1
Exhibit 10.23
10% SENIOR SECURED CONVERTIBLE NOTE
DATED MARCH 27, 2000
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED
STATES SECURITIES ACT OF 1933, AS AMENDED (THE "1933 ACT"). THE HOLDER HEREOF,
BY PURCHASING SUCH SECURITIES AGREES FOR THE BENEFIT OF THE COMPANY THAT SUCH
SECURITIES MAY BE OFFERED, SOLD OR OTHERWISE TRANSFERRED ONLY (A) TO THE
COMPANY, (B) PURSUANT TO THE EXEMPTION FROM REGISTRATION UNDER THE 1933 ACT
PROVIDED BY RULE 144 THEREUNDER, IF AVAILABLE, OR (C) IF REGISTERED UNDER THE
1933 ACT AND APPLICABLE STATE SECURITIES LAWS. IN ADDITION, A SECURITIES
PURCHASE AGREEMENT, REGISTRATION RIGHTS AGREEMENT, LICENSE AGREEMENT AND
SECURITY AGREEMENT, EACH DATED AS OF THE DATE HEREOF, COPIES OF WHICH MAY BE
OBTAINED FROM THE COMPANY AT ITS PRINCIPAL EXECUTIVE OFFICE, CONTAIN CERTAIN
ADDITIONAL AGREEMENTS AMONG THE PARTIES, INCLUDING, WITHOUT LIMITATION,
PROVISIONS WHICH, AMONG OTHER THINGS, (A) SPECIFY VOLUNTARY AND MANDATORY
REPAYMENT, PREPAYMENT AND REDEMPTION RIGHTS AND OBLIGATIONS AND (B) SPECIFY
EVENTS OF DEFAULT FOLLOWING WHICH THE REMAINING BALANCE DUE AND OWING HEREUNDER
MAY BE ACCELERATED OR CONVERTED.
On or before March 31, 2001 (the "Maturity Date"), AHT CORPORATION, a
Delaware corporation (the "Company"), for value received, hereby promises to pay
to CYBEAR, INC., a Delaware corporation (the "Holder"), the principal sum of
Four Million Dollars ($4,000,000) and to pay interest thereon from the date
hereof at the rate of ten percent (10%) per annum (the "Interest Rate").
Interest shall be paid quarterly, in arrears, on (i) June 30, 2000,
September 30, 2000 and December 31, 2000 (unless such day is not a Business Day,
in which event on the next succeeding Business Day) (each an "Interest Payment
Date"), (ii) the Maturity Date, and (iii) the date the principal amount of the
Convertible Note shall be declared to be or shall automatically become due and
payable, on the principal sum hereof outstanding in like coin or currency, from
the most recent Interest Payment Date to which interest has been paid on this
Convertible Note, or if no interest has been paid on this Convertible Note, from
the date of this Convertible Note until payment in full of the principal sum
hereof has been made until the principal hereof is paid in full.
Past due amounts (including interest, to the extent permitted by law)
will also accrue interest at 13% per annum or, if less, the maximum rate
permitted by applicable law, and will be payable on demand (the "Default
Interest Rate"). Interest on this Convertible Note will be calculated on the
basis of a 365-day year. All payments of principal and interest hereunder shall
be made for the benefit of the Holder at the Holder's account at First Union
National Bank, 0000 Xxxx Xxxxxx Xxxx, Xxxxx 000, Xxxx Xxxxx, Xxxxxxx, pursuant
to the terms of the Purchase Agreement (hereafter defined).
2
This Convertible Note is referred to in that Securities Purchase
Agreement (the "Purchase Agreement"), the Registration Rights Agreement, the
Letter Agreement and the Security Agreement, each dated as of the date hereof
between the Company and the Holder (collectively, the "Agreements"). The
Agreements contain certain additional agreements among the parties with respect
to the terms of this Convertible Note, including, without limitation, provisions
which (i)specify voluntary and mandatory repayment, prepayment and redemption
rights and obligations and (ii) specify Events of Default (as defined in the
Purchase Agreement) following which the remaining balance due and owing
hereunder may be accelerated or converted. All such provisions are an integral
part of this Convertible Note and are incorporated herein by reference.
Capitalized terms used but not defined herein shall have the meanings set forth
in the Agreements. This Convertible Note is transferable and assignable to one
or more purchasers, in accordance with the limitations set forth in the
Agreements.
The Company shall keep a register (the "Register") in which shall be
entered the name and address of the registered holder of this Convertible Note
and particulars of this Convertible Note held by such holder and of all
transfers of this Convertible Note. References to the Holder shall mean the
Person listed in the Register as the registered holder of such Convertible Note.
The ownership of this Convertible Note shall be proven by the Register.
1. Certain Terms Defined. All terms defined in the Purchase Agreement
and not otherwise defined herein shall have for purposes hereof the meanings
provided for therein.
2. Payment of Principal. The Company shall repay the remaining unpaid
balance on this Convertible Note on the Maturity Date. The Company may, and
shall be obligated to, prepay all or a portion of this Convertible Note on the
terms specified in the Agreements.
3. Conversion Terms.
3.1 Conversion of Convertible Note. The Holder shall have the right, at
its option, at any time and from time to time, after the date hereof to convert
the principal amount of this Convertible Note, or any portion of such principal
amount in the minimum amount of $1,000 or any integral multiple thereof, into
that number of fully paid and nonassessable shares of Common Stock (as such
shares shall then be constituted) determined pursuant to this Section 4.1. The
number of shares of Common Stock to be issued upon each conversion of this
Convertible Note shall be determined by dividing the Conversion Amount (as
defined below) by the Conversion Price in effect on the date (the "Conversion
Date") a Notice of Conversion is delivered to the Company by the Holder by
facsimile or other reasonable means of communication dispatched prior to 11:00
p.m., Eastern Standard Time PROVIDED, HOWEVER, the aggregate number of shares to
be issued pursuant to the conversion of this Convertible Note and all other of
the Convertible Notes shall never exceed the Maximum Number of Shares. The term
"Conversion Amount" means, with respect to any conversion of this Convertible
Note, the sum of (i) the principal amount of this Convertible Note to be
converted in such conversion (including any premium thereon pursuant to the
Purchase Agreement) plus (ii) accrued and unpaid interest, if any, on such
principal amount at the interest rates provided in this Convertible Note to the
Conversion Date plus (iii) Default Interest, if any, on the interest referred to
in the immediately preceding clause (ii).
2
3
3.2 Conversion Price. The Conversion Price of this Convertible Note
(the "Conversion Price") per share shall be the lower of (i) 80% of the Average
Market Price per share of Common Stock on the Conversion Date; or (ii) $4.34
(the "Conversion Price"), subject to equitable adjustments for stock splits,
stock dividends or rights offerings by the Company relating to the Company's
securities or the securities of any Subsidiary of the Company, combinations,
recapitalization, reclassifications, extraordinary distributions and similar
events, as provided in the Purchase Agreement.
3.3 Authorized Shares.
(a) Consistent with Section 7.12 of the Purchase Agreement, the Company
(i) acknowledges that it shall irrevocably instruct its transfer agent to issue
certificates for the Common Stock issuable upon conversion of this Convertible
Note and (ii) agrees that its issuance of this Convertible Note shall constitute
full authority to its officers and agents who are charged with the duty of
executing stock certificates to execute and issue the necessary certificates for
shares of Common Stock in accordance with the terms and conditions of this
Convertible Note.
(b) If at any time a Holder of this Convertible Note submits a Notice of
Conversion, (i) the Company does not have sufficient authorized but unissued
shares of Common Stock available to effect such conversion in full in accordance
with the provisions of this Section 4 (each, a "Conversion Default"), the
Company shall issue to the Holder all of the shares of Common Stock which are
then available to effect such conversion. The portion of this Convertible Note
which the Holder included in its Conversion Notice and which exceeds the amount
which is then convertible into available shares of Common Stock (the "Excess
Amount") shall, notwithstanding anything to the contrary contained herein, not
be convertible into Common Stock in accordance with the terms hereof until (and
at the Holder's option at any time after) the date additional shares of Common
Stock are authorized by the Company, or its stockholders, as applicable, at
which time the Conversion Price in respect thereof shall be the lower of (i) the
Conversion Price on the Conversion Default Date (as defined below) and (ii) the
Conversion Price on the Conversion Date thereafter elected by the Holder in
respect thereof.
3.4 Method of Conversion.
(a) Notwithstanding anything to the contrary set forth herein, upon
conversion of this Convertible Note in accordance with the terms hereof, the
Company shall not be required to physically surrender this Convertible Note to
the Holder unless the entire unpaid principal amount of this Convertible Note is
so converted. The Company and the Holder shall maintain records showing the
principal amount so converted and the date of such conversions or shall use such
other method, reasonably satisfactory to the Holder and the Company, so as not
to require physical surrender of this Convertible Note upon each such
conversion. In the event of any dispute or discrepancy, such records of the
Company shall be controlling and determinative in the absence of manifest error.
Notwithstanding the foregoing, if any portion of this Convertible Note is
converted as aforesaid, the Company may not transfer this Convertible Note
unless the Holder first physically surrenders this Convertible Note to the
Company, whereupon the Company will forthwith issue and deliver upon the order
of the Holder a new note of like tenor, registered as the Holder (upon payment
by the Holder of any applicable transfer taxes), may
3
4
request, representing in the aggregate the remaining unpaid principal amount of
this Convertible Note. The Holder and any assignee, by acceptance of this
Convertible Note, acknowledge and agree that, by reason of the provisions of
this paragraph, following conversion of a portion of this Convertible Note, the
unpaid and unconverted principal amount of this Convertible Note represented by
this Convertible Note may be less than the amount stated on the face hereof.
(b) The Company shall not be required to pay any tax which may be
payable in respect of any transfer involved in the issuance and delivery of
shares of Common Stock or other securities or property on conversion of this
Convertible Note in a name other than that of the Holder (or in street name),
and the Company shall not be required to issue or deliver any such shares or
other securities or property unless and until the person or persons (other than
the Holder or the custodian in whose street name such shares are to be held for
the Holder's account) requesting the issuance thereof shall have paid to the
Company the amount of any such tax or shall have established to the satisfaction
of the Company that such tax has been paid.
(c) Upon receipt by the Company of a Notice of Conversion, the Holder
shall be deemed to be the holder of record of the Common Stock issuable upon
such conversion on the Conversion Date, the outstanding principal amount and the
amount of accrued and unpaid interest on this Convertible Note shall be reduced
to reflect such conversion, and, unless the Company defaults on its obligations
under this Article 4, all rights with respect to the portion of this Convertible
Note being so converted shall forthwith terminate except the right to receive
the Common Stock or other securities, cash or other assets, as herein provided,
on such conversion. If the Holder shall have given a Notice of Conversion as
provided herein, the Company's obligation to issue and deliver the certificates
for shares of Common Stock shall be absolute and unconditional, irrespective of
the absence of any action by the Holder to enforce the same, any waiver or
consent with respect to any provision thereof, the recovery of any judgment
against any person or any action by the Holder to enforce the same, any waiver
or consent with respect to any provision thereof, the recovery of any judgment
against any person or any action to enforce the same, any failure or delay in
the enforcement of any other obligation of the Company to the holder of record,
or any setoff, counterclaim, recoupment, limitation or termination, or any
breach or alleged breach by the Holder of any obligation to the Company, and
irrespective of any other circumstance which might otherwise limit such
obligation of the Company to the Holder in connection with such conversion. The
date of receipt of such Notice of Conversion shall be the Conversion Date so
long as it is received before 11:00 p.m., Eastern Standard Time, on such date.
(d) Notwithstanding the foregoing, if the Holder has not received
certificates for all shares of Common Stock prior to the second (2nd) business
day after the expiration of the Deadline with respect to a conversion of any
portion of this Convertible Note following delivery of a properly completed
Notice of Conversion for any reason, then (unless the Holder otherwise elects to
retain its status as a holder of Common Stock by so notifying the Company), the
Holder shall regain the rights of a Holder of this Convertible Note with respect
to such unconverted portions of this Convertible Note and the Company shall, as
soon as practicable, return such unconverted Convertible Note to the holder or,
if the Convertible Note has not been surrendered, adjust its records to reflect
that such portion of this Convertible Note has not been converted. In all cases,
the Holder shall retain all of its rights and remedies for the Company's failure
to convert this Convertible Note.
4
5
(e) In lieu of delivering physical certificates representing the shares
of Common Stock assessable upon conversion, provided the Company's transfer
agent is participating in the Depository Trust Company ("DTC") Fast Automated
Securities Transfer program, upon request of the Holder and its compliance with
the provisions contained in Section 4.1 and in this Section 4.4, the Company
shall use its best efforts to cause its transfer agent to electronically
transmit the shares of Common Stock assessable upon conversion to the Holder by
crediting the account of Holder's Prime Broker with DTC through its Deposit
Withdrawal Agent Commission system.
4. Modification of Convertible Note. This Convertible Note may not be
modified without prior written consent of the Company and the Holder.
5. Usury. All agreements in this Convertible Note and in the other
Transaction Agreements are expressly limited so that in no contingency or event
whatsoever, whether by reason of advancement or acceleration of maturity of the
Obligations, or otherwise, shall the amount paid or agreed to be paid hereunder
or thereunder for the use, forbearance or detention of money exceed the highest
lawful rate permitted under applicable usury laws. If, from any circumstance
whatsoever, fulfillment of any provision of this Convertible Note or any of the
other Transaction Agreements, at the time performance of such provision shall be
due, shall involve transcending the limit of validity prescribed by law which a
court of competent jurisdiction may deem applicable hereto, then, ipso facto,
the obligation to be fulfilled shall be reduced to the limit of such validity
and if, from any circumstance whatsoever, the Holder shall ever receive as
interest an amount which would exceed the highest lawful rate, the receipt of
such excess shall be deemed a mistake and shall be canceled automatically or, if
theretofore paid, such excess shall be held in trust by the Holder for the
benefit of the Company and shall be credited against the principal amount of the
Convertible Note to which the same may lawfully be credited, and any portion of
such excess not capable of being so credited shall be rebated to the Company.
6. Miscellaneous. This Convertible Note shall be deemed to be a contract
made under the laws of the State of Delaware, and for all purposes shall be
governed by and construed in accordance with the laws of said State. The parties
hereto, including all guarantors or endorsers, hereby waive presentment, demand,
notice, protest and all other demands and notices in connection with the
delivery, acceptance, performance and enforcement of this Convertible Note,
except as specifically provided herein, and assent to extensions of the time of
payment, or forbearance or other indulgence without notice. The Company hereby
submits to the exclusive jurisdiction of the United States District Court for
the Southern District of Florida and of any Florida state court sitting in Palm
Beach County for purposes of all legal proceedings arising out of or relating to
this Convertible Note. The Company irrevocably waives, to the fullest extent
permitted by law, any objection which it may now or hereafter have to the laying
of the venue of any such proceeding brought in such a court and any claim that
any such proceeding brought in such a court has been brought in an inconvenient
forum.
The Holder of this Convertible Note by acceptance of this
Convertible Note agrees to be bound by the provisions of this Convertible Note
which are expressly binding on such Holder.
This Convertible Note has been executed, delivered and shall
at all times be held outside the State of Florida.
5
6
IN WITNESS WHEREOF, the Company has caused this Note to be
executed in its name, and its corporate seal to be hereunto affixed by its
proper officers thereunder duly authorized.
Date: March 27, 2000
AHT CORPORATION
(Corporate Seal)
By: /s/ Xxxxxxxx Xxxxxxx
--------------------------------------
Name: Xxxxxxxx Xxxxxxx
Title: Chairman and Chief Executive
Officer
6
