EXHIBIT 10.63
PROMISSORY NOTE
$300,000
New York, New York
June 13, 2002
This Promissory Note (the "NOTE") is executed and delivered
pursuant to that certain Asset Purchase Agreement dated effective as of April
17, 2002 (as amended, the "AGREEMENT") between ClearBlue Technologies
Management, Inc. and AppliedTheory Corporation and the subsidiaries of
AppliedTheory Corporation set forth on the signature page thereto and Schedule 1
thereto. Capitalized terms not otherwise defined herein shall have the meanings
ascribed thereto in the Agreement.
1. PAYMENT. FOR VALUE RECEIVED, the undersigned,
ClearBlue Technologies Management, Inc., a Delaware corporation ("MAKER"),
promises to pay to the order of AppliedTheory Corporation, a Delaware
corporation, or its assigns or any subsequent holder(s) of this Note ("HOLDER"),
on the fourth anniversary of the date of this Note at such place as the Holder
may designate from time to time in writing to the Maker, in lawful money of the
United States of America, the principal sum of THREE HUNDRED THOUSAND DOLLARS
($300,000), together with interest on the unpaid principal balance of this Note
from the date hereof until paid at eight percent (8%) per annum. Interest shall
be computed on the basis of the actual days elapsed over a 360 day year, and
shall be payable in cash on each anniversary date of the date of this Note.
The principal balance of this Note may be prepaid, at the
option of Maker, in whole at any time, or in part from time to time, without
premium or penalty.
All amounts received for payment under this Note shall, at the
option of Holder, be applied first to any unpaid expense of Holder under Section
5 hereof, then to unpaid interest due on overdue installments, then to unpaid
interest accrued, and finally to the reduction of the outstanding principal
balance of the Note.
2. REPRESENTATIONS, WARRANTIES AND COVENANTS. While this
Note is outstanding, Maker hereby continuously represents, warrants and
covenants to Holder that:
a. Company Status. Maker is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and duly qualified and in good standing in every other state or
jurisdiction in which the nature of Maker's business requires such qualification
except where failure to be so qualified would not individually or in the
aggregate have a material adverse effect on its business.
b. Authority and Execution. Maker has full power,
authority and legal right to own its property and assets and to transact the
business in which it is engaged. Maker has the full power, authority and legal
right to execute and deliver, to perform its obligations and has taken all
necessary action to authorize the execution, delivery and performance of this
Note.
c. Legal, Valid and Binding Character. This Note
constitutes the legal, valid and binding obligation of Maker and is enforceable
in accordance with its terms.
d. No Violations. The execution, delivery and
performance of its obligations hereunder by Maker will not violate any
requirement of law applicable to Maker or any material contract, agreement or
instrument to which Maker is a party or by which Maker or its property is bound.
e. Financial Information. Maker shall provide Holder as
soon as available, but in any event within ninety (90) days after the end of
each fiscal year, Maker's balance sheet as at the end of such fiscal year and
the related statements of income for the twelve months then ended, which shall
be prepared in accordance with U.S. generally accepted accounting principles
("GAAP").
f. Net Worth. Maker covenants that its net worth as
determined consistent with GAAP shall be at least $15 million at all times
during which the Note or any portion thereof remains unpaid.
3. DEFAULT; REMEDY. The occurrence of one or more on the
following events shall constitute an "Event of Default":
a. A default shall be made in the payment of any
principal or interest under the Note when the same shall become due and payable
whether at maturity, by acceleration, or otherwise within 10 days of when same
shall become due and payable;
b. The failure to perform under and/or committing any
other breach of this Note (and Maker covenants to provide written notice to
Holder of such breach that Holder would not otherwise have knowledge of) which
is not cured within thirty (30) days of the notice in writing to Maker by
Holder (or Holder by Maker) of the occurrence of such breach; or
c. If Maker shall (i) apply for or consent to the
appointment of, or the taking of the possession by, a receiver, custodian,
trustee or liquidator of itself or of all or a substantial part of its property,
(ii) make a general assignment for the benefit of creditors, (iii) commence a
voluntary case under the federal bankruptcy laws (as now or hereafter in
effect), (iv) be adjudicated a bankrupt or insolvent, (v) file a petition
seeking to take advantage of any other law providing for the relief of debtors,
(vi) acquiesce to, or fail to have dismissed, within thirty (30) days, any
petition filed against it in any involuntary case under such bankruptcy laws, or
(vii) take any action for the purpose of effecting any of the foregoing.
d. During the pendency of any uncured Event of Default,
unpaid principal amounts remaining unpaid hereunder and any interest installment
not paid when due remaining
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unpaid hereunder shall bear interest at a rate of two percentage points (2%) in
excess of the rate set forth in Section 1 hereof.
4. ACCELERATION. If a payment Event of Default shall
occur and remain uncured within any applicable notice and cure period then this
Note shall immediately become due and payable, without notice. If any other
Event of Default shall occur hereunder which is not cured within any applicable
grace period, then this Note may be declared to be immediately due and payable,
together with attorneys' fees, if the collection hereof is placed in the hands
of an attorney to obtain or enforce payment hereof.
5. EXPENSES OF COLLECTION BORNE BY MAKER. If this Note
is not paid in accordance with its terms, or should it become necessary in the
opinion of Holder to employ counsel to collect or enforce this Note, Maker shall
pay to Holder, to the extent permitted by applicable law, all reasonable costs,
charges, disbursements and attorney's fees incurred by Holder in collecting or
enforcing payment thereof or in protecting the same, whether incurred in or out
of court.
6. WAIVER OF JURY TRIAL; OTHER WAIVERS; EXCLUSIVE
JURISDICTION; GOVERNING LAW. MAKER EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY
OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION ARISING UNDER THIS NOTE AND
HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF
ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY.
The delay or failure to exercise any right hereunder shall not
waive such right. Maker hereby waives demand, presentment, protest, notice of
dishonor or nonpayment, notice of protest, any and all delays or lack of
diligence in collection hereof and assents to each and every extension or
postponement of the time of payment or other indulgence.
Any legal suit, action or proceeding not directly subject to
the jurisdiction of the Bankruptcy Court and arising out of or relating to this
Note must be instituted in a federal court whose district encompasses any part
of New York City, State of New York, and the Maker and Holder hereby submit to
this jurisdiction.
This Note shall be governed by, and construed and interpreted
in accordance with, the laws of the Slate of New York.
7. MODIFICATION; WAIVER. This Note may not be modified
nor shall any waiver hereunder be effective unless in writing and signed by the
party against whom the same is asserted.
8. ASSIGNMENT. This Note may be assigned by the Holder;
provided, however, that it shall not be held of record by more than three (3)
holders (counting as a single holder for such purpose any liquidating trust or
similar entity).
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IN WITNESS HEREOF, the undersigned has duly executed and
delivered this Note the date and year first above written.
CLEARBLUE TECHNOLOGIES
MANAGEMENT, INC.
By: /s/ Xxxx Xxxxxxxxx
------------------------
Name: XXXX XXXXXXXXX
Title: PRESIDENT
STATE OF NEW YORK )
) ss.:
COUNTY OF ONONDAGA )
On the 5th day of June, 2002 before me personally came Xxxx Xxxxxxxxx
to me known, who being by me duly sworn, did depose and say that he is the
President, of the corporation described in and which executed the foregoing
instrument; and that he/she signed his/her name thereto by order of said
corporation.
/s/ Xxxxxxxx X. Xxxxxx
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Notary Public XXXXXXXX X. XXXXXX
Notary Public, State of New York
Qualified in Onon. Co. No. 4755760
My Commission Expires Sept. 30, 2002
[Signature Page to $300,000 Promissory Note]