NOTE PURCHASE AGREEMENT
This Note Purchase Agreement (the "Agreement"), dated as of
April 21, 1997, is made among X.X. Xxxxxxx ("Seller"), Hadron,
Inc., a New York Corporation ("Hadron"), Engineering and
Information Services, Inc. a Virginia corporation and the wholly-
owned subsidiary of Hadron ("EISI"), Sycom Services, Inc., a
Delaware corporation and the wholly-owned subsidiary of Hadron
("Sycom," and together with EISI, the "Makers"), and Xxxxxx X.
Xxxxxx, S. Xxxxx Xxxxxx, Xxxxxx Xxxxxx, J. Xxxxxxx Xxxxx and
Xxxxxx Xxxxxxx (the "Buyers").
WHEREAS, the Makers are currently indebted to the Seller
pursuant to the terms of a Second Amended and Restated
Convertible Promissory Note dated December 31, 1996 in the
principal amount of $250,000.00 (the "Note"), a copy of which is
attached as Exhibit A to this Agreement.
WHEREAS, the Note provides that the Seller may, at any time
amounts remain outstanding and unpaid under the Note, convert the
principal and interest then outstanding into that number of
shares of Hadron fully paid and non-assessable $0.02 par value
common stock (the "Common Stock") equal to the total principal
and interest then outstanding divided by $0.25 (the "Conversion
Right").
WHEREAS, the Note further provides that upon its prepayment
the Seller shall receive from Hadron warrants entitling Seller to
purchase from Hadron for $0.25 per share that number of shares of
Common Stock equal to the amount of the prepayment divided by
$0.25 (the "Prepayment Right").
WHEREAS, Hadron joined in the execution of the Note to (a)
acknowledge and agree to the Conversion Right and the Prepayment
Right set forth therein, (b) agree at all times to reserve and
keep available from its authorized common stock, solely for
issuance and delivery pursuant to exercise of the Conversion
Right or the Prepayment Right, a sufficient number of shares of
Common Stock to permit the full-conversion of the Note and the
full exercise of the warrants which may be issued pursuant to the
Prepayment Right, and (c) agree to take such corporate action and
obtain all authorizations and approvals as may be necessary in
order that Hadron may validly and legally issue to Xxxxxxx upon
exercise of the Conversion Right or exercise of the warrants
issuable pursuant to exercise of the Prepayment Right, fully paid
and non-assessable shares of Common Stock at the price set forth
in the Note.
WHEREAS, each of the Buyers is an executive officer of
Hadron, EISI or Sycom.
WHEREAS, none of the Buyers presently holds more than a
nominal interest in the equity of Hadron.
WHEREAS, the Seller desires that each of the Buyers hold an
equity interest in Hadron so that each will be provided an
incentive to continue their efforts on behalf of Hadron.
NOW THEREFORE, in consideration of the foregoing and the
representations, warranties, and agreements herein contained, the
parties hereto agree as follows:
1. Seller agrees to sell to each of the Buyers a two percent
(2%) share of the Note (the "Note Share(s)") on the terms and
conditions set forth herein. Each Note Share acquired by the
Buyers shall exclude any claim to interest relating to any period
prior to the date of this Agreement, all of which interest shall
be due and payable to Buyer under the terms of the Note, as
amended.
2. Each of the Buyers agrees to pay Seller Five Thousand
Dollars ($5,000.00) in same day funds for his or her respective
Note Share.
3. In addition to the right to receive payment from Makers of
principal in the amount of Five Thousand Dollars ($5,000.000) and
interest accruing thereon from the date of this Agreement at the
rate set forth in the Note, each Note Share shall convey to each
of the respective Buyers a Conversion Right and a Prepayment
Right on the same terms as currently set forth in the Note.
4. Each Note Share is to be evidenced by a promissory note
("New Note") from Makers in favor of each of the respective
Buyers in the form attached as Exhibit B hereto.
5. The Note is to be canceled and replaced with a new note to
be executed by Makers in favor of Xxxxxxx in the amount of Two
Hundred Twenty Five Thousand Dollars ($225,000.00) in the form
attached as Exhibit C hereto.
6. The transactions contemplated by this Agreement are to be
consummated simultaneously with the execution of this Agreement.
7. Each Buyer represents and warrants, severally and not
jointly, that:
(a) Buyer understands that the New Note and the Common
Stock to which Buyer may be entitled upon exercise of the
Conversion Right or Prepayment Right (the "Securities") will not
be registered under the Securities Act of 1933, as amended (the
"Securities Act"), or any state securities laws,
(b) the Securities to be acquired by such Buyer pursuant to
this Agreement will be acquired by such Buyer for such Buyer's
own account, not as a nominee or agent, and without a view to
resale or other distribution within the meaning of the Securities
Act and the rules and regulations thereunder, and that such Buyer
will not distribute any of the Securities in violation of the
Securities Act,
(c) such Buyer (i) acknowledges that the Securities
acquired by such Buyer pursuant to this Agreement must be held
indefinitely by such Buyer unless subsequently registered under
the Securities Act or an exemption from registration is
available, (ii) is aware that any routine sales of Securities
made pursuant to Rule 144 under the Securities Act may be made
only in limited amounts and in accordance with the terms and
conditions of that Rule and that in such cases where the Rule is
not applicable, compliance with some other registration exemption
will be required, and (iii) is aware that Rule 144 is not
currently available for use by such Buyer for resale of any of
the Securities to be acquired by such Buyer pursuant to this
Agreement,
(d) such Buyer has such knowledge and experience in
financial and business matters such that such Buyer is capable of
evaluating the merits and risks of such Buyer's investment in any
of the Securities to be acquired by such Buyer pursuant to this
Agreement,
(e) such Buyer, through his or her position as an officer
of EISI, Sycom or Hadron, has access to information concerning
the operations and prospects of Makers and Hadron sufficient to
make a reasonable and informed investment decision with respect
to the Securities,
(f) such Buyer agrees that such Buyer will not sell or
otherwise transfer or dispose of Securities or any interest
therein unless such Securities have been registered under the
Securities Act or may be sold or transferred in reliance on an
exemption from such registration, and
(g) such Buyer agrees that the certificates or instruments
representing the Securities to be acquired by Buyer pursuant to
this Agreement may contain a restrictive legend noting the
restrictions on transfer described herein and required by federal
and applicable state securities laws, and that appropriate "stop-
transfer" instructions may be given to Hadron's transfer agent,
if any, provided that this paragraph (g) shall no longer be
applicable to any Securities following their transfer pursuant to
a registration statement effective under the Securities Act or in
compliance with Rule 144 or if an opinion of counsel reasonably
satisfactory to Hadron is to the effect that transfer
restrictions and the legend referred to herein are no longer
required in order to establish compliance with any provisions of
the Securities Act.
8. Hadron (a) agrees to the transfer of the Conversion Right
and the Prepayment Right from the Note to the New Notes, (b)
agrees at all times to reserve and keep available from its
authorized common stock, solely for issuance and delivery
pursuant to exercise of the Conversion Right or the Prepayment
Right set forth in the New Notes, a sufficient number of shares
of Common Stock to permit the full-conversion of each of the New
Notes and the full exercise of the warrants which may be issued
pursuant to the Prepayment Right set forth in each New Note, and
(c) agrees to take such corporate action and obtain all
authorizations and approvals as may be necessary in order that
Hadron may validly and legally issue to the Buyers upon exercise
of the Conversion Right or exercise of the warrants issuable
pursuant to exercise of the Prepayment Right set forth in the New
Notes, fully paid and non-assessable shares of Common Stock at
the price set forth in the New Notes.
9. This Agreement and the relationship between the parties
shall be governed by, and construed in accordance with, the laws
of the State of Virginia regardless of the laws that might
otherwise govern under applicable principles of conflicts of law.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first written above.
HADRON, INC.
By: /S/ XXXXXX X. XXXXXX
Xxxxxx X. Xxxxxx
President
ENGINEERING AND INFORMATION
SERVICES, INC.
By:/S/ XXXXXX X. XXXXXX
Xxxxxx X. Xxxxxx
President
SYCOM SERVICES, INC.
By: /S/ J. XXXXXXX XXXXX
J. Xxxxxxx Xxxxx
President
SELLER:
/S/ X.X. XXXXXXX
X.X. Xxxxxxx
BUYERS:
/S/ XXXXXX X. XXXXXX
Xxxxxx X. Xxxxxx
/S/ S. XXXXX XXXXXX
S. Xxxxx Xxxxxx
/S/ XXXXXX X. XXXXXX
Xxxxxx X. Xxxxxx
/S/ J. XXXXXXX XXXXX
J. Xxxxxxx Xxxxx
/S/ XXXXXX X. XXXXXXX
Xxxxxx X. Xxxxxxx
EXHIBIT A
THE SHARES OF COMMON STOCK, PAR VALUE $0.02 PER SHARE, OF HADRON,
INC. INTO WHICH THIS NOTE IS CONVERTIBLE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 OR ANY STATE SECURITIES LAW AND
MAY NOT BE TRANSFERRED, SOLD OR OTHERWISE DISPOSED OF EXCEPT
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT OR A VALID
EXEMPTION FROM REGISTRATION UNDER SUCH ACT AND APPLICABLE STATE
SECURITIES LAWS
SECOND AMENDED AND RESTATED
CONVERTIBLE PROMISSORY NOTE
$250,000.00 WASHINGTON, D.C. December 31, 1996
FOR VALUE RECEIVED, ENGINEERING AND INFORMATION SERVICES,
INC., a Virginia corporation, and SYCOM SERVICES, INC., a
Delaware corporation (collectively, "Makers"), hereby promise to
pay to the order of X.X. XXXXXXX ("Payee"), at his domicile at
000 Xxxxx Xxxxxx, S.E., in the City of Washington, District of
Columbia, or at such other place as may be designated by Payee,
the principal sum of TWO HUNDRED FIFTY THOUSAND AND NO/lOO
DOLLARS ($250,000.00), together with interest from the date
hereof until maturity at the rate of three percent (3%) per annum
over the Prime Rate (hereinafter defined) from time to time in
effect. Said interest rate shall be adjusted as and when any
change in the Prime Rate shall occur. For purposes hereof, the
term "Prime Rate" shall mean the highest prime rate per annum
published from time to time in the money rates column or section
of The Wall Street Journal as the interest rate in effect for
corporate loans at large U.S. money center commercial banks
(whether or not such rate has actually been charged by any such
bank). In the event The Wall Street Journal ceases publication of
such prime rate, the term "Prime Rate" shall mean the prime rate
per annum announced from time to time by any U.S. money center
commercial bank selected by Payee. This Second Amended and
Restated Convertible Promissory Note represents an amendment of
the Amended and Restated Convertible Promissory Note dated
September 27, 1996 and issued by Makers in favor of Payee in the
principal amount of $250,000.00.
1. Interest on the unpaid principal balance of this note shall
be due and payable quarterly as it accrues, the first such
payment of accrued interest being due and payable on or before
March 15, 1997, and successive payments of accrued interest being
due and payable on or before the 15th day of each succeeding
March, June, September and December thereafter until October 21,
1998, when, if not sooner paid, the entire principal balance of
this note, together with all accrued but unpaid interest thereon,
shall be paid in full. The principal balance of this note,
together with all accrued but unpaid interest thereon, shall be
due and payable on October 21, 1998.
2. (a) At any time prior to the payment in full of all
amounts, principal and interest, due under this note, whether
before or after the date such amounts are due hereunder, the
outstanding principal amount of this note together with all
accrued but unpaid interest thereon may, at the option of Payee,
be converted into fully paid and non-assessable, restricted
shares ("Hadron Shares") of the common stock, par value $0.02 per
share, of Hadron, Inc. ("Hadron Common Stock") at the Conversion
Price (as hereinafter defined) in accordance with this Section 2.
(b) In the event Payee elects to convert this note to
Hadron Shares, Payee shall deliver to Makers and Hadron, Inc.
("Hadron") written notice of his election to convert this note
into Hadron Shares in accordance with the terms hereof; and upon
the delivery of such notice, and the surrender of this note to
either of the Makers, Makers shall cause Hadron to issue and
deliver to Payee a certificate or certificates for the number of
full Hadron Shares issuable upon the conversion of this note and
cash as hereinafter provided in respect of any fraction of a
Hadron Share issuable upon such conversion. Such conversion shall
be deemed to have been effected as of the date Payee delivers
notice of his election to convert ("Conversion Date"); provided,
however, that Payee shall not deliver notice of his election to
convert this note within ten (10) trading days prior to a date on
which Hadron is required to make any filing with the United
States Securities and Exchange Commission. As of the Conversion
Date, the rights of Payee as holder of this note shall cease with
respect to this note and the person in whose name any certificate
for Hadron Shares is issued shall be deemed to have become the
holder of record of the Hadron Shares represented thereby. Any
and all notices to be given by Payee hereunder shall be in
writing and delivered by hand or mailed, postage prepaid, by
certified or registered U.S. mail, return receipt requested, to
Makers and Hadron at 0000 Xxxxxxxx Xxxx, Xxxxx 000, Xxxxxxxxxx,
Xxxxxxxx 00000, and shall be deemed given upon receipt.
(c) Hadron shall not be required to issue fractions of
Hadron Shares upon conversion of this note. If any fractional
interest in a Hadron Share shall be deliverable upon the
conversion of this note, Makers shall cause Hadron to make a cash
payment therefor on the basis of the Conversion Price.
(d) The price at which the outstanding principal amount of
this note together with all accrued but unpaid interest thereon
may be converted into Hadron Shares on a per share basis (the
"Conversion Price") shall be equal to $.25 per share.
3. Makers may at any time prepay this note, in full or in part,
and all payments hereunder, whether designated as payments of
principal or interest, shall be applied first to the payment of
accrued interest and the balance to principal. Interest shall
immediately cease on any principal amount so prepaid.
4. In the event Makers shall prepay this note as hereinabove
provided, Payee shall be entitled to receive, and Makers shall
cause Hadron to execute, issue and deliver to Payee,
simultaneously with any and all such payments, a warrant
("Warrant") which shall be in proper form for issuance and
transfer, registered in the name of Payee, and issued in respect
to the number of Hadron Shares determined as hereinafter
provided. Each Warrant (a) shall expire on October 21, 2003;
(b) shall entitle Payee to purchase, in accordance with the terms
thereof, the number of Hadron Shares equal to the quotient
obtained by dividing (i) the principal amount of this note
together with all interest thereon prepaid by Makers, by (ii) the
Conversion Price; (c) may be exercised in full or in part during
its term at the price per Hadron Share equal to the Conversion
Price; and (d) shall otherwise be in form and substance
satisfactory to Hadron and Payee.
5. Payee agrees and acknowledges that the Hadron Shares
issuable upon conversion of this note, the Warrants and the
Hadron Shares issuable upon exercise of the Warrants are and
shall be restricted securities. Except for transfers, sales or
other dispositions pursuant to an effective registration
statement under the Securities Act of 1933 and any applicable
state securities laws (the "Acts"), such securities may not be
transferred, sold or otherwise disposed of by Payee or any other
holder hereof or thereof unless prior to transferring, selling or
otherwise disposing of any of such securities, Payee or such
holder delivers to Hadron prior to the disposition an opinion of
counsel, reasonably acceptable to Hadron, to the effect that
registration is not required under the Acts. If, in the opinion
of such counsel, such transfer, sale or other disposition may be
effected without such registration, the securities may thereafter
be transferred, sold or otherwise disposed of, and Makers shall
cause Hadron to do all things necessary to facilitate such
transfer, sale or other disposition, including the prompt
transfer of such securities on the books of Hadron and the
issuance of certificates representing such securities, free of
any restrictive legends or stop transfer instructions unless
otherwise required by such opinion, all in accordance with such
notice and opinion.
6. It is expressly agreed that time is of the essence of this
note, and if default shall be made in the payment of principal or
interest hereunder, as the same shall become due and payable; or
should either Maker institute proceedings to be adjudicated a
bankrupt or insolvent, or consent to the institution of any such
proceedings against it or fail to cause the dismissal or stay of
any such proceedings within thirty (30) days after commencement,
or consent to any filing of any petition or the appointment of a
receiver of such Maker's property; or should Payee conclude that
the prospect of payment of this note is impaired for any reason;
then in any such event, Payee may, at his option, declare the
entire principal of this note together with all accrued but
unpaid interest thereon immediately due and payable whereupon
this note shall become due and payable in full, both as to
principal and interest, and failure to exercise said option shall
not constitute a waiver on the part of Payee hereof of the right
to exercise said option at any other time.
7. All past due principal and interest on this note shall bear
interest from the due date thereof until paid at the lesser of:
(a) fifteen percent (15%) per annum or
(b) the highest rate permitted by law.
8. If this note is not paid at maturity, however such maturity
is brought about, and the same is placed in the hands of an
attorney for collection, or suit is brought on same, or the same
is collected through probate, bankruptcy or other judicial
proceedings, then Makers agree and promise to pay all expenses
incurred by Payee, including, without limitation, court costs and
attorneys' fees.
9. Makers, and any and all co-makers, guarantors, sureties and
endorsers of this note, expressly and severally waive all
notices, demands for payment, presentation for payment, protests
and notices of intention to accelerate with regard to each, every
and all installments or other payments hereof and hereunder.
10. Notwithstanding anything to the contrary contained herein,
Makers shall be jointly and severally liable for the payment and
performance of and compliance with any and all obligations,
covenants, provisions, terms and conditions contained in this
note to be paid, performed or complied with by Makers.
11. The payment and performance of this note are secured by that
certain Assignment and Security Agreement dated October 21, 1993
by and between Makers, as debtor, and Payee, as secured party,
covering the collateral more particularly described therein.
12. Hadron joins in the execution of this note for the sole
purposes of (a) acknowledging and agreeing to the provisions
hereof regarding conversion of this note to Hadron Shares and the
issuance of Warrants for Hadron Shares, (b) agreeing at all times
to reserve and keep available from its authorized Hadron Common
Stock, solely for issuance and delivery upon conversion of this
note or exercise of the Warrants, a sufficient number of Hadron
Shares to permit the full-conversion of this note and the full
exercise of Warrants, and (c) agreeing to take such corporate
action and obtain all authorizations and approvals as may be
necessary in order that Hadron may validly and legally issue to
Payee upon conversion of this note, and upon the exercise of any
and all Warrants, fully paid and non-assessable Hadron Shares at
the prices determined in accordance with this note.
EXECUTED as of the 31st day of December 1996.
ENGINEERING AND INFORMATION SERVICES, INC., a Virginia
corporation
By: /S/ XXXXXX XXXXXX
XXXXXX XXXXXX
President
SYCOM SERVICES, INC., a Delaware corporation
By: /S/ J. XXXXXXX XXXXX
J. XXXXXXX XXXXX
President
ACKNOWLEDGED AND AGREED TO As of the 31ST day of December 1996.
HADRON, INC., a New York corporation
By: /S/ XXXXXX X. XXXXXX
Xxxxxx X. Xxxxxx
President
EXHIBIT B
THE SHARES OF COMMON STOCK, PAR VALUE $0.02 PER SHARE, OF HADRON,
INC. INTO WHICH THIS NOTE IS CONVERTIBLE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 OR ANY STATE SECURITIES LAW AND
MAY NOT BE TRANSFERRED, SOLD OR OTHERWISE DISPOSED OF EXCEPT
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT OR A VALID
EXEMPTION FROM REGISTRATION UNDER SUCH ACT AND APPLICABLE STATE
SECURITIES LAWS
CONVERTIBLE PROMISSORY NOTE
$5,000.00 WASHINGTON, D.C. _________, 1997
FOR VALUE RECEIVED, ENGINEERING AND INFORMATION SERVICES,
INC., a Virginia corporation, and SYCOM SERVICES, INC., a
Delaware corporation (collectively, "Makers"), hereby promise to
pay to the order of ____________________("Payee"), at___________
________________________ , or at such other place as may be
designated by Payee, the principal sum of FIVE THOUSAND AND
NO/1OO DOLLARS ($5,000.00), together with interest from the date
hereof until maturity at the rate of three percent (3%) per annum
over the Prime Rate (hereinafter defined) from time to time in
effect. Said interest rate shall be adjusted as and when any
change in the Prime Rate shall occur. For purposes hereof, the
term "Prime Rate" shall mean the highest prime rate per annum
published from time to time in the money rates column or section
of The Wall Street Journal as the interest rate in effect for
corporate loans at large U.S. money center commercial banks
(whether or not such rate has actually been charged by any such
bank). In the event The Wall Street Journal ceases publication
of such prime rate, the term "Prime Rate" shall mean the prime
rate per annum announced from time to time by any U.S. money
center commercial bank selected by Payee.
1. Interest on the unpaid principal balance of this note shall
be due and payable quarterly as it accrues, the first such
payment of accrued interest being due and payable on or before
June 15, 1997, and successive payments of accrued interest being
due and payable on or before the 15th day of each succeeding
June, September, December and March thereafter until October 21,
1998, when, if not sooner paid, the entire principal balance of
this note, together with all accrued but unpaid interest thereon,
shall be paid in full. The principal balance of this note,
together with all accrued but unpaid interest thereon, shall be
due and payable on October 21, 1998.
2. (a) At any time prior to the payment in full of all
amounts, principal and interest, due under this note, whether
before or after the date such amounts are due hereunder, the
outstanding principal amount of this note together with all
accrued but unpaid interest thereon may, at the option of Payee,
be converted into fully paid and non-assessable, restricted
shares ("Hadron Shares") of the common stock, par value $0.02 per
share, of Hadron, Inc. ("Hadron Common Stock") at the Conversion
Price (as hereinafter defined) in accordance with this Section 2.
(b) In the event Payee elects to convert this note to
Hadron Shares, Payee shall deliver to Makers and Hadron, Inc.
("Hadron") written notice of his or her election to convert this
note into Hadron Shares in accordance with the terms hereof; and
upon the delivery of such notice, and the surrender of this note
to either of the Makers, Makers shall cause Hadron to issue and
deliver to Payee a certificate or certificates for the number of
full Hadron Shares issuable upon the conversion of this note and
cash as hereinafter provided in respect of any fraction of a
Hadron Share issuable upon such conversion. Such conversion shall
be deemed to have been effected as of the date Payee delivers
notice of his or her election to convert ("Conversion Date");
provided, however, that Payee shall not deliver notice of his or
her election to convert this note within ten (10) trading days
prior to a date on which Hadron is required to make any filing
with the United States Securities and Exchange Commission. As of
the Conversion Date, the rights of Payee as holder of this note
shall cease with respect to this note and the person in whose
name any certificate for Hadron Shares is issued shall be deemed
to have become the holder of record of the Hadron Shares
represented thereby. Any and all notices to be given by Payee
hereunder shall be in
writing and delivered by hand or mailed, postage prepaid, by
certified or registered U.S. mail, return receipt requested, to
Makers and Hadron at 0000 Xxxxxxxx Xxxx, Xxxxx 000, Xxxxxxxxxx,
Xxxxxxxx 00000, and shall be deemed given upon receipt.
(c) Hadron shall not be required to issue fractions of
Hadron Shares upon conversion of this note. If any fractional
interest in a Hadron Share shall be deliverable upon the
conversion of this note, Makers shall cause Hadron to make a cash
payment therefor on the basis of the Conversion Price.
(d) The price at which the outstanding principal amount of
this note together with all accrued but unpaid interest thereon
may be converted into Hadron Shares on a per share basis (the
"Conversion Price") shall be equal to $.25 per share.
3. Makers may at any time prepay this note, in full or in part,
and all payments hereunder, whether designated as payments of
principal or interest, shall be applied first to the payment of
accrued interest and the balance to principal. Interest shall
immediately cease on any principal amount so prepaid.
4. In the event Makers shall prepay this note as hereinabove
provided, Payee shall be entitled to receive, and Makers shall
cause Hadron to execute, issue and deliver to Payee,
simultaneously with any and all such payments, a warrant
("Warrant") which shall be in proper form for issuance and
transfer, registered in the name of Payee, and issued in respect
to the number of Hadron Shares determined as hereinafter
provided. Each Warrant (a) shall expire on October 21, 2003; (b)
shall entitle Payee to purchase, in accordance with the terms
thereof, the number of Hadron Shares equal to the quotient
obtained by dividing (i) the principal amount of this note
together with all interest thereon prepaid by Makers, by (ii) the
Conversion Price; (c) may be exercised in full or in part during
its term at the price per Hadron Share equal to the Conversion
Price; and (d) shall otherwise be in form and substance
satisfactory to Hadron and Payee.
5. Payee agrees and acknowledges that the Hadron Shares
issuable upon conversion of this note, the Warrants and the
Hadron Shares issuable upon exercise of the Warrants are and
shall be restricted securities. Except for transfers, sales or
other dispositions pursuant to an effective registration
statement under the Securities Act of 1933 and any applicable
state securities laws (the "Acts"), such securities may not be
transferred, sold or otherwise disposed of by Payee or any other
holder hereof or thereof unless prior to transferring, selling or
otherwise disposing of any of such securities, Payee or such
holder delivers to Hadron prior to the disposition an opinion of
counsel, reasonably acceptable to Hadron, to the effect that
registration is not required under the Acts. If, in the opinion
of such counsel, such transfer, sale or other disposition may be
effected without such registration, the securities may thereafter
be transferred, sold or otherwise disposed of, and Makers shall
cause Hadron to do all things necessary to facilitate such
transfer, sale or other disposition, including the prompt
transfer of such securities on the books of Hadron and the
issuance of certificates representing such securities, free of
any restrictive legends or stop transfer instructions unless
otherwise required by such opinion, all in accordance with such
notice and opinion.
6. It is expressly agreed that time is of the essence of this
note, and if default shall be made in the payment of principal or
interest hereunder, as the same shall become due and payable; or
should either Maker institute proceedings to be adjudicated a
bankrupt or insolvent, or consent to the institution of any such
proceedings against it or fail to cause the dismissal or stay of
any such proceedings within thirty (30) days after commencement,
or consent to any filing of any petition or the appointment of a
receiver of such Maker's property; or should Payee conclude that
the prospect of payment of this note is impaired for any reason;
then in any such event, Payee may, at his or her option, declare
the entire principal of this note together with all accrued but
unpaid interest thereon immediately due and payable whereupon
this note shall become due and payable in full, both as to
principal and interest, and failure to exercise said option shall
not constitute a waiver on the part of Payee hereof of the right
to exercise said option at any other time.
7. All past due principal and interest on this note shall bear
interest from the due date thereof until paid at the lesser of:
(a) fifteen percent (15%) per annum or
(b) the highest rate permitted by law.
8. If this note is not paid at maturity, however such maturity
is brought about, and the same is placed in the hands of an
attorney for collection, or suit is brought on same, or the same
is collected through probate, bankruptcy or other judicial
proceedings, then Makers agree and promise to pay all expenses
incurred by Payee, including, without limitation, court costs and
attorneys' fees.
9. Makers, and any and all co-makers, guarantors, sureties and
endorsers of this note, expressly and severally waive all
notices, demands for payment, presentation for payment, protests
and notices of intention to accelerate with regard to each, every
and all installments or other payments hereof and hereunder.
10. Notwithstanding anything to the contrary contained herein,
Makers shall be jointly and severally liable for the payment and
performance of and compliance with any and all obligations,
covenants, provisions, terms and conditions contained in this
note to be paid, performed or complied with by Makers.
11. Hadron joins in the execution of this note for the sole
purposes of (a) acknowledging and agreeing to the provisions
hereof regarding conversion of this note to Hadron Shares and the
issuance of Warrants for Hadron Shares, (b) agreeing at all times
to reserve and keep available from its authorized Hadron Common
Stock, solely for issuance and delivery upon conversion of this
note or exercise of the Warrants, a sufficient number of Hadron
Shares to permit the full-conversion of this note and the full
exercise of Warrants, and (c) agreeing to take such corporate
action and obtain all authorizations and approvals as may be
necessary in order that Hadron may validly and legally issue to
Payee upon conversion of this note, and upon the exercise of any
and all Warrants, fully paid and non-assessable Hadron Shares at
the prices determined in accordance with this note.
EXECUTED as of the day of 1997.
ENGINEERING AND INFORMATION SERVICES, INC., a Virginia
corporation
By:_________________________
XXXXXX XXXXXX
President
SYCOM SERVICES, INC., a Delaware corporation
By:__________________________
J. XXXXXXX XXXXX
President
ACKNOWLEDGED AND AGREED TO as of the _____________day of
__________________ 1997.
HADRON, INC., a New York corporation
By: _______________________________
Xxxxxx X. Xxxxxx
President
EXHIBIT C
THE SHARES OF COMMON STOCK, PAR VALUE $0.02 PER SHARE, OF HADRON,
INC. INTO WHICH THIS NOTE IS CONVERTIBLE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 OR ANY STATE SECURITIES LAW AND
MAY NOT BE TRANSFERRED, SOLD OR OTHERWISE DISPOSED OF EXCEPT
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT OR A VALID
EXEMPTION FROM REGISTRATION UNDER SUCH ACT AND APPLICABLE STATE
SECURITIES LAWS
THIRD AMENDED AND RESTATED
CONVERTIBLE PROMISSORY NOTE
$225,000.00 WASHINGTON, D.C. _____________, 1997
FOR VALUE RECEIVED, ENGINEERING AND INFORMATION SERVICES,
INC., a Virginia corporation, and SYCOM SERVICES, INC., a
Delaware corporation (collectively, "Makers"), hereby promise to
pay to the order of X.X. XXXXXXX ("Payee"), at his domicile at
000 Xxxxx Xxxxxx, S.E., in the City of Washington, District of
Columbia, or at such other place as may be designated by Payee,
the principal sum of TWO HUNDRED TWENTY FIVE THOUSAND AND NO/lOO
DOLLARS ($225,000.00), together with interest from the date
hereof until maturity at the rate of three percent (3%) per annum
over the Prime Rate (hereinafter defined) from time to time in
effect. Said interest rate shall be adjusted as and when any
change in the Prime Rate shall occur. For purposes hereof, the
term "Prime Rate" shall mean the highest prime rate per annum
published from time to time in the money rates column or section
of The Wall Street Journal as the interest rate in effect for
corporate loans at large U.S. money center commercial banks
(whether or not such rate has actually been charged by any such
bank). In the event The Wall Street Journal ceases publication
of such prime rate, the term "Prime Rate" shall mean the prime
rate per annum announced from time to time by any U.S. money
center commercial bank selected by Payee. This Third Amended and
Restated Convertible Promissory Note represents an amendment of
the Second Amended and Restated Convertible Promissory Note dated
December 31, 1996 and issued by Makers in favor of Payee in the
principal amount of $250,000.00.
1. Interest on the unpaid principal balance of this note shall
be due and payable quarterly as it accrues, the first such
payment of accrued interest being due and payable on or before
June 15, 1997, and successive payments of accrued interest being
due and payable on or before the 15th day of each succeeding
June, September, December and March thereafter until October 21,
1998, when, if not sooner paid, the entire principal balance of
this note, together with all accrued but unpaid interest thereon,
shall be paid in full. The principal balance of this note,
together with all accrued but unpaid interest thereon, shall be
due and payable on October 21, 1998.
2. (a) At any time prior to the payment in full of all
amounts, principal and interest, due under this note, whether
before or after the date such amounts are due hereunder, the
outstanding principal amount of this note together with all
accrued but unpaid interest thereon may, at the option of Payee,
be converted into fully paid and non-assessable, restricted
shares ("Hadron Shares") of the common stock, par value $0.02 per
share, of Hadron, Inc. ("Hadron Common Stock") at the Conversion
Price (as hereinafter defined) in accordance with this Section 2.
(b) In the event Payee elects to convert this note to
Hadron Shares, Payee shall deliver to Makers and Hadron, Inc.
("Hadron") written notice of his election to convert this note
into Hadron Shares in accordance with the terms hereof; and upon
the delivery of such notice, and the surrender of this note to
either of the Makers, Makers shall cause Hadron to issue and
deliver to Payee a certificate or certificates for the number of
full Hadron Shares issuable upon the conversion of this note and
cash as hereinafter provided in respect of any fraction of a
Hadron Share issuable upon such conversion. Such conversion
shall be deemed to have been effected as of the date Payee
delivers notice of his election to convert ("Conversion Date");
provided, however, that Payee shall not deliver notice of his
election to convert this note within ten (10) trading days prior
to a date on which Hadron is required to make any filing with the
United States Securities and Exchange Commission. As of the
Conversion Date, the rights of Payee as holder of this note shall
cease with respect to this note and the person in whose name any
certificate for Hadron Shares is issued shall be deemed to have
become the holder of record of the Hadron Shares represented
thereby. Any and all notices to be given by Payee hereunder
shall be in writing and delivered by hand or mailed, postage
prepaid, by certified or registered U.S. mail, return receipt
requested, to Makers and Hadron at 0000 Xxxxxxxx Xxxx, Xxxxx 000,
Xxxxxxxxxx, Xxxxxxxx 00000, and shall be deemed given upon
receipt.
(c) Hadron shall not be required to issue fractions of
Hadron Shares upon conversion of this note. If any fractional
interest in a Hadron Share shall be deliverable upon the
conversion of this note, Makers shall cause Hadron to make a cash
payment therefor on the basis of the Conversion Price.
(d) The price at which the outstanding principal amount of
this note together with all accrued but unpaid interest thereon
may be converted into Hadron Shares on a per share basis (the
"Conversion Price") shall be equal to $.25 per share.
3. Makers may at any time prepay this note, in full or in part,
and all payments hereunder, whether designated as payments of
principal or interest, shall be applied first to the payment of
accrued interest and the balance to principal. Interest shall
immediately cease on any principal amount so prepaid.
4. In the event Makers shall prepay this note as hereinabove
provided, Payee shall be entitled to receive, and Makers shall
cause Hadron to execute, issue and deliver to Payee,
simultaneously with any and all such payments, a warrant
("Warrant") which shall be in proper form for issuance and
transfer, registered in the name of Payee, and issued in respect
to the number of Hadron Shares determined as hereinafter
provided. Each Warrant (a) shall expire on October 21, 2003; (b)
shall entitle Payee to purchase, in accordance with the terms
thereof, the number of Hadron Shares equal to the quotient
obtained by dividing (i) the principal amount of this note
together with all interest thereon prepaid by Makers, by (ii) the
Conversion Price; (c) may be exercised in full or in part during
its term at the price per Hadron Share equal to the Conversion
Price; and (d) shall otherwise be in form and substance
satisfactory to Hadron and Payee.
5. Payee agrees and acknowledges that the Hadron Shares
issuable upon conversion of this note, the Warrants and the
Hadron Shares issuable upon exercise of the Warrants are and
shall be restricted securities. Except for transfers, sales or
other dispositions pursuant to an effective registration
statement under the Securities Act of 1933 and any applicable
state securities laws (the "Acts"), such securities may not be
transferred, sold or otherwise disposed of by Payee or any other
holder hereof or thereof unless prior to transferring, selling or
otherwise disposing of any of such securities, Payee or such
holder delivers to Hadron prior to the disposition an opinion of
counsel, reasonably acceptable to Hadron, to the effect that
registration is not required under the Acts. If, in the opinion
of such counsel, such transfer, sale or other disposition may be
effected without such registration, the securities may thereafter
be transferred, sold or otherwise disposed of, and Makers shall
cause Hadron to do all things necessary to facilitate such
transfer, sale or other disposition, including the prompt
transfer of such securities on the books of Hadron and the
issuance of certificates representing such securities, free of
any restrictive legends or stop transfer instructions unless
otherwise required by such opinion, all in accordance with such
notice and opinion.
6. It is expressly agreed that time is of the essence of this
note, and if default shall be made in the payment of principal or
interest hereunder, as the same shall become due and payable; or
should either Maker institute proceedings to be adjudicated a
bankrupt or insolvent, or consent to the institution of any such
proceedings against it or fail to cause the dismissal or stay of
any such proceedings within thirty (30) days after commencement,
or consent to any filing of any petition or the appointment of a
receiver of such Maker's property; or should Payee conclude that
the prospect of payment of this note is impaired for any reason;
then in any such event, Payee may, at his option, declare the
entire principal of this note together with all accrued but
unpaid interest thereon immediately due and payable whereupon
this note shall become due and payable in full, both as to
principal and interest, and failure to exercise said option shall
not constitute a waiver on the part of Payee hereof of the right
to exercise said option at any other time.
7. All past due principal and interest on this note shall bear
interest from the due date thereof until paid at the lesser of:
(a) fifteen percent (15%) per annum or
(b) the highest rate permitted by law.
8. If this note is not paid at maturity, however such maturity
is brought about, and the same is placed in the hands of an
attorney for collection, or suit is brought on same, or the same
is collected through probate, bankruptcy or other judicial
proceedings, then Makers agree and promise to pay all expenses
incurred by Payee, including, without limitation, court costs and
attorneys' fees.
9. Makers, and any and all co-makers, guarantors, sureties and
endorsers of this note, expressly and severally waive all
notices, demands for payment, presentation for payment, protests
and notices of intention to accelerate with regard to each, every
and all installments or other payments hereof and hereunder.
10. Notwithstanding anything to the contrary contained herein,
Makers shall be jointly and severally liable for the payment and
performance of and compliance with any and all obligations,
covenants, provisions, terms and conditions contained in this
note to be paid, performed or complied with by Makers.
11. The payment and performance of this note are secured by that
certain Assignment and Security Agreement dated October 21, 1993
by and between Makers, as debtor, and Payee, as secured party,
covering the collateral more particularly described therein.
12. Hadron joins in the execution of this note for the sole
purposes of (a) acknowledging and agreeing to the provisions
hereof regarding conversion of this note to Hadron Shares and the
issuance of Warrants for Hadron Shares, (b) agreeing at all times
to reserve and keep available from its authorized Hadron Common
Stock, solely for issuance and delivery upon conversion of this
note or exercise of the Warrants, a sufficient number of Hadron
Shares to permit the full-conversion of this note and the full
exercise of Warrants, and (c) agreeing to take such corporate
action and obtain all authorizations and approvals as may be
necessary in order that Hadron may validly and legally issue to
Payee upon conversion of this note, and upon the exercise of any
and all Warrants, fully paid and non-assessable Hadron Shares at
the prices determined in accordance with this note.
EXECUTED as of the _________day of ____________________1997.
ENGINEERING AND INFORMATION SERVICES, INC., a Virginia
corporation
By: __________________________
XXXXXX XXXXXX
President
SYCOM SERVICES, INC., a Delaware corporation
By: __________________________
J. XXXXXXX XXXXX
President
ACKNOWLEDGED AND AGREED TO As of the ____________day of
_________________1997.
HADRON, INC., a New York corporation
By: _______________________________
Xxxxxx X. Xxxxxx
President
