THIS NOTE, THE SHARES OF COMMON STOCK, PAR VALUE $0.02 PER SHARE,
OF HADRON, INC. INTO WHICH THIS NOTE IS CONVERTIBLE AND THE
WARRANT WHICH MAY BE ISSUED PURSUANT TO THE TERMS OF THIS NOTE
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
FORM OF
CONVERTIBLE PROMISSORY NOTE
$24,000.00 ALEXANDRIA, VIRGINIA June 20, 1997
FOR VALUE RECEIVED, HADRON, INC, a New York corporation
("Hadron") hereby promises to pay to the order ___________________
("Payee"), at 0000 Xxx Xxxx Xxxxx, XxXxxx, Xxxxxxxx 00000, or at
such other place as may be designated by Xxxxx, the principal sum
of TWENTY FOUR THOUSAND DOLLARS ($24,000.00), together with
interest from the date hereof until maturity at the rate of ten
percent (10%) per annum, compounded quarterly.
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
September 20, 1997, and successive payments of accrued interest
being due and payable on or before the 20th day of each
succeeding December, March, June and September thereafter until
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 June 20,
1999 (the "Maturity Date").
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 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").
The number of Hadron Shares into which this note shall be
convertible shall be determined by dividing the total principal
then outstanding by 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 Hadron written notice of
Xxxxx's 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 Hadron, Hadron shall
promptly thereafter 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 Xxxxx's election to
convert ("Conversion Date"); provided, however, that Payee shall
not deliver notice of Xxxxx's 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 Xxxxx hereunder shall be in writing and
delivered by hand or mailed, postage prepaid, by certified or
registered U.S. mail, return receipt requested, to 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, Hadron shall 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 $0.60 per share.
3. Hadron 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. Upon payment of principal under this note, Payee shall be
entitled to receive and Hadron shall execute, issue and deliver
to Payee promptly after such payment 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. Such Warrant:
(a) shall be exercisable:
i) through June 20, 2001, if the payment of principal
giving rise thereto is paid either prior to or on the
Maturity Date, or
ii) through the end of the last day in the period which
begins on June 21, 2001 and which extends the same number of
days which pass from the Maturity Date through the day on
which the principal giving rise thereto is paid;
(b) shall entitle Payee to purchase, in accordance with the
terms thereof, that number of Hadron Shares equal to the quotient
of the principal paid giving rise to the warrant divided by 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. Xxxxx agrees and acknowledges that the Hadron Shares
issuable upon conversion of this note, the Warrant and the Hadron
Shares issuable upon exercise of the Warrant 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 Hadron shall
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 Hadron 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 Xxxxxx'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 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 Xxxxxx agrees and promises to pay all expenses
incurred by Xxxxx, including, without limitation, court costs and
attorneys' fees.
9. Hadron, 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. Xxxxxx (a) acknowledges and agrees 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 Warrant, a sufficient number of Hadron Shares to
permit the full conversion of this note and the full exercise of
the Warrant, and (b) 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 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.
11. This Note shall be subordinate and junior in right of
payment in all respects to amounts outstanding under the Line of
Credit Agreement entered into between Hadron and Century National
Bank on or about June 25, 1997.
EXECUTED this 20th day of June 1997.
HADRON, INC., a New York corporation
By: /S/ X.X. XXXXXXX
_____________________
X.X. Xxxxxxx, Xx.D.
Chairman and
Chief Executive Officer
