any substantial part of its or their properties,
or (iii) ordering the winding-up or liquidation of the affairs of Company or any
of its significant subsidiaries and such case or proceeding shall remain
undismissed or unstayed for sixty (60) consecutive days or such court shall
enter a decree or order granting the relief sought in such case or proceeding.
(f) Company or any of its significant subsidiaries shall (i) file a petition
seeking relief under title 11 of the United States Code, as now constituted or
hereafter amended, or any other applicable federal, state or foreign bankruptcy
or other similar law, (ii) consent to the institution of proceedings thereunder
or to the filing of any such petition or to the appointment of or taking
possession by a custodian, receiver, liquidator, assignee, trustee or
sequestrator (or similar official) of Company or any of its significant
subsidiaries or of any substantial part of its or their properties, (iii) fail
generally to pay its debts as such debts become due, or admit in writing its
inability to pay its debts or make a general assignment for the benefit of
creditors, or (iv) take any corporate action in furtherance of any such action.
If any Event of Default specified in this Section 2 shall have
occurred and be continuing, Xxxxxx may declare this Note and all accrued and
unpaid interest hereon to be forthwith due and payable, by giving written notice
thereof to Company whereupon all principal under this Note and all such interest
shall become and be due and payable, without presentment, demand, protest or
further notice of any kind, all of which are expressly waived by Company.
3. Optional Prepayment. Company shall have the right at any time or from time to
time and without premium or penalty, to voluntarily prepay all or any portion of
this Note. Each prepayment shall be accompanied by the payment of accrued and
unpaid interest on the amount being prepaid, through the date of prepayment.
4. Representations and Warranties. Company represents and warrants on the date
hereof as follows:
(a) Company and each of its significant subsidiaries (i) is a corporation duly
organized, validly existing and in good standing under the laws of the state of
its incorporation; (ii) is duly qualified as a foreign corporation and in good
standing under the laws of each jurisdiction where its ownership or lease of
property or the conduct of its business requires such qualification (except for
jurisdictions in which such failure to so qualify or to be in good standing
would not have a material adverse effect); (iii) has the requisite corporate
power and authority and the legal right to own, pledge, mortgage or otherwise
encumber and operate its properties, to lease the property it operates under
lease, and to conduct its business as now being conducted; (iv) has, or has
applied for, all material licenses, permits, consents or approvals from or by,
and has made all material filings with, and has given all material notices to,
all governmental authorities having jurisdiction, to the extent required for
such ownership, operation and conduct; (v) is in compliance with its certificate
or articles of incorporation and by-laws; and (vi) is in compliance with all
applicable provisions of law, except for such non-compliance which would not
have a material adverse effect. For purposes of this Note, "material adverse
effect" shall mean a material adverse effect on the business, assets,
operations, prospects or financial or other condition of Company and its
subsidiaries, taken as a whole.
(b) The execution, delivery and performance by Company of each of this Note and
the Warrant: (i) are within Company's corporate power and authority; (ii) have
been duly authorized by all necessary or proper corporate action; (iii) are not
in contravention of any provision of Company's certificate of incorporation or
by-laws; (iv) will not violate any law or regulation, or any order or decree of
any court or governmental instrumentality; (v) will not conflict with or result
in the breach or termination of, constitute a default under or accelerate any
performance required by, any indenture, mortgage, deed of trust, lease,
agreement or other instrument to which Company or any of its subsidiaries is a
party or by which Company, any of its subsidiaries or any of their property is
bound; (vi) will not result in the creation or imposition of any lien upon any
of the property of Company or any of its subsidiaries; and (vii) do not require
the consent or approval of, or any filing with, any governmental authority or
any other person or entity. For purposes of this Note, the term "Warrant" shall
mean the Warrant issued by Company, dated the date hereof, evidencing GE
Capital's right to purchase 300,000 shares of common stock, $0.01 par value, of
Company.
(c) Each of this Note and the Warrant is the legal, valid and binding obligation
of Company and is enforceable against Company in accordance with its terms,
subject to applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and similar laws affecting creditors' rights and
remedies generally, and subject, as to enforceability, to general principles of
equity, including principles of commercial reasonableness, good faith and fair
dealing (regardless of whether enforcement is sought in a proceeding at law or
in equity).
(d) Company has made available to GE Capital a true and complete copy of each
report, schedule, registration statement and definitive proxy statement filed by
Company with the Securities and Exchange Commission (the "SEC") since January 1,
1998 and prior to the date of this Note (the "Company SEC Documents"), which are
all the documents (other than preliminary material) that Company was required to
file with the SEC since such date. As of their respective dates, the Company SEC
Documents complied in all material respects with the requirements of the
Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as
amended, as the case may be, and the rules and regulations of the SEC thereunder
applicable to such Company SEC Documents, and none of the Company SEC Documents
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading.
5. Successors and Assigns. (a) This Note shall inure to the benefit of GE
Capital, any other Holder and their respective successors and assigns. GE
Capital and any other Holder may assign to any party all or any part of, or any
interest (undivided or divided) in, its rights and benefits herein, and to the
extent of that assignment such assignee shall have the same rights and benefits
against Company as it would have had if such assignee were GE Capital. This Note
and the provisions hereof are binding upon successors of Company.
(b) Neither this Note nor any obligation hereunder shall be assigned by Company
to any party.
6. Fees and Expenses. Company agrees to reimburse GE Capital for all reasonable
out-of-pocket fees, costs and expenses, including, without limitation, the
reasonable fees, costs and expenses of legal counsel, incurred in connection
with the preparation, execution and delivery of this Note, the Warrant and any
other documents related hereto on thereto, and related to the enforcement of
this Note.
7. Presentment and Demand. Demand, presentment, protest and notice of nonpayment
and protest are hereby waived by Company.
8. Amendment and Non-Waiver. (a) This Note may not be amended except by an
agreement in writing signed by Company and the Holder hereof.
(b) To the extent permitted by law, no failure to exercise and no delay on the
part of Holder in exercising any power or right in connection with this Note or
available at law or in equity, shall operate as a waiver thereof, and no single
or partial exercise of any such rights or power, or any abandonment or
discontinuance of steps to enforce such a right or power, shall preclude any
other or further exercise thereof or the exercise of any other right or power.
No course of dealing among any Holder, Company or any other person shall operate
as a waiver of any right of any Holder. No modification or waiver of any
provision of this Note and no consent to any departure therefrom shall in any
event be effective unless in writing and signed by the party against whom
enforcement thereof is to be sought, and then such waiver or consent shall be
effective only in the specific instance and for the purpose for which given.
9. Notices. Except as otherwise provided herein, any notice, demand, request,
consent, approval, declaration, delivery or other communication hereunder to be
made pursuant to the provisions of this Note shall be sufficiently given or made
if in writing and either delivered in person with receipt acknowledged or sent
by registered or certified mail, return receipt requested, postage prepaid, or
by telecopy and confirmed by telecopy answerback, addressed as follows:
(a) If to GE Capital:
General Electric Capital Corporation
000 Xxxx Xxxxx Xxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Attn: GE Equity Group - Marketing Services
Telecopy No: (000) 000-0000
with copies to:
General Electric Capital Corporation
000 Xxxx Xxxxx Xxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Attn: GE Equity Group Legal Counsel
Telecopy No: (000) 000-0000
and
Xxxx, Gotshal & Xxxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxx X. Xxxxxxx, Esq.
Telecopy No: (000) 000-0000
(b) If to Company:
Marketing Services Group, Inc.
000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxx Xxxxxxx
Telecopy No.: (000) 000-0000
with copies to:
Xxxxx Xxxxxxxxx & Xxxxx LLP
0000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxx X. Xxxxx, Esq.
Telecopy No.: (000) 000-0000
or at such other address as may be substituted by notice given as herein
provided. The giving of any notice required hereunder may be waived in writing
by the party entitled to receive such notice. Every notice, demand, request,
consent, approval, declaration, delivery or other communication hereunder shall
be deemed to have been duly given or served on the date on which personally
delivered, with receipt acknowledged, telecopied and confirmed by telecopy
answerback, or three (3) business days after the same shall have been deposited
in the United States mail. Failure or delay in delivering copies of any notice,
demand, request, consent, approval, declaration, delivery or other communication
to the person designated above to receive a copy shall in no way adversely
affect the effectiveness of such notice, demand, request, consent, approval,
declaration, delivery or other communication.
10. Submission to Jurisdiction; Jury Waiver. (a) Company, GE Capital and any
other Holder hereby irrevocably submit to the jurisdiction of any New York State
or Federal court sitting in New York City, and they hereby irrevocably agree
that any action may be heard and determined in such New York State court or in
such Federal court. Company, GE Capital and any other Holder hereby irrevocably
waive, to the fullest extent they may effectively do so, the defense of an
inconvenient forum to the maintenance of any action in any jurisdiction.
Company, GE Capital and any other Holder hereby irrevocably agree that the
summons and complaint or any other process in any action in any jurisdiction may
be served by mailing in accordance with the provision set forth in Section 9.
Company, GE Capital and any other Holder may also be served in any other manner
permitted by law, in which event their time to respond shall be the time
provided by law.
(b) EACH OF COMPANY, GE CAPITAL AND ANY OTHER HOLDER HEREBY IRREVOCABLY WAIVE
ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT
OF OR RELATING TO ANY OBLIGATIONS UNDER THIS NOTE.
11. Governing Law. This Note shall be governed by and construed and enforced in
accordance with the laws of the State of New York applicable to agreements made
and to be wholly performed in such State and without giving effect to the
conflict of laws principles thereof.
MARKETING SERVICES GROUP, INC.
By: /s/ Xxxxxx Xxxxxxx
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Name: Xxxxxx Xxxxxxx
Title: Chairman and Chief Executive Officer
