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Exhibit 10.2
PROMISSORY NOTE AND PLEDGE AGREEMENT
$1,000,000 July 10, 2000
FOR VALUE RECEIVED, Xxxxx X. Xxxxx (the "MAKER") promises to pay Cyrk,
Inc., a Delaware corporation (the "COMPANY"), the sum of ONE MILLION and 00/00
Dollars ($1,000,000).
SECTION 1. PRINCIPAL AND INTEREST. The unpaid principal balance of this
Promissory Note and Pledge Agreement (the "NOTE") shall be paid in full on
demand, together with all accrued but unpaid interest, as provided in Section 11
of the Employment Agreement between the Maker and the Company, dated September
1, 1999 (the "EMPLOYMENT AGREEMENT"). This Note shall bear interest (computed on
the basis of the actual number of days elapsed over a 365-day year) on the
unpaid principal amount hereof at a rate per annum equal to six and six tenths
percent (6.6%), compounded annually. Interest shall be based upon the Federal
short-term interest rate, and restated on July 1 of each year. All accrued
interest shall be payable at maturity of this promissory note. All payments
hereunder shall be made in immediately available funds.
SECTION 2. PREPAYMENT. The Maker may at any time prepay all or a
portion of the unpaid principal amount of this Note without penalty or premium,
together with all accrued but unpaid interest on the amount so prepaid to the
date of prepayment.
SECTION 3. EVENTS OF DEFAULT. For the purposes of this Note an "EVENT
OF DEFAULT":
the Maker shall default in the payment of principal of or
interest on this Note after the same becomes due and
payable;
SECTION 4. RIGHTS UPON DEFAULT. Upon the occurrence of an Event of
Default, (a) the principal of and accrued interest in respect of this Note shall
become due and payable without presentment, demand, protest or other notice of
any kind, all of which are hereby expressly waived by the Maker and (b) the
Company shall have all of the rights and remedies provided by law, including,
without limitation, those provided by the Uniform Commercial Code.
In case of an Event of Default and the acceleration of the Maker's
obligations hereunder, the Maker will pay to the holder hereof such further
amount as shall be sufficient to cover the cost and expense of collection,
including, without limitation, reasonable attorneys' fees, expenses and
disbursements. No delay or omission on the part of the holder hereof in
exercising any right shall operate as a waiver thereof or otherwise prejudice
the rights of the holder of this Note. No waiver of any single breach or default
shall be deemed a waiver or breach of any other breach or default. No right
conferred hereby upon the holder hereof shall be exclusive of any other right
referred to herein or now or hereafter available at law, in equity, by statute
or otherwise; all remedies shall be cumulative and not alternative.
In case there shall exist an Event of Default, but subject to the
provisions of the Uniform Commercial Code or other applicable law, the Company
may cause all or any of the Pledged Securities (as hereinafter defined) to be
transferred into its name or into the name of its nominee or nominees.
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Upon the occurrence of an Event of Default, the Company shall have the
right at any time or times thereafter to sell, resell, assign and deliver all or
any of the Pledged Securities in one or more parcels at any exchange or broker's
board or at public or private sale. Unless the Pledged Securities threaten to
decline speedily in value or are of a type customarily sold on a recognized
market, the Company will give the Maker at least ten (10) days prior written
notice of the time and place of any public sale thereof or of the time after
which any private sale or any other intended disposition thereof is to be made.
Any such notice shall be deemed to meet any requirement hereunder or under any
applicable law (including the Uniform Commercial Code) that reasonable
notification be given of the time and place of such sale or other disposition.
Such notice may be given without any demand of performance or other demand, all
such demands being hereby expressly waived by the Maker. All such sales shall be
at such commercially reasonable price or prices, as the Company shall deem best
and either for cash or on credit or for future deliver (without assuming any
responsibility for credit risk). At any such sale or sales the Company may
purchase any or all of the Pledged Securities to be sold thereat upon such terms
as the Company may deem best. Upon any such sale or sales the Pledged Securities
so purchased shall be held by the purchaser absolutely free from any claims or
rights of whatsoever kind or nature, including any equity of redemption and any
similar rights, all such equity of redemption and any similar rights being
hereby expressly waived and released by the Maker, other than restrictions under
applicable securities law. In the event any consent, approval or authorization
of any governmental agency will be necessary to effectuate any such sale or
sales, the Maker shall execute all such applications or other instruments as may
be required. The proceeds of any such sale or sales, together with any other
additional collateral security at the time received and held hereunder, shall be
received and applied: first, to the payment of all costs and expenses of such
sale, including reasonable attorneys' fees; second, to the payment of the amount
owed hereunder to which the Company does not have recourse against the Maker;
third, to the payment of the amount owed hereunder to which the Company does
have recourse against the Maker, and any surplus thereafter remaining shall be
paid to the Maker or to whomever may be legally entitled thereto (including, if
applicable, any subordinated creditor of the Maker).
The Maker recognizes that the Company may be unable to effect a public sale
of all or a part of the Pledged Securities by reason of certain prohibitions
contained in the Securities Act of 1933, as amended (the "SECURITIES ACT") but
may be compelled to resort to one or more private sales to a restricted group of
purchasers, each of whom will be obligated to agree, among other things, to
acquire such Pledged Securities for its own account, for investment and not with
a view to the distribution or resale thereof. The Maker acknowledges that
private sales so made may be at prices and upon other terms less favorable to
the seller than if such Pledged Securities were sold at public sales, and that
the Company has no obligation to delay sale of any such Pledged Securities for
the period of time necessary to permit such Pledged Securities to be registered
for public sale under the Securities Act. The Maker agrees that any such private
sales shall not be deemed to have been made in a commercially unreasonable
manner solely because they shall have been made under the foregoing
circumstances.
SECTION 5. PLEDGE OF PLEDGED SECURITIES; FULL RECOURSE. For the
purposes of securing payment of this Note, the Maker pledges, but shall not
deliver, to the Company the property described below (the "Pledged Securities")
and grants to the Company a security interest therein:
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421,054 shares of the Company's Common Stock, $.01 par value per
share, represented by stock certificate number ______________.
In addition to the Pledged Securities, the Company shall have full recourse to
the Maker for all amounts due hereunder.
SECTION 6. REPRESENTATIONS AND WARRANTIES OF THE MAKER. The Maker
hereby represents, warrants and covenants to the Company that:
(a) The Maker has good title to the Pledged Securities, free and
clear of all claims, mortgages, pledges, liens, security interests and
other encumbrances of every nature whatsoever other than those under
applicable securities law or set forth herein.
(b) The Maker will not sell, convey or otherwise dispose of any of
the Pledged Securities, nor will the Maker create, incur or permit to
exist any pledge, mortgage, lien, charge, encumbrance or any security
interest whatsoever with respect to any of the Pledged Securities or
the proceeds thereof, other than liens on and security interests in
the Pledged Securities created hereby and restrictions under
applicable securities laws.
SECTION 7. NOTICES. All communications under this Note shall be in
writing and shall be hand delivered or sent prepaid by first class mail or
recognized overnight delivery service to the respective addresses set forth
below (or such other addresses as may be furnished in writing by the Maker and
the Company):
(a) To the Company:
Cyrk, Inc.
000 Xxxxxxxxx Xxxxx
Xxxxxxxxx, XX 00000
Attention: Xxxxxxxx X. Xxxxxxxx, Esq.
Xxxxxx, Hall & Xxxxxxx
Exchange Place
00 Xxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Cameron "Bunk" Read, Esq.
(b) To the Maker:
Xxxxx X. Xxxxx
c/o Simon Marketing, Inc.
0000 Xxxxxx xx xxx Xxxxx, Xxxxx 000
Xxx Xxxxxxx, XX 00000
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Irell & Xxxxxxx LLP
0000 Xxxxxx xx xxx Xxxxx
Xxxxx 000
Xxx Xxxxxxx, XX 00000-0000
Attn: Xxxxxx Xxxxxxx
SECTION 8. WAIVER AND AMENDMENTS. The provisions of this Note may be
waived or amended only with the written approval of the Company and the Maker
and shall only be effective to the extent specifically set forth in said
writing.
SECTION 9. GOVERNING LAW. This Note shall be governed by the internal
laws of the Commonwealth of Massachusetts, without giving effect to conflicts of
law principles, and is executed as a sealed instrument.
IN WITNESS WHEREOF, the undersigned has executed this Promissory Note and
Pledge Agreement this 29th day of June, 2000.
/s/ Xxxxx X. Xxxxx
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Xxxxx X. Xxxxx
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