PROMISSORY NOTE
$1,050,000 August 21, 2000
FOR VALUE RECEIVED, the undersigned, LAZAR & COMPANY I.G.,
LLC, a New York limited liability company with its principal executive offices
located at One Penn Plaza, New York, New York 10119 ("Lazar"), hereby
unconditionally promises to pay to the order of CONTINENTAL CHOICE CARE, INC., a
New Jersey corporation with its principal executive offices located at 44 Aspen
Drive, Livingston, New Jersey 07039 (the "Company") or to any other holder of
this Note (the Company or such other holder being the "Payee"), the principal
amount of $1,050,000. Principal and interest hereunder shall be paid on the
Maturity Date (as defined herein). Principal and interest hereunder are payable
in lawful money of the United States of America to the Payee at its place of
business specified in Section 6 or in accordance with Section 6, (such place of
business or other place being the "Payment Place"), in cash or other immediately
available U.S. funds. Unless otherwise noted, capitalized terms used herein but
not defined upon their first usage shall have the meaning ascribed to such terms
in Section 16 hereof. This Note has been issued under the Purchase Agreement and
is secured pursuant to the provisions of the Pledge Agreement and entitled to
the rights thereof.
SECTION 1. Payment of Principal and Interest.
(a) Maturity Date. The "Maturity Date" is August 21, 2003.
(b) Interest. Lazar hereby promises to pay interest on the
unpaid principal amount of this Note from the date hereof until this Note shall
be paid in full in cash or other immediately available U.S. funds at the
Applicable Rate, compounded annually, computed on the basis of a year of 360
days counting the actual number of days elapsed; provided, however, during any
period in which an Event of Default has occurred and is continuing, the unpaid
principal amount of this Note, shall thereafter bear interest, payable on demand
at a rate which is 2% per annum in excess of the Applicable Rate, but not in
excess of the maximum rate of interest permitted by applicable law.
(c) Optional Prepayment. Lazar may, at any time and from time
to time, without premium or penalty, prepay all or a portion of the unpaid
principal amount of this Note, together with unpaid accrued interest on the
amount so prepaid to the date chosen for prepayment, payable in cash or other
immediately available U.S. funds. All prepayments in respect of this Note shall
be applied first to the payment of all expenses to the Payee hereunder, second
to interest, and last to the principal amount of this Note.
(d) Payment Date. If any date fixed for payment hereunder is
not a Business Day, such payment date shall be extended to the next succeeding
Business Day, and during any such extension, interest on the unpaid principal
amount of this Note shall accrue and be payable at the Applicable Rate.
SECTION 2. Events of Default.
(a) For purposes of this Note, an "Event of Default" shall be
deemed to have occurred upon:
(i) any failure by Lazar to pay (by delivery of cash
or other immediately available U.S. funds) all or any portion of principal,
interest accruing thereon or other amounts due and owing under this Note when
the same shall be due and payable in accordance with the terms hereof, whether
on the scheduled date, by acceleration or otherwise; or
(ii) any default by Lazar in the due and punctual
performance or observance of any of the covenants or agreements of Lazar
contained in this Note or in the Pledge Agreement, which failure continues
unremedied for a period of 30 days after written notice of such default is given
by the Payee to Lazar; or
(iii) (A) the filing by Lazar or Shlomo Lazar, Lazar
& Company I.G., Inc. or assignees thereof to the Purchase Agreement or the
Warrant (each a "Lazar Affiliate") of a voluntary petition seeking liquidation,
reorganization, arrangement or readjustment, in any form, of their respective
debts under Title 11 of the United States Code or any other applicable domestic
or foreign bankruptcy, insolvency or similar law (or corresponding provisions of
future laws), or the filing by Lazar or a Lazar Affiliate of an answer
consenting to or acquiescing in any such petition, (B) the making by Lazar or a
Lazar Affiliate of any assignment for the benefit of their respective creditors,
or the admission by Lazar or a Lazar Affiliate in writing of their respective
inability to pay their respective debts as they become due, (C) the filing of
(x) an involuntary petition against Lazar or a Lazar Affiliate under Title 11 of
the United States Code, or any other applicable domestic or foreign bankruptcy,
insolvency or similar law (or corresponding provisions of future laws), (y) an
application for the appointment of a custodian, receiver, trustee or other
similar official for Lazar or a Lazar Affiliate for all or a substantial part of
their respective assets, or (z) an involuntary petition against Lazar or a Lazar
Affiliate seeking liquidation, winding up, reorganization, arrangement,
adjustment, protection, relief or composition of Lazar or a Lazar Affiliate or
any of their respective debts under any other domestic or foreign insolvency
law, provided that any such filing under this subsection (iii)(C) shall not have
been vacated, set aside or stayed within a 60 day period from the date thereof,
or (D) the entry against Lazar or a Lazar Affiliate of a final and nonappealable
order for relief under any domestic or foreign bankruptcy, insolvency or similar
law now or hereafter in effect; or
(iv) all or any substantial part of Lazar's assets
the loss of which would materially and adversely affect the financial condition,
prospects, assets or business of Lazar shall be condemned, seized or otherwise
appropriated, or custody or control of such assets shall be assumed by any
governmental agency or by any court of competent jurisdiction at the instance of
any governmental agency and shall be retained for a period of 60 days; or
(v) any material representation or material warranty
made or deemed made by Lazar to the Payee in connection with the issuance of
this Note or in any of the Collateral Documents shall be false or misleading in
any material respect on the date as of which made or deemed made; or
(vi) any money judgment (other than a money judgment
covered by insurance, but only if the insurer has admitted liability with
respect to such money judgment), writ or warrant of attachment, or similar
process shall be entered or filed against Lazar involving in any such case an
amount in excess of 30% of the then outstanding principal and accrued interest
due under this Note, or any of its assets and shall remain undischarged,
unvacated, unbonded or unstayed for a period of 60 days; or
(vii) for any reason (not due to the fault of the
Payee) any Collateral Document ceases to be in full force and effect or any Lien
intended to be created thereby ceases to be or is not valid and perfected; or
any Lien in favor or made for the benefit of the Payee contemplated by any
Collateral Document, shall, at any time, be invalidated or otherwise cease to be
in full force and effect (not due to the fault of the Payee); or
(viii) the dissolution, liquidation, or termination
of Lazar.
(b) Upon the occurrence and during the continuance of any
Event of Default described in Section 2(a) above other than in clause (iii)
thereof, the Payee may, by written notice to Lazar, declare all or any portion
of the unpaid principal amount of this Note and all interest accrued thereon and
other amounts due and owing hereunder to be immediately due and payable. Upon
the occurrence of any Event of Default described in clause (iii) of Section 2(a)
above, the unpaid principal amount of this Note and all interest accrued thereon
and other amounts due and owing hereunder shall accelerate and become due and
payable, without any action or express notice by the Payee. Demand, presentment,
protest and notice of non-payment are hereby waived by Lazar. All payments made
following an Event of Default and all proceeds of Collateral received by the
Payee in respect of this Note shall be applied first to the payment of all
expenses owing to the Payee hereunder, second to interest, and last to the
original principal amount of this Note.
SECTION 3. Collateral. The obligations of Lazar under this
Note are secured by the Pledge Agreement and reference is made to such document
for the terms and conditions governing the collateral security for the
obligations of Lazar hereunder.
SECTION 4. Waiver or Alteration. None of the provisions hereof
may be waived, altered or amended, except by a written instrument signed by the
Payee and Lazar, but no such waiver shall extend to any subsequent or other
Event of Default or impair any right consequent thereon except to the extent
expressly provided in such waiver.
SECTION 5. Remedies Cumulative. No failure to exercise or
delay in exercising any right, remedy, power or privilege hereunder or under the
Collateral Documents shall operate as a waiver thereof, nor shall any single or
partial exercise of any right, remedy, power or privilege hereunder or under the
Collateral Documents preclude any other or further exercise thereof or the
exercise of any other right, remedy, power or privilege. The rights, remedies,
powers and privileges provided herein and in the Collateral Documents are
cumulative and not exclusive of any rights, remedies, powers and privileges
provided at law or in equity.
SECTION 6. Notices.
(a) All demands, notices, communications and reports
("notices") provided for in this Note will be in writing and will be either
personally delivered, mailed by registered or certified mail (return receipt
requested) or sent by reputable overnight courier service (delivery charges
prepaid) to any party at the address specified below, or at such address, to the
attention of such other person, and with such other copy, as the recipient party
has specified by prior written notice to the sending party pursuant to the
provisions of this Section 6.
If to Lazar:
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Lazar & Company I.G., LLC
One Penn Plaza, 36th Floor
New York, New York 10119
Attention: President
with a copy, which will not constitute notice to Lazar, to:
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Akin, Gump, Strauss, Hauer & Feld, L.L.P.
590 Madison Avenue
New York, New York 10022
Attention: Steven H. Scheinman
Facsimile Number: (212) 872-1002
If to the Company:
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Continental Choice Care, Inc.
44 Aspen Drive
Livingston, New Jersey 07039
Attention: President
with a copy, which will not constitute notice to the Company, to:
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Pitney, Hardin, Kipp & Szuch LLP
200 Campus Drive
P.O. Box 1945
Morristown, New Jersey 07962-1945
Attention: Joseph Lunin
Facsimile Number: (973) 966-1550
(b) Any such notice will be deemed to have been given when
delivered personally, on the third business day after deposit postage pre-paid
in the U.S. mail, or on the business day after deposit with a reputable
overnight courier service delivery charges pre-paid, as the case may be.
SECTION 7. Governing Law. This Note will be governed by and
construed in accordance with the domestic laws of the State of New Jersey,
without giving effect to any choice of law or conflict rule of any jurisdiction
that would cause the laws of any other jurisdiction to be applied. In
furtherance of the foregoing, the internal law of the State of New Jersey will
control the interpretation and construction of this Note, even if under any
choice of law or conflict of law analysis, the substantive law of some other
jurisdiction would ordinarily apply.
SECTION 8. Jurisdiction. Each of the parties hereby (a)
irrevocably submits to the exclusive jurisdiction of the state courts of, and
the federal courts located in, the State of New Jersey in any action or
proceeding arising out of or relating to, this Note, (b) waives, and agrees to
assert, by way of motion, as a defense, or otherwise, in any such suit, action
or proceeding, any claim that it is not subject personally to the jurisdiction
of the above-named courts, that its property is exempt or immune from attachment
or execution under the law of another jurisdiction, that the suit, action or
proceeding is brought in an inconvenient forum, that the venue of the suit,
action or proceeding is improper or that this Note or the subject matter hereof
may not be enforced in or by such court, and agrees not to seek, any review by
any court of any other jurisdiction which may be called upon to grant an
enforcement of the judgment of any such court.
SECTION 9. Severability. If any provision of this Note is
invalid or unenforceable in any jurisdiction, the other provisions hereof shall
remain in full force and effect in such jurisdiction and the remaining
provisions hereof shall be liberally construed in favor of the Payee in order to
effectuate the provisions hereof and the invalidity of any provision hereof in
any jurisdiction shall not affect the validity or enforceability of any other
provision in any other jurisdiction, including the State of New Jersey.
SECTION 10. Costs of Enforcement. Lazar agrees to pay, or
reimburse the Payee, on demand, for all losses, including, without limitation,
attorneys' fees and disbursements, and costs of settlement incurred by the Payee
after the occurrence of an Event of Default in enforcing any obligation of Lazar
hereunder or in foreclosing against the Collateral or exercising or enforcing
any other right or remedy available by reason of an Event of Default.
SECTION 11. Successors and Assigns: Transferability. This Note
shall inure to the benefit of the Payee and be binding upon Lazar and their
respective transferees, successors and assigns; provided, however, that Lazar
may not transfer or assign any of its rights or obligations hereunder without
the prior written consent of the Payee; provided, further, that the Payee may
not transfer or assign any of its rights or obligations hereunder without the
prior written consent of Lazar, unless any such transfer or assignment is by
operation of law. Within five Business Days after receipt of notice of any
assignment by the Payee to any person or entity of all or any part of this Note,
Lazar shall, at the request and expense of such assignee, execute and deliver to
such assignee, in exchange for the surrendered Note or Notes, a new Note to the
order of such assignee in an amount equal to the amount of this Note assigned to
it, and if the Payee has retained any amount owing to it hereunder, a new Note
to the order of the Payee in an amount equal to the amount retained by it
hereunder, which new Note or Notes shall be dated the same date as the
surrendered Note or Notes and be in substantially the form of this Note, and
such assignee will be deemed the Payee under the Note issued to it.
SECTION 12. Replacement of Note. Upon receipt of evidence
reasonably satisfactory to Lazar of the loss, theft, destruction or mutilation
of this Note, and Lazar's receipt of an indemnity agreement of the Payee
reasonably satisfactory to Lazar, Lazar will, at the expense of the Payee,
execute and deliver, in lieu thereof, a new Note of like terms.
SECTION 13. Further Assurances. Lazar shall execute and
deliver from time to time to the Payee all such further documents and
instruments and do all such other acts and things as may be reasonably required
by the Payee to enable the Payee to exercise and enforce its rights hereunder
and under the Collateral Documents and to perfect, continue the perfection of,
preserve and protect its Lien on the Collateral.
SECTION 14. Waiver of Jury Trial. LAZAR AND THE PAYEE
IRREVOCABLY WAIVE ANY AND ALL RIGHTS LAZAR AND THE PAYEE MAY HAVE TO TRIAL BY
JURY IN ANY ACTION, PROCEEDING, OR CLAIM OF ANY NATURE RELATING TO THIS NOTE OR
THE PLEDGE AGREEMENT. Lazar and the Payee acknowledge that the foregoing waiver
is knowing and voluntary.
SECTION 15. Descriptive Headings. The descriptive headings of
this Note are inserted for convenience only and do not constitute a part of this
Note.
SECTION 16. Definitions.
(a) For purposes of this Note, the following terms have the
following meanings:
"Applicable Rate" means 7% per annum.
"Business Day" shall mean a day other than a Saturday, Sunday
or other day on which commercial banks in New York or New Jersey are authorized
or required by law to close.
"Collateral" shall have the meaning given such term in the
Pledge Agreement.
"Collateral Documents" shall mean the Purchase Agreement, the
Pledge Agreement, and all other security agreements, collateral assignments and
other agreements or conveyances at any time delivered to the Payee to create or
evidence Liens to secure the obligations of Lazar hereunder.
"Lien" shall mean any mortgage, lien, pledge, charge, security
interest or encumbrance of any kind in respect of any asset, whether now owned
or hereafter acquired, including any conditional sale or other title retention
agreement, any lease in the nature thereof, any option or other agreement to
sell and any filing of or agreement to give any financing statement under the
Uniform Commercial Code (or equivalent statutes) of any jurisdiction.
"Note" means, collectively, this Note and any note issued to
an assignee pursuant to Section 11 hereof.
"Pledge Agreement" shall mean the Pledge Agreement dated as of
the date hereof made by Lazar in favor of the Company, for itself and for the
benefit of the Payee, as such agreement may be amended, supplemented or modified
from time to time.
"Purchase Agreement" shall mean the Purchase Agreement dated
as of June 7, 2000 entered into between the Company and Lazar regarding the
purchase and sale of the Shares and the Warrant as such agreement may be
amended, supplemented or modified from time to time.
"Warrant" shall mean the Warrant dated as of the date hereof
issued by the Company to Lazar.
(b) All references to "Sections" of this Note shall be to
Sections of this Note unless otherwise specifically provided.
IN WITNESS WHEREOF, Lazar has caused this Note to be executed
by its duly authorized officer as of the day and year first written above.
LAZAR & COMPANY I.G., LLC
By: LAZAR & COMPANY I.G., INC.
Managing Member
SHLOMO LAZAR
By: ________________________
Shlomo Lazar
Chief Executive Officer