SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
New Filing
AHT CORPORATION
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(Name of Issuer)
Common Stock, par value $.01 per share
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(Title of Class of Securities)
00130R103
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CUSIP Number
Eddy Friedfeld
555 White Plains Road, 2nd Floor
Tarrytown, New York 10591
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(Name, Address and Telephone Number of Person Authorized to Receive Notices
and Communications)
March 27, 2000
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(Date of Event Which Requires Filing of This Statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition that is the subject of this schedule 13D, and is filing
this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the
following box. [ ]
Note: Schedules filed in paper format shall include a signed
original and five copies of the schedule, including all exhibits.
Seess.240.13d-7(b) for other parties to whom copies are to be sent.
*The remainder of this cover page shall be filled out for a
reporting person's initial filing on this form with respect to the
subject class of securities, and for any subsequent amendment
containing information which would alter disclosures provided in a
prior cover page.
The information required on the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 ("Act") or otherwise subject to the liabilities of that section of
the Act but shall be subject to all other provisions of the Act (however, see
the Notes).
(Page 1 of 5 pages)
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SCHEDULE 13D
CUSIP NO. 00130R103 PAGE 2 OF 5 PAGES
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(1) Names of Reporting Persons and SS or IRS Identification No. of above
Person:
CYBEAR, INC. I.R.S. # 13-3936988
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(2) Check the Appropriate Box If a Member of a Group: (A) [ ] (B) [ ]
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(3) SEC Use Only:
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(4) Source of Funds:
WC
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(5) Check Box If Disclosure of Legal Proceedings Is Required Pursuant to
Items 2(d) or 2(e): [ ]
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(6) Citizenship or Place of Organization:
DELAWARE, UNITED STATES OF AMERICA
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Number of Shares (7) SOLE VOTING POWER: 1,426,194
Beneficially
Owned by Each (8) SHARED VOTING POWER:
Reporting Person
With: (9) SOLE DISPOSITIVE POWER: 1,426,194
(10) SHARED DISPOSITIVE POWER:
(11) Aggregate Amount Beneficially Owned by Each Reporting Person:
1,426,194 SHARES OF COMMON STOCK
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(12) Check Box If Aggregate Amount in Row (11) Excludes Certain Shares: [ ]
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(13) Percent of Class Represented by Amount in Row (11):
12.5%
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(14) Type of Reporting Person:
CO
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SCHEDULE 13D
CUSIP NO. 00130R103 PAGE 3 OF 5 PAGES
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Item 1. SECURITY AND ISSUER
This Statement relates to the Common Stock, par value $.01 per share
(the "Common Stock"), of AHT Corporation, a Delaware corporation (the "Issuer").
The Issuer's principal executive offices are located at 555 White Plains Road,
2nd Floor, Tarrytown, New York 10591.
Item 2. IDENTITY AND BACKGROUND
(a) This Schedule 13D is being filed by Cybear, Inc., a Delaware
corporation ("Cybear").
(b) The business address of Cybear is 5000 Blue Lake Drive, Suite
200, Boca Raton, Florida 33431.
(c) Cybear is an Internet service provider and application
services provider which uses or intends to use its own secure
private network to provide access to the Internet, email and
productivity applications on a transaction or subscription
basis to physicians, physician organizations, pharmacies and
hospitals, including online applications such as business
tools for hospital messaging, lab orders and results,
streamlined purchasing, prescription writing, claims
processing, eligibility verification, formulary compliance,
credentialing, web site creation and physician-patient
communications via the Internet, thereby using the Internet to
improve the efficiency of administrative and communications
tasks of managing patient care while addressing the healthcare
industry's critical need for secure and reliable transmission
of information.
(d) During the last five years, neither Cybear nor, to the best
knowledge of Cybear, have the officers, directors or
controlling persons of Cybear been convicted in a criminal
proceeding (excluding traffic violations or similar
misdemeanors).
(e) During the last five years, neither Cybear nor, to the best
knowledge of Cybear, have the officers, directors or
controlling persons of Cybear been a party to a civil
proceeding of a judicial or administrative body of competent
jurisdiction and as a result of such proceeding was or is
subject to a judgment, decree, or final order enjoining future
violations of, or prohibiting or mandating activities subject
to federal or state securities laws or finding any violation
with respect to such laws.
Item 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
This statement relates to the acquisition of beneficial ownership by
Cybear of 1,426,194 shares of Common Stock pursuant to Cybear's purchase of the
Issuer's 10% Senior Secured Convertible Note due March 31, 2001 in the amount of
$4.0 million (the "Convertible Note"), which is convertible, at Cybear's option,
into shares of Common Stock, and a warrant to purchase 300,000 shares of Common
Stock (the "Warrant").
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SCHEDULE 13D
CUSIP NO. 00130R103 PAGE 4 OF 5 PAGES
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Item 4. PURPOSE OF THE TRANSACTION
The aforementioned securities were acquired in connection with Cybear's
purchase of the Convertible Note and related Warrant for $4 million and its
entering into a Co-Marketing and License Agreement and Development and Services
Agreement, whereby Cybear (i) was granted a license to use certain computer
software applications which Cybear believes will enable users of its website to
access and use a prescription writing and transmission service and a laboratory
ordering process; and (ii) agreed to develop, with the assistance of the Issuer,
an electronic prescription writing device. Both agreements provide, among other
things, for a sharing of revenue between Cybear and the Issuer in the event
revenues are generated from the sales of products and services related to the
two agreements.
Cybear and the Issuer have had discussions regarding a possible
business combination between Cybear and the Issuer, but Cybear has no present
intention to enter into a business combination with the Issuer and discussions
regarding a possible business combination have ceased. Cybear reserves the right
to, and may in the future, change its purpose or plans with respect to its
investment in the Issuer and to take such actions as it deems appropriate in
light of the circumstances existing at the time.
Item 5. INTEREST IN SECURITIES OF THE ISSUER
(a) As of the close of business on April 3, 2000, pursuant to Rule
13d-3, Cybear may be deemed to beneficially own approximately
1,426,194 shares of Common Stock, or approximately 12.5% of
the total shares of Common Stock outstanding of the Issuer,
which represents (i) 1,126,194 shares of Common Stock issuable
upon conversion of the Convertible Note at an assumed
conversion price of $3.5518, based on the average of the
closing prices of the Common Stock on the Nasdaq National
Market as reported by Bloomberg for the thirty (30)
consecutive trading days immediately prior to April 3, 2000;
and (ii) 300,000 shares of Common Stock issuable upon the
exercise of the Warrant, (collectively, the "Shares").
(b) Cybear may be deemed to have sole voting and dispositive power
of the Shares.
(c) Except as otherwise reported herein, there have been no
transactions by Cybear, or to Cybear's knowledge by any
executive officer, director or controlling person of Cybear,
involving the Common Stock of the Issuer effected during the
past 60 days.
(d) No other person is known to have the right to receive or the
power to direct the receipt of dividends from, or the proceeds
from the sale of the shares of the Issuer.
(e) Not applicable.
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SCHEDULE 13D
CUSIP NO. 00130R103 PAGE 5 OF 5 PAGES
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Item 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO SECURITIES OF THE ISSUER
Except as described herein, neither Cybear nor, to Cybear's knowledge,
any executive
officer, director or controlling person of Cybear, is a party to any contract,
arrangement, understanding or relationship with any person with respect to any
securities of the Issuer.
Item 7. MATERIAL TO BE FILED AS EXHIBITS
(a) Securities Purchase Agreement dated March 27, 2000 between
Cybear and the Issuer
(b) 10% Senior Secured Convertible Note
(c) Warrant to purchase 300,000 shares of Issuer Common Stock.
SIGNATURES
After reasonable inquiry and to the best of the undersigned's knowledge
and belief, the undersigned certifies that the information set forth in this
statement is true, complete and correct.
CYBEAR, INC.
Date: April 4, 2000 /S/ TIMOTHY E. NOLAN
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Timothy E. Nolan, President, Chief Operating
Officer and Director
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EXHIBIT 7(a)
SECURITIES PURCHASE AGREEMENT
BY AND BETWEEN
AHT CORPORATION
AS THE COMPANY
AND
CYBEAR, INC.
AS THE PURCHASER
DATED: MARCH 27, 2000
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SECURITIES PURCHASE AGREEMENT
AGREEMENT, dated March 27, 2000, by and between AHT CORPORATION, a
Delaware corporation (the "Company"), and CYBEAR, INC., a Delaware corporation
(the "Purchaser").
R E C I T A L S:
WHEREAS, the Company is currently contemplating raising up to
$4,000,000 in a private placement of debt securities (the "Offering"); and
WHEREAS, the Company desires to sell and issue to the Purchaser, and
the Purchaser desires to purchase from the Company, $4,000,000 aggregate
principal amount of the Company's 10% Senior Secured Convertible Note due March
31, 2001 (the "Convertible Note"), with terms and conditions as set forth in the
form of Convertible Note attached hereto as EXHIBIT A (with such changes and
modifications as may be approved by the Purchaser); and
WHEREAS, in order to induce the Purchaser to enter into the
transactions described in this Agreement, the Company desires to issue to the
Purchaser warrants to purchase 300,000 shares of the Company's common stock,
$.01 par value (the "Common Stock") on the terms and conditions described in the
Common Stock Purchase Warrant in the form attached hereto as EXHIBIT B (with
such changes and modifications as may be approved by the Purchaser) (the
"Warrants"); and
WHEREAS, the Convertible Note will be convertible into shares of Common
Stock, and the Purchaser will have registration rights with respect to such
shares of Common Stock issuable upon conversion as set forth in the Registration
Rights Agreement in the form attached hereto as EXHIBIT C; and
WHEREAS, the Purchaser will have certain registration rights with
respect to the shares of Common Stock issuable upon exercise of the Warrants as
set forth in the Registration Rights Agreement;
NOW, THEREFORE, in consideration of the foregoing premises and the
covenants contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
hereby agree as follows:
1. DEFINITIONS
1.1 DEFINITIONS. The following terms, as used herein, have the following
meanings:
"Affiliate" means, with respect to any Person (the "Subject Person"),
(i) any other Person (a "Controlling Person") that directly, or indirectly
through one or more intermediaries, Controls the Subject Person or (ii) any
other Person (other than the Subject Person or a Consolidated Subsidiary
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of the Subject Person) which is Controlled by or is under common Control with a
Controlling Person.
"Agreement" means this Securities Purchase Agreement, as amended,
supplemented or otherwise modified from time to time in accordance with its
terms.
"Asset Sale" has the meaning set forth in Section 8.7.
"Average Market Price" means, for any security as of any date, the
average of the closing price on the Nasdaq Market as reported by Bloomberg or,
if the Nasdaq Market is not the principal trading market for such security, the
closing price of such security on the principal securities exchange or trading
market where such security is listed or traded as reported by Bloomberg, or if
the foregoing do not apply, the closing price of such security in the
over-the-counter market on the electronic bulletin board for such security as
reported by Bloomberg, or, if no closing price is reported for such security by
Bloomberg, then the average of the high bid prices of any market makers for such
security as reported in the "pink sheets" by the National Quotation Bureau,
Inc., in each case for the thirty (30) consecutive Trading Days immediately
prior to such date.
"Balance Sheet Date" has the meaning set forth in Section 4.7.
"Benefit Arrangement" means at any time an employee benefit plan within
the meaning of Section 3(3) of ERISA which is not a Plan or a Multiemployer Plan
and which is maintained or otherwise contributed to by the Company.
"Benefit Plans" has the meaning set forth in Section 4.9(b).
"Bloomberg" means Bloomberg, L.P.
"Business Day" means any day except a Saturday, Sunday or other day on
which commercial banks in New York, New York and Miami, Florida are authorized
or required by law to close.
"Capital Reorganization" has the meaning set forth in Section 11.5.
"Change of Control" means:
(i) after the date of this Agreement any Person, other than
the Purchaser or an Affiliate of the Purchaser, shall have acquired
beneficial ownership (within the meaning of Rules 13d-3 and 13d-5
promulgated by the SEC pursuant to the Exchange Act) of 33.3% or more
of the outstanding shares of Common Stock of the Company;
(ii) a transfer of all or substantially all of the assets of
the Company to any Person, other than the Purchaser or an Affiliate of
the Purchaser, in a single transaction or series of related
transactions;
(iii) a consolidation, merger or amalgamation of the Company
with or into another Person, other than the Purchaser or an Affiliate
of the Purchaser, (other than a merger (x) which does not result in any
reclassification, conversion, exchange or cancellation of
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outstanding shares of Common Stock or in which the Company is the
surviving entity, (y) which is effected solely to change the
jurisdiction of incorporation of the Company and results in a
reclassification, conversion or exchange of outstanding shares of
Common Stock solely into shares of Common Stock or (z) consummated in
compliance with Section 8.5 hereof); or
(iv) individuals constituting the Board of Directors of the
Company on the date hereof (together with any new Directors whose
election by such Board of Directors or whose nomination for election by
the stockholders of the Company (x) was approved by a vote of at least
50.1% of the Directors then still in office who were either Directors
as of the date hereof or whose election or nomination for election was
previously so approved or (y) supported by the Purchaser or its
Affiliates, cease for any reason to constitute at least a majority of
the Board of Directors of the Company then in office; or
"Closing" has the meaning set forth in Section 2.3.
"Closing Date" means March 27, 2000.
"Code" means the Internal Revenue Code of 1986, as amended.
"Company" means AHT Corporation, a Delaware corporation, and its
successors.
"Company Corporate Documents" means the certificate of incorporation
and by-laws of the Company.
"Consolidated Subsidiary" means at any date with respect to any Person,
any Subsidiary or other entity, the accounts of which would be consolidated with
those of such Person in its consolidated financial statements if such statements
were prepared as of such date.
"Control" (including, with correlative meanings, the terms
"Controlling," "Controlled by" and under "common Control with"), as used with
respect to any Person, means the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies of that
Person, whether through the ownership of voting securities, by contract or
otherwise .
"Conversion Date" shall mean the date of delivery (including delivery
via telecopy) of a Notice of Conversion for all or a portion of the Convertible
Note by the holder thereof to the Company if such day is a Business Day, or the
next succeeding Business Day if the date of delivery is not a Business Day.
"Conversion Price" means the lower of (i) 80% of the Average Market
Price per share of Common Stock on the Conversion Date; or (ii) $4.34.
"Conversion Shares" has the meaning set forth in Section 4.5.
"Convertible Note" means the Company's 10% Senior Secured Convertible
Note substantially in the form set forth as EXHIBIT A hereto.
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"Deadline" has the meaning set forth in Section 10.1.
"Debt" of any Person means at any date, without duplication, (i) all
obligations of such Person for borrowed money, (ii) all obligations of such
Person evidenced by bonds, debentures, notes, or other similar instruments
issued by such Person, (iii) all obligations of such Person as lessee which (y)
are capitalized in accordance with GAAP or (z) arise pursuant to sale-leaseback
transactions, (iv) all reimbursement obligations of such Person in respect of
letters of credit or other similar instruments, (v) all Debt of others secured
by a Lien on any asset of such Person, whether or not such Debt is otherwise an
obligation of such Person and (vi) all Debt of others Guaranteed by such Person.
"Default" means any event or condition which constitutes an Event of
Default or which, with the giving of notice or lapse of time or both would,
unless cured or waived, will constitute an Event of Default.
"Default Interest Rate" has the meaning set forth in the Convertible
Note.
"Derivative Securities" has the meaning set forth in Section 10.6.
"Directors" means the individuals then serving on the Board of
Directors or similar such management council of the Company.
"Environmental Laws" means any and all federal, state, municipal, local
and foreign statutes, laws, regulations, ordinances, rules, judgments, orders,
decrees, permits, concessions, grants, franchises, licenses, agreements or other
governmental restrictions relating to the environment or to emissions,
discharges or releases of pollutants, contaminants, petroleum or petroleum
products, chemicals or industrial, toxic or hazardous substances or wastes into
the environment, including, without limitation, ambient air, surface water,
ground water, or land, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
pollutants, contaminants, petroleum or petroleum products, chemicals or
industrial, toxic or hazardous substances or wastes or the cleanup or other
remediation thereof.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, or any successor statute.
"ERISA Group" means the Company and each Subsidiary and all members of
a controlled group of corporations and all trades or businesses (whether or not
incorporated) under common control which, together with the Company or any
Subsidiary, are treated as a single employer under the Code.
"Event of Default" has the meaning set forth in Section 12 hereof.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Fixed Price(s)" has the meaning set forth in Section 11.1.
"GAAP" has the meaning set forth in Section 1.2.
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"Guarantee" by any Person means any obligation, contingent or
otherwise, of such Person directly or indirectly guaranteeing (whether by virtue
of partnership arrangements, by agreement to keep well, to purchase assets,
goods, securities or services, to take-or-pay, or to maintain a minimum net
worth, financial ratio or similar requirements, or otherwise) any Debt of any
other Person and, without limiting the generality of the foregoing, any
obligation, direct or indirect, contingent or otherwise, of such Person (i) to
purchase or pay (or advance or supply funds for the purchase or payment of) such
Debt or (ii) entered into for the purpose of assuring in any other manner the
holder of such Debt of the payment thereof or to protect such holder against
loss in respect thereof (in whole or in part); PROVIDED that the term Guarantee
shall not include endorsements for collection or deposit in the ordinary course
of business. The term Guarantee used as a verb has a corresponding meaning.
"Guaranty Agreement" means the Guaranty Agreement of even date herewith
between Advanced Health Technologies Corporation, Advanced Health Management
Corporation, and Advanced Health Bukstel and Halfpenny Corporation, each a
Delaware corporation and wholly owned subsidiary of the Company, in the form
attached hereto as EXHIBIT H.
"Hazardous Materials" means any hazardous materials, hazardous wastes,
hazardous constituents, hazardous or toxic substances or petroleum products
(including crude oil or any derivative or fraction thereof), defined or
regulated as such in or under any Environmental Laws.
"Intellectual Property" has the meaning set forth in Section 4.20.
"Issuer Registration Statement" means a registration statement filed by
the Company which seeks to register the sale of securities by the Company for
cash.
"License Agreement" means the Co-Marketing and License Agreement of
even date herewith between the Purchaser and Advanced Health Technologies
Corporation, a wholly owned subsidiary of the Company, in the form attached
hereto as EXHIBIT G.
"Lien" means, any lien, mechanic's lien, materialmen's lien, lease,
easement, charge, encumbrance, mortgage, conditional sale agreement, title
retention agreement, agreement to sell or convey, option, claim, title
imperfection, encroachment or other survey defect, pledge, restriction, security
interest or other adverse claim, whether arising by contract or under law or
otherwise (including, without limitation, any financing lease having
substantially the same economic effect as any of the foregoing, and the filing
of any financing statement under the Uniform Commercial Code or comparable law
of any jurisdiction in respect of any of the foregoing).
"Liquidated Damages Amount" has the meaning set forth in Section 8.2.
"Listing Applications" shall have the meaning set forth in Section 4.4.
"Material Adverse Effect" means for a specified party, a material
adverse effect on (a) the business, operations, property or condition of the
specified party taken as a whole, (b) the ability of the specified party to
perform its material obligations under this Agreement, or (c) the validity or
enforceability against the specified party of this Agreement or the rights or
remedies of any other party hereunder to such an extent that such Agreement or
the rights or remedies of any other
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party hereunder to such an extent that such other party would be deprived of the
practical realization of the benefits contemplated by this Agreement to be
derived by such other party from this Agreement, including the exhibits to this
Agreement, and on the transactions contemplated hereby or by the agreements or
instruments to be entered into in connection herewith, and; provided, however,
that the existence of a Material Adverse Effect shall be deemed not to include
(x) the adverse impact, if any, of changes in laws, rules, regulations,
interpretations or other promulgations of any governmental authority, or changes
in GAAP, regulatory accounting requirements and market conditions applicable to
companies in the same line of business as the specified party, or (y) the impact
of the fees and expenses of all counsel, accountants and financial advisors, and
the other costs and expenses reasonably incurred by the specified party, in
connection with this Agreement and the transactions contemplated by this
Agreement.
"Material Plan" means at any time a Plan or Plans having aggregate
Unfunded Liabilities in excess of $500,000.
"Maturity Date" shall mean the date of maturity of the Convertible
Note; specifically, March 31, 2001.
"Maximum Number of Shares" shall mean 2,213,550 shares of Common Stock,
which amount is equal to 19.9% of the outstanding Common Stock on the Closing
Date, less 300,000 for Warrants.
"Multiemployer Plan" means at any time an employee pension benefit plan
within the meaning of Section 4001(a)(3) of ERISA to which any member of the
ERISA Group is then making or accruing an obligation to make contributions or
has within the preceding five plan years made contributions, including for these
purposes any Person which ceased to be a member of the ERISA Group during such
five year period.
"Nasdaq Market" means the Nasdaq Stock Market's National Market.
"Net Cash Proceeds" means, with respect to any transaction, the total
amount of cash proceeds received by the Company or any Subsidiary less (i)
underwriters' fees, brokerage commissions, professional fees and other customary
out-of-pocket expenses payable in connection with such transaction, and (ii) in
the case of dispositions of assets, (A) actual transfer taxes and income taxes
payable with respect to such dispositions, and (B) the amount of Debt, if any,
secured by a Lien on the asset or assets disposed of and required to be, and
actually repaid by the Company or any Subsidiary in connection therewith, and
any trade payables specifically relating to such asset or assets sold by the
Company or any Subsidiary that are not assumed by the purchaser of such asset or
assets.
"Notice of Conversion" means the form to be delivered by the holder of
the Convertible Note upon conversion of all or a portion thereof to the Company
substantially in the form of EXHIBIT D attached hereto.
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"Notice of Exercise" means the form to be delivered by a holder of a
Warrant upon exercise of all or a portion thereof to the Company.
"Offering" has the meaning set forth in the Recitals.
"Other Taxes" has the meaning set forth in Section 3.6(d).
"Par Value Redemption Price" has the meaning set forth in Section
3.3(a).
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
"Permits" means all domestic and foreign licenses, franchises, grants,
authorizations, permits, easements, variances, exemptions, consents,
certificates, orders and approvals necessary to own, lease and operate the
properties of, and to carry on the business of the Company and the Subsidiaries.
"Permitted Debt" has the meaning set forth in Section 8.1.
"Person" means an individual, corporation, partnership, trust,
incorporated or unincorporated association, joint venture, joint stock company,
government (or any agency or political subdivision thereof) or other entity of
any kind.
"Plan" means at any time an employee pension benefit plan (other than a
Multiemployer Plan) which is covered by Title IV of ERISA or subject to the
minimum funding standards under the Code and either (i) is maintained, or
contributed to, by any member of the ERISA Group for employees of any member of
the ERISA Group or (ii) has at any time within the preceding five years been
maintained, or contributed to, by any Person which was at such time a member of
the ERISA Group for employees of any Person which was at such time a member of
the ERISA Group.
"Premium Price" shall mean a dollar amount equal to: (i) one hundred
twenty percent (120%) of the principal amount of the Convertible Note then
outstanding, plus (ii) all accrued and unpaid interest (including Default
Interest, if any) thereon.
"Purchase Price" means the purchase price for the Securities set forth
in Section 2.2 hereof.
"Purchaser" means Cybear, Inc., a Delaware corporation, and its
successors and assigns.
"Registrable Securities" has the meaning set forth in Section 10.4(a).
"Registration Default" has the meaning set forth in Section 10.4(e).
"Registration Default Notice" has the meaning set forth in Section
10.4(f).
"Registration Maintenance Period" has the meaning set forth in Section
10.4(d).
"Registration Rights Agreement" means the agreement between the Company
and the Purchaser dated the Closing Date substantially in the form set forth in
EXHIBIT C attached hereto.
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"Required Effectiveness Date" has the meaning set forth in Section
10.4(d).
"Required Registration Statement" means a registration statement on
which the Registrable Securities are listed pursuant to the Registration Rights
Agreement.
"Rights Offering" has the meaning set forth in Section 11.3.
"SEC" means the Securities and Exchange Commission or any entity
succeeding to all of its material functions.
"SEC Reports" shall have the meaning set forth in Section 4.7.
"Securities" means the Convertible Note, the Warrants and, as
applicable, the Conversion Shares and the Warrant Shares.
"Securities Act" means the Securities Act of 1933, as amended.
"Security Agreement" means the agreement between the Purchaser, the
Company and Advanced Health Technologies Corporation, Advanced Health Management
Corporation, and Advanced Health Bukstel and Halfpenny Corporation (each a
Delaware corporation and wholly owned subsidiary of the Company) dated the
Closing Date substantially in the form set forth in EXHIBIT E attached hereto.
"Share Reorganization" has the meaning set forth in Section 11.2.
"Significant Subsidiary" has the meaning ascribed to it under the
regulations promulgated under the Securities Act.
"Solvency Certificate" shall mean a certificate executed by the chief
financial officer of the Company as to the solvency of the Company, the adequacy
of its capital and its ability to pay its debts, all after giving effect to the
issuance and sale of the Convertible Note and the completion of the offering
(including without limitation the payment of any fees or expenses in connection
therewith).
"Special Distribution" has the meaning set forth in Section 11.4.
"Subordination Terms" means with respect to any Debt the terms of
subordination set forth in EXHIBIT F hereto and which terms shall be set forth
in the instrument evidencing or governing such Debt.
"Subsidiary" means, with respect to any Person, any corporation or
other entity of which a majority of the capital stock or other ownership
interests having ordinary voting power to elect a majority of the board of
directors or other persons performing similar functions are at the time directly
or indirectly owned by such Person. Unless specified to the contrary,
"Subsidiary" means a Subsidiary of the Company.
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"Subsidiary Corporate Documents" means the certificates of
incorporation and by-laws of each Subsidiary.
"Taxes" has the meaning set forth in Section 3.5(a).
"Trading Day" shall mean any Business Day in which the Nasdaq Market or
other automated quotation system or exchange on which the Common Stock is then
traded is open for trading for at least four (4) hours.
"Transaction Agreements" means this Agreement, the Convertible Note,
the Warrants, the Registration Rights Agreement, the License Agreement, the
Security Agreement and the Guaranty Agreement.
"Transfer" means any disposition of Securities that would constitute a
sale thereof under the Securities Act.
"Unfunded Liabilities" means, with respect to any Plan at any time, the
amount (if any) by which (i) the present value of all benefits under such Plan
exceeds (ii) the fair market value of all Plan assets allocable to such benefits
(excluding any accrued but unpaid contributions), all determined as of the then
most recent valuation date for such Plan, but only to the extent that such
excess represents a potential liability of a member of the ERISA Group to the
PBGC or any other Person under Title IV of ERISA.
"Warrants" means the Common Stock Purchase Warrants to purchase 300,000
shares of Common Stock issued to the Purchaser on the Closing Date in the form
of EXHIBIT B hereto
"Warrant Shares" has the meaning set forth in Section 4.5.
1.2 ACCOUNTING TERMS AND DETERMINATIONS. Unless otherwise specified herein,
all accounting terms used herein shall be interpreted, all accounting
determinations hereunder shall be made, and all financial statements required to
be delivered hereunder shall be prepared, in accordance with generally accepted
accounting principles as in effect from time to time, applied on a consistent
basis (except for changes concurred in by the Company's independent public
accountants) ("GAAP"). All references to "dollars," "Dollars" or "$" are to
United States dollars unless otherwise indicated.
2. PURCHASE AND SALE OF SECURITIES
2.1 PURCHASE AND SALE OF CONVERTIBLE NOTE. Subject to the terms and
conditions set forth herein, the Company agrees to issue and sell to the
Purchaser, and the Purchaser agrees to purchase from the Company, on the Closing
Date, the Convertible Note in the principal amount of $4,000,000. In connection
with the purchase and sale of the Convertible Note, the Company will issue to
the Purchaser the Warrants to purchase 300,000 shares of Common Stock in the
form of EXHIBIT B hereto.
2.2 PURCHASE PRICE. The purchase price for the Convertible Note shall be
100% of the principal amount thereof. One Dollar ($1.00) of the purchase price
of the Convertible Note shall be allocated
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to the Warrants. The aggregate consideration payable by the Purchaser to the
Company for the Convertible Note and the Warrants shall be $4,000,000 (the
"Purchase Price").
2.3 CLOSING AND FORM OF PAYMENT.
(a) On the Closing Date, payment of the Purchase Price by the
Purchaser, subject to the satisfaction of all terms and conditions set forth
herein, shall be made by wire transfer to the Company of immediately available
funds.
(b) The closing of the transactions contemplated by this Agreement
shall occur on the Closing Date at the offices of the Company (the "Closing").
At the Closing, the Company shall deliver to the Purchaser (A) the Convertible
Note issued to the Purchaser as of the Closing Date, and (B) the Warrants issued
to the Purchaser as of the Closing Date, against payment of the Purchase Price.
3. PAYMENT TERMS OF CONVERTIBLE NOTE
3.1 PAYMENT MECHANICS. The Company will pay all sums becoming due on the
Convertible Note by the method and at the address specified for such purpose as
the Purchaser shall specify to the Company in writing for such purpose, without
the presentation or surrender of the Convertible Note or the making of any
notation thereon, except that upon written request of the Company made
concurrently with or reasonably promptly after payment or prepayment in full of
this Convertible Note, the Purchaser shall surrender the Convertible Note for
cancellation, reasonably promptly after any such request, to the Company at its
principal executive office. All payments to the Purchaser shall be made for the
Purchaser's benefit to the Purchaser. Prior to any sale or other disposition of
the Convertible Note, the Purchaser will, at its election, either endorse
thereon the amount of principal paid thereon and the last date to which interest
has been paid thereon or surrender the Convertible Note to the Company in
exchange for a new Convertible Note. The Company will afford the benefits of
this Section 3.1 to any transferee of the Convertible Note purchased under this
Agreement and that has made the same agreement relating to this Convertible Note
as the Purchaser has in this Section 3.1; PROVIDED that such transferee is an
"accredited investor" under Rule 501 of the Securities Act.
3.2 VOLUNTARY PREPAYMENT. Following the Closing Date, the Company, at any
time and from time to time, upon not less than thirty (30) days prior written
notice ("Prepayment Notice") to the Purchaser, shall have the right to redeem
all, but not less than all, of the outstanding principal amount of the
Convertible Note then outstanding at the Premium Price. The Purchaser will have
Conversion Rights until the close of business on the date immediately preceding
the date fixed for redemption.
3.3 MANDATORY PAYMENTS.
(a) INTEREST PAYMENTS: PAR VALUE REDEMPTION. Commencing on the Closing
Date and continuing thereafter until the Maturity Date, the Company shall pay to
Purchaser on a quarterly basis interest computed at a rate equal to ten percent
(10%) per annum on the outstanding principal balance of the Convertible Note
outstanding from time to time during such quarterly period. The
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first quarterly interest payment shall be due on June 30, 2000. Two subsequent
quarterly interest payments shall be made, one on September 30, 2000 and the
other on December 31, 2000. On March 31, 2001 the remaining outstanding
principal balance of the Convertible Note plus all accrued and unpaid interest
thereon shall be due and payable in full (including, without limitation, Default
Interest, if any) (the unpaid principal balance of the Convertible Note, plus
all accrued and unpaid interest thereon, including Default Interest, if any, is
herein referred to as the "Par Value Redemption Price").
(b) CHANGE OF CONTROL PREMIUM PRICE REDEMPTION. Upon the occurrence of
a Change of Control of the Company and for a period of six months thereafter,
the Purchaser shall have the right to cause the Company to redeem the principal
amount of the Convertible Note then outstanding, together with all accrued and
unpaid interest (including Default Interest, if any) thereon at the Premium
Price, upon ten (10) days prior written notice.
3.4 PREPAYMENT PROCEDURES.
(a) Any prepayment or redemption of the Convertible Note pursuant to
Sections 3.2 or 3.3 above shall be deemed to be effective and consummated (for
purposes of determining the Premium Price, the amount of accrued and unpaid
interest and the time at which the Holder shall thereafter not be entitled to
deliver a Notice of Conversion for the Convertible Note) on the date the
redemption is consummated.
(b) Within five (5) Business Days after (i) the Maturity Date or (ii)
the effective date of a prepayment or redemption of the Convertible Note as
specified in Section 3.4(a) above, the Company shall deliver by wire transfer in
immediately available funds the applicable prepayment/redemption price to the
Purchaser. If the Purchaser does not receive payment of any amounts due for
prepayment or on redemption of the Convertible Note by reason of the Company's
failure to make payment at the times prescribed above for any reason, the
Company shall pay to the Purchaser on demand (i) interest on the sums not paid
when due at an annual rate equal to the Default Interest Rate; and (ii) all
costs of collection, including, but not limited to, reasonable attorneys' fees
and costs, whether or not any suit or other formal proceedings are instituted.
(c) Any Notice of Conversion delivered by the Purchaser (including
delivery via telecopy) to the Company prior to the (i) Maturity Date or (ii)
effective date of a redemption specified in Section 3.4(a) above, shall be
honored by the Company and the conversion of the Convertible Note shall be
deemed effected on the Conversion Date. In addition, between the effective date
of redemption specified in Section 3.4(a) above and the date the Company is
required to deliver the redemption proceeds to the Purchaser, the Purchaser may
deliver a Notice of Conversion to the Company, PROVIDED that such notice will be
(i) of no force or effect if the Company timely pays the redemption proceeds to
the Purchaser when due or (ii) honored on or as of the date the Notice of
Conversion if the Company fails to timely pay the redemption proceeds to the
Purchaser when due.
3.5 PAYMENT OF ADDITIONAL AMOUNTS. Any and all payments by the Company
hereunder or under the Convertible Note to the Purchaser shall be made without
deduction or withholding for any and all present or future taxes, levies,
imposts, deductions, charges or withholdings, and all liabilities with
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respect thereto (all such taxes, levies, imposts, deductions, charges,
withholdings and liabilities being hereinafter referred to as "Taxes") unless
such Taxes are required by law or the administration thereof to be deducted or
withheld. If the Company shall be required by law or the administration thereof
to deduct or withhold any Taxes from or in respect of any sum payable under the
Convertible Note (i) the Company shall make such deductions or withholdings; and
(ii) the Company shall forthwith pay the full amount deducted or withheld to the
relevant taxation or other authority in accordance with applicable law.
4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to the Purchaser as of the Closing
Date the following:
4.1 ORGANIZATION AND QUALIFICATION. The Company and each Significant
Subsidiary is a corporation (or other legal entity) duly organized, validly
existing and in good standing under the laws of its jurisdiction of
incorporation, with full power and authority to own, lease, use and operate its
properties and to carry on its business as and where now owned, leased, used,
operated and conducted. The SEC Reports sets forth a list of all Significant
Subsidiaries and the jurisdiction in which each is incorporated. The Company and
each of its Significant Subsidiaries is duly qualified to conduct business as a
foreign corporation and is in good standing in every jurisdiction in which the
nature of the business conducted by it makes such qualification necessary,
except where such failure would not have a Material Adverse Effect.
4.2 AUTHORIZATION AND EXECUTION.
(a) Except as contemplated by Section 7.9, the Company has all
requisite corporate power and authority to enter into and perform the
Transaction Agreements and to consummate the transactions contemplated hereby
and thereby and to issue the Securities in accordance with the terms hereof and
thereof.
(b) Except as contemplated by Section 7.9, the execution, delivery and
performance by the Company of each Transaction Agreement and the issuance by the
Company of the Securities have been duly and validly authorized and no further
consent or authorization of the Company, its Board of Directors or its
shareholders is required.
(c) The Transaction Agreements have been duly executed and delivered by
the Company.
(d) The Transaction Agreements constitute, and upon execution and
delivery thereof by the Purchaser , will constitute, a valid and binding
agreement of the Company, in each case enforceable against the Company in
accordance with its respective terms, subject to (i) applicable bankruptcy,
insolvency or similar laws affecting the enforceability of creditors rights
generally and (ii) equitable principles of general applicability.
4.3 CAPITALIZATION. As of December 31, 1999, the authorized, issued and
outstanding capital stock of the Company is as set forth on SCHEDULE 4.3 hereto.
All of such outstanding shares of capital stock are, or upon issuance will be,
duly authorized, validly issued, fully paid and non-assessable. No
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shares of capital stock of the Company are subject to preemptive rights of the
stockholders of the Company or any liens or encumbrances imposed through the
actions or failure to act of the Company. Other than as set forth in the SEC
Reports or as disclosed in SCHEDULE 4.3, as of the date hereof, (i) there are no
outstanding options, warrants, scrip, rights to subscribe for, puts, calls,
rights of first refusal, agreements, understandings, claims or other commitments
or rights of any character whatsoever relating to, or securities or rights
convertible into or exchangeable for any shares of capital stock of the Company
or any of its Subsidiaries, or other arrangements , in each case under which the
Company or any of its Subsidiaries is or may become bound to issue additional
shares of capital stock of the Company or any of its Subsidiaries, and (ii)
there are no agreements or arrangements under which the Company or any of its
Subsidiaries are obligated to register the sale of any of its or their
securities under the Securities Act (except pursuant to the Registration Rights
Agreement) and (iii) there are no anti-dilution or price adjustment provisions
contained in any security issued by the Company (or in any agreement providing
rights to security holders) that will be triggered by the issuance of the
Convertible Note, Conversion Shares, Warrants or Warrant Shares. The Company has
made available to the Purchaser true and correct copies of the Company's SEC
Reports, and the terms of all securities convertible into or exercisable for
Common Stock and the material rights of the holders thereof in respect thereto.
4.4 GOVERNMENTAL AUTHORIZATION. The execution and delivery by the Company
of the Transaction Agreements will not, the issuance and sale by the Company of
the Securities will not, and the consummation of the transactions contemplated
hereby and by the other Transaction Agreements will not, require any action by
or in respect of, or filing with, any governmental body, agency or governmental
official except (a) such actions or filings that have been undertaken or made
prior to the date hereof and that will be in full force and effect (or as to
which all applicable waiting periods have expired) on and as of the date hereof
or which are not required to be filed on or prior to the Closing Date, (b) such
actions or filings that, if not obtained, would not result in a Material Adverse
Effect, (c) the additional share notice ("Listing Applications") to be filed
with the Nasdaq Market relating to the shares of Common Stock issuable upon
conversion of the Convertible Note and exercise of the Warrants and (d) the
filing of a "Form D" as described in Section 7.13 below.
4.5 ISSUANCE OF SHARES. Subject to the matters contemplated by Section 7.9,
upon conversion in accordance with the terms of the Convertible Note, or upon
exercise in accordance with the terms of the Warrants (assuming the payment of
the exercise price set forth in the Warrants), the shares of Common Stock issued
upon conversion of the Convertible Note (the "Conversion Shares") or exercise of
the Warrants (the "Warrant Shares") shall be duly and validly issued and
outstanding, fully paid and nonassessable, free and clear of any taxes, Liens
and charges with respect to issuance and shall not be subject to preemptive
rights or similar rights of any other stockholders of the Company. Assuming the
representations and warranties of the Purchaser herein are true and correct in
all material respects, each of the Securities will have been issued in material
compliance with all applicable United States federal securities laws. The
Company understands and acknowledges that, in certain circumstances, the
issuance of the Conversion Shares could dilute the ownership interests of other
stockholders of the Company. The Company further acknowledges that its
obligation to issue the Conversion Shares upon conversion of the Convertible
Note in accordance with this Agreement and the Convertible Note is absolute and
unconditional regardless of the dilutive effect that such issuance may have on
the ownership interests of other stockholders of the Company.
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4.6 NO CONFLICTS. The execution and delivery by the Company of the
Transaction Agreements to which it is a party will not, the issuance and sale by
the Company of the Securities will not and the consummation of the transactions
contemplated hereby and by the other Transaction Agreements will not, as of the
date hereof, contravene or constitute a default under or violation of (i) any
provision of applicable law or regulation, (ii) the Company Corporate Documents,
(iii) any agreement, judgment, injunction, order, decree or other material
instrument binding upon the Company or any Subsidiary or any of their respective
assets, or result in the creation or imposition of any Lien on any asset of the
Company or any Subsidiary, except in the case of (i) or (ii) hereof where such
contravention or default would not have a Material Adverse Effect. The Company
and each Subsidiary is in compliance with and conforms to all statutes, laws,
ordinances, rules, regulations, orders, restrictions and all other legal
requirements of any domestic or foreign government or any instrumentality
thereof having jurisdiction over the conduct of its businesses or the ownership
of its properties, except in each case where such failure would not have a
Material Adverse Effect.
4.7 FINANCIAL INFORMATION AND SEC REPORTS. Since December 31, 1998, the
Company has timely filed all forms, reports and documents with the SEC required
to be filed by it under the Exchange Act through the date hereof (all of the
foregoing filed prior to the date hereof and all exhibits included therein and
financial statements and schedules thereto and documents (other than exhibits)
incorporated by reference therein, being referred to herein collectively as the
"SEC Reports"). The Company has made available to the Purchaser true and
complete copies of the SEC Reports, except for such exhibits and incorporated
documents, as well as the Company's unaudited financial statements for the year
ended December 31, 1999 which the Company intends to file after the completion
of its audit as part of its Annual Report on Form 10-K for the fiscal year ended
December 31, 1999 (the "1999 Statement"). Such SEC Reports, at the time filed
complied in all material respects in light of the circumstances when made with
the requirements of the Exchange Act and the rules and regulations of the SEC
thereunder applicable to such SEC Reports. The SEC Reports (including without
limitation, the financial statements or schedules included therein) do not
contain any untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements made therein, in light of the
circumstances under which they were made, not misleading. The audited and
unaudited consolidated balance sheets of the Company and its Subsidiaries
contained in the SEC Reports and the 1999 Statement, and the related
consolidated statements of income, changes in stockholders' equity and changes
in cash flows for the periods then ended, including the footnotes thereto,
except as indicated therein, (i) complied in all material respects with
applicable accounting requirements and the published rules and regulations of
the SEC with respect thereto, (ii) have been prepared in accordance with GAAP
consistently applied throughout the periods indicated, except that the unaudited
financial statements do not contain notes and may be subject to normal audit
adjustments and normal annual adjustments and (iii) fairly present the financial
condition of the Company and its Subsidiaries at the dates indicated and the
consolidated results of their operations and cash flows for the periods then
ended. Since December 31, 1999 (the "Balance Sheet Date"), except as disclosed
in the SEC Reports, the 1999 Statement or otherwise disclosed to the Purchaser
in writing, there has been (i) no material adverse change in the assets or
liabilities, or in the business or financial condition, or in the results of
operations, of the Company and its Subsidiaries, whether as a result of any
legislative or regulatory change, revocation of any license or rights to do
business, fire, explosion, accident, casualty, labor trouble, flood, drought,
riot, storm, condemnation, act of God, public force or otherwise and (ii) no
material adverse
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change in the assets or liabilities, or in the business or financial condition,
or in the results of operations of the Company and its Subsidiaries except in
the ordinary course of business.
4.8 LITIGATION. Except as disclosed in the SEC Reports or in SCHEDULE 4.8,
there is no action, suit or proceeding pending or, to the knowledge of the
Company, threatened against the Company or any Subsidiary, before any court or
arbitrator or any governmental body, agency or official which is reasonably
likely to have a Material Adverse Effect.
4.9 COMPLIANCE WITH ERISA AND OTHER BENEFIT PLANS.
(a) Each member of the ERISA Group has fulfilled its obligations under
the minimum funding standards of ERISA and the Code with respect to each Plan
and is in compliance in all material respects with the presently applicable
provisions of ERISA and the Code with respect to each Plan. No member of the
ERISA Group has (i) sought a waiver of the minimum funding standard under
Section 412 of the Code in respect of any Plan, (ii) failed to make any required
contribution or payment to any Plan or Multiemployer Plan or in respect of any
Benefit Arrangement, or made any amendment to any Plan or Benefit Arrangement,
which has resulted or could result in the imposition of a Lien or the posting of
a bond or other security under ERISA or the Code or (iii) incurred any liability
under Title IV of ERISA other than a liability to the PBGC for premiums under
Section 4007 of ERISA.
(b) The benefit plans not covered under clause (a) above (including
profit sharing, deferred compensation, stock option, employee stock purchase,
bonus, retirement, health or insurance plans, collectively the "Benefit Plans")
relating to the employees of the Company are duly registered where required by,
and are in good standing in all material respects under, all applicable laws.
All required employer and employee contributions and premiums under the Benefit
Plans to the date hereof have been made, the respective fund or funds
established under the Benefit Plans are funded in accordance with applicable
laws, and no past service funding liabilities exist thereunder.
(c) No Benefit Plans have any unfunded liabilities, either on a "going
concern" or "winding up" basis and determined in accordance with all applicable
laws and actuarial practices and using actuarial assumptions and methods that
are reasonable in the circumstances. No event has occurred and no condition
exists with respect to any Benefit Plans that has resulted or could reasonably
be expected to result in any pension plan having its registration revoked or
wound up (in whole or in part) or refused for the purposes of any applicable
laws or being placed under the administration of any relevant pension benefits
regulatory authority or being required to pay any taxes or penalties (in any
material amounts) under any applicable laws.
4.10 ENVIRONMENTAL MATTERS. The costs and liabilities associated with
Environmental Laws (including the cost of compliance therewith) are unlikely to
have a Material Adverse Effect. Each of the Company and the Subsidiaries
conducts its businesses in compliance in all material respects with all
applicable Environmental Laws.
4.11 TAXES. All United States federal, state, county, municipal, local or
foreign income tax returns and all other material tax returns (including foreign
tax returns) which are required to be filed by or on behalf of the Company and
each Subsidiary have been filed and all material taxes due pursuant to
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such returns or pursuant to any assessment received by the Company and each
Subsidiary have been paid except those being disputed in good faith and for
which adequate reserves have been established. The charges, accruals and
reserves on the books of the Company and each Subsidiary in respect of taxes or
other governmental charges have been established in accordance with GAAP.
4.12 INVESTMENTS, JOINT VENTURES. Except set forth on SCHEDULE 4.12, the
Company has no Significant Subsidiaries or other direct or indirect Investment
in any Person, and the Company is not a party to any partnership, management,
shareholders' or joint venture or similar agreement, other than as set forth in
the SEC Reports.
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4.13 NOT AN INVESTMENT COMPANY. Neither the Company nor any Subsidiary is
an "investment company" within the meaning of the Investment Company Act of
1940, as amended.
4.14 NO SOLICITATION; NO INTEGRATION WITH OTHER OFFERINGS. No form of
general solicitation or general advertising was used by the Company or, to the
best of its actual knowledge, any other Person acting on behalf of the Company,
in connection with the offer and sale of the Securities. Neither the Company,
nor, to its knowledge, any Person acting on behalf of the Company, has, either
directly or indirectly, sold or offered for sale to any Person (other than the
Purchaser) any of the Securities or, within the six months prior to the date
hereof, any other similar security of the Company except as contemplated by this
Agreement, and the Company represents that neither itself nor any Person
authorized to act on its behalf (except that the Company makes no representation
as to the Purchaser and its Affiliates) will sell or offer for sale any such
security to, or solicit any offers to buy any such security from, or otherwise
approach or negotiate in respect thereof with, any Person or Persons so as
thereby to cause the issuance or sale of any of the Securities to be in
violation of any of the provisions of Section 5 of the Securities Act. The
issuance of the Securities to the Purchaser will not be integrated with any
other issuance of the Company's securities (past, current or future) which
requires stockholder approval under the rules of the Nasdaq Market.
4.15 PERMITS. Each of the Company and its Subsidiaries has all material
Permits; (b) all such Permits are in full force and effect, and each of the
Company and its Subsidiaries has fulfilled and performed all material
obligations with respect to such Permits; and (c) no event has occurred which
allows, or after notice or lapse of time would allow, revocation or termination
by the issuer thereof or which results in any other material impairment of the
rights of the holder of any such Permit.
4.16 LEASES. Except as disclosed in the SEC Reports, neither the Company nor
any Subsidiary is a party to any capital lease obligation with a value greater
than $100,000 or to any operating lease with an aggregate annual rental greater
than $100,000 during the life of such lease.
4.17 PUBLIC UTILITY HOLDING COMPANY. Neither the Company nor any Subsidiary
is, or will be upon the issuance and sale of the Securities and the use of the
proceeds described herein, subject to regulation under the Public Utility
Holding Company Act of 1935, as amended, the Federal Power Act, the Interstate
Commerce Act or to any federal or state statute or regulation limiting its
ability to issue and perform its obligations under any Transaction Agreement.
4.18 INTELLECTUAL PROPERTY RIGHTS.
(a) Except as set forth on SCHEDULE 4.18 attached hereto, each of the
Company and its Subsidiaries owns, or is licensed under, and has the rights to
use, as applicable, all of the patents, trademarks, tradenames, service marks,
service names, trade secrets, protected computer software (including, without
limitation, any source or object codes therefor or documentation relating
thereto) and copyright registrations, and applications therefor, including all
Internet domain names registered with any third party, technology rights and
licenses, franchises, know-how, processes, inventions and intellectual property
rights necessary for and material to the conduct of its business (collectively,
"Material Intellectual Property").
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(b) SCHEDULE 4.18 contains a true and complete list of all Material
Intellectual Property, therefor owned by or licensed to the Company or its
Subsidiaries on the date hereof, including all Internet domain names registered
with any third party. Except as set forth in SCHEDULE 4.18, the Company or its
Subsidiaries owns, or is a valid licensee of all Material Intellectual Property
used in its business as currently conducted. Neither the Company, its
Subsidiaries or, to the Company's and its Subsidiaries' knowledge, its
predecessors has materially interfered with or misappropriated the intellectual
property of others, and none of the Material Intellectual Property as used in
the business conducted by such entity infringes in any material manner upon or
otherwise violates the intellectual property of others, nor to the Company's and
its Subsidiaries' knowledge with respect to predecessors, has any person
asserted a claim of such material infringement or violation of intellectual
property against any such entity. Except as set forth on SCHEDULE 4.18, neither
the Company nor its Subsidiaries has licensed or sublicensed its rights in any
Material Intellectual Property, except non-exclusive licenses in the ordinary
course of business, forms of which license agreements and a list of which
licensees, the Company has delivered or made available to the Purchaser.
(c) To the Company's and its Subsidiaries' knowledge, except as
described on SCHEDULE 4.18 or disclosed in the SEC Reports, no officer, director
or employee of the Company or its Subsidiaries has entered into any contract
other than on behalf of the Company or such Subsidiary and with the Company's
authorization, which requires such officer, director or employee to assign any
interest in any Material Intellectual Property.
(d) The Material Intellectual Property owned or licensed by the Company
or its Subsidiaries is sufficient to continue to operate the business as
conducted on the date hereof.
(e) Except as set forth on SCHEDULE 4.18, there are no settlements,
forbearances to sue, consents, judgments, or orders of which the Company or a
Subsidiary is a party or of which it is aware and which (i) restrict the
Company's or a Subsidiary's rights to use any Material Intellectual Property
owned by or licensed to the Company or such Subsidiary or (ii) permit third
parties to use any Material Intellectual Property.
(f) Except as set forth in Section 12 hereof or on SCHEDULE 4.18, the
consummation of the transactions contemplated hereby will not result in the
material loss or impairment of Company's or a Subsidiary's right to own or use
any of the Material Intellectual Property, nor will require the consent of any
government authority or third party in respect of such Material Intellectual
Property.
4.19 INSURANCE. The Company and its Subsidiaries maintain insurance in at
least such amounts and cover such risks such that any uninsured loss would not
have a Material Adverse Effect. All insurance coverages of the Company and its
Subsidiaries are in full force and effect and there are no past due premiums in
respect of any such insurance.
4.20 TITLE TO PROPERTIES. The Company and its Subsidiaries have good and
marketable title to all their respective properties reflected on the financial
statements referred to in Section 4.7 as being owned by the Company.
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4.21 INTERNAL ACCOUNTING CONTROLS. The Company and each of its Subsidiaries
maintain a system of internal accounting controls sufficient, in the judgment of
the Company's Board of Directors, to provide reasonable assurance that (i)
transactions are executed in accordance with management's general or specific
authorizations, (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with GAAP, (iii) access to
assets is permitted only in accordance with management's general or specific
authorization and (iv) the recorded accountability for assets is compared with
the existing assets at reasonable intervals and appropriate action is taken with
respect to any differences, where non-compliance therewith could not reasonably
be expected, in the aggregate, to have a Material Adverse Effect.
4.22 STANDSTILL. The Company shall comply with the terms and provisions of
Section 8.3 and has no intention of violating the terms and provisions of such
Section.
5. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
Purchaser hereby represents and warrants to the Company that:
5.1 Authorization and Execution.
(a) The execution, delivery and performance of the Transaction
Agreements, to the extent the Purchaser has executed such agreements and the
purchase of the Securities pursuant hereto are within the Purchaser's corporate
powers, and have been duly and validly authorized by all requisite corporate
action;
(b) The Transaction Agreements have been duly executed and delivered
by the Purchaser.
(c) The execution and delivery by the Purchaser of the Transaction
Agreements to which it is a party does not, and the consummation of the
transactions contemplated hereby and thereby will not, contravene or constitute
a default under or violation of (i) any provision of applicable law or
regulation, or (ii) any agreement, judgment, injunction, order, decree or other
instrument binding upon Purchaser.
5.2 ACQUISITION FOR INVESTMENT. The Purchaser is acquiring the Convertible
Note and the Warrants, and will acquire the Conversion Shares and the Warrant
Shares, for its own account for investment and not with a view towards the
public sale or distribution thereof within the meaning of the Securities Act;
and the Purchaser has no intention of making any distribution, within the
meaning of the Securities Act, of the Securities except in compliance with the
registration requirements of the Securities Act or pursuant to an exemption
therefrom; PROVIDED, however, that by making this representation the Purchaser
does not agree to hold the securities for any minimum or specified period of
time (unless any such holding period is required by the terms of any such
exemption being relied on by the Purchaser); and PROVIDED that the disposition
of the Purchaser's property shall at all times be and remain within its control.
5.3 ACCREDITED INVESTOR. The Purchaser is an "accredited investor" as
that term is defined in Rule 501 of Regulation D under the Securities Act by
reason of Rule 501(a)(3) thereof;
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5.4 REOFFERS AND RESALES. The Purchaser will not, directly or indirectly,
offer, sell, pledge, transfer or otherwise dispose of (or solicit any offers to
buy, purchase or otherwise acquire or take a pledge of) any of the Securities
unless registered under the Securities Act, pursuant to an exemption from
registration under the Securities Act or in a transaction not requiring
registration under the Securities Act;
5.5 COMPANY RELIANCE. The Purchaser understands that (a) the Convertible
Note is being offered and sold and the Warrants are being issued to the
Purchaser, (b) upon conversion of the Convertible Note, the Conversion Shares
will be issued to the Purchaser, (c) upon exercise of the Warrants, the Warrant
Shares will be issued to the Purchaser, in each such case in reliance on one or
more exemptions from the registration requirements of the Securities Act,
including, without limitation, Regulation D, and exemptions from state
securities laws and that the Company is relying upon the truth and accuracy of,
and the Purchaser's compliance with, the representations, warranties,
agreements, acknowledgments and understandings of the Purchaser set forth herein
in order to determine the availability of such exemptions and the eligibility of
the Purchaser to acquire or receive an offer to acquire the Securities; and the
information with respect to the Purchaser provided to the Company by the
Purchaser is accurate and complete in all material respects;
5.6 INFORMATION PROVIDED. The Purchaser and its advisors, if any, have
requested, received and considered all information relating to the business,
properties, operations, condition (financial or other), results of operations or
prospects of the Company and information relating to the offer and sale of the
Convertible Note and issuance of the Warrants, and the offer of the Conversion
Shares and the Warrant Shares deemed relevant by them (assuming the accuracy and
completeness of the SEC Reports and of the Company's responses to the
Purchaser's requests); the Purchaser and its advisors, if any, have been
afforded the opportunity to ask questions of the Company concerning the terms of
the offering of the Securities and the business, properties, operations,
condition (financial or other), results of operations and prospects of the
Company and have received satisfactory answers to any such inquiries (assuming
the accuracy and completeness of the SEC Reports and the Company's responses to
the Purchaser's requests); without limiting the generality of the foregoing, the
Purchaser has had the opportunity to obtain and to review the SEC Reports and
the Schedules hereto in connection with its decision to purchase the Convertible
Note and to acquire the Warrants, the Purchaser has relied solely upon the SEC
Reports, the Schedules hereto, the representations, warranties, covenants and
agreements of the Company set forth in this Agreement and to be contained in the
other Transaction Documents, as well as any independent investigation of the
Company completed by the Purchaser or its advisors, if any, and is not relying
on any oral representation, statement or promise of any employee or agent of the
Company; the Purchaser understands that its investment in the Securities
involves a high degree of risk.
5.7 ABSENCE OF APPROVALS. The Purchaser understands that no United States
federal or state agency or any other government or governmental agency has
passed on or made any recommendation or endorsement of the Securities;
5.8 PURCHASER STATUS. The Purchaser is not a "broker" or "dealer" as those
terms are defined in the Exchange Act which is required to be registered with
the SEC pursuant to Section 15 of the Exchange Act.
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5.9 STANDSTILL. The Purchaser shall comply with the terms and provisions of
Section 8.3 and has no intention of violating the terms and provisions of such
Section.
6. CONDITIONS PRECEDENT TO PURCHASE OF SECURITIES
6.1 CONDITIONS PRECEDENT TO THE PURCHASER'S OBLIGATION TO PURCHASE. The
obligation of the Purchaser to purchase the Convertible Note and Warrants at the
Closing is subject to the satisfaction, on or before the Closing Date of each of
the following conditions, PROVIDED that these conditions are for Purchaser's
sole benefit and may be waived by Purchaser at any time in its sole discretion:
(a) The Company shall have executed and delivered to the Purchaser
the Transaction Agreements;
(b) The Company shall have delivered to the Purchaser duly executed
certificates representing the Convertible Note and the Warrants in accordance
with Section 2.3 hereof;
(c) The Company shall have delivered the Solvency Certificate;
(d) The representations and warranties of the Company contained in
each Transaction Agreement shall be true and correct in all material respects as
of the date when made and as of the Closing Date as though made at such time
(except for representations and warranties that speak as of a specified date)
and the Company shall have performed, satisfied and complied in all material
respects with all covenants, agreements and conditions required by such
Transaction Agreements to be performed, satisfied or complied with by it at or
prior to the Closing Date. The Purchaser shall have received an Officer's
Certificate, executed by the chief executive officer of the Company, dated as of
the Closing Date, to the foregoing effect and as to such other matters as may be
reasonably requested by the Purchaser;
(e) The Company shall have received all governmental, board of
directors, shareholders and third party consents and approvals necessary in
connection with the issuance and sale of the Securities;
(f) All applicable waiting periods in respect to the issuance and
sale of the Securities shall have expired without any action having been taken
by any competent authority that could restrain, prevent or impose any materially
adverse conditions thereon or that could seek or threaten any of the foregoing;
(g) The Purchaser shall have received an opinion, dated the Closing
Date, of O'Sullivan Graev & Karabell LLP, counsel to the Company, in a form
acceptable to the Purchaser, as to certain matters relating to the Company and
the transactions contemplated by this Agreement;
(h) All fees and expenses due and payable by the Company on or prior
to the Closing Date shall have been paid;
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(i) The Company Corporate Documents and the Subsidiary Corporate
Documents, if any, shall be in full force and effect and no term or condition
thereof shall have been amended, waived or otherwise modified without the prior
written consent of the Purchaser;
(j) There shall exist no action, suit, investigation, litigation or
proceeding pending or threatened in any court or before any arbitrator or
governmental instrumentality that challenges the validity of or purports to
affect this Agreement or any other Transaction Agreement, or other transaction
contemplated hereby or thereby or that could reasonably be expected to have a
Material Adverse Effect, or any material adverse effect on the enforceability of
the Transaction Agreements or the Securities or the rights of the Purchaser;
(k) The Purchaser shall have confirmed receipt of the Convertible
Note and the Warrants to be issued, duly executed by the Company;
(l) Immediately before and after the Closing Date, no Default or
Event of Default shall have occurred and be continuing; and
(m) The Purchaser shall have received all other opinions,
resolutions, certificates, instruments, agreements or other documents as it
shall reasonably request.
6.2 CONDITIONS TO THE COMPANY'S OBLIGATIONS. The obligations of the Company
to issue and sell the Securities to the Purchaser pursuant to this Agreement are
subject to the satisfaction, at or prior to the Closing Date, of the following
conditions:
(a) The representations and warranties of the Purchaser contained
herein shall be true and correct in all material respects on the Closing Date
and the Purchaser shall have performed and complied in all material respects
with all agreements required by this Agreement to be performed or complied with
by the Purchaser at or prior to the Closing Date;
(b) The issue and sale of the Securities by the Company shall not be
prohibited by any applicable law, court order or governmental regulation;
(c) Receipt by the Company of duly executed counterparts of the
Transaction Agreements signed by the Purchaser; and
(d) The Company shall have received payment of the Purchase Price of
the Convertible Note.
7. AFFIRMATIVE COVENANTS
The Company hereby agrees that, from and after the date hereof for so
long as the Convertible Note remains outstanding (except for Sections 7.1(a),
7.8, 7.9, 7.10 and 7.11, which shall apply for so long as the Convertible Note
or Warrants remain outstanding) and for the benefit of the Purchaser:
7.1 INFORMATION. The Company will deliver to each holder of the Convertible
Note:
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(a) promptly upon the filing thereof, copies of (i) all registration
statements (other than the exhibits thereto and any registration statements on
Form S-8 or its equivalent), (ii) all reports on Forms 10-K, 10-Q and 8-K (or
their equivalents) which the Company or any Subsidiary has filed with the SEC
and (iii) any material press releases issued by the Company or any Subsidiary;
(b) within five Business Days after the Company's Chief Executive
Officer or Chief Financial Officer obtains knowledge of a Default or Event of
Default , a certificate of the chief financial officer of the Company setting
forth the details thereof and the action which the Company is taking or proposes
to take with respect thereto;
(c) promptly upon the mailing thereof to the shareholders of the
Company generally, copies of all financial statements, reports and proxy
statements so mailed and any other document generally distributed to
shareholders;
(d) if and when any member of the ERISA Group (i) gives or is
required to give notice to the PBGC of any "reportable event" (as defined in
Section 4043 of ERISA) with respect to any Plan which might constitute grounds
for a termination of such Plan under Title IV of ERISA, or knows that the plan
administrator of any Plan has given or is required to give notice of any such
reportable event, a copy of the notice of such reportable event given or
required to be given to the PBGC; (ii) receives notice of complete or partial
withdrawal liability under Title IV of ERISA or notice that any Multiemployer
Plan is in reorganization, is insolvent or has been terminated, a copy of such
notice; (iii) receives notice from the PBGC under Title IV of ERISA of an intent
to terminate, impose liability (other than for premiums under Section 4007 of
ERISA) in respect of, or appoint a trustee to administer any Plan, a copy of
such notice; (iv) applies for a waiver of the minimum funding standard under
Section 412 of the Code, a copy of such application; (v) gives notice of intent
to terminate any Plan under Section 4041(c) of ERISA, a copy of such notice and
other information filed with the PBGC; (vi) gives notice of withdrawal from any
Plan pursuant to Section 4063 of ERISA, a copy of such notice; or (vii) fails to
make any required payment or contribution to any Plan or Multiemployer Plan or
in respect of any Benefit Arrangement or makes any amendment to any Plan or
Benefit Arrangement which has resulted or could result in the imposition of a
Lien or the posting of a bond or other security, a certificate of the chief
financial officer or the chief accounting officer of the Company setting forth
details as to such occurrence and action, if any, which the Company or
applicable member of the ERISA Group is required or proposes to take; and
(e) promptly following the commencement thereof, notice and a
description in reasonable detail of any material litigation or proceeding to
which the Company or any Subsidiary is a party which the Company is required to
disclose in its SEC Reports.
7.2 PAYMENT OF OBLIGATIONS. The Company and its Subsidiaries will pay and
discharge, at or before maturity, all their respective material obligations,
including, without limitation, tax liabilities, except where the same may be
contested in good faith by appropriate proceedings and will maintain, in
accordance with GAAP, appropriate reserves for the accrual of any of the same.
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7.3 MAINTENANCE OF PROPERTY; INSURANCE. The Company and each Subsidiary
will keep, all property useful and reasonably necessary in its business in good
working order and condition, ordinary wear and tear excepted. In addition, the
Company and each Subsidiary will maintain insurance in at least such amounts and
against such risks as it has insured against as of the Closing Date.
7.4 MAINTENANCE OF EXISTENCE. The Company will continue to engage in
business of the same general type as now conducted by the Company, and will
preserve, renew and keep in full force and effect its respective corporate
existence and their respective material rights, privileges and franchises
necessary or desirable in the normal conduct of business except as permitted
pursuant to Section 8.5.
7.5 COMPLIANCE WITH LAWS. The Company and each Subsidiary will comply, in
all material respects, with all federal, state, municipal, local or foreign
applicable laws, ordinances, rules, regulations, municipal by-laws, codes and
requirements of governmental authorities (including, without limitation,
Environmental Laws and ERISA and the rules and regulations thereunder) except
(i) where compliance therewith is contested in good faith by appropriate
proceedings or (ii) where non-compliance therewith could not reasonably be
expected, in the aggregate, to have a Material Adverse Effect.
7.6 INSPECTION OF PROPERTY, BOOKS AND RECORDS. The Company and each
Subsidiary will keep proper books of record and account in accordance with GAAP;
and will permit, during normal business hours upon reasonable notice, the
Purchaser or an Affiliate thereof, as representatives of the Purchaser, to visit
and inspect any of their respective properties, upon reasonable prior notice, to
examine and make abstracts from any of their respective books and records and to
discuss their respective affairs, finances and accounts with their respective
executive officers and independent public accountants, all at such reasonable
times at Purchaser's expense. The Purchaser and any such Affiliate shall
maintain the confidentiality of any information of the Company disclosed to it.
7.7 INVESTMENT COMPANY ACT. The Company will not be or become an open-end
investment trust, unit investment trust or face-amount certificate company that
is or is required to be registered under Section 8 of the Investment Company Act
of 1940, as amended.
7.8 SUPPLEMENTAL INFORMATION. If at any time the Company is not subject to
the requirements of Section 13 or 15(d) of the Exchange Act, the Company will
promptly furnish at its expense, upon request, for the benefit of the holders
from time to time of Securities, and prospective purchasers of Securities,
information satisfying the information requirements of Rule 144 under the
Securities Act.
7.9 RESERVED SHARES AND LISTINGS.
(a) The Purchaser acknowledges that the Company does not presently
have sufficient authorized but unissued shares of Common Stock to deliver to the
Purchaser upon exercise of the Warrants and conversion of the Convertible Notes.
No later than July 14, 2000, the Company shall have taken all action necessary,
including, without limitation, calling a meeting of shareholders to amend its
certificate of incorporation to authorize a sufficient number of shares to
enable the Company to issue the Maximum Number of Shares plus the shares
issuable upon exercise of the Warrant;
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(b) Subject to Section 7.9(a), the Company shall at all times have
authorized, and reserved for the purpose of issuance, a sufficient number of
shares of Common Stock to provide for the full conversion of the outstanding
Convertible Note and issuance of the Conversion Shares (based on the Maximum
Number of Shares under the Convertible Note), and the exercise in full of the
Warrants and the issuance of the Warrant Shares (based on the exercise price of
the Warrants in effect from time to time). The Company shall not reduce the
number of shares of Common Stock reserved for issuance upon conversion of the
Convertible Note and exercise of the Warrants without the prior written consent
of the Purchaser.
(c) The Company shall promptly secure the listing of the Conversion
Shares and Warrant Shares upon each national securities exchange or automated
quotation system, if any, upon which the shares of Common Stock are then listed
(subject to official notice of issuance) and shall maintain, so long as any
other shares of Common Stock shall be so listed, such listing of all Conversion
Shares and Warrant Shares from time to time issuable upon conversion or exercise
of the Convertible Note and Warrants. The Company will obtain and maintain the
listing and trading of its Common Stock on the Nasdaq Market, the Nasdaq
SmallCap Market, the New York Stock Exchange, Inc., or the American Stock
Exchange Inc., and will comply in all respects with the Company's reporting,
filing and other obligations under the bylaws or rules of the National
Association of Securities Dealers, Inc. (the "NASD") and such exchanges, as
applicable. The Company shall promptly provide to the Purchaser copies of any
notices it receives from Nasdaq regarding the continued eligibility of the
Common Stock for listing on the Nasdaq Market.
(d) On or prior to the date that the SEC declares effective the
Required Registration Statement, the Company shall properly file all Listing
Applications with the Nasdaq Market associated with the shares of Common Stock
covered by such registration statement.
7.10 ISSUANCE OF SHARES OF COMMON STOCK. Upon receipt of a Notice of
Conversion or Notice of Exercise, as applicable, the Company shall immediately
issue irrevocable instructions to its transfer agent to issue certificates,
registered in the name of the Purchaser or its nominee, for the Conversion
Shares or Warrant Shares, as applicable, in such amounts as specified from time
to time by the Purchaser to the Company upon proper conversion of the
Convertible Note or exercise of the Warrants. Upon conversion of the Convertible
Note in accordance with its terms, and/or exercise of the Warrants in accordance
with their terms, the Company will, and will use its best lawful efforts to
cause its transfer agent to, issue one or more certificates representing shares
of Common Stock in such name or names and in such denominations specified by
Purchaser in a Notice of Conversion or Notice of Exercise, as the case may be.
As long as a Required Registration Statement contemplated by the Registration
Rights Agreement shall remain effective, the shares of Common Stock issuable
upon conversion of Convertible Note or exercise of the Warrants, if transferred
pursuant to such Required Registration Statement, shall be issued to any
transferee of such shares from Purchaser without any restrictive legend. Nothing
in this Section 7.12 shall affect in any way Purchaser's obligations to comply
with all securities laws applicable to Purchaser upon resale of such shares of
Common Stock, including any prospectus delivery requirements.
7.11 FORM D; BLUE SKY LAWS. The Company agrees to file a "Form D" with
respect to the Securities as required under Regulation D of the Securities Act
and to provide a copy thereof to the
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Purchaser promptly after such filing. The Company shall, on or before the
Closing Date, take such action as the Company shall reasonable determine is
necessary to qualify the Securities for sale to the Purchaser at the Closing
pursuant to this Agreement under applicable securities or "blue sky" laws of the
states of the United States (or to obtain an exemption from such qualification),
and shall provide evidence of any such action so taken to the Purchaser on or
prior to the Closing Date.
8. NEGATIVE COVENANTS
The Company or the Purchaser, as the case may be, hereby agrees that,
from and after the date hereof for so long as the Convertible Note remains
outstanding and for the benefit of the other party:
8.1 LIMITATION ON DEBT OR OTHER LIABILITIES. The Company will not itself,
and will not permit any Subsidiary to, create, assume, incur or in any manner
become liable in respect of, including, without limitation, by reason of any
business combination transaction (all of which are referred to herein as
"incurring"), any Debt; PROVIDED that the following items of Debt shall be
excluded from such calculation (such Debt being referred to as "Permitted
Debt"):
(a) Debt not in excess of $1,000,000 aggregate principal amount
which is outstanding on the date hereof and which would be reflected on a
consolidated balance sheet of the Company as of the date hereof prepared in
accordance with GAAP;
(b) Non-recourse Debt not in excess of $1,000,000 aggregate
principal amount which Debt, by its terms, bars the lender thereof from action
against the Company or any Subsidiary, as borrower, if the security value falls
below the amount required to repay such Debt;
(c) Debt not in excess of $2,000,000 aggregate principal amount
incurred in connection with equipment leases to which the Company or its
Subsidiaries are a party incurred in the ordinary course of business; and
(d) Debt not in excess of $5,000,000 aggregate principal amount
incurred in connection with trade accounts payable, imbalances and refunds
arising in the ordinary course of business.
(e) Debt which is subordinated to this Convertible Note as to
payment on the Subordination Terms set forth in EXHIBIT E or on such other terms
as shall have been approved in advance of the incurrence of such Debt by the
Purchaser as evidenced by the written approval of the Purchaser given prior to
the incurrence of such Debt and for which no payment of principal of such Debt
is scheduled to be due prior to the date that is six months after the Maturity
Date; so long as in the case of Debt permitted by the preceding clauses (b)
through (e), at the time of incurrence of such Debt no Event of Default has
occurred and is continuing or would result from such incurrence and no event
which, with notice or passage of time, or both, would become an Event of Default
has occurred and is continuing or would result from such incurrence.
8.2 EXCLUSIVITY. For a period of thirty (30) days from March 17, 2000 (the
"Exclusivity Period"), the Company will not, and will not permit its officers,
directors, employees, agents or
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representatives to enter into or participate in material discussions with any
third party other than the Purchaser and its Affiliates concerning (i) the
possible acquisition or sale of the Company or of substantially all of its stock
or assets, including its technology; or (ii) an agreement to loan One Million
Dollars ($1,000,000) or more to the Company or similar financing arrangement. If
the Company breaches this provision, the Company shall pay Purchaser, as
liquidated damages, the sum of Two Million Dollars ($2,000,000) without the
necessity of proof by the Company of actual damages (the "Liquidated Damages
Amount"). The parties acknowledge that the Liquidated Damages Amount is a fair
and reasonable measure of the damages that the Purchaser would sustain as a
result of the breach of this provision, and that the amount of actual damages in
the event of such breach would be impossible to ascertain. The parties
acknowledge and agree that, in addition to all other remedies available (at law
or otherwise) to Purchaser, Purchaser shall be entitled to equitable relief
(including injunction and specific performance) as a remedy for any breach or
threatened breach of this provision.
8.3 STANDSTILL. For a period of two years after the Closing, the Company
and the Purchaser shall not and shall cause their Affiliates to refrain from,
directly or indirectly, alone or in concert with others, acquiring, offering to
acquire (by purchase, gift or otherwise) or selling short the securities of the
other party hereto, or otherwise in any manner seeking to depress the price of
the securities of the other party hereto through trading in the securities of
such party or derivatives of such securities.
8.4 TRANSACTIONS WITH AFFILIATES. The Company and each Subsidiary will not,
directly or indirectly, pay any funds to or for the account of, make any
investment in (whether by acquisition of stock or indebtedness, by loan,
advance, transfer of property, guarantee or other agreement to pay, purchase or
service, directly or indirectly, any Debt, or otherwise), lease, sell, transfer
or otherwise dispose of any assets, tangible or intangible, to, or participate
in, or effect any transaction in connection with any joint enterprise or other
joint arrangement with, any Affiliate, except, (i) pursuant to those agreements
specifically identified on SCHEDULE 8.4 attached hereto (with a copy of such
agreements annexed to such SCHEDULE 8.4) (ii) on terms to the Company or such
Subsidiary no less favorable than terms that could be obtained by the Company or
such Subsidiary from a Person that is not an Affiliate of the Company upon
negotiation at arms' length, as determined in good faith by the Board of
Directors of the Company or (iii) with and among the Company and its
Subsidiaries; PROVIDED that no determination of the Board of Directors shall be
required with respect to any such transactions entered into in the ordinary
course of business.
8.5 MERGER OR CONSOLIDATION. The Company will not, in a single transaction
or a series of related transactions, (i) consolidate with or merge with or into
any other Person, or (ii) permit any other Person to consolidate with or merge
into it, unless (w) either (A) the Company shall be the survivor of such merger
or consolidation or (B) the surviving Person shall expressly assume by
supplemental agreement all of the obligations of the Company under the
Securities and this Agreement; (x) immediately before and immediately after
giving effect to such transaction (including any indebtedness incurred or
anticipated to be incurred in connection with the transaction), no Default or
Event of Default shall have occurred and be continuing; (y) if the Company is
not the surviving entity, such surviving entity's common shares shall be listed
on either The New York Stock Exchange, American Stock Exchange, or the Nasdaq
Stock Market's National Market or the Nasdaq Small Cap Market and (z) the
Company has delivered to the Purchaser an officers' certificate stating
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that such consolidation, merger or transfer complies with this Agreement, that
the surviving Person agrees to be bound by all of the agreements and covenants
set forth in the Transaction Agreements as if such surviving Person is the
Company, and that all conditions precedent in this Agreement relating to such
transaction have been satisfied.
8.6 RESTRICTIONS ON CERTAIN AMENDMENTS. Neither the Company nor any
Subsidiary will waive any provision of, amend, or suffer to be amended, any
provision of such entity's existing indebtedness, any Company Corporate Document
or Subsidiary Corporate Document if such amendment, in the Company's reasonable
judgment, would materially adversely affect the Purchaser without the prior
written consent of the Purchaser, which such consent shall not be unreasonably
withheld.
8.7 LIMITATION ON ASSET SALES. Neither the Company nor any Subsidiary will
consummate an Asset Sale unless (a) it receives consideration in cash at the
time of such Asset Sale at least equal to the fair market value of the assets
sold or otherwise disposed of (as determined in good faith by the Company's
Board of Directors) and (b) the Net Cash Proceeds of such sale are used either
(i) to purchase similar assets in the same line of business of equivalent value
within twelve (12) months of the date of the Asset Sale or (ii) to immediately
redeem or prepay the Convertible Note or (iii) for a combination of purchases
and prepayment permitted by the foregoing clauses (i) and (ii). As used herein,
"Asset Sale" means any sale, lease, transfer or other disposition (or series of
related sales, leases, transfers or dispositions) of shares of capital stock of
a Subsidiary (other than directors' qualifying shares), property or other assets
(each referred to for the purposes of this definition as a "disposition"),
including any disposition by means of a merger, consolidation or similar
transaction (other than as permitted under Section 8.5), other than a
disposition of property or assets in the ordinary course of business.
8.8 LIMITATION ON SUBSIDIARIES. Neither the Company nor any Subsidiary
shall permit the creation of any Subsidiaries in which the Company, directly or
indirectly, does not own at least a majority of the outstanding equity
interests, unless approved by the Purchaser, which such consent shall not be
unreasonably withheld.
8.9 LIMITATION ON STOCK REPURCHASES. So long as the Convertible Note is
outstanding, the Company shall not, without the prior written consent of the
Purchaser, redeem, repurchase or otherwise acquire (whether for cash or in
exchange for property or other securities or otherwise) in any rolling twelve
(12) month period more than five percent (5%) of the shares of capital stock of
the Company or any warrants, rights or options to purchase or acquire any such
shares held by persons others than the Purchaser.
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9. LIMITATION ON TRANSFERS
9.1 RESTRICTIONS ON TRANSFER. From and after their respective dates of
issuance, none of the Securities shall be transferable except upon the
conditions specified in this Section 9, which conditions are intended to ensure
compliance with the provisions of the Securities Act in respect of the Transfer
of any of such Securities or any interest therein. Purchaser will use its best
efforts to cause any proposed transferee of any Securities held by it to agree
to take and hold such Securities subject to the provisions and upon the
conditions specified in this Section 9.
9.2 RESTRICTIVE LEGENDS.
(a) Each certificate for Securities issued to Purchaser or to a
subsequent transferee shall (except as contemplated by Section 7.12 and Section
9.1 hereof) include a legend in substantially the following form:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT"). THE HOLDER HEREOF, BY PURCHASING SUCH
SECURITIES, AGREES FOR THE BENEFIT OF THE CORPORATION THAT
SUCH SECURITIES MAY BE OFFERED, SOLD OR OTHERWISE TRANSFERRED
ONLY (A) TO THE CORPORATION, (B) PURSUANT TO THE EXEMPTION
FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE
144 THEREUNDER, IF AVAILABLE, OR (C) IF REGISTERED UNDER THE
SECURITIES ACT.
9.3 NOTICE OF PROPOSED TRANSFERS. Prior to any proposed Transfer of the
Securities other than a transfer (i) registered under the Securities Act, (ii)
to an affiliate of Purchaser which is an "accredited investor" within the
meaning of Rule 501(a) under the Securities Act, PROVIDED that any such
transferee shall agree to be bound by the terms of this Agreement, and (iii) to
be made in reliance on Rule 144 under the Securities Act, the holder thereof
shall give written notice to the Company of such holder's intention to effect
such Transfer, setting forth the manner and circumstances of the proposed
Transfer, which shall be accompanied by (A) an opinion of counsel to the
Company, confirming that such transfer does not give rise to a violation of the
Securities Act, (B) representation letters in form and substance reasonably
satisfactory to the Company to ensure compliance with the provisions of the
Securities Act and (C) letters in form and substance reasonably satisfactory to
the Company from each such transferee stating such transferee's agreement to be
bound by the terms of this Agreement and the Registration Rights Agreement. Such
proposed Transfer may be effected only if the Company shall have received such
notice of transfer, opinion of counsel, representation letters and other letters
referred to in the immediately preceding sentence, whereupon the holder of such
Securities shall be entitled to Transfer such Securities in accordance with the
terms of the notice delivered by the holder to the Company.
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10. ADDITIONAL AGREEMENTS AMONG THE PARTIES
10.1 LIQUIDATED DAMAGES.
(a) The Company shall, and shall use its best efforts to cause its
transfer agent to, issue and deliver shares of Common Stock within five (5)
trading days of delivery of a properly completed Notice of Conversion or Notice
of Exercise, as applicable (the "Deadline") to the Purchaser (or any party
receiving Securities by Transfer from Purchaser) at the address of the Purchaser
set forth in the Notice of Conversion or Notice of Exercise, as the case may be.
Consistent with Section 7.12 hereof, if such Notice of Conversion or Notice of
Exercise, as applicable, is delivered while a Required Registration Statement is
effective, such certificates shall be delivered without restrictive legend if
such shares are being transferred pursuant to such Required Registration
Statement. The Company understands that a delay in the issuance of such
certificates after the Deadline could result in economic loss to the Purchaser.
(b) Without in any way limiting the Purchaser's right to pursue
other remedies, including actual damages and/or equitable relief, the Company
agrees that if delivery of the Conversion Shares or Warrant Shares following
delivery of a properly completed Notice of Conversion or Notice of Exercise is
more than one (1) Business Day after the Deadline, the Company shall pay to the
Purchaser as liquidated damages and not a penalty $1,000 per day in cash, for
each of the first two (2) days beyond the Deadline and $2,500 per day in cash
for each day thereafter that the Company fails to deliver such Common Stock.
Such cash amount shall be paid to the Purchaser by the fifth day of the month
following the month in which it has accrued or, at the option of the Purchaser
(by written notice to the Company by the first day of the month following the
month in which it has accrued).
10.2 CONVERSION NOTICE. The Company agrees that, in addition to any other
remedies which may be available to the Purchaser, including, but not limited to,
the remedies available under Section 10.1, in the event the Company fails for
any reason (other than as a result of actions taken by Purchaser in breach of
this Agreement) to effect delivery to Purchaser of certificates as contemplated
by Section 10.1 representing the shares of Common Stock on or prior to the
Deadline after conversion of the Convertible Note, or certificates contemplated
by Section 10.1 after exercise of any Warrant, Purchaser will be entitled, if
prior to the delivery of such certificates, to revoke the Notice of Conversion
or Notice of Exercise, as applicable, by delivering a notice to such effect to
the Company whereupon the Company and the Purchaser shall each be restored to
their respective positions immediately prior to delivery of such Notice of
Conversion or Notice of Exercise.
10.3 DELIVERY OF SOURCE CODE. Within five (5) days of the Closing Date, the
Company shall deliver to the Purchaser in escrow, the Source Code and the
Commentary (each as defined in the License Agreement) for the software programs
entitled "Dr. Chart" and "@Rx," together will all necessary codes, keys and all
similar types of access information in order to access all such Source Code and
to customize, modify, and manipulate the related software programs. The
Purchaser shall deposit materials in a secure, environmentally safe, locked
facility which is accessible only to authorized representatives of the
Purchaser. The Purchaser shall have the obligation to use its best efforts to
protect and maintain the confidentiality of the deposit materials. The Purchaser
shall not
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disclose, transfer, make available, or use the deposit materials and shall not
disclose the contents of the deposit material to any third party or to any
unauthorized personnel. Upon the occurrence of an Event of Default which remains
uncured for a period of thirty (30) days, the Company shall grant to the
Purchaser a perpetual, non-exclusive, non-transferable, limited license to use
and copy "Dr. Chart" and "@Rx", in source code form, and to create derivative
works therefrom, thirty (30) days from such Event of Default if such Event of
Default remains uncured. The Purchaser will acknowledge and agree that such
license shall not commence unless and until such Event of Default occurs and
remains uncured for a period of thirty (30) days, and the Purchaser shall have
no right to use any source code unless and until the occurrence and continuance
of such Event of Default.
10.4 REGISTRATION RIGHTS; ADDITIONAL REGISTRATION STATEMENTS.
(a) The Company shall grant the Purchaser registration rights
covering the Conversion Shares and Warrant Shares (the "Registrable Securities")
on the terms set forth in the Registration Rights Agreement.
(b) At any time during the period ending on the first date that
follows a total of 90 days following the effectiveness of a Required
Registration Statement during which there has been no (i) Registration Default
relating to such Required Registration Statement or (ii) any other delay in the
ability of the Purchaser to sell the Common Stock pursuant to such Required
Registration Statement, the Company agrees that it will not cause any
registration statement (other than a Required Registration Statement or an
Issuer Registration Statement) to be declared effective by the SEC.
(c) At any time during the period beginning on the date Purchaser
demands registration pursuant to the Registration Rights Agreement and ending on
the date of the effectiveness of a Required Registration Statement filed
pursuant to such demand, the Company agrees that it will not file any
registration statement (other a Required Registration Statement or an Issuer
Registration Statement) without the written consent of the Purchaser.
(d) A "Registration Default" shall have occurred if
(i) a registration statement on which the Registrable Securities
are listed pursuant to the Registration Rights Agreement (a "Required
Registration Statement") is not declared effective by the SEC within 120 days of
the filing thereof (the "Required Effectiveness Date"); or
(ii) such effectiveness is not maintained for a continuous
period of at least 90 days (the "Registration Maintenance Period"), and provided
the Purchaser has not unreasonably delayed providing any information concerning
the Purchaser as selling shareholder as may be reasonably requested by the
Company for inclusion in such Required Registration Statement; or
(iii) the Company has filed or caused to be declared effective a
registration statement (other than a Required Registration Statement or an
Issuer Registration Statement) in breach of Sections 10.4(b) or (c).
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11. ADJUSTMENT OF FIXED PRICE
11.1 REORGANIZATION. The Conversion Price, and the Maximum Number of Shares
(collectively, the "Fixed Prices") shall be adjusted as hereafter provided.
11.2 SHARE REORGANIZATION. If and whenever the Company shall subdivide the
outstanding shares of Common Stock into a greater number of shares, consolidate
the outstanding shares of Common Stock into a smaller number of shares, issue
Common Stock or securities convertible into or exchangeable for shares of Common
Stock as a stock dividend to all or substantially all the holders of Common
Stock, or make a distribution on the outstanding Common Stock to all or
substantially all the holders of Common Stock payable in Common Stock or
securities convertible into or exchangeable for Common Stock, any of such events
being herein called a "Share Reorganization," then in each such case the
applicable Fixed Price shall be adjusted, effective immediately after the record
date at which the holders of Common Stock are determined for the purposes of the
Share Reorganization or, if no record date is fixed, the effective date of the
Share Reorganization, by multiplying the applicable Fixed Price in effect on
such record or effective date, as the case may be, by a fraction of which:
(a) the numerator shall be the number of shares of Common Stock
outstanding on such record or effective date (without giving effect to the
transaction); and
(b) the denominator shall be the number of shares of Common Stock
outstanding after giving effect to such Share Reorganization, including, in the
case of a distribution of securities convertible into or exchangeable for shares
of Common Stock, the number of shares of Common Stock that would have been
outstanding if such securities had been converted into or exchanged for Common
Stock on such record or effective date.
11.3 RIGHTS OFFERING. If and whenever the Company shall issue to all or
substantially all the holders of Common Stock, rights, options or warrants under
which such holders are entitled, during a period expiring not more than
forty-five (45) days after the record date of such issue, to subscribe for or
purchase Common Stock (or Derivative Securities), at a price per share (or, in
the case of Derivative Securities, at an exchange or conversion price per share
at the date of issue of such securities) of less than 95% of the Market Price of
the Common Stock on such record date (any such event being herein called a
"Rights Offering"), then in each such case the applicable Fixed Price shall be
adjusted, effective immediately after the record date at which holders of Common
Stock are determined for the purposes of the Rights Offering, by multiplying the
applicable Fixed Price in effect on such record date by a fraction of which:
(a) the numerator shall be the sum of the number of shares of Common
Stock outstanding on such record date, and a number obtained by dividing:
(i) either, (x) the product of the total number of shares of
Common Stock so offered for subscription or purchase and the price at which such
shares are so offered, or (y) the product of the maximum number of shares of
Common Stock into or for which the convertible or exchangeable securities so
offered for subscription or purchase may be converted or exchanged and the
conversion or exchange price of such securities, or, as the case may be, by
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(ii) the Market Price of the Common Stock on such record date; and
(b) the denominator shall be the sum of the number of shares of
Common Stock outstanding on such record date, and the number of shares of Common
Stock so offered for subscription or purchase (or, in the case of Derivative
Securities), the maximum number of shares of Common Stock for or into which the
securities so offered for subscription or purchase may be converted or
exchanged).
To the extent that such rights, options or warrants are not exercised prior to
the expiry time thereof, the applicable Fixed Price shall be readjusted
effective immediately after such expiry time to the applicable Fixed Price which
would then have been in effect upon the number of shares of Common Stock (or
Derivative Securities) actually delivered upon the exercise of such rights,
options or warrants.
11.4 SPECIAL DISTRIBUTION. If and whenever the Company shall issue or
distribute to all or substantially all the holders of Common Stock shares of the
Company of any class, other than Common Stock, rights, options or warrants, or
any other assets (excluding cash dividends and equivalent dividends in shares
paid in lieu of cash dividends in the ordinary course); and if such issuance or
distribution does not constitute a Share Reorganization or a Rights Offering
(any such event being herein called a "Special Distribution"), then in each such
case the applicable Fixed Price shall be adjusted, effective immediately after
the record date at which the holders of Common Stock are determined for purposes
of the Special Distribution, by multiplying the applicable Fixed Price in effect
on such record date by a fraction of which:
(a) the numerator shall be the difference between (i) the product of
the number of shares of Common Stock outstanding on such record date and the
Market Price of the Common Stock on such date; and (ii) the fair market value,
as determined by the Directors (whose determination shall be conclusive), to the
holders of Common Stock of the shares, rights, options, warrants, evidences of
indebtedness or other assets issued or distributed in the Special Distribution
(net of any consideration paid therefor by the holders of Common Stock), and
(b) the denominator shall be the product of the number of shares of
Common Stock outstanding on such record date and the Market Price of the Common
Stock on such date.
11.5 CAPITAL REORGANIZATION. If and whenever there shall occur a
reclassification or redesignation of the shares of Common Stock or any change of
the shares of Common Stock into other shares, other than in a Share
Reorganization, a consolidation, merger or amalgamation of the Company with, or
into another body corporate, or the transfer of all or substantially all of the
assets of the Company to another body corporate, (any such event being herein
called a "Capital Reorganization"), then in each such case the holder who
exercises the right to convert Convertible Note or exercise the Warrants after
the effective date of such Capital Reorganization shall be entitled to receive
and shall accept, upon the exercise of such right, in lieu of the number of
shares of Common Stock to which such holder was theretofore entitled upon the
exercise of the conversion privilege, the aggregate number of shares or other
securities or property of the Company or of the body corporate resulting from
such Capital Reorganization that such holder would have been entitled to receive
as a result of such Capital Reorganization if, on the effective date thereof,
such holders had been the holder of the
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number of shares of Common Stock to which such holder was theretofore entitled
upon conversion of the Convertible Note; PROVIDED, however, that no such Capital
Reorganization shall be consummated in effect unless all necessary steps shall
have been taken so that the holder of the Convertible Note shall thereafter be
entitled to receive such number of shares or other securities of the Company or
of the body corporate resulting from such Capital Reorganization, subject to
adjustment thereafter in accordance with provisions the same, as nearly as may
be possible, as those contained above.
11.6 ADJUSTMENT RULES. The following rules and procedures shall be
applicable to adjustments made in this Section 11:
(a) no adjustment in the applicable Fixed Price shall be required
unless such adjustment would result in a change of at least 1% in the applicable
Fixed Price then in effect; PROVIDED, however, that any adjustments which, but
for the provisions of this clause would otherwise have been required to be made,
shall be carried forward and taken into account in any subsequent adjustment;
(b) no adjustment in the applicable Fixed Price shall be made
pursuant to this Article 11 in respect of the issue from time to time of Common
Stock to holders of Common Stock who exercise an option to receive substantially
equivalent dividends in Common Stock in lieu of receiving cash dividends in the
ordinary course; and
(c) if a dispute shall at any time arise with respect to any
adjustment of the applicable Fixed Price, such dispute shall be conclusively
determined by the auditors of the Company or, if they are unable or unwilling to
act, by a firm of independent chartered accountants selected by the Directors of
the Company and any such determination shall be binding upon the Company and
Purchaser.
11.7 CERTIFICATE AS TO ADJUSTMENT. The Company shall from time to time
promptly after the occurrence of any event which requires an adjustment in the
applicable Fixed Price deliver to the Purchaser a certificate specifying the
nature of the event requiring the adjustment, the amount of the adjustment
necessitated thereby, the applicable Fixed Price after giving effect to such
adjustment and setting forth, in reasonable detail, the method of calculation
and the facts upon which such calculation is based.
11.8 NOTICE TO PURCHASER. If the Company shall fix a record date for: any
Share Reorganization (other than the subdivision of outstanding Common Stock
into a greater number of shares or the consolidation of outstanding Common Stock
into a smaller number of shares), any Rights Offering, any Special Distribution,
any Capital Reorganization (other than a reclassification or redesignation of
the Common Stock into other shares), or any cash dividend, the Company shall,
not less than 10 days prior to such record date or, if no record date is fixed,
prior to the effective date of such event, give to the Purchaser notice of the
particulars of the proposed event or the extent that such particulars have been
determined at the time of giving the notice.
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12. EVENTS OF DEFAULT
12.1 EVENTS OF DEFAULT. Each of the following events is an "Event of
Default" under this Agreement and the Transaction Agreements:
(a) failure by the Company to pay or prepay when due, all or any
part of the principal on the Convertible Note (whether by virtue of the
agreements specified in this Agreement or the Convertible Note) and the
continuance of such failure for thirty (30) days);
(b) failure by the Company or any of its Subsidiaries to pay or
prepay when due, all or any part of the principal on the Permitted Debt and the
continuance of such failure for thirty (30) days);
(c) failure by the Company to pay (i) within thirty (30) days of the
due date thereof any interest on the Convertible Note or (ii) within thirty (30)
days following the delivery of notice to the Company of any fees or any other
amount payable (not otherwise referred to in (a) above or this clause (b)) by
the Company under this Agreement;
(d) failure by the Company to timely comply with the requirements of
Section 10.1(a) or (b) hereof, which failure is not cured within thirty (30)
days of such failure;
(e) an event of default or breach shall have occurred and continued
for thirty (30) days after notice from the Purchaser under any Transaction
Agreement;
(f) failure on the part of the Company or any of its Subsidiaries to
observe or perform any covenant contained in any part of Sections 7 or 8 of this
Agreement and continuation of such default for thirty (30) days after notice;
(g) the Company shall have its Common Stock delisted or suspended
from the Nasdaq Market for at least fifteen (15) consecutive Trading Days and is
unable to obtain a listing on either the New York Stock Exchange, the American
Stock Exchange, the Nasdaq Stock Market's SmallCap Market or the Nasdaq Market
within such fifteen (15) Trading Days;
(h) the Company or any of its Subsidiaries has commenced a voluntary
case or other proceeding seeking liquidation, winding-up, reorganization or
other relief with respect to itself or its debts under any bankruptcy,
insolvency, moratorium or other similar law now or hereafter in effect or
seeking the appointment of a trustee, receiver, liquidator, custodian or other
similar official of it or any substantial part of its property, or has consented
to any such relief or to the appointment of or taking possession by any such
official in an involuntary case or other proceeding commenced against it, or has
made a general assignment for the benefit of creditors;
(i) an involuntary case or other proceeding has been commenced
against the Company or any of its Subsidiaries seeking liquidation, winding-up,
reorganization or other relief with respect to it or its debts under any
bankruptcy, insolvency, moratorium or other similar law now or hereafter in
effect or seeking the appointment of a trustee, receiver, liquidator, custodian
or other similar official of it or any substantial part of its property, and
such involuntary case or other
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proceeding shall remain undismissed and unstayed for a period of sixty (60)
days, or an order for relief has been entered against the Company under the
federal bankruptcy laws as now or hereafter in effect;
(j) any representation, warranty, certification or statement made by
the Company or any of its Subsidiaries in any Transaction Agreement or which is
contained in any certificate, document or financial or other statement furnished
at any time under or in connection with any Transaction Agreement shall prove to
have been untrue in any material respect when made and such breach shall
continue for thirty (30) days after notice; or
(k) any member of the ERISA Group has failed to pay when due an
amount or amounts aggregating in excess of $100,000 which it shall have become
liable to pay under Title IV of ERISA; or notice of intent to terminate a
Material Plan has been filed under Title IV of ERISA by any member of the ERISA
Group, any plan administrator or any combination of the foregoing; or the PBGC
has instituted proceedings under Title IV of ERISA to terminate, to impose
liability (other than for premiums under Section 4007 of ERISA) in respect of,
or to cause a trustee to be appointed to administer any Material Plan; or a
condition has existed by reason of which the PBGC is entitled to obtain a decree
adjudicating that any Material Plan must be terminated; or there has occurred a
complete or partial withdrawal from, or a default, within the meaning of Section
4219(c) (5) of ERISA, with respect to, one or more Multiemployer Plans which
could cause one or more members of the ERISA Group to incur a current payment
obligation in excess of $100,000;
12.2 DEFAULT REMEDIES. If one or more of the above Events of Default shall
have occurred and be continuing, then, and in every such occurrence, the
Purchaser shall have the right to, by notice to the Company:
(a) declare the Convertible Note to be, and the Convertible Note
shall thereon become immediately due and payable, PROVIDED that in the case of
any of the Events of Default specified in paragraph (h) or (i) above with
respect the Company or any Subsidiary, then, without any notice to the Company
or any other act by any Purchaser, the entire amount of the Convertible Note
shall become immediately due and payable;
(b) convert the Convertible Note at fifty percent (50%) of the
Conversion Price;
(c) exercise its rights under the Security Agreement; and
(d) exercise its rights under the License Agreement, including the
extension of the term of the License Agreement to a perpetual license and the
release of the Purchaser of its obligation to make any payments to the Company
pursuant thereto;
PROVIDED further, if any Event of Default has occurred and is continuing, and
irrespective of whether the Convertible Note has been declared immediately due
and payable hereunder, any Purchaser may proceed to protect and enforce the
rights of Purchaser by an action at law, suit in equity or other appropriate
proceeding, whether for the specific performance of any agreement contained
herein or in the Convertible Note, or for an injunction against a violation of
any of the
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terms hereof or thereof, or in aid of the exercise of any power granted hereby
or thereby or by law or otherwise.
12.3 POWERS AND REMEDIES CUMULATIVE. No right or remedy herein conferred
upon or reserved to the Purchaser is intended to be exclusive of any other right
or remedy, and every right and remedy shall, to the extent permitted by law, be
cumulative and in addition to every other right and remedy given hereunder or
now or hereafter existing at law or in equity or otherwise. The assertion or
employment of any right or remedy hereunder, or otherwise, shall not prevent the
concurrent assertion or employment of any other appropriate right or remedy.
Every power and remedy given by the Convertible Note or by law may be exercised
from time to time, and as often as shall be deemed expedient, by the Purchaser.
13. MISCELLANEOUS
13.1 NOTICES. All notices, demands and other communications to any party
hereunder shall be in writing (including telecopier or similar writing) and
shall be given to such party at the address set forth below, or such other
address as such party may hereafter specify for the purpose to the other
parties. Each such notice, demand or other communication shall be effective (i)
if given by telecopy, when such telecopy is transmitted to the telecopy number
specified below, (ii) if given by mail, four (4) days after such communication
is deposited in the mail with first class postage prepaid, addressed as
aforesaid or (iii) if given by any other means, when delivered at the address
specified in or pursuant to this Section.
If to Company: AHT Corporation
555 White Plains Road
Tarrytown, NY 10591
Telecopy: (914) 332-1741
Attn: Jonathan Edelson, Chairman and Chief
Executive Officer
Eddy Friedfeld, General Counsel
with a copy to: John Suydam
O'Sullivan Graev & Karabell, LLP
30 Rockefeller Plaza
New York, NY 10112
Telecopy: (212) 728-5950
If to Purchaser: Cybear, Inc.
5000 Blue Lake Drive, Suite 200
Boca Raton, FL 33431
Telecopy: (561) 994-2828
Attn: Timothy E. Nolan, President and Chief
Operating Officer
with a copy to: Charles J. Rennert
Berman Wolfe Rennert Vogel & Mandler, P.A.
Bank of America Tower
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100 Southeast 2nd Street, Suite 3500
Miami, FL 33131
Telecopy: 305-373-6036
13.2 NO WAIVERS; AMENDMENTS. No failure or delay on the part of any party in
exercising any right, power or remedy hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right, power or
remedy preclude any other or further exercise thereof or the exercise of any
other right, power or remedy. No provision of this Agreement may be amended,
supplemented or waived unless such amendment, supplement or waiver is in writing
and is signed by the Company and the Purchaser.
13.3 INDEMNIFICATION.
(a) The Company agrees to indemnify and hold harmless the Purchaser,
its Affiliates, and each Person, if any, who controls Purchaser, or any of its
Affiliates, within the meaning of the Securities Act or the Exchange Act (each a
"Controlling Person"), and the respective partners, agents, employees, officers
and directors of Purchaser, its Affiliates and any such Controlling Person (each
an "Indemnified Party" and collectively, the "Indemnified Parties"), from and
against any and all losses, claims, damages, liabilities and expenses
(including, without limitation, and as incurred, reasonable costs of
investigating, preparing or defending any such claim or action, whether or not
such Indemnified Party is a party thereto, PROVIDED that the Company shall not
be obligated to advance such costs to any Indemnified Party other than the
Purchaser unless it has received from such Indemnified Party an undertaking to
repay to the Company the costs so advanced if it should be determined by final
judgment of a court of competent jurisdiction that such Indemnified Party was
not entitled to indemnification hereunder with respect to such costs) which may
be incurred by such Indemnified Party in connection with any investigative,
administrative or judicial proceeding brought or threatened that relates to or
arises out of, or is in connection with any activities contemplated by any
Transaction Agreement or any other services rendered in connection herewith;
PROVIDED that the Company will not be responsible for any claims, liabilities
losses, damages or expenses that are determined by final judgment of a court of
competent jurisdiction to result from such Indemnified Party's gross negligence,
willful misconduct or bad faith.
(b) If any action shall be brought against an Indemnified Party with
respect to which indemnity may be sought against the Company under this
Agreement, such Indemnified Party shall promptly notify the Company in writing
and the Company, at its option, may, assume the defense thereof, including the
employment of counsel reasonably satisfactory to such Indemnified Party and
payment of all reasonable fees and expenses. The failure to so notify the
Company shall not affect any obligations the Company may have to such
Indemnified Party under this Agreement or otherwise unless the Company is
materially adversely affected by such failure. Such Indemnified Party shall have
the right to employ separate counsel in such action and participate in the
defense thereof, but the fees and expenses of such counsel shall be at the
expense of such Indemnified Party, unless: (i) the Company has failed to assume
the defense and employ counsel or (ii) the named parties to any such action
(including any impleaded parties) include such Indemnified Party and the
Company, and such Indemnified Party shall have been advised by counsel that
there may be one or more legal defenses available to it which are different from
or additional to those available to the
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Company, in which case, if such Indemnified Party notifies the Company in
writing that it elects to employ separate counsel at the expense of the Company,
the Company shall not have the right to assume the defense of such action or
proceeding on behalf of such Indemnified Party, PROVIDED, however, that the
Company shall not, in connection with any one such action or proceeding or
separate but substantially similar or related actions or proceedings in the same
jurisdiction arising out of the same general allegations or circumstances, be
responsible hereunder for the reasonable fees and expenses of more than one such
firm of separate counsel, in addition to any local counsel, which counsel shall
be designated by the Purchaser. The Company shall not be liable for any
settlement of any such action effected without the written consent of the
Company (which shall not be unreasonably withheld) and the Company agrees to
indemnify and hold harmless each Indemnified Party from and against any loss or
liability by reason of settlement of any action effected with the consent of the
Company. In addition, the Company will not, without the prior written consent of
the Purchaser, settle or compromise or consent to the entry of any judgment in
or otherwise seek to terminate any pending or threatened action, claim, suit or
proceeding in respect to which indemnification or contribution may be sought
hereunder (whether or not any Indemnified Party is a party thereto) unless such
settlement, compromise, consent or termination includes an express unconditional
release of the Purchaser and the other Indemnified Parties, satisfactory in form
and substance to the Purchaser, from all liability arising out of such action,
claim, suit or proceeding.
(c) If for any reason the foregoing indemnity is unavailable
(otherwise than pursuant to the express terms of such indemnity) to an
Indemnified Party or insufficient to hold an Indemnified Party harmless, then in
lieu of indemnifying such Indemnified Party, the Company shall contribute to the
amount paid or payable by such Indemnified Party as a result of such claims,
liabilities, losses, damages, or expenses (i) in such proportion as is
appropriate to reflect the relative benefits received by the Company on the one
hand and by the Purchaser on the other from the transactions contemplated by
this Agreement or (ii) if the allocation provided by clause (i) is not permitted
under applicable law, in such proportion as is appropriate to reflect not only
the relative benefits received by the Company on the one hand and the Purchaser
on the other, but also the relative fault of the Company and the Purchaser as
well as any other relevant equitable considerations. Notwithstanding the
provisions of this Section 13.3, the aggregate contribution of all Indemnified
Parties shall not exceed the amount of interest and fees actually received by
the Purchaser pursuant to this Agreement. It is hereby further agreed that the
relative benefits to the Company on the one hand and the Purchaser on the other
with respect to the transactions contemplated hereby shall be determined by
reference to, among other things, whether any untrue or alleged untrue statement
of material fact or the omission or alleged omission to state a material fact
related to information supplied by the Company or by the Purchaser and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission. No Person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any Person who was not guilty of such
fraudulent misrepresentation
(d) The indemnification, contribution and expense reimbursement
obligations set forth in this Section 13.3: (i) shall be in addition to any
liability the Company may have to any Indemnified Party at common law or
otherwise, (ii) shall survive the termination of this Agreement and the other
Transaction Agreements and the payment in full of the Convertible Note and (iii)
shall
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remain operative and in full force and effect regardless of any investigation
made by or on behalf of the Purchaser or any other Indemnified Party.
13.4 EXPENSES: DOCUMENTARY TAXES. The Company agrees to pay (i) all
reasonable out-of-pocket expenses of the Purchaser, including fees and
disbursements of counsel, in connection with any waiver or consent hereunder or
under any other Transaction Document or any amendment hereof or thereof and (ii)
all reasonable out-of-pocket expenses of the Purchaser and each holder of
Securities, including fees and disbursements of counsel, in connection with any
collection, bankruptcy, insolvency and other enforcement proceedings resulting
therefrom. In addition, the Company agrees to pay any and all stamp, transfer
and other similar taxes, assessments or charges payable in connection with the
execution and delivery of any Transaction Agreement or the issuance of the
Securities to the Purchaser, excluding its assigns.
13.5 PAYMENT. The Company agrees that, so long as Purchaser shall own the
Convertible Note purchased by it from the Company hereunder, the Company will
make payments to Purchaser of all amounts due thereon by wire transfer by 1:00
P.M. (Eastern Standard Time) on the date of payment.
13.6 USURY. It is the intention of the parties to comply with all applicable
usury laws. Accordingly, it is agreed that notwithstanding any provision to the
contrary in the Transaction Agreements, in no event shall the Transaction
Agreements require the payment or permit the collection of interest in excess of
the maximum amount permitted by such laws. If any such excess of interest is
contracted for, charged or received under the Transaction Agreements, or in the
event the maturity of the indebtedness evidenced by such Transaction Agreements
is accelerated in whole or in part, so that under any such circumstance, the
amount of interest contracted for, charged or received shall exceed the maximum
amount of interest permitted by the applicable usury laws, then in any such
event (a) the provisions of this paragraph shall govern or control, (b) neither
the Company nor any other person or entity now or hereafter liable for repayment
of the Convertible Note shall be obligated to pay the amount of such interest
not permitted by the applicable usury laws, (c) any such excess which may have
been collected shall be refunded to the Company and (d) the effective rate of
interest for the Convertible Note shall be automatically reduced to the maximum
lawful rate allowed under applicable usury laws.
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13.7 SUCCESSORS AND ASSIGNS. This Agreement, the Schedules and Exhibits
hereto, and the documents and instruments and other agreements among the parties
hereto referenced herein: (a) constitute the entire agreement among the parties
with respect to the subject matter hereof and supersede all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter hereof; (b) shall be binding upon the Company and upon the
Purchaser and its successors and assigns; (c) are not intended to confer upon
any other person any rights or remedies hereunder; and (d) shall not be assigned
by operation of law or otherwise except as otherwise specifically provided,
except that Purchaser may assign its rights and delegate its respective
obligations hereunder and thereunder to Andrx Corporation or another of its
Affiliates. All provisions hereunder purporting to give rights to Purchaser and
its affiliates or to holders of Securities are for the express benefit of such
Persons and their successors and assigns.
13.8 BROKERS. The Company represents and warrants that it has not employed
any broker, finder, financial advisor or investment banker who would be entitled
to any brokerage, finder's or other fee or commission payable by the Company or
the Purchaser in connection with the sale of the Securities. Purchaser hereby
warrants that it has not employed any broker, finder, financial advisor or
investment banker who would be entitled to any brokerage, finder's or other fee
or commission payable by the Company in connection with the sale of the
Securities.
13.9 CHOICE OF LAW. THIS AGREEMENT AND ALL CLAIMS ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR ANY TRANSACTION AGREEMENT, WHETHER ASSERTED IN
CONTRACT OR TORT, SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS
OF THE STATE OF DELAWARE. EACH PARTY HERETO HEREBY SUBMITS TO THE EXCLUSIVE
JURISDICTION OF THE UNITED STATES DISTRICT COURT IN THE SOUTHERN DISTRICT OF
FLORIDA AND OF ANY FLORIDA STATE COURT SITTING IN PALM BEACH COUNTY, FLORIDA FOR
PURPOSES OF ALL LEGAL PROCEEDINGS ARISING OUT OF OR RELATING TO THIS AGREEMENT
OR THE TRANSACTIONS CONTEMPLATED HEREBY. EACH PARTY HERETO 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.
13.10 WAIVER OF JURY TRIAL. The parties hereto each knowingly, voluntarily
and intentionally waive their respective rights to a trial by jury in respect of
any litigation related to or arising from this Agreement, or any course of
conduct, course of dealing, statement or actions of any of the parties hereto.
13.11 FURTHER ASSURANCE. The Company and the Purchaser shall each take such
further actions as requested by any party hereto which are necessary, desirable
or proper to carry out the purposes of this Agreement and each Transaction
Agreement.
13.12 SEVERABILITY. If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and
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<PAGE>
shall in no way be affected, impaired or invalidated unless a failure of
consideration would result thereby.
13.13 SURVIVAL. All provisions contained in this Agreement (unless
specifically noted to the contrary) shall survive the payment in full of the
Convertible Note and shall remain operative and in full force and effect.
13.14 COUNTERPARTS. This Agreement may be executed by telecopy signature and
in any number of counterparts each of which shall be an original with the same
effect as if the signatures there to and hereto were upon the same instrument.
[signatures on following page]
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers, as of the date first
above written.
AHT CORPORATION CYBEAR, INC.
By: /s/ JONATHAN EDELSON By: /s/ ERIC MOSKOW, M.D.
---------------------------------------- ---------------------------
Name: Jonathan Edelson Name: Eric Moskow, M.D.
Title: Chairman and Chief Executive Officer Title: Executive Vice President
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<PAGE>
EXHIBIT 7(b)
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, 5355 Town Center Road, Suite 101, Boca Raton, Florida, pursuant
to the terms of the Purchase Agreement (hereafter defined).
<PAGE>
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).
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<PAGE>
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
<PAGE>
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.
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(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.
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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/ JONATHAN EDELSON
--------------------------------------------
Name: Jonathan Edelson
Title: Chairman and Chief Executive Officer
6
<PAGE>
EXHIBIT 7(c)
WARRANT
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, LETTER 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.
WARRANT TO PURCHASE
COMMON STOCK, PAR VALUE $.01 PER SHARE
OF AHT CORPORATION
This certifies that, for value received, Cybear, Inc. or registered
assigns (the "Warrantholder"), is entitled to purchase from AHT CORPORATION (the
"Company"), subject to the provisions of this Warrant, at any time and from time
to time until 5:00 p.m. Eastern Standard Time on March 31, 2005, three hundred
thousand (300,000) shares of the Company's Common Stock, par value $.01 per
share (the "Warrant Shares"). The purchase price payable upon the exercise of
this Warrant shall be $4.34 per Warrant Share. The Warrant Price and the number
of Warrant Shares which the Warrantholder is entitled to purchase is subject to
adjustment upon the occurrence of the contingencies set forth in Section 3 of
this Warrant; as adjusted from time to time, such purchase price is hereinafter
referred to as the "Warrant Price."
This Warrant, evidencing the right to purchase Common Stock of the
Company, is referred to in, among other agreements, that Securities Purchase
Agreement (the "Purchase Agreement") and the Registration Rights Agreement each
dated March 27, 2000, between the Company and the Warrantholder (collectively,
the "Agreements"). The Agreements contain certain additional agreements among
the parties with respect to the terms of this Warrant. All such provisions are
an integral part of this Warrant and are incorporated herein by reference.
Capitalized terms used but not defined herein shall have the meanings set forth
in the Agreements.
This Warrant is subject to the following terms and conditions:
<PAGE>
1. EXERCISE OF WARRANT.
(a) This Warrant may be exercised in whole or in part but not for a
fractional share. Upon delivery of this Warrant at the offices of the Company or
at such other address as the Company may designate by notice in writing to the
registered holder hereof with the Subscription Form annexed hereto duly
executed, accompanied by payment of the Warrant Price for the number of Warrant
Shares purchased (in cash, by certified, cashier's or other check acceptable to
the Company, by Common Stock of the Company having a Market Value (as
hereinafter defined) equal to the aggregate Warrant Price for the Warrant Shares
to be purchased, or any combination of the foregoing), the registered holder of
this Warrant shall be entitled to receive a certificate or certificates for the
Warrant Shares so purchased. Such certificate or certificates shall be promptly
delivered to the Warrantholder. Upon any partial exercise of this Warrant, the
Company shall promptly execute and deliver a new Warrant of like tenor for the
balance of the Warrant Shares purchasable hereunder.
(b) In lieu of exercising this Warrant pursuant to Section 1(a), the
holder may elect to receive shares of Common Stock equal to the value of this
Warrant determined in the manner described below (or any portion thereof
remaining unexercised) upon delivery of this Warrant at the offices of the
Company or at such other address as the Company may designate by notice in
writing to the registered holder hereof with the Notice of Cashless Exercise
Form annexed hereto duly executed. In such event the Company shall issue to the
holder a number of shares of the Company's Common Stock computed using the
following formula:
X = Y (A-B)
-------
A
Where X = the number of shares of Common Stock to be issued to the holder.
Y = the number of shares of Common Stock purchasable under this
Warrant (at the date of such calculation).
A = the Market Value of the Company's Common Stock on the
business day immediately preceding the day on which the
Notice of Cashless Exercise is received by the Company.
B = Warrant Price (as adjusted to the date of such calculation).
(c) Subject to Section 7.9 of the Purchase Agreement, the Warrant
Shares deliverable hereunder shall, upon issuance, be fully paid and
non-assessable and the Company agrees that at all times during the term of this
Warrant it shall cause to be reserved for issuance such number of shares of its
Common Stock as shall be required for issuance and delivery upon exercise of
this Warrant.
<PAGE>
(d) For purposes of this Warrant, the Market Value of a share of
Common Stock on any date shall be determined as follows:
(i) If the Common Stock is listed on Nasdaq, the closing price
on the date of valuation;
(ii) If the Common Stock is listed on the New York Stock
Exchange or the American Stock Exchange, the closing price on such exchange on
the date of valuation;
(iii) If neither (i) nor (ii) apply but the Common Stock is
quoted in the over-the-counter market, another recognized exchange, on the pink
sheets or the OTC Bulletin Board, the mean between the high reported "bid"
prices thereof on the date of valuation; and
(iv) if the Common Stock is not traded on a national securities
exchange or in the over-the-counter market, the fair market value of a share of
Common Stock on such date as determined in good faith by the Board of Directors.
If the Warrantholder disagrees with the determination of the Market Value of any
securities of the Company determined by the Board of Directors under Section
1(d)(iv), the Market Value of such securities shall be determined by an
independent appraiser acceptable to the Company and the holder (or, if they
cannot agree on such an appraiser, by an independent appraiser selected by each
of them, and Market Value shall be the median of the appraisals made by such
appraisers). If there is one appraiser, the cost of the appraisal shall be
shared equally between the Company and the holder. If there are two appraisers,
each of the Company and the holder shall pay for its own appraisal.
The Company will, at the time of the exercise, exchange or transfer of this
Warrant, upon the request of the registered Warrantholder hereof, acknowledge in
writing its continuing obligation to afford to such Warrantholder or transferee
any rights (including, without limitation, any right to registration of the
Company's shares of Common Stock) to which such Warrantholder or transferee
shall continue to be entitled after such exercise, exchange or transfer in
accordance with the provisions of this Warrant, provided that if the registered
Warrantholder of this Warrant shall fail to make any such request, such failure
shall not affect the continuing obligation of the Company to afford to such
Warrantholder or transferee any such rights.
2. TRANSFER OR ASSIGNMENT OF WARRANT.
(a) Any assignment or transfer of this Warrant shall be made by
surrender of this Warrant at the offices of the Company or at such other address
as the Company may designate in writing to the registered holder hereof with the
Assignment Form annexed hereto duly executed and accompanied by payment of any
requisite transfer taxes, and the Company shall, without charge, execute and
deliver a new Warrant of like tenor in the name of the assignee for the portion
so assigned in case of only a partial assignment, with a new Warrant of like
tenor to the assignor for the balance of the Warrant Shares purchasable.
<PAGE>
(b) Prior to any assignment or transfer of this Warrant, the holder
thereof shall deliver an opinion of counsel to the Company to the effect that
the proposed transfer may be effected without registration under the Act.
3. ADJUSTMENT OF WARRANT PRICE AND WARRANT SHARES -- ANTI-DILUTION PROVISIONS.
(a) (1) Except as hereinafter provided, in case the Company shall at
any time after the date hereof issue any shares of Common Stock (including
shares held in the Company's treasury) without consideration, then, and
thereafter successively upon each issuance, the Warrant Price in effect
immediately prior to each such issuance shall forthwith be reduced to a price
determined by multiplying the Warrant Price in effect immediately prior to such
issuance by a fraction:
(A) the numerator of which shall be the total number of
shares of Common Stock outstanding immediately prior to
such issuance, and
(B) the denominator of which shall be the total number of
shares of Common Stock outstanding immediately after
such issuance.
For the purposes of any computation to be made in accordance with the provisions
of this clause (1), the following provisions shall be applicable: (i) Shares of
Common Stock issuable by way of dividend or other distribution on any stock of
the Company shall be deemed to have been issued and to be outstanding at the
close of business on the record date fixed for the determination of stockholders
entitled to receive such dividend or other distribution and shall be deemed to
have been issued without consideration. Shares of Common Stock issued otherwise
than as a dividend or other distribution, shall be deemed to have been issued
and to be outstanding at the close of business on the date of issue; and (ii)
the number of shares of Common Stock at any time outstanding shall not include
any shares then owned or held by or for the account of the Company.
(2) In case the Company shall at any time subdivide or combine
the outstanding shares of Common Stock, the Warrant Price shall forthwith be
proportionately decreased in the case of the subdivision or proportionately
increased in the case of combination to the nearest one cent. Any such
adjustment shall become effective at the close of business on the date that such
subdivision or combination shall become effective.
(b) In the event that the number of outstanding shares of Common
Stock is increased by a stock dividend payable in shares of Common Stock or by a
subdivision of the outstanding shares of Common Stock, which may include a stock
split, then from and after the time at which the adjusted Warrant Price becomes
effective pursuant to the foregoing Subsection (a) of this Section by reason of
such dividend or subdivision, the number of shares issuable upon the exercise of
this Warrant shall be increased in proportion to such increase in outstanding
shares. In the event that the number of outstanding shares of Common Stock is
decreased by a combination of the outstanding shares of Common Stock, then, from
and after the time at which the adjusted Warrant Price becomes effective
pursuant to such Subsection A of this Section by
<PAGE>
reason of such combination, the number of shares issuable upon the exercise of
this Warrant shall be decreased in proportion to such decrease in outstanding
shares.
(c) In the event of an adjustment of the Warrant Price, the number
of shares of Common Stock (or reclassified stock) issuable upon exercise of this
Warrant after such adjustment shall be equal to the number determined by
dividing:
(1) an amount equal to the product of (i) the number of shares
of Common Stock issuable upon exercise of this Warrant immediately prior to such
adjustment, and (ii) the Warrant Price immediately prior to such adjustment, by
(2) the Warrant Price immediately after such adjustment.
(d) In the case of (1) any reorganization or reclassification of the
outstanding shares of Common Stock (other than a change in par value, or from
par value to no par value, or from no par value to par value, or as a result of
a subdivision or combination) or (2) any consolidation of the Company with, or
merger of the Company with, another corporation, or in the case of any sale,
lease or conveyance of all, or substantially all, of the property, assets,
business and goodwill of the Company as an entity, the holder of this Warrant
shall thereafter have the right upon exercise to purchase the kind and amount of
shares of stock and other securities and property receivable upon such
reorganization, reclassification, consolidation, merger or sale by a holder of
the number of shares of Common Stock which the holder of this Warrant would have
received had all Warrant Shares issuable upon exercise of this Warrant been
issued immediately prior to such reorganization, reclassification,
consolidation, merger or sale, at a price equal to the Warrant Price then in
effect pertaining to this Warrant (the kind, amount and price of such stock and
other securities to be subject to adjustment as herein provided). The Company
shall not effect a transaction of the type described in clause (2) of this
sub-paragraph (D) unless upon or prior to the consummation thereof, the
Company's successor corporation, or if the Company shall be the surviving
company in any such transaction but is not the issuer of the shares of stock,
securities or other property to be delivered to the holders of the Company's
outstanding shares of Common Stock at the effective time thereof, then such
issuer, shall assume in writing the obligation hereunder to deliver to the
Warrantholder of this Warrant such shares of stock, securities, cash or other
property as such holder shall be entitled to purchase in accordance with the
provisions hereof.
(e) In case the Company shall, at any time prior to the expiration
of this Warrant and prior to the exercise thereof, dissolve, liquidate or wind
up its affairs, the Warrantholder shall be entitled, upon the exercise thereof,
to receive, in lieu of the Warrant Shares of the Company which it would have
been entitled to receive, the same kind and amount of assets as would have been
issued, distributed or paid to it upon such Warrant Shares of the Company, had
it been the holder of record of shares of Common Stock receivable upon the
exercise of this Warrant on the record date for the determination of those
entitled to receive any such liquidating distribution. After any such
dissolution, liquidation or winding up which shall result in any distribution in
excess of the Warrant Price provided for by this Warrant, the Warrantholder may
at its option exercise the same without making payment of the aggregate Warrant
Price and in such case the
<PAGE>
Company shall upon the distribution to said Warrantholder consider that the
aggregate Warrant Price has been paid in full to it and in making settlement to
said Warrantholder, shall deduct from the amount payable to such Warrantholder
an amount equal to the aggregate Warrant Price. Except as otherwise expressly
provided in the prior paragraph, in the event of any dissolution of the Company
following the transfer of all or substantially all of its properties or assets,
the Company, prior to such dissolution, shall at its expense deliver or cause to
be delivered the stock and other securities and property (including cash, where
applicable) receivable by the holders of the Warrants after the effective date
of such dissolution pursuant to this sub-paragraph (E) to a bank or trust
company having its principal office in New York City, as trustee for the holder
or holders of the Warrants.
(f) Except as otherwise expressly provided in this Section 2, upon
any reorganization, consolidation, merger or transfer (and any dissolution
following any transfer) referred to in this Section 2, this Warrant shall
continue in full force and effect and the terms hereof shall be applicable to
the shares of stock and other securities and property receivable on the exercise
of this Warrant after the consummation of such reorganization, consolidation or
merger or the effective date of dissolution following any such transfer, as the
case may be, and shall be binding upon the issuer of any such stock or other
securities, including, in the case of any such transfer, the person acquiring
all or substantially all of the properties or assets of the Company, whether or
not such person shall have expressly assumed the terms of this Warrant.
(g) In case the Company shall, at any time prior to the expiration
of this Warrant and prior to the exercise thereof make a distribution of assets
(other than cash) or securities of the Company to its stockholders (the
"Distribution") the Warrantholder shall be entitled, upon the exercise thereof,
to receive, in addition to the Warrant Shares it is entitled to receive, the
same kind and amount of assets or securities as would have been distributed to
it in the Distribution had it been the holder of record of shares of Common
Stock receivable upon exercise of this Warrant on the record date for
determination of those entitled to receive the Distribution.
(h) Irrespective of any adjustments in the number of Warrant Shares
and the Warrant Price or the number or kind of shares purchasable upon exercise
of this Warrant, this Warrant may continue to express the same price and number
and kind of shares as originally issued.
4. OFFICER'S CERTIFICATE.
Whenever the number of Warrant Shares and the Warrant Price shall be
adjusted pursuant to the provisions hereof, the Company shall forthwith file at
its principal executive office an officers' certificate, signed by the Chairman
of the Board, President, or one of the Vice Presidents of the Company and by its
Chief Financial Officer or one of its Treasurers or Assistant Treasurers,
stating the adjusted number of Warrant Shares and the new Warrant Price
calculated to the nearest one hundredth and setting forth in reasonable detail
the method of calculation and the facts requiring such adjustment and upon which
such calculation is based. Each adjustment shall remain in effect until a
subsequent adjustment hereunder is required. A copy of such statement shall be
mailed to the Warrantholder at its address in the records of the Company in
accordance with the notice provision of the Securities Purchase Agreement. The
Company will
<PAGE>
forthwith mail a copy of each such certificate to each holder of a Warrant, and
will, on the written request at any time of any holder of a Warrant, furnish to
such holder a like certificate setting forth the Warrant Price and the number
and type of Shares at the time in effect and showing how it was calculated.
5. CHARGES, TAXES AND EXPENSES.
The issuance of certificates for Warrant Shares upon any exercise of
this Warrant shall be made without charge to the Warrantholder for any tax or
other expense in respect to the issuance of such certificates, all of which
taxes and expenses shall be paid by the Company, and such certificates shall be
issued only in the name of the Warrantholder.
6. NO DILUTION OR IMPAIRMENT.
The Company will not, by amendment of its Articles of Incorporation or
By-laws, or through any reorganization, transfer of assets, consolidation,
merger, dissolution, issue or sale of securities or any other voluntary action,
avoid or seek to avoid the observance or performance of any of the terms of the
Warrants, but will at all times in good faith assist in the carrying out of all
such terms and in the taking of all such action as may be necessary or
appropriate in order to protect the rights of the holders of the Warrants, as
specified herein and in the Securities Purchase Agreement, against dilution (to
the extent specifically provided herein) or other impairment. Without limiting
the generality of the foregoing, the Company (a) will not increase the par value
of any shares of stock receivable on the exercise of the Warrants above the
amount payable therefor on such exercise, and (b) will not effect a subdivision
or split up of shares or similar transaction with respect to any class of the
Common Stock without effecting an equivalent transaction with respect to all
other classes of Common Stock.
7. NOTICE OF RECORD DATE. In case of
(a) any taking by the Company of a record of the holders of any
class of its securities for the purpose of determining the holders thereof who
are entitled to receive any dividend or other distribution, or any right to
subscribe for, purchase or otherwise acquire any shares of stock of any class or
any other securities or property, or to receive any other right, or
(b) any capital reorganization of the Company, any reclassification
or recapitalization of the capital stock of the Company or any transfer of all
or substantially all the assets of the Company to or consolidation or merger of
the Company with or any voluntary or involuntary dissolution, liquidation or
winding up of the Company, or
(c) events shall have occurred resulting in the voluntary or
involuntary dissolution, liquidation or winding up of the Company then and in
each such event the Company will mail or cause to be mailed to each holder of a
Warrant a notice specifying (i) the date on which any record is to be taken for
the purpose of any such dividend, distribution or right, and stating the amount
and character of such dividend, distribution or right, (ii) the date on which
any such reorganization, reclassification, recapitalization, transfer,
consolidation, merger, dissolution, liquidation or winding up is to take place,
and the time, if any is to be fixed, as of which the holders of record of Common
Stock shall be entitled to exchange their Common Stock for
<PAGE>
securities or other property deliverable on such reorganization,
reclassification, recapitalization, transfer, consolidation, merger,
dissolution, liquidation or winding up, and (iii) the amount and character of
any stock or other securities, or rights or options with respect thereto,
proposed to be issued or granted, the date of such proposed issue or grant and
the persons or class of persons to whom such proposed issue or grant is to be
offered or made. Such notice shall be mailed at least thirty (30) days prior to
the date specified in such notice on which any such action is to be taken.
8. EXCHANGE OF WARRANTS.
On surrender for exchange of any Warrant, properly endorsed, to the
Company, the Company, at its expense, will issue and deliver to or on the order
of the holder thereof a new Warrant or Warrants of like tenor, in the name of
such holder or as such holder (on payment by such holder or any applicable
transfer taxes) may direct, calling in the aggregate on the face or faces
thereof for the number of shares of Common Stock called for on the face or faces
of the Warrant or Warrants so surrendered.
9. REPLACEMENT OF WARRANTS.
On receipt of evidence reasonably satisfactory to the Company of the
loss, theft, destruction or mutilation of any Warrant and, in the case of any
such loss, theft or destruction of any Warrant, on delivery of an indemnity
agreement or security reasonably satisfactory in form and amount to the Company
or, in the case of any such mutilation, on surrender and cancellation of such
Warrant, the Company, at its expense, will execute and deliver, in lieu thereof,
a new Warrant of like tenor.
10. WARRANT AGENT.
The Company may, by written notice to each holder of a Warrant,
appoint an agent having an office in New York, New York, for the purpose of
issuing shares of Common Stock on the exercise of the Warrants pursuant to
Section 1, exchanging Warrants pursuant to Section 7, and replacing Warrants
pursuant to Section 8, or any of the foregoing, and thereafter any such
issuance, exchange or replacement, as the case may be, shall be made at such
office by such agent.
11. REMEDIES.
The Company stipulates that the remedies at law of the holder of
this Warrant in the event of any default or threatened default by the Company in
the performance of or compliance with any of the terms of this Warrant are not
and will not be adequate, and that such terms may be specifically enforced by a
decree for the specific performance of any agreement contained herein or by an
injunction against a violation of any of the terms hereof or otherwise.
12. NEGOTIABILITY, ETC.
This Warrant is issued upon the following terms, to all of which
each Warrantholder or owner hereof by the taking hereof consents and agrees:
<PAGE>
(a) (a)subject to the terms of Section 2 of this Warrant, title to
this Warrant may be transferred by endorsement (by the Warrantholder hereof
executing the form of assignment at the end hereof) and delivery in the same
manner as in the case of a negotiable instrument transferable by endorsement and
delivery;
(b) (b)any person in possession of this Warrant properly endorsed is
authorized to represent himself as absolute owner hereof and is empowered to
transfer absolute title hereto by endorsement and delivery hereof to a bona fide
purchaser hereof for value; each prior taker or owner waives and renounces all
of his equities or rights in this Warrant in favor of each such bona fide
purchaser, and each such bona fide purchaser shall acquire absolute title hereto
and to all rights represented hereby; and
(c) (c)until this Warrant is transferred on the books of the
Company, the Company may treat the register Warrantholder hereof as the absolute
owner hereof for all purposes, notwithstanding any notice to the contrary.
13. NOTICES.
All notices and other communications from the Company to the registered
Warrantholder of this Warrant shall be given in writing (unless otherwise
specified herein) and shall be effective upon personal delivery, via facsimile
(upon receipt of confirmation of error-free transmission) or two business days
following deposit of such notice with an internationally recognized courier
service, with postage prepaid and addressed, to such address as may have been
furnished to the Company in writing by such registered Warrantholder or, until
any such registered Warrantholder furnishes to the Company an address, then to,
and at the address of, the last registered Warrantholder of this Warrant who has
so furnished an address to the Company.
14. MISCELLANEOUS.
(a) (a)The terms of this Warrant shall be binding upon and shall
inure to the benefit of any successors or assigns of the Company and of the
holder or holders hereof and of the shares of Common Stock issued or issuable
upon the exercise hereof.
(b) Except as otherwise set forth herein, no holder of this Warrant,
as such, shall be entitled to vote or receive dividends or be deemed to be a
stockholder of the Company for any purpose, nor shall anything contained in this
Warrant be construed to confer upon the holder of this Warrant, as such, any
rights of a stockholder of the Company or any right to vote, give or withhold
consent to any corporate action, receive notice of meetings, receive dividends
or subscription rights, or otherwise.
(c) Receipt of this Warrant by the holder hereof shall constitute
acceptance of an agreement to the foregoing terms and conditions.
(d) The Warrant and the performance of the parties hereunder shall
be construed and interpreted in accordance with the laws of the State of
Delaware and the parties hereunder consent and agree that the State and Federal
Courts which sit in Palm Beach County, Florida shall have exclusive jurisdiction
with respect to all controversies and disputes arising hereunder.
<PAGE>
(e) This Warrant and any term hereof may be changed, waived,
discharged or terminated only by an instrument in writing signed by the party
against which enforcement of such change, waiver, discharge or termination is
sought.
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by
its duly authorized officer and its corporate seal to be affixed hereto.
Dated: March 27, 2000
AHT CORPORATION
BY: /s/ JONATHAN EDELSON
---------------------------------------
Name: Jonathan Edelson
Title: Chairman and Chief Executive Officer
<PAGE>
SUBSCRIPTION FORM
(TO BE EXECUTED BY THE REGISTERED HOLDER
IF HE DESIRES TO EXERCISE THE WARRANT)
To:AHT CORPORATION
The undersigned hereby exercises the right to purchase _________
shares of Common Stock, par value $.01 per share, covered by the attached
Warrant in accordance with the terms and conditions thereof, and herewith makes
payment of the Warrant Price for such shares in full. The undersigned requests
that a certificate for such shares of Common Stock be registered in the name of
_____________, whose address is ___________________________________________, and
that such Certificate be delivered to ____________ whose address is
____________________________.
NAME (please print)
SIGNATURE
(Signature must conform in all respects to the
name of the registered Warrantholder, as
specified on the face of the Warrant.)
SOCIAL SECURITY NUMBER (or Other
Identifying Number of Holder)
ADDRESS
DATED:
<PAGE>
NOTICE OF EXERCISE OF COMMON STOCK WARRANT
PURSUANT TO NET ISSUE ("CASHLESS") EXERCISE PROVISIONS
(TO BE EXECUTED BY THE REGISTERED WARRANTHOLDER IN
ADDITION TO THE SUBSCRIPTION FORM, IF HE DESIRES
TO EXERCISE THE WARRANT IN A CASHLESS EXERCISE)
AHT Corporation Aggregate Price of Warrant $_______
555 White Plains Rd
Tarrytown, NY 10591
Attn: John Edelson Aggregate Price Being Exercised: $_______
Warrant Price (per share): $_______
Number of Shares of Common Stock to be Issued
Under this Notice: _______
<PAGE>
CASHLESS EXERCISE
Gentlemen:
The undersigned, registered holder of the Warrant to Purchase Common
Stock delivered herewith ("Warrant") hereby irrevocably exercises such Warrant
for, and purchases thereunder, shares of the Common Stock of AHT CORPORATION, a
Delaware corporation, as provided below. Capitalized terms used herein, unless
otherwise defined herein, shall have the meanings given in the Warrant. The
portion of the Aggregate Price (as hereinafter defined) to be applied toward the
purchase of Common Stock pursuant to this Notice of Exercise is $____________ ,
thereby leaving a remainder Aggregate Price (if any) equal to $____________.
Such exercise shall be pursuant to the net issue exercise provisions of Section
I. (b) of the Warrant; therefore, the holder makes no payment with this Notice
of Exercise. The number of shares to be issued pursuant to this exercise shall
be determined by reference to the formula in Section I.(b)of the Warrant which
requires the use of the Market Value (as defined in Section I.(d) of the
Warrant) of the Company's Common Stock in accordance with the provisions
thereof. To the extent the foregoing exercise is for less than the full
Aggregate Price of the Warrant, the remainder of the Warrant representing a
number of Shares equal to the quotient obtained by dividing the remainder of the
Aggregate Price by the Warrant Price (and otherwise of like form, tenor and
effect) may be exercised under Section I.(a) of the Warrant. For purposes of
this Notice the term "Aggregate Price" means the product obtained by multiplying
the number of shares of Common Stock for which the Warrant is exercisable times
the Warrant Price.
SIGNATURE
DATE:_________________________ ADDRESS
<PAGE>
ASSIGNMENT
(TO BE EXECUTED BY THE REGISTERED WARRANTHOLDER
IF HE DESIRES TO TRANSFER THE WARRANT)
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers unto__________ (please print name and address of transferee) the right
to purchase shares of Common Stock of AHT CORPORATION, evidenced by the within
Warrant, and does hereby irrevocably constitute and appoint__________ Attorney
to transfer the said Warrant on the books of the Company, with full power of
substitution.
NAME (please print)
SIGNATURE
(Signature must conform in all respects to the
name of the registered Warrantholder, as
specified on the face of the Warrant.)
SOCIAL SECURITY NUMBER (or Other Identifying
Number of Holder)
IN THE PRESENCE OF:
