Promissory Note - Executive TeleCard Ltd. and Seymour Gordon
PROMISSORY NOTE
$500,000 February 28, 1996
EXECUTIVE TELECARD, LTD., a Delaware corporation (hereinafter
called "Maker"), for value received, promises to pay to the order of
Seymour Gordon, (hereinafter called "Payee"), in lawful money of the
United States of America, the principal amount of five hundred thousand
dollars ($500,000).
Principal and interest shall be payable as follows:
All accrued interest shall be payable in monthly installments,
the first payment commencing on March 28, 1996 and continuing on the 28th
day of each month thereafter through August 28, 1997, at which time the
unpaid principal amount and all accrued but unpaid interest shall be due
and payable in full.
The unpaid principal amount outstanding under this Note shall
bear interest from the date hereof until paid in full at a rate of twelve
percent (12%) per annum.
MAKER SHALL make all payments due hereunder to the following
address:
Mr. Seymour Gordon
3 Hawthorne Lane
Lawrence, New York 11559
MAKER SHALL be entitled to prepay the principal or interest of
this Note from time to time and at any time, in whole or in part, without
premium or penalty.
ALL PAST due principal and interest shall bear interest until
paid at the highest rate allowed by applicable law.
If ANY payment on this Note becomes due and payable on a
Saturday or Sunday, the maturity thereof shall be extended to the next
succeeding business day and interest thereon shall be payable at the then
applicable rate during such extension. Interest shall be calculated on
the basis of the actual number of days (including the first day but
excluding the last) elapsed over a year of 360 days.
MAKER WARRANTS and represents to Payee that Maker is a
corporation existing and in good standing under the laws of the State of
Delaware, that the borrowing evidenced hereby, the execution and delivery
of this Note and the performance by Maker of its obligations under this
Note or under any security or other agreement relating to the payment of
this Note are within Maker's corporate powers, have been authorized by all
necessary corporate action, have received all necessary governmental
approval, if any is required, and do not and will not contravene or
conflict with any provision of law or of the charter or by-laws of Maker
or of any agreement to which Maker is a party or is bound thereby.
IF DEFAULT, is made in the payment of any installment of
interest or principal, as and when the same is or becomes due and such
default continues for five business days following delivery to Maker of
written notice of default by Payee, the owner and holder of this Note may,
without notice or demand, declare all sums owing hereon at once due and
payable. If default is made in the payment of this Note at maturity
(regardless of how maturity may be brought about), and the same is placed
in the hands of an attorney for collection, or suit is filed hereon, or
proceedings are had in bankruptcy, receivership or other judicial
proceedings for the establishment or collection of any amount called for
hereunder, or any amount payable or to be payable hereunder is collected
through any such proceedings, Maker agrees to pay the owner and holder of
this note all reasonable attorney's and collection fees incurred and
actually expended by such owner and holder for such purposes.
MAKER, expressly waives demand and presentment for payment,
notice of nonpayment, protest, notice of protest, notice of dishonor,
bringing of suit and diligence in taking any action to collect amounts
called for hereunder.
NO DELAY on the part of the holder of this Note in the exercise
of any power or right under this Note, or under any other instrument
executed pursuant hereto, shall operate as a waiver thereof, nor shall a
single or partial exercise of any power or right preclude other or further
exercise thereof or the exercise of any other power or right.
IT IS the intention of Maker and Payee to conform strictly to
applicable usury laws. Accordingly, if the transactions contemplated
hereby would be usurious under applicable law (including without
limitation, the laws of the State of New York and the laws of the United
States), then in that event, notwithstanding anything to the contrary in
any agreement entered into in connection with or as security for this
Note, it is agreed as follows: (i) the aggregate of all consideration
which constitutes interest under applicable law that is taken, reserved,
contracted for, charged or received under this Note or under any of the
other aforesaid agreements or otherwise in connection with this Note shall
under no circumstances exceed the maximum amount of interest allowed by
applicable law, (or, if this Note shall have been paid in full, refunded
to the Maker); and (ii) in the event that maturity of this Note is
accelerated by reason of an election by the holder hereof resulting from
any default hereunder or otherwise, or in the event of any required or
permitted prepayment, then such consideration that constitutes interest
may never include more than the maximum amount allowed by applicable law,
and excess interest, if any, provided for in this Note or otherwise shall
be canceled automatically as of the date of such acceleration or
prepayment and, if theretofore prepaid, shall be credited on this Note (or
if this Note shall have been paid in full, refunded to the Maker).
THIS NOTE shall be construed in accordance with and governed by
the laws of the State of New York.
MAKER
EXECUTIVE TELECARD, LTD.
/s/ Allen Mandel
By: Allen Mandel
Its: Executive Vice President
<PAGE>
STOCK OPTION AGREEMENT
THIS AGREEMENT is made February 28, 1996, by and between
Executive Telecard, Ltd., a Delaware corporation (the "Corporation") and
Seymour Gordon ("Gordon").
1. Grant of Option. The Corporation hereby grants to Gordon
the right, privilege and option to purchase 50,000 shares of its
restricted common stock at the purchase price of $6 per share, in the
manner and subject to the conditions hereinafter provided.
2. Time of Exercise of Option. The aforesaid option may be
exercised at any time, and from time to time, in whole or in part, until
the termination thereof as provided in paragraph 4 below.
3. Method of Exercise. The option shall be exercised by
written notice directed to the Corporation at the Corporation's principal
place of business at 8 Avenue C, Nanuet, New York 10954, accompanied by a
check in payment of the option price for the number of shares specified
and paid for. The Corporation shall make immediate delivery of such
shares, provided that if any law or regulation requires the Corporation to
take any action with respect to the shares specified in such notice before
the issuance thereof, then the date of delivery of such shares shall be
extended for the period necessary to take such action.
4. Termination of Option. This option, to the extent not
heretofore exercised, shall terminate on the third anniversary of the date
of this Agreement.
5. Reclassification, Consolidation or Merger. If and to the
extent that the number of issued shares of the common stock of the
Corporation shall be increased or reduced by change in par value, split
up, reclassification, distribution of a dividend payable in stock, or the
like, the number of share subject to option and the option price per share
shall be proportionately adjusted. If the Corporation is reorganized or
consolidated or merged with another corporation, Gordon shall be entitled
to receive options covering shares of such reorganized, consolidated or
merged company in the same proportion, at an equivalent price, and subject
to the same conditions. For the purposes of the preceding sentence, the
excess of the aggregate fair market value of the shares subject to the
option immediately after the reorganization, consolidation or merger over
the aggregate option price of such shares shall not be more than the
excess of the aggregate fair market value of all shares subject to the
option immediately before such reorganization, consolidation or merger
over the aggregate option price of such shares, and the new option or
assumption of the old option shall not give Gordon additional benefits
which he did not have under the old option, or deprive him of benefits
which he had under the old option.
6. Rights Prior to Exercise of Option. This option is non-
transferable by Gordon, except in the event of his death, and during his
lifetime is exercisable only by him. Gordon shall have no rights as a
stockholder with respect to the option shares until payment of the option
price and delivery to him of such shares as herein provided.
7. Investment Intent. Gordon represents that all common
shares of the Corporation purchased by him pursuant to the exercise of all
or any portion of the option will be acquired for investment purposes and
not with a view to distribution, and that he will not sell or otherwise
dispose of any such common shares in any manner which is contrary to the
laws, regulations and rules enforced or promulgated by the Securities and
Exchange Commission.
8. Notices. All Notices and other communication hereunder
shall be in writing and shall be deemed to have been duly given if
delivered or mailed first class, postage prepaid:
a) If to the Corporation, at 8 Avenue C, Nanuet, New York
10954; and
b) If to Gordon, at 3 Hawthorne Lane, Lawrence, New York
11559.
9. Governing Law. This Agreement shall be deemed to be made
under and shall be construed in accordance with the laws of the State of
New York.
10. Binding Effect. This Agreement shall inure to the benefit
of and be binding upon the parties hereto and their respective heirs,
executors, administrators, successors and assigns.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed on the day and year first above written.
SEYMOUR GORDON EXECUTIVE TELECARD, LTD.
/s/ Seymour Gordon /s/ Allen Mandel
By: Allen Mandel
Its: Executive Vice President