EXHIBIT 4.2
EXECUTIVE TELECARD, LTD.
Promissory Note
New York, New York
June 17, 1999
Executive TeleCard, Ltd., a Delaware corporation (the "Maker"), for
value received, promises to pay, subject to the terms and conditions of this
Note, to American United Global, Inc. (the "Holder"), the principal sum of Five
Hundred Thousand ($500,000) with simple interest on the outstanding unpaid
principal amount accruing from the date hereof until this Note is paid in full,
at the rate of interest for each month equal to the prime rate of interest for
such month at the bank where the Maker maintains its principal bank account, or
if there is no such bank, at the average of the prime rates of the three largest
banks in the United States of America (the "Prime Rate"). All interest payment
calculations required hereunder shall be computed on the basis of the actual
number of days elapsed over a year comprised of 365 days.
1. Payments
1.1 Principal (and any accrued but unpaid interest) shall be due and
payable (1) commencing on September 1, 1999 in twelve (12) equal monthly
installments or (2) in full on the first date (subsequent to the date hereof) on
which (x) the Maker receives in any transaction or series of transaction any
equity or debt financing of at least fifty million dollars ($50,000,000) or (y)
the Vogo Networks LLC subsidiary of the Maker receives in any transaction or
series of transaction any equity or debt financing of at least five million
dollars ($5,000,000)
1.2 Payments of principal and interest of this Note shall be made to
the Holder at American United Global, Inc., c/o Gersten, Savage & Kaplowitz LLP,
101 E. 52nd Street, New York, NY 10022 or such other place or places within the
United States as may be specified by the Holder of this Note in a written notice
to the Maker at least 10 business days before a given payment date.
1.3 Payments of principal and interest on this Note shall be made in
lawful money of the United States of America by mailing the Maker's good check
in the proper amount to such Holder to arrive prior to or on the due date of
such
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payment or otherwise transferring funds so as to be received by such Holder on
the due date of such payment. Interest payment shall be made monthly.
1.4 If any payment on this Note becomes due and payable on a Saturday,
Sunday or other day on which commercial banks in New York City are authorized or
required by law to close, the maturity thereof shall be extended to the next
succeeding business day, and no interest on the principal amount shall be
payable during such extension.
1.5 In no event shall the amount of interest due or payable hereunder
exceed the maximum rate of interest allowable by applicable law, and in the
event any such payment is inadvertently paid by the Maker, or inadvertently
received by the Holder, then such excess shall be credited as a payment of
principal. It is the express intent hereof that the Maker not pay, and the
Holder not receive, directly or indirectly in any manner whatsoever, interest in
excess of that which may be legally paid by the Maker under applicable law.
2. Security.
The principal and interest payments under this Note shall be
secured by, and the Maker will cause Vogo at the Closing (as defined in the
Asset Purchase Agreement dated July 10, 1998, as amended, to which Maker
and the Holder are parties) to grant a security interest in, all chattels,
assets and property being acquired by Vogo Networks LLC ("Vogo") at the
Closing (as generally described in Exhibit A), wherever located, and all
products and proceeds thereof. This security interest will be granted to the
Holder to secure the payment of the indebtedness evidenced by this Note
(including all renewals, extensions and modifications thereof).
3. Subordination of Note
The principal and all interest due under this Note shall be
subordinated in all respects to the debt obligations of the Maker and Vogo set
forth on Exhibit B; provided, however, that such subordination shall not prevent
this Note from becoming fully due and payable under Section 1.1 of this Note.
4. Subordination of Security Interest
The security interest granted under this Note shall not be a first
priority security interest, but shall be (1) subordinated in all respects to
security interests granted (previously or in the future) with respect to (i) the
obligations described in paragraphs 1 and 2 of Exhibit B and (ii) the
obligations being assumed by Vogo at the Closing under the Asset Purchase
Agreement dated July 10, 1998, as amended, to which Maker and the Holder are
parties, and any interest, penalties or
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other amounts which may accrue thereon, and (2) pari passu in all respects with
security interests granted in connection with future indebtedness of Vogo;
provided, however, that such subordination or pari passu treatment shall not
prevent this Note from becoming fully due and payable under Section 1.1 of
this Note.
5. Reduction and Cancellation of Note.
5.1 If the Holder shall fail to make payment under the AUGI Note (as
defined in the Asset Purchase Agreement dated July 10, 1998, as amended) the
principal balance under this Note shall be reduced by $200,000, and all interest
accrued on such $200,000 shall be rescinded and cease to be accrued.
5.2 Upon payment in full in accordance with Section 1 hereof of all
outstanding obligations under this Note, the Maker's obligations in respect of
payment of this Note shall terminate and the Holder shall surrender this Note to
the Maker.
6. Events of Default.
In the event that:
(a) Maker defaults for more than five (5) business days after
receipt of written notice of failure to make any payment required to be made on
this Note or any other note issued by the Maker in favor of the Holder; or
(b) The Maker: (i) commences any case, proceeding or other action
(1) under any existing or future law of any jurisdiction, domestic or
foreign, relating to bankruptcy, insolvency, reorganization or relief of
debtors, seeking to have an order for relief entered with respect to the Maker,
or seeking to adjudicate the Maker a bankrupt or insolvent, or seeking
reorganization, arrangement, composition or other relief with respect to the
Maker or its debts or (2) seeking appointment of a receiver, trustee, custodian
or other similar official for the Maker or for all or any substantial part of
the Maker's assets, or shall make a general assignment for the benefit of its
creditors; or (ii) is the debtor named in any other case, proceeding or other
action of a nature referred to in clause (i) above which (1) results in the
entry of an order for relief or any such adjudication or appointment or (2)
remains undismissed, undischarged or unbonded for a period of thirty (30) days;
or (iii) takes any action in furtherance of, or indicating its consent to,
approval of, or acquiescence in, any of the facts set forth in clause (i) or
(ii) above; or (iv) shall generally not, or shall be unable to, or shall admit
in writing its inability to, pay its debts as they become due; then, and in any
such event (an "Event of Default"), and at any time thereafter, the Holder of
this Note may, by written notice to the Maker, declare this Note due and
payable, whereupon this Note shall be due and payable
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without presentment, demand, protest or other notice of any kind, all of which
are hereby expressly waived.
7. Miscellaneous.
7.1 Upon receipt of evidence reasonably satisfactory to the Maker of
the loss, theft, destruction or mutilation of this Note and of a letter of
indemnity reasonably satisfactory to the Maker and upon surrender or
cancellation of the Note, if mutilated, the Maker will make and deliver a new
Note of like tenor in lieu of such lost, stolen, destroyed or mutilated Note.
7.2 This Note and the rights and obligations of the Maker and any
Holder hereunder shall be construed in accordance with and be governed by the
internal laws of the State of New York.
7.3 Time is of the essence of this Note. If any provisions of this Note
or the application thereof to any person or circumstance shall be invalid or
unenforceable to any extent, the remainder of this Note and the application of
such provisions to other persons or circumstances shall not be affected thereby
and shall be enforced to the greatest extent permitted by law.
7.4 All notices to be given under this Note shall be mailed by first
class mail, postage prepaid, or telegraphed or telexed with confirmation of
receipt or delivered by hand or by overnight delivery service:
i. If to the Maker, at:
Executive Telecard, Ltd.
2000 Pennsylvania Avenue, N.W.
Washington, DC 20006
ii. if to the Holder at the address set forth in Section 1.2.
or at such other address as it may have furnished in writing to the other party.
Any notice so addressed, when mailed by registered or certified mail shall be
deemed to be given three days after so mailed, when telegraphed or telexed shall
be deemed to be given when transmitted, or when delivered by hand or overnight
shall be deemed to be given when delivered.
[Signature on next page]
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IN WITNESS WHEREOF, the Maker has executed this Note as of the day and
year first above written.
EXECUTIVE TELECARD, LTD.
By:______________________________
Name:____________________________
Title:___________________________
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