EXHIBIT B
THIS NOTE AND THE SECURITIES INTO WHICH THIS NOTE MAY
BE CONVERTED HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED. THESE UNREGISTERED SECURITIES MAY
NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF REGISTRATION OR
OBTAINING AN EXEMPTION THEREFROM UNDER SAID ACT.
HADRON, INC.
6% Convertible Note
$______ ________1999
McLean, Virginia
FOR VALUE RECEIVED, the undersigned, Hadron, Inc. a
corporation organized under the laws of the State of New
York, ("Maker") hereby promises to pay to [ ] ("Holder"),
the principal sum of $_______, together with interest from
the date hereof (computed on the basis of a three hundred
and sixty (360) day year) at the rate of six percent (6%)
per annum on the principal amount from time to time
remaining unpaid hereof at Holder's address set forth on
Attachment A, or at such other place as the Holder may from
time to time in writing designate. Interest and principal
shall be payable in lawful money of the United State of
America, as follows:
Accrued interest shall be payable on a quarterly basis,
beginning on the third (3rd) month anniversary date of the
date first stated above and the outstanding principal amount
hereof shall be paid in full on [ ], 2002 (the "Maturity
Date"), unless this Convertible Note shall have been fully
paid or converted in its entirety as hereinafter provided:
1. Convertible Notes.
This Convertible Note is one of several promissory
notes issued pursuant to the Stock Purchase Agreement and
Other Sellers' Stock Purchase Agreements dated as of April
30, 1999 among Maker and the shareholders of Avenue
Technologies, Inc.
2. Prepayment and Waiver of Presentment.
This Convertible Note may be prepaid in whole or
in part at any time more than ninety (90) days after the
date of issuance without the prior written consent of the
Holder, provided that written notice of such intention to
prepay is given by Maker to Holder at least thirty (30) days
prior to prepayment, during which period Holder may exercise
Holder's conversion rights hereunder. The Maker waives
presentment, demand, notice of dishonor, protest and notice
of nonpayment and protest.
3. Events of Default.
In the event of the occurrence of an Event of
Default (as defined below) the Holder may declare the entire
unpaid principal balance of this Convertible Note, together
with interest accrued, immediately due and payable at the
place of payment, without presentment, protest, notice or
demand, all of which are expressly waived. The term "Event
of Default" shall mean:
(a) the failure to pay any installment of
principal or interest due under this
Convertible Note within thirty days after the
day on which any such payment is due;
(b) the Maker shall admit in writing its
inability to pay its debts generally as they
become due; an order, judgment or decree
shall be entered for relief in respect of or
adjudicating the Maker bankrupt or insolvent;
the Maker shall petition or apply to any
tribunal for the appointment of, or taking of
possession by, a trustee, receiver,
custodian, or liquidator or other similar
official of the Maker or any substantial part
of its assets; or the Maker shall commence
any proceeding relating to the Maker under
any bankruptcy, reorganization, arrangement,
insolvency, readjustment of debt, dissolution
or liquidation law of any jurisdiction, or
any such petition or application is filed or
any such proceeding is commenced against the
Maker and such petition, application or
proceeding is not dismissed within 120 days.
Interest Rate After Default. Upon the occurrence of an
Event of Default, the Holder may, upon notice to the Maker,
raise the interest rate on the unpaid principal amount under
this Convertible Note to a rate which is two (2) percentage
points above the rate of interest otherwise applicable (the
"Default Interest Rate"), independent of whether the Holder
elects to accelerate the unpaid principal balance as a
result of such default.
Interest Rate After Judgment. If judgment is entered
against the Maker on this Convertible Note, the amount of
the judgment entered (which may include principal, interest,
fees and costs shall bear interest at the higher of the
maximum interest rate imposed upon judgments by applicable
law or the Default Interest Rate.
Expenses of Collection and Attorneys' Fees. Upon the
occurrence of an Event of Default, if this Convertible Note
is referred to an attorney for collection, whether or not
suit has been filed, the Maker shall pay all of the Holder's
reasonable costs, fees and expenses, including all
attorneys' fees resulting from such referral which relate to
the collection of this Convertible Note.
Status of Subsequent Holders. In the event any Holder
of this Convertible Note transfers this Convertible Note for
value, and provided the Holder complies with Section 5, the
Maker agrees that all subsequent holders of this Convertible
Note shall have all rights of a holder of a negotiable
instrument with respect to this Convertible Note even though
this Convertible Note may not qualify, under applicable law,
absent this section, as a negotiable instrument.
Extensions of Maturity. The Maker agrees that the
maturity of this Convertible Note, or any payment due
hereunder, may be extended by the Holder at any time or from
time to time without releasing, discharging, or affecting
the liability of Maker.
Assignability. This Convertible Note may be
assigned by the Holder or any holder at any time or from
time to time provided such assignment is consistent with
Section 5.
Invalidity of Any Part. If any provision or part
of any provision of this Convertible Note shall for any
reason be held invalid, illegal, or unenforceable in any
respect, such invalidity, illegality, or unenforceability
shall not affect any other provisions of this Convertible
Note, and this Convertible Note shall be construed as if
such invalid, illegal, or unenforceable provision or part
thereof had never been contained herein, but only to the
extent of its invalidity, illegality, or unenforceability.
4. Conversion.
The Holder of this Convertible Note is hereby
given the right to convert at any time following the
ninetieth (90) day from the date first written above and
prior to the Maturity Date all or such portion of the unpaid
principal amount (but not the accrued or unpaid interest) of
this Convertible Note into fully paid and non-assessable
shares of Hadron, Inc.'s common stock, with a par value of
$.02 per share ("Common Stock") on the basis of one share of
Common Stock for each two dollars and twenty-five cents
($2.25) of the principal amount ("Conversion Price").
Such conversion shall be effected by the surrender
of this Convertible Note at the principal office of the
Maker (or such other office or agency of the Corporation as
the Corporation may designate by notice in writing to the
Holder), during usual business hours, together with notice
in writing that the Holder wishes to convert all or a
portion of this Convertible Note, which notice shall also
state the exact principal amount to be converted, and
instructions for delivery of the Common Stock.
As soon as practicable after the conversion date,
the Maker shall deliver to Holder certificates representing
the number of shares of Common Stock issuable by reason of
the conversion. The Holder shall also make payment to the
Holder of accrued interest to the date of conversion on the
portion of the Note converted in accordance with this
Convertible Note.
In each case of conversion of this Convertible
Note in part only, the Maker shall receive this Convertible
Note as a fiduciary agent of the Holder, shall endorse on
this Convertible Note the date and the amount of this
Convertible Note so converted, and such amount shall be
deemed no longer outstanding. Upon such endorsement, the
Maker shall promptly return this Convertible Note to the
Holder.
5. Sale of Convertible Note.
Neither this Convertible Note nor the Common Stock
have been registered under the Securities Act of 1933, as
amended, (the "1933 Act") or under the securities laws of
any state and they may not be sold, transferred, pledged or
hypothecated in the absence of (1) an effective registration
statement for such securities under the 1933 Act, and such
registration or qualification as may be necessary under the
applicable securities laws of any state, or (2) an opinion
of counsel in the form and substance reasonably satisfactory
to the Maker that such registration or qualification is not
required. The Maker may cause the certificate or
certificates evidencing all or any of the shares issued upon
exercise of the conversion rights to bear the following
legend:
"The shares evidenced by this
certificate have not been registered
under the Securities Act of 1933, as
amended, or under the securities
laws of any state. The shares may
not be sold, transferred, pledged or
hypothecated in the absence of an
effective registration statement
under the Securities Act of 1933, as
amended, and such registration or
qualification as may be necessary
under the securities laws of any
state, or an opinion of counsel
satisfactory to the Company that
such registration and qualification
is not required."
This Convertible Note shall be registered on the
books of the Maker kept at its principal offices for that
purpose, and shall be transferable only on such books by the
Holder hereof in person or by duly authorized attorney upon
surrender of this Convertible Note properly endorsed, and
only in compliance with the provisions hereof.
Subject to compliance with Section 5, this Convertible
Note may be divided or combined with other Convertible Notes
upon presentation thereof at the office of the Maker,
together with a written notice specifying the name or names
and denomination or denominations in which a new Convertible
Note or new Convertible Notes are to be issued, signed by
the Holder or by the duly appointed legal representative or
duly authorized attorney thereof. The Maker shall execute
and deliver a new Convertible Note or Convertible Notes to
be divided or combined in accordance with such notice.
6. Restrictions.
(a) The Maker will at all times from and after
this date reserve and keep available out of its authorized
but unissued shares of Common Stock or its treasury shares,
or otherwise, solely for the purpose of issuance upon the
conversion of this Convertible Note, such number of shares
of Common Stock as shall then be issuable upon the
conversion of this Convertible Note. The Maker covenants
that all shares of Common Stock that shall be so issuable
shall, when issued, be duly and validly issued, fully paid
and nonassessable and free from all taxes, liens and
charges.
(b) The issuance of certificates for shares of
Common Stock upon conversion of this Convertible Note shall
be made without charge to the Holder for any issuance tax or
other cost incurred by the Maker in connection with such
conversion and the related issuance of shares of Common
Stock.
(C) Before taking any action which would cause an
adjustment reducing the Conversion Price below the then par
value, if any, of the shares of Common Stock issuable upon
exercise of the Convertible Notes, the Maker shall take any
corporate action which may be necessary in order that the
Maker may validly and legally issue fully paid and
nonassessable shares of such Common Stock at such adjusted
Conversion Price.
7. Voting.
Nothing contained in this Convertible Note shall
be construed as conferring upon the Holder the right to vote
or to consent or to receive notice as a stockholder in
respect of meetings of stockholders for the election of
directors of the Maker or any other matter.
8. Adjustments.
(a) Adjustment. The number of shares of Common
Stock which are issuable upon conversion of this Convertible
Note shall be subject to adjustment from time to time as set
forth in this Section 8.
(b) Stock Dividends, Subdivisions and
Combinations. If at any time the Maker shall:
(i) declare, order, pay or make a dividend
on Common Stock payable in additional
shares of Common Stock or other
securities;
(ii) subdivide its outstanding shares of
Common Stock into a larger number of
shares of Common Stock; or
(iii) combine its outstanding shares of
Common Stock into a smaller number of
shares of Common Stock;
then (a) the number of shares of Common Stock for which this
Convertible Note is exercisable immediately after the
happening of such event shall be adjusted to equal the
number of shares of Common Stock which a record holder of
the same number of shares of Common Stock immediately prior
to the happening of such event would own or be entitled to
receive after the happening of such event, and (B) the
Conversion Price shall be adjusted to equal (1) the
Conversion Price in effect immediately prior to such event
multiplied by the number of shares of Common Stock issuable
upon conversion of this Convertible Note immediately prior
to the adjustment divided by (2) the number of shares
issuable upon conversion of this Convertible Note
immediately after such adjustment.
(c) Dividends and Distributions. If the Maker
shall distribute to all holders of its outstanding shares of
Common Stock assets or securities other than additional
shares of Common Stock, including stock of a subsidiary but
excluding dividends or distributions of indebtedness, cash
and distributions referred to in Section 8(b), (any such
assets or securities, the "assets or securities"), then, in
each case, the number of shares of Common Stock issuable
after such record date to Holder upon the exercise of each
Convertible Note shall be determined by multiplying the
number of shares of Common Stock issuable upon the exercise
of such Convertible Note immediately prior to such record
date by a fraction, the numerator of which shall be the fair
market value per share of Common Stock immediately prior to
the record date for such distribution and the denominator of
which shall be the fair market value per share of Common
Stock immediately prior to the record date for such
distribution less the then fair value as determined in good
faith by the Board of Directors of Maker of the evidences of
its assets or other distributions so distributed
attributable to one share of Common Stock. Such adjustment
shall be made on the record date for the determination of
shareholders entitled to receive such distribution. Any
adjustment required by this Section 8(c) shall be made on
the record date for the determination of shareholders
entitled to receive such distribution.
9. Organic Changes.
If any capital reorganization or reclassification
of the capital stock of the Maker (other than a change in
par value, or from par value to no par value, or as a result
of an issuance of Common Stock by dividend, or other
distribution or by reason of a subdivision or combination),
or any consolidation or merger of the Maker with or into
another corporation, ("Organic Change") shall be effected in
such a way that all of the holders of Common Stock shall be
entitled to receive stock or securities with respect to or
in exchange for Common Stock, then appropriate provision
shall be made with respect to the Holder's rights and
interests to the end that the provisions contained in this
Convertible Note shall thereafter be applicable in relation
to any shares of stock or securities thereafter deliverable
upon the conversion of this Convertible Note (including, in
the case of any such consolidation or merger, an immediate
adjustment in the number of shares of Common Stock
acquirable and receivable upon conversion of this
Convertible Note and, if applicable, the conversion price),
such that Holder shall thereafter have the right to acquire
and receive upon the basis and upon the terms and conditions
specified herein and in lieu of the shares of Common Stock
of the Maker, upon the conversion of this Convertible Note,
such shares of stock, securities or assets as may be issued
or payable with respect to or in exchange for a number of
outstanding shares of Common Stock equal to the number of
shares of Common Stock acquirable and receivable upon
conversion of this Convertible Note immediately prior to the
event giving rise to the Organic Charge.
10. Notice of Adjustment.
Immediately upon any adjustment in the number of
shares of Common Stock acquirable and receivable upon
conversion of this Convertible Note or any adjustment or
readjustment in the conversion price, the Maker shall send
written notice to the Holder, which notice shall set forth
in reasonable detail the method of calculation and the facts
upon which such calculation is based. The Maker shall, upon
written request of the Holder of the Convertible Note,
furnish or cause to be furnished to such Holder a similar
certificate setting forth (i) such adjustments and
readjustments, (ii) the conversion price then in effect, and
(iii) the number of shares of Common Stock which then would
be received upon the conversion of the Convertible Note. The
Maker may retain a firm of independent public accountants
to make any computation required under this Section and a
certificate signed by such firm shall be conclusive evidence
of the correctness of any computation made.
11. Fractional Interests.
The Maker shall not be required to issue any
fractional shares of Common Stock on the conversion of this
Convertible Note. If any principal amount remains unpaid
upon conversion of this Convertible Note, the Maker shall
pay such remaining principal amount on the Maturity Date, or
such earlier date as the Maker may select.
12. Notices.
(a) Any notice pursuant to this Convertible Note
to be given or made by the Holder to or upon the Maker shall
be sufficiently given or made if sent by certified or
registered mail, postage prepaid, addressed (until another
address is sent by the Maker to the Holder) as follows:
Hadron, Inc.
0000 Xxxxxx Xxxxx Xxxxxxxx
Xxxxx 000 Xxxx
Xxxxxxxxx, XX 00000
Attention: X. Xxxxx Xxxxxx,
Executive Vice President
(b) Any notice pursuant to this Convertible Note
to be given or made by the Maker to or upon the Holder shall
be sufficiently given or made if sent by certified or
registered mail, postage prepaid, addressed (until another
address is sent by the Holder to the Maker) to the address
of the Holder set forth in Attachment A.
13. Register of Notes.
The Maker shall keep at its principal office (or
such other place the Maker reasonably designates) a register
for the registration of Convertible Notes. Each transfer of
the Convertible Notes, conversion thereof into Common Stock
and payment thereunder as well as the name and address of
such holder of Convertible Notes shall be noted on the
register of Convertible Notes. The register shall be made
available by the Maker for review by the Holder or his agent
during usual business hours of the Maker.
14. Modification and Waiver.
No modification or waiver of any provision of this
Convertible Note, nor any departure by the Maker therefrom,
shall in any event be effective unless the same shall be in
writing signed by the Holder and then such modification or
waiver shall be effective only in the specific instance for
the specific purpose given.
15. Notice of Certain Mergers and Asset Dispositions.
In the event that the Maker proposes to consolidate
with or merge into another corporation in a transaction in
which the Common Stock will be changed or converted into other
securities, cash or property, or to sell, transfer or
otherwise dispose of all or substantially all of its property,
assets or business to another corporation or other entity, the
Maker shall deliver to each Holder any written notice of such
proposed transaction which it is also sending to all of the
record holders of its Common Stock. Company will provide to
Holder upon receipt of a written request, one copy of
materials forwarded to stockholders or filed with the
Securities and Exchange Commission by the Company.
16. Miscellaneous.
The Maker will make and deliver a new Convertible
Note of like tenor in the principal amount of this Convertible
Note in lieu of such Convertible Note upon receipt by the
Maker of: (i) evidence reasonably satisfactory to it of the
loss, theft, destruction or mutilation of this Convertible
Note; (ii) in case of loss, theft or destruction of this
Convertible Note, of indemnity reasonably satisfactory to
Maker, and upon reimbursement to the Maker of all reasonable
expenses incidental thereto; and (iii) this Convertible Note,
surrendered and cancelled, in the case of mutilation. Any
Convertible Note so made and delivered shall be dated as of
the date to which interest shall have been paid on the
Convertible Note lost, stolen, destroyed or mutilated.
The terms of this Convertible Note shall be governed by
and construed in accordance with the laws of the Commonwealth
of Virginia.
This Convertible Note shall not be valid or obligatory
for any purpose until authenticated by the execution hereof by
the President or CEO of the Maker.
IN WITNESS WHEREOF, Hadron, Inc., a New York corporation
has caused this Convertible Note to be signed in its corporate
name by its President or CEO and its corporate seal affixed
hereto duly attested, by authority duly given, all as of the
day and year first above written.
Attest: HADRON, INC.
a New York Corporation
____________________ By: __________________________
Corporate Secretary X. X. Xxxxxxx
Chairman and
Chief Executive Officer
[SEAL]
