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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) July 23, 1998
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GLOBIX CORPORATION
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(Exact name of registrant as specified in charter)
Delaware 1-14168 13-3781263
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(State or other juris- (Commission (IRS Employer
diction of Incorporation) File number) Identification No.)
295 Lafayette Street, 3rd Floor, New York, New York 10012
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number,
including area code (212) 334-8500
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(Former Name or Former Address, if Changed Since Last Report)
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Item 5. Other Events.
On July 23, 1998, Globix Corporation (the "Company") entered
into a Securities Purchase Agreement with Cybernet Data Systems, Inc., a
Delaware corporation ("Cybernet"), pursuant to which the Company purchased for
$1,000,000, a 10% Convertible Subordinated Debenture due 2001 (the "Debenture")
and a Warrant to Purchase Common Stock (the "Warrant").
The Debenture is non-interest bearing until July 23, 1999. Beginning on
July 23, 1999, the Debenture will bear interest at a rate of 10% per annum,
payable semi-annually in advance on July 23 and January 23, in each year until
July 23, 2001, when the Debenture is to be redeemed by Cybernet. The Debenture
is convertible into 670,000 shares of Cybernet common stock.
The Warrant entitles the Company to purchase an additional 666,667
shares of Cybernet common stock at an exercise price of $1.50 per share until
the Warrant's expiration date of July 23, 1999.
Item 7. Financial Statements and Exhibits.
(c) Exhibits.
10(a) 10% Convertible Subordinated Debenture
due 2001, made by Cybernet to the Company, dated July 23, 1998.
10(b) Warrant to Purchase Common Stock of
Cybernet, issued to the Company, dated as of July 23, 1998.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
GLOBIX CORPORATION
By /s/ Marc H. Bell
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Marc H. Bell, President
and Chief Executive Officer
Dated: August 17, 1998
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EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
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<S> <C>
10(a) 10% Convertible Subordinated Debenture due 2001, made by
Cybernet to the Company, dated July 23, 1998.
10(b) Warrant to Purchase Common Stock of Cybernet, issued to the
Company, dated as of July 23, 1998.
</TABLE>
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Exhibit 10(a)
NEITHER THIS DEBENTURE NOR THE SHARES OF COMMON STOCK UNDERLYING THIS DEBENTURE
(COLLECTIVELY THE "SECURITIES") HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933 NOR UNDER ANY STATE SECURITIES LAWS AND MAY NOT BE PLEDGED, SOLD, ASSIGNED
OR TRANSFERRED UNTIL (i) A REGISTRATION STATEMENT WITH RESPECT THERETO IS
EFFECTIVE UNDER THE SECURITIES ACT OF 1933 AND ANY APPLICABLE STATE SECURITIES
LAWS OR (ii) THE COMPANY RECEIVES AN OPINION OF COUNSEL TO THE COMPANY OR OTHER
COUNSEL TO THE HOLDER OF SUCH DEBENTURE, WHICH OPINION IS REASONABLY
SATISFACTORY TO THE COMPANY, THAT SUCH SECURITIES MAY BE PLEDGED, SOLD, ASSIGNED
OR TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES
ACT OF 1933 OR APPLICABLE STATE SECURITIES LAWS.
CYBERNET DATA SYSTEMS, INC.
(Incorporated under the laws of
the State of Delaware)
No. D-1
$1,000,000 Dated: July 23, 1998
10% Convertible Subordinated Debenture due 2001
FOR VALUE RECEIVED, CYBERNET DATA SYSTEMS, INC., a Delaware corporation (the
"Company"), promises to pay to Globix Corporation or registered assigns (the
"Holder"), the principal amount of One Million ($1,000,000) Dollars (the
"Principal Amount") in such coin or currency of the United States of America as
at the time of payment shall be legal tender for the payment of public and
private debts, with interest (computed on the basis of a 360 day year of twelve
30 day months) on the unpaid balance of such principal amount at the rate of 10%
per annum from and after July 23, 1999. Interest on the unpaid principal amount
shall be paid in advance semi-annually commencing on July 23, 1999. Principal
and any accrued and unpaid interest shall be payable in one installment on the
due date of July 23, 2001 (the "Due Date"), unless this Debenture is fully
converted or redeemed before such date as provided herein.
1. The Debenture. This Debenture is designated as 10% Convertible Subordinated
Debenture due 2001 in the principal amount of $1,000,000 (the "Debenture"). This
Debenture has been issued by the Company, along with a Common Stock Purchase
Warrant (the "Warrant"), pursuant to the terms and subject to the conditions of
a Securities Purchase Agreement between the Company and the Holder of even date
hereof (the "Securities Purchase Agreement"). Reference is made to the
Securities Purchase Agreement for certain agreements of the parties applicable
to this Debenture. Notwithstanding any provision to the contrary contained
herein, this Debenture is subject to and entitled to certain terms, conditions,
covenants and agreements contained in the Securities Purchase Agreement. Any
transferee of this Debenture, by his acceptance hereof, assumes the obligations
of the Holder in the Securities Purchase Agreement.
The Holder of this Debenture may, at his option and either in person or by duly
authorized attorney, surrender the same at the office of the Company and,
without expense to the Holder (other than transfer taxes, if
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any, arising in connection with a transfer hereof), receive in exchange therefor
a Debenture or Debenture, for the same aggregate unpaid principal amount as the
Debenture or Debenture so surrendered for exchange and each payable to such
person or persons as may be designated by such Holder. Every Debenture so made
and delivered in exchange for this Debenture shall in all other respects be in
the same form and have the same terms as this Debenture.
2. Subordination.
2.1 The indebtedness evidenced by the Debenture shall be subordinated and junior
in right of payment to all Senior Indebtedness (as defined below) to the extent
and in the manner set forth in Sections 2.2 through 2.7 hereof.
2.2 In the event of (i) any insolvency, bankruptcy, receivership, liquidation,
reorganization, debt readjustment or composition or other similar proceeding
relative to the Company or its creditors or its property, (ii) any proceeding
for voluntary liquidation, dissolution or other winding up of the Company,
whether or not involving insolvency or bankruptcy proceedings or (iii) any
assignment for the benefit of creditors or any other marshaling of the assets of
the Company, then and in any such event the holders of all Senior Indebtedness
shall first be paid in full the principal thereof and prepayment charges, if
any, and interest at the time due thereon before any payment or distribution of
any character, whether in cash, securities or other property, shall be made on
account of the Debenture.
2.3 Until the Senior Indebtedness is paid in full, the holder of the Debenture
shall be subordinated to the rights of the holders of Senior Indebtedness to
receive payments or distributions of assets or securities of the Company
applicable to Senior Indebtedness. For the purposes of such subordination, no
payments or distributions to the holders of Senior Indebtedness of assets or
securities which otherwise would have been payable or distributable to holder of
the Debenture shall, as between the Company, its creditors (other than the
holders of Senior Indebtedness) and the holder of the Debenture, be deemed to be
a payment by the Company to or on account of the Senior Indebtedness, and no
payments or distributions to the holder of the Debenture of assets or
securities, by virtue of the subordination herein provided for shall, as between
the Company, its creditors (other than the holders of Senior Indebtedness) and
the holder of the Debenture, be deemed to be a payment by the Company to or on
account of the Debenture. Notwithstanding the foregoing, unless previously
converted, this Debenture may be paid on the Due Date.
2.4 Upon any distribution of assets or securities of the Company referred to in
this Section 2, the holder of the Debenture shall be entitled to rely upon a
certificate of any liquidating trustee or agent or other person making any
distribution to the holder of the Debenture for the purpose of ascertaining the
persons entitled to participate in such distribution, the holders of Senior
Indebtedness and other indebtedness
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of the Company, the amount thereof or payable thereon, the amount or amounts
paid or distributed thereon and all other facts pertinent thereto or to this
Section 2.
2.5 In the event and during the continuation of any default in the payment of
principal of, or prepayment charge, if any, or interest on, any Senior
Indebtedness beyond any applicable period of grace, or in the event that any
event of default with respect to any Senior Indebtedness shall have occurred and
be continuing permitting the holders of such Senior Indebtedness (or a trustee
on behalf of the holders thereof) to accelerate the maturity thereof, then
unless and until such default or event of default shall have been cured or
waived or shall have ceased to exist, no payment of principal, premium, if any,
or interest shall be made by the Company on the Debenture.
2.6 No right of any present or future holder of any Senior Indebtedness of the
Company to enforce subordination as herein provided shall at any time in any way
be prejudiced or impaired by any act or failure to act on the part of the
Company or by any act or failure to act, in good faith, by any such holder, or
by any non-compliance by the Company with the covenants, agreements and
conditions of the Debenture, regardless of any knowledge thereof any such holder
may have or be otherwise charged with.
2.7 "Senior Indebtedness" means all loans, advances, reimbursement obligations
regarding letters of credit, liabilities, covenants, guarantees and duties now
existing on or arising from time to time thereafter and renewals, extensions and
refundings of any such indebtedness, whether for principal, premium or interest
or otherwise of the Company or any subsidiary of the Company to, but only to,
(i) any bank or other commercial financing institution or (ii) Bowne & Co. Inc.,
and its successors, assigns and affiliates, whether direct or indirect, absolute
or contingent, secured or unsecured, due or to become due, including, without
limitation, (i) any debt, liability or obligation owing from the Company or any
Subsidiary to others which such bank or other commercial financing institution
may have obtained by assignment, pledge, purchase or otherwise, (ii) any
overdraft or overadvance to the Company, and (iii) all interest, charges,
expenses and attorney's fees for which the Company or any subsidiary of the
Company is now or hereafter becomes liable to any such bank or other lending
institution under any agreement or by law (unless in the instrument creating or
evidencing such indebtedness, or pursuant to which the same is outstanding, it
is provided that such indebtedness or such renewal, extension or refunding
thereof is subordinated in right of payment to the Debenture).
3. Conversion of Debenture.
3.1 The holder of this Debenture shall have the right, at its option, at any
time after the date of this Debenture, up to and including the Maturity Date to
convert, subject to the terms and provisions of this Section 3, in whole or in
part, the principal of any this Debenture into
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shares of Common Stock of the Company (calculated to the nearest one
one-hundredth (1/100) of a share), at the price of $1.492537 per share or, in
case an adjustment of such price has taken place pursuant to the provisions of
this Section 3, then at the price as last adjusted (the "Conversion Price") upon
surrender of the Debenture to the Company at any time during normal business
hours, together with written notice (the "Conversion Notice") that the holder
elects to convert this Debenture, in whole or in part, into such shares of
Common Stock in accordance with the provisions of this Section 3, and specifying
the name or names in which the shares of Common Stock issuable upon such
conversion shall be registered, together with the addresses of the persons so
named, and, if so required by the Company, accompanied by a written instrument
or instruments of transfer in the form annexed hereto duly executed by the
registered holder or his attorney duly authorized in writing.
3.2 As promptly as practicable after the surrender, as herein provided, of this
Debenture for conversion and the receipt of the Conversion Notice relating
thereto, the Company shall deliver to the Holder, or upon the written order of
the Holder of the Debenture so surrendered, a certificate or certificates
representing the number of fully-paid and non-assessable shares of Common Stock
of the Company into which this Debenture shall be converted in accordance with
the provisions of this Section 3. Subject to the following provisions of this
Section 3.2, such conversion shall be deemed to have been made at the close of
business on the date that this Debenture shall have been surrendered for
conversion together with the Conversion Notice, so that the rights of the Holder
as a holder of the Debenture shall cease at such time and the person or persons
entitled to receive the shares of Common Stock upon conversion of this Debenture
shall be treated for all purposes as having become the record holder or holders
of such shares of Common Stock at such time and such conversion shall be at the
Conversion Price in effect at such time; provided, however, that no such
surrender on any date when the stock transfer books of the Company shall be
closed shall be effective to constitute the person or persons entitled to
receive the shares of Common Stock upon such conversion as the record holder or
holders of such shares of Common Stock on such date, but such surrender shall be
effective to constitute the person or persons entitled to receive such shares of
Common Stock as the record holder or holders thereof for all purposes at the
close of business on the next succeeding day on which such stock transfer books
of the Company are open and such conversion shall be at the Conversion Price in
effect at the close of business on such next succeeding day.
If the last day for the exercise of the conversion right shall not be a business
day, then such conversion right may be exercised on the next succeeding business
day.
3.3 Upon such conversion, all principal due under this Debenture shall be
discharged and the Company released from all obligations thereunder; provided,
however, that all accrued and unpaid interest shall either be
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paid at such time or converted in the same manner as the conversion of the
principal amount, in either event at the option of the Holder.
3.4 The Conversion Price in effect from time to time shall be proportionately
decreased in the event that the Company shall at any time (i) make a subdivision
of shares of Common Stock outstanding or (ii) pay a dividend in shares of Common
Stock or make a distribution in shares of Common Stock. The Conversion Price in
effect from time to time shall be proportionately increased in the event that
the Company shall at any time combine the shares of its Common Stock
outstanding. An adjustment made pursuant to this Section 3.4 shall, in the case
of a subdivision or combination, become effective retroactively immediately
after the effective date thereof and shall, in the case of a dividend or
distribution, become effective retroactively immediately after the record date
for the determination of stockholders entitled thereto.
3.5 Whenever the Conversion Price is adjusted pursuant to Section 3.4 hereof,
the Company shall promptly cause a notice stating that such adjustment has been
effected and the adjusted Conversion Price to be given to such holder of the
Debenture at its address appearing on the Debenture registry books. Any
calculation required to be made under this Section 3 shall be made to the
nearest cent or the nearest one-hundredth of a share, as the case may be.
3.6 No fractional shares or scrip representing fractional shares shall be issued
upon the conversion of this Debenture. If the conversion of this Debenture
results in a fraction, an amount equal to such fraction multiplied by the
Closing Price (as hereinafter defined) shall be paid to the persons who would
otherwise be entitled to receive such fractional interests in cash by the
Company.
3.7 In case of any reclassification or change of outstanding shares of Common
Stock issuable upon conversion of the Debenture (other than a change in par
value, or from par value to no par value, or from no par value to par value), or
in case of any consolidation or merger of the Company with or into another
corporation (other than a merger in which the Company is the surviving
corporation and which does not result in any reclassification or change of
outstanding shares of Common Stock, other than a change in number of the shares
issuable upon conversion of the Debenture) or in case of any sale or conveyance
to another entity of all or substantially all of the assets of the Company, or
in the case of an exchange of outstanding shares of Common Stock for the shares
or other securities of another corporation or entity, or in the event of a
dividend or other distribution of the securities of a subsidiary of the Company
or of any other entity to holders of shares of Common Stock, the holder of this
Debenture shall have the right thereafter to convert this Debenture into the
kind and amount of shares of stock and other securities and property receivable
upon such reclassification, change, consolidation, merger, sale, conveyance,
dividend or distribution by a holder of the number of shares of Common Stock of
the Company into which this Debenture might have been converted immediately
prior to such
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reclassification, change, consolidation, merger, sale, conveyance, dividend or
distribution. The above provisions of this Section 3.7 shall similarly apply to
successive reclassifications and changes of shares of Common Stock and to
successive consolidations, mergers, sales, conveyances, dividends or
distributions.
3.8 The Company covenants that it will at all times reserve and keep available
out of its authorized Common Stock, solely for the purpose of issuance upon
conversion of the Debenture as herein provided, such number of shares of Common
Stock as shall then be issuable upon the conversion of this Debenture. The
Company covenants that all shares of Common Stock which shall be so issuable
shall be duly and validly issued, fully-paid and non-assessable.
3.9 Before taking any action which would cause an adjustment reducing the
Conversion Price below the then par value of the shares of Common Stock issuable
upon conversion of the Debenture, the Company will take any corporate action
which may, in the opinion of its counsel, be necessary in order that the Company
may validly and legally issue fully-paid and non-assessable shares of such
Common Stock at such adjusted Conversion Price, and at least thirty days prior
to the record date for determining shareholders of record with respect to any
such action, the Company shall give the Holder written notice of such action by
certified or registered mail, return receipt requested.
3.10 The issuance of certificates for shares of Common Stock upon the conversion
of Debenture shall be made without charge to the converting holder for any tax
in respect of the issuance of such certificates, and such certificates shall be
issued in the respective names of, or in such names as may be directed by, the
holder of the Debenture converted; provided, however, that 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 any such certificate in a name other
than that of the holder of the Debenture converted, and the Company shall not be
required to issue or deliver such certificates unless or until the person or
persons requesting the issuance thereof shall have paid to the Company the
amount of such tax or shall have established to the satisfaction of the Company
that such tax has been paid.
3.11 Upon conversion of this Debenture, the registered holder may be required to
execute and deliver to the Company an instrument, in form reasonably
satisfactory to the Company, representing that the shares of the Common Stock
issuable upon conversion hereof are being acquired for investment and not with a
view to distribution within the meaning of the Securities Act of 1933, as
amended (the "Securities Act").
3.12 Upon any partial conversion of this Debenture, the Company at its expense
will forthwith issue and deliver to or upon the order of the holder thereof a
new Debenture or Debenture in principal amount equal to the unpaid and
unconverted principal amount of such surrendered Debenture, such new Debenture
or Debenture to be dated and to bear
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interest from the date to which interest has been paid up to the date of such
surrendered Debenture.
3.13 Except as hereinafter provided, in case the Company shall at any time after
the date hereof issue or sell any shares of Common Stock issued upon the
exercise of any options, rights or warrants, to subscribe for shares of Common
Stock and shares of Common Stock issued upon the direct or indirect conversion
or exchange of securities for shares of Common Stock, for a consideration per
share less than the Conversion Price then in effect at the time of issuance,
then forthwith upon such issuance or sale, the Conversion Price shall (until
another such issuance or sale) be reduced to the price (calculated to the
nearest full cent) equal to the quotient derived by dividing (A) an amount equal
to the sum of (X) the product of (a) the Conversion Price per share of Common
Stock on the date immediately prior to the issuance or sale of such shares,
multiplied by (b) the total number of shares of Common Stock outstanding
immediately prior to such issuance or sale, plus (Y) the aggregate of the amount
of all consideration, if any, received by the Company upon such issuance or
sale, by (B) the total number of shares of Common Stock outstanding immediately
after such issuance or sale; provided, however, that in no event shall the
Conversion Price be adjusted pursuant to this computation to an amount in excess
of the Conversion Price in effect immediately prior to such computation. For the
purposes of any computation to be made in accordance with this Section 3.13, the
following provisions shall be applicable: (i) In case of the issuance or sale or
shares of Common Stock for a consideration part or all of which shall be cash,
the amount of the cash consideration therefor shall be deemed to be the amount
of cash received by the Company for such shares; (ii)In case of the issuance or
sale (otherwise then as a dividend or other distribution on any stock of the
Company) of shares of Common Stock for a consideration part or all of which
shall be other than cash, the amount of the consideration therefor other than
cash shall be deemed to be the value of such consideration as determined in good
faith by the Board of Directors of the Company.
3.14 Except as herein provided, in case the Company shall at any time after the
date hereof issue options, rights or warrants to subscribe for shares of Common
Stock, or issue any securities convertible into or exchangeable for shares of
Common Stock, for a consideration per share less than the Conversion Price
immediately prior to the issuance of such options, rights or warrants, or such
convertible or exchangeable securities, or without consideration, the Conversion
Price in effect immediately prior to the issuance of such options, rights or
warrants, or such convertible or exchangeable securities, as the case may be,
shall be reduced to a price determined by making a computation in accordance
with the provisions of Section 3.13 hereof.
3.15 No adjustment of the Conversion Price shall be made: (a) Upon the issuance
or sale of the Debenture or the Warrant or the shares of Common Stock issuable
upon the conversion of the Debenture or the exercise of the Warrant; (b) Upon
the issuance or sale of Common Stock (or other
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securities exercisable or convertible into Common Stock) which Common Stock is
issued at no less than 80.4% of the Conversion Price then in effect; (c) Upon
the issuance or sale of Common Stock (or other securities exercisable or
convertible into Common Stock) which Common Stock is issued at less than 80.4%
of the Conversion Price then in effect ("Subject Issuances") unless and until
the aggregate consideration received by the Company of all Subject Issuance
during the one year period commencing from the first Subject Issuance equals or
exceeds Five Hundred Thousand ($500,000) Dollars, in which event such adjustment
shall be calculated from the first Subject Issuance; (d) If the amount of said
adjustment shall be less than 5 cents ($.05) per share, provided, however, that
in such case any adjustment that would otherwise be required then to be made
shall be carried forward and shall be made at the time of and together with the
next subsequent adjustment which, together with any adjustment so carried
forward, shall amount to at least 5 cents ($.05) per share; (e) exercise of any
warrants, options, convertible notes, debentures or other similar convertible
securities which are outstanding as of the date hereof ("Preexisting Derivative
Securities") or Common Stock issuable upon the exercise of any Preexisting
Derivative Securities;(f) any warrants or options which may be issued after the
date hereof to directors, officers, employees, advisors or consultants of the
Company pursuant to stock option plans or otherwise; or (g) any issuance of
Common Stock (or other securities exercisable or convertible into Common Stock)
issued in connection with any mergers, acquisitions, purchases of businesses or
assets or similar transactions.
4. Optional Redemption.
4.1 The Debenture may be redeemed, at the holder's option, in whole only, upon
notice ("Notice of Redemption") to the Company, at any time prior to maturity,
at a redemption price equal to the principal amount thereof and accrued and
unpaid interest if but only if there is a Change of Control of the Company.
4.2 "Change of Control" means any of the following (i) the sale, lease,
conveyance or other disposition of all or substantially all of the Company's
assets as an entirety or substantially as an entirety or substantially as an
entirety to any person or "group" (within the meaning of Section 13(d)(3) of the
Securities Exchange Act of 1934, as amended (the"Exchange Act")) (other than the
officers and members of the Board of Directors of the Company as of the date of
this Debenture) in one or a series of transactions; (ii) the approval by the
stockholders of the Company of any plan or proposal for the liquidation or
dissolution of the Company; (iii) any transaction or series of transactions (as
a result of a tender offer, merger, consolidation or otherwise) that results in
any person (other than the officers or members of the Board of Directors of the
Company as of the date of this Debenture), including a "group" (within the
meaning of Section 13(d)(3) of the Exchange Act) that includes such person,
acquiring "beneficial ownership" (as defined in Rule 13d-3 under the Exchange
Act), directly or indirectly, of 50% or
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more of the aggregate voting power of all classes of common equity of the
Company; or (iv) individuals who at time of the issuance of this Debenture
constituted the Board of Directors (together with any new directors whose
election to the Board of Directors or whose nomination for election by the
Company's stockholders was approved by a vote of at least two-thirds of the
members of the Board of Directors at the beginning of such period or whose
election or nomination for election was previously so approved) cease for any
reason to constitute during such period a majority of the members of the Board
of Directors then in office.
5. Restrictions Upon Transferability. Neither this Debenture nor the shares of
Common Stock issuable upon conversion of this Debenture have been registered
under the Securities Act and may not be sold or transferred in whole or in part
unless the Holder shall have first given notice to the Company describing such
sale or transfer and furnished to the Company either (a) an opinion of counsel,
which counsel and opinion (in form and substance) shall be reasonably
satisfactory to the Company, to the effect that the proposed sale or transfer
may be made without registration under the Securities Act or (b) an interpretive
letter from the SEC to the effect that no enforcement action will be recommended
if the proposed sale or transfer is made without registration under the
Securities Act; provided however, that the foregoing shall not apply if there is
in effect a registration statement with respect to this Debenture at the time of
the proposed sale or transfer.
6. Events of Default and Remedies.
6.1 An "Event of Default" shall occur if:
(a) The Company defaults in the payment of this Debenture, when and as the same
shall become due and payable whether at maturity thereof, or by acceleration or
otherwise, which default shall continue for a period of five (5) days following
written notice by the holder to the Company; or
(b) The Company fails to comply with any of the covenants, conditions or
agreements set forth in this Debenture and such default shall continue for a
period of ten (10) days following written notice by the holder to the Company;
or
(c) The Company shall file or consent by answer or otherwise to the entry of an
order for relief or approving a petition for relief or reorganization or
arrangement or any other petition in bankruptcy, for liquidation or to take
advantage of any bankruptcy or insolvency law of any jurisdiction, or shall make
an assignment for the benefit of its creditors, or shall consent to the
appointment of a custodian, receiver, trustee or other officer with similar
powers of itself or of any substantial part of this property, or shall be
adjudicated a bankrupt or insolvent, or shall take corporate action for the
purpose of any of the foregoing, or if a court or governmental authority of
competent jurisdiction shall enter an order appointing a custodian, receiver,
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trustee or other officer with similar powers with respect to the Company or any
substantial part of its property, or constituting an order for relief or
approving a petition for relief or reorganization or any other petition in
bankruptcy or for liquidation or to take advantage of any bankruptcy or
insolvency law of any jurisdiction, or ordering the dissolution, winding up or
liquidation of the Company, or if any such petition shall be filed against the
Company and such petition shall not be dismissed within ninety (90) days.
6.2 In case an Event of Default (other than an Event of Default resulting from
the Company's failure to pay the principal of, or any interest upon, this
Debenture when the same shall be due and payable in accordance with the terms
hereof, after giving effect to applicable "cure" provisions herein, which event
of default shall not require prior written notice) or bankruptcy, insolvency or
reorganization shall occur and be continuing, the holder of the Debenture, by
notice in writing to the Company may declare all unpaid principal and accrued
interest on this Debenture due and payable without any other act on the part of
the holder of the Debenture. Such acceleration may be annulled and past defaults
(except, unless theretofore cured, a default in payment of principal or interest
on the Debenture) may be waived by the holder of the Debenture then outstanding
or its duly authorized agent.
6.3 Should the indebtedness represented by this Debenture or any part thereof be
collected in any proceeding, or this Debenture be placed in the hands of
attorneys for collection after default, the Company agrees to pay as an
additional obligation under this Debenture, in addition to the principal due and
payable hereon, all reasonable costs of collecting this Debenture, including
reasonable attorneys' fees.
7. Amendments. This Debenture may be amended, modified, superseded, canceled,
renewed or extended, and the terms hereof may be waived, only by a written
instrument signed by the Company and the holder of the Debenture.
8. No Waiver. No delay on the part of any party in exercising any right, power
or privilege hereunder shall operate as a waiver hereof, nor shall any waiver on
the part of any party of any right, power or privilege hereunder, nor any single
or partial exercise of any right, power or privilege hereunder preclude any
other or further exercise hereof or the exercise of any other right, power or
privilege hereunder. The rights and remedies provided herein are cumulative and
are not exclusive of any rights or remedies which any party may otherwise have
at law or in equity.
9. Loss, Theft, Destruction or Mutilation of Debenture. Upon receipt by the
Company of evidence reasonably satisfactory to the Company of the loss, theft,
destruction or mutilation of this Debenture, and of indemnity or security
reasonably satisfactory to the Company, and upon reimbursement to the Company of
all reasonable expenses incidental thereto, and upon surrender and cancellation
of this Debenture, if
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<PAGE>
mutilated, the Company will make and deliver a new Debenture of like tenor and
of the same series, in lieu of this Debenture. This Debenture made and delivered
in accordance with the provisions of this Section shall be dated as of the date
hereof.
10. Notice. Any notice or other communication required or permitted hereunder
shall be in writing and shall be delivered personally, by facsimile or sent by
certified, registered, or express mail, postage prepaid, and shall be deemed
given when so delivered personally or one day by overnight courier or, if
mailed, five days after the date of deposit in the United States, as follows (i)
if to the Company, 50 Washington Street, Norwalk, CT 06854 and (ii) if to the
holder of this Debenture, at such addresses as set forth in the Securities
Purchase Agreement of the holder of this Debenture.
11. No Personal Guarantees. It is expressly understood that this Debenture is
issued without any personal guarantee from any officer, director, shareholder,
employee or agent of the Company with respect to the obligations hereunder.
12. Governing Law. This Debenture shall be governed by a construed in accordance
with the laws of the State of New York, without giving effect to conflict of law
principles.
13. Successors and Assigns. All the covenants, stipulations, promises and
agreements in this Debenture contained by or on behalf of the Company shall bind
its successors and assigns, whether or not so expressed.
14. Enforceability. If any provision of this Debenture shall be held to be
invalid, illegal or unenforceable, such invalidity, illegality or
unenforceability shall not affect any other provisions of this Debenture, and
this Debenture shall be construed as if any invalid, illegal or unenforceable
provisions had not been contained herein; provided however, that default in the
performance or observance by the Company of any provision of this Debenture
which has been held to be invalid, illegal or unenforceable shall,
notwithstanding such invalidity, illegality or unenforceability, constitute an
Event of Default hereunder, if such default would have constituted an Event of
Default without regard to such invalidity, illegality or unenforceability.
IN WITNESS WHEREOF, the Company has caused this Debenture to be signed in its
corporate name by a duly authorized officer and to be dated as of the date first
above written.
CYBERNET DATA SYSTEMS, INC.
By /s/ Marc Strausberg
-------------------------------------
Marc Strausberg, Chief Executive Officer
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<PAGE>
Exhibit 10(b)
Neither this Warrant nor the shares of Common Stock issuable upon exercise of
this Warrant have been registered under the Securities Act of 1933, as amended,
and this Warrant cannot be sold or transferred, and the shares of Common Stock
issuable upon exercise of this Warrant cannot be sold or transferred, unless and
until they are so registered or upon receipt of an opinion of Warrantholder's
counsel, satisfactory to the Corporation, that such registration is not then
required under the circumstances of such sale or transfer. Transfer of this
Warrant is subject to certain restrictions as set for the herein. The transfer
or sale of this Warrant is subject to the terms of a Stockholders' Agreement,
dated July 23, 1998, a copy of which is on file at the office of Cybernet Data
Systems, Inc.
Warrant to Purchase
Common Stock of
Cybernet Data Systems, Inc.
Expiring July 23, 1999
NAME: Globix Corporation
ADDRESS: 295 Lafayette Street
New York, New York 10012
Number of shares of Common Stock to be issued upon exercise in
full: 666,667
Purchase price per share: $1.50
For Value Received, Cybernet Data Systems, Inc., a Delaware corporation (the
"Corporation"), promises to issue to the holder of this Warrant
("Warrantholder") 666,667 shares of Common Stock of the Corporation, $.01 par
value, (the "Common Stock"), pursuant to the terms of this Warrant set forth
herein, upon the payment by the Warrantholder to the Corporation of the purchase
price per share set forth above (the "Purchase Price") and to deliver to the
Warrantholder a certificate or certificates representing the Common Stock
purchased.
1. Covenants of the Corporation. The Corporation will at all times reserve and
keep available out of its authorized shares of Common Stock, solely for the
purpose of issue upon the exercise of this Warrant as herein provided, such
number of shares of Common Stock as shall then be issuable upon the exercise of
this Warrant. The Corporation covenants that all underlying shares of Common
Stock which shall be so issued shall be duly and validly issued and fully paid
and nonassessable and free from all taxes, liens and charges with respect to the
issuance thereof.
<PAGE>
2. Exercise.
2.1. Exercise Period. The Warrantholder may exercise the purchase rights
represented by this Warrant at any time from July 23, 1998 to July 23, 1999
("Exercise Time").
3. Exercise of Warrant.
3.1. Dividends. No payment or adjustment shall be made upon any
exercise of this Warrant on account of any previous cash dividends.
3.2. Purchase Price. The Purchase Price shall be $1.50 per share.
3.3. Partial Exercise of Warrant. This Warrant may be exercised, in whole or in
part. It may be exercised by the Warrantholder at any time during the exercise
period, for all or part of the number of shares of Common Stock purchasable upon
complete exercise of the Warrant. Upon any partial exercise of this Warrant,
there shall be countersigned and issued to the Holder hereof a new Warrant in
respect to the shares as to which this Warrant shall not have been exercised.
This Warrant may be exchanged at the office of the Company by surrender of this
Warrant, properly endorsed, either separately or in combination with one or more
other Warrants, for one or more new Warrants of the same aggregate number of
shares as here evidenced by the Warrant or Warrants exchanged. No fractional
shares will be issued upon the exercise of rights to purchase hereunder. The
Company is not required to issue fractional shares upon the exercise of this
Warrant. Warrants for fractional shares shall be rounded down to the nearest
whole number. This Warrant is transferable at the office of the Company in the
manner and subject to the limitations set forth herein.
3.4. Exercise of Warrant. In order to exercise this Warrant, the Warrantholder
shall deliver to the Corporation (i) a written notice of such holder's election
to exercise this Warrant (in the form attached hereto as Exhibit A), and (ii)
payment of the Purchase Price for the number of shares being purchased, in cash
or by a certified or cashier's check. The Corporation may require the
Warrantholder to furnish a written statement that the shares of Common Stock are
being purchased for his, her or its own account and not with a view to the
distribution thereof. Upon receipt of written notice, the Corporation shall as
promptly as practicable execute or cause to be executed and delivered to such
holder a certificate or certificates representing the Common Stock purchased.
3.5. Adjustment to Purchase Price.
(a) Dividends and Subdivisions. In case the Corporation shall at any time
subdivide its outstanding shares of Common Stock into a greater number of shares
or declare a dividend or make any other
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<PAGE>
distribution upon the Common Stock of the Corporation payable in Common Stock,
the Purchase Price shall be proportionately reduced and the number of shares of
Common Stock as shall then be issuable upon the exercise of this Warrant
immediately prior to such subdivision, dividend or distribution shall be
proportionately increased, and conversely, in case the outstanding shares of
Common Stock of the Corporation shall be combined into a smaller number of
shares, the Purchase Price shall be proportionately increased and the number of
shares of Common Stock as shall then be issuable upon the exercise of this
Warrant immediately prior to such combination shall be proportionately reduced.
(b) Reorganization. Reclassification. Consolidation. Merger or Sale. Any
recapitalization, reorganization, reclassification, consolidation, merger, sale
of all or substantially all of the Corporation's assets to another Person or
other transaction which is effected in such a way that holders of Common Stock
are entitled to receive (either directly or upon subsequent liquidation) stock,
securities or assets with respect to or in exchange for Common Stock is referred
to herein as "Organic Change." Prior to the consummation of any Organic Change,
the Corporation shall make appropriate provisions and reasonable judgments of
the Board of Directors of the Corporation to insure that each of the Registered
Holders of the Warrants shall thereafter have the right to acquire and receive
in lieu of or in addition to (as the case may be) the shares of Common Stock
immediately theretofore acquirable and receivable upon the exercise of such
Registered Holder's Warrants, such shares of stock, securities or assets as may
be issued or payable with respect to or in exchange for the number of shares of
Common Stock immediately theretofore acquirable and receivable upon exercise of
such Registered Holder's Warrants had such Organic Change not taken place.
(c) Record Date. In case the Corporation shall take a record of the holders of
its Common Stock for the purpose of entitling them to receive a dividend or
other distribution payable in Common Stock, then such record date shall be
deemed to be the date of the issue or sale of the shares of Common Stock deemed
to have been issued or sold upon the declaration of such dividend or the making
of such other distribution, as the case may be.
3.6. Notice of Adjustment. Upon any adjustment in the number of shares of Common
Stock issuable upon the exercise of this Warrant, then and in each case the
Corporation shall give written notice thereof, which notice shall state the
number of shares of Common Stock issuable upon exercise of this Warrant
resulting from such adjustment, setting forth in reasonable detail the method of
calculation and the facts upon which such calculation is based.
3.7. Issue Tax. The issuance of certificates for shares of Common
Stock upon exercise of this Warrant shall be made without charge to
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<PAGE>
the holder hereof for any issuance tax in respect thereof, provided that the
Corporation shall not be required to pay any tax which may be payable in respect
of any transfer involved in the issuance and delivery of any certificate in a
name other than that of the holder of this Warrant.
3.8. Closing of Books. The Corporation will not close its books against the
transfer of any shares of Common Stock issued or issuable upon the exercise of
this Warrant.
3.9. Transferability and Registration Under Securities Act.
(a) This Warrant may not be sold, assigned, pledged or transferred except in
compliance with the terms and conditions of that certain Stockholders' Agreement
dated July 23, 1998, a copy of which can be obtained from the executive office
of the Corporation.
(b) The Warrantholder, by acceptance hereof, acknowledges and agrees that (A)
the Warrants have not been registered under the Securities Act of 1933, as
amended (the "1933 Act"), or the securities laws of any state, based upon an
exemption from such registration requirements for non-public offerings pursuant
to Section 4(2) under the 1933 Act; (B) the Warrants are and will be "restricted
securities", as said term is defined in Rule 144 of the Rules and Regulations
promulgated under the 1933 Act; (C) the Warrants may not be sold or otherwise
transferred unless (i) such transfer is in compliance with Section 3.9(a)
herein, and (ii) they have either been first registered under the 1933 Act and
all applicable state securities laws, or (x) unless exemptions from such
registration provisions are available with respect to said resale or transfer,
and (y) the undersigned shall have first delivered to the Corporation a written
opinion of counsel (which counsel and opinion (in form and substance) shall be
reasonably satisfactory to the Corporation), to the effect that the proposed
sale or transfer is exempt from the registration provisions of the 1933 Act and
all applicable state securities laws. Such restrictions of this Section 3.9
shall be deemed to apply to the transferability and registration of any shares
of Common Stock or other securities acquired upon exercise hereof; (D) the
Corporation is under no obligation to register this Warrant under the 1933 Act
or any state securities laws, or to take any action to make any exemption from
any such registration provisions available, except as provided in that certain
registration rights agreement between the Corporation and the holder of this
Warrant of even date herewith; and (E) stop transfer instructions will be placed
with the transfer agent for the Warrants.
3.10. Notice. Any notice or other document required or permitted to be given or
delivered to the Warrantholder and holder of shares issued upon exercise of this
Warrant shall be sent by certified or registered mail, return receipt requested,
to the Warrantholder at
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<PAGE>
the address now shown on this Warrant or at such other address as the holder
shall furnish to the Corporation in writing. Any notice or other document
required or permitted to be given or delivered to the Corporation at 50
Washington Street, 9th floor, South Norwalk, CT 06854 or such other address as
shall have been furnished to the Warrantholder and holder of the Common Stock by
the Corporation.
3.11. No Voting Rights; Limitation of Liability. This Warrant shall not entitle
the registered Holder hereof to any voting rights or other rights as a
stockholder of the Company prior to the Exercise Time. No provisions hereof, in
the absence of affirmative action by the Warrantholder to purchase Common Stock
hereunder, and no mere enumeration herein of the rights or privileges of the
Warrantholder shall give rise to any liability of such holder for the Purchase
Price or as a shareholder of the Corporation (whether such liability is asserted
by the Corporation or creditors of the Corporation).
3.12. Replacement. Upon receipt of evidence reasonably satisfactory to the
Company of the ownership and the loss, theft, destruction or mutilation of any
certificate evidencing this Warrant, and in the case of any such loss, theft or
destruction, upon receipt of an indemnity undertaking from the holder of this
Warrant or such other Person satisfactory to the Company (it being acknowledged
that an unsecured indemnity from any original Warrantholder or an affiliated
transferee shall be satisfactory), or, in the case of any such mutilation upon
surrender of such certificate, the Company shall execute and deliver in lieu of
such certificate a new certificate of like kind representing the same rights
represented by such lost, stolen, destroyed or mutilated certificate and dated
the date of such lost, stolen, destroyed or mutilated certificate.
IN WITNESS WHEREOF, the Corporation has caused this Warrant to be executed by
its President or a Vice President, thereunto duly authorized, the execution
hereof to be attested by its Secretary; and the affixing of its corporate seal
on this 23rd day of July, 1998.
(Corporate Seal) Cybernet Data Systems, Inc.
ATTEST:
By:/s/ Susan J. Strausberg By:/s/ Marc Strausberg
------------------------ ----------------------
Secretary President
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<PAGE>
EXHIBIT A
FORM OF ELECTION TO PURCHASE
The undersigned hereby irrevocably elects to exercise the right, represented by
this Warrant Certificate, to purchase shares of Common Stock and herewith
tenders in payment for such Common Stock cash or a check payable to the order of
Cybernet Data Systems, Inc. (the "Corporation") in the amount of $ , all
in accordance with the terms hereof. The undersigned hereby represents and
warrants that it is obtaining the Common Stock solely for investment purposes
and not with any intention to distribute such Common Stock and acknowledges that
such Common Stock have not been registered under the Securities Act of 1933 and
that such Common Stock can not be sold or transferred unless so registered or
upon receipt of an opinion of counsel, reasonably acceptable to the Corporation
and its counsel, that registration is not then required. The undersigned
requeststhat a certificate for such Common Stock be registered in the name
of , whose address is
, and that such Certificate be delivered to
, whose address is
Dated: Signature:
(Signature must conform in
all respects to name of
holder as specified on the
face of the Warrant
Certificate.)
(Insert Social Security or Other
Identifying Number of Holder)
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