Document:

NEITHER THIS NOTE NOR THE SHARES OF COMMON STOCK INTO WHICH IT IS

CONVERTIBLE HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF

EXHIBIT 4.13

 

NEITHER THIS NOTE NOR THE SHARES OF COMMON

STOCK INTO WHICH IT IS CONVERTIBLE HAVE BEEN REGISTERED UNDER THE SECURITIES

ACT OF 1933, AS AMENDED, OR ANY STATES SECURITIES LAWS IN RELIANCE UPON

APPLICABLE EXEMPTIONS THEREUNDER.  THIS

NOTE MAY CONSTITUTE A “SECURITY” FOR THE PURPOSES OF SUCH LAWS, AND, AS SUCH,

MAY NOT BE FURTHER SOLD OR TRANSFERRED BY THE HOLDER IN THE ABSENCE OF AN

EFFECTIVE REGISTRATION UNDER SUCH LAWS OR AN EXEMPTION THEREUNDER APPLICABLE TO

SUCH SALE OR TRANSFER.

 

CONVERTIBLE NOTE

EPICEDGE, INC.

 

$500,000.00

 

Date: November 1, 2000

 

FOR VALUE RECEIVED,

EpicEdge, Inc., a Texas corporation (the “Company”), promises to pay to the

registered holder, Carl R. Rose, his successors and assigns (in each case,

“Payee”), the sum of Five Hundred Thousand Dollars ($500,000), plus interest at

the rate of eight percent (8%) per annum accruing from the date hereof on the

unpaid indebtedness hereof until finally paid. 

Such principal and accrued interest shall be paid by the Company in

lawful money of the United States of America, at the Company’s offices in

Houston, Texas, or at such other place as may be designated in writing by the

Company to Payee as follows:

 

(a)           Accrued and unpaid interest hereunder shall be payable in

cash upon maturity or in shares of the Company’s Common Stock upon conversion

as provided in Section 3.

 

(b)           All outstanding principal and unpaid accrued interest

shall be finally due and payable on December 1, 2001 (the “Maturity Date”)

unless otherwise pre-paid pursuant to Section 1.

 

1.             Prepayment; Demand for Prepayment.

 

(a)           The principal or interest hereunder may be prepaid at any

time without penalty or premium; provided, however, that the

Company shall provide at least (10) days prior written notice to Payee, and

Payee may elect to exercise its conversion rights hereunder with respect to the

indebtedness to be prepaid prior to receipt of such prepayment.

 

(b)           In the event the Company consummates the sale of its

subsidiary, IPS Associates, Inc. (“IPS”), Payee may make demand (the “Demand”)

upon the Company for prepayment in full of the outstanding amounts due

hereunder; provided, however, that Payee must make such Demand

within thirty (30) days of the consummation of the sale by the Company of IPS.

 

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2.             Default. 

In the event of (i) any failure by the Company to make any payment of

principal or interest hereunder within ten (10) days after written notice of

default in such payment from Payee has been received by the Company, (ii) the

filing of a petition by or against the Company under the provisions of any

state insolvency law or under the provisions of the Federal Bankruptcy Act (for

bankruptcy or reorganization or other relief), or (iii) any assignment by the

Company for the benefit of its creditors, Payee may, at Payee’s option, declare

the entire unpaid balance hereof immediately due and payable.  Any delay on the part of Payee in exercising

any rights hereunder shall not operate as a waiver of such rights; acceptance

of any payment after its due date shall not be deemed a waiver of the right to

require prompt payment when due of all other sums; and acceptance of any

payment after Payee has declared the entire indebtedness due and payable shall

not cure any default of the Company or operate as a waiver of any rights of

Payee hereunder.  Upon default, the

Company agrees to pay all costs and reasonable actual attorneys= fees for

collection of this debt instrument.

 

3.             Conversion Rights.

 

(a)           Terms. 

Payee shall have the right from time to time to convert (the “Conversion

Right”) any or all of the unpaid indebtedness hereof (including accrued but

unpaid interest) into shares of the Company’s common stock, par value $.01 (the

“Common Stock”), at a conversion rate of fifty cents ($0.50) of indebtedness

per share of Common Stock (the “Conversion Rate”).  Such Conversion Right may be exercised at any time prior to the

Maturity Date.  To effect such conversion,

Payee must tender to the Company at its offices in Houston, Texas, this Note

together with a written notice of exercise of such Conversion Right stating the

amount of indebtedness being converted. 

Upon the giving of the notice of conversion and receipt of this Note as

hereinabove provided, no further interest shall accrue upon the converted

indebtedness hereof, and the Company shall issue to Payee a certificate

evidencing the shares of Common Stock to which Payee is entitled in proper

form.  The Company will pay any

documentary stamp taxes attributable to the initial issuance of shares of its

Common Stock upon conversion of any indebtedness represented hereby.

 

(b)           Adjustments. 

In the event of any stock dividend, split, combination or

reclassification directly affecting the then outstanding Common Stock, the then

effective Conversion Rate at which the indebtedness evidenced by this Note may

be converted into shares of Common Stock shall be proportionately adjusted,

upward or downward, to prevent dilution or enlargement of the rights of Payee,

effective at the close of business on the date of such dividend, split,

combination or reclassification.  In the

event the Common Stock shall be changed into another kind of capital stock or

debt (otherwise then through a stock dividend, split, combination or

reclassification) or shall represent the right to receive some other security

or property, as a result of any capital reorganization or any merger or

consolidation with another corporation in which the Company is not the

surviving corporation, or any sale of all or substantially all of the assets of

the Company to another corporation, such debt shall (subject to further

adjustment in conversion price as herein provided) thereafter entitle Payee to

acquire upon conversion hereof the kind and number of shares of stock or other

securities or property to which Payee would have been entitled if Payee had

converted this Note into Common Stock immediately prior to such capital

reorganization, merger, consolidation or sale of assets.  If the Conversion Rate shall be adjusted as

provided in this Section 3(b), the Company shall

 

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forthwith prepare a statement signed by the

Chairman of the Board, the President, any Vice President, the Secretary or the

Treasurer of the Company, showing in reasonable detail the facts requiring such

adjustment and the Conversion Rate that will be effective after such

adjustment.  The Company shall forthwith

cause such statement to be sent by first class mail, postage prepaid, to Payee

at its address appearing upon the Company’s register.

 

(c)           Transfer to Comply with the Securities Act of 1933.  Neither this Note nor any of the shares of

Common Stock of the Company issued upon conversion of this Note, nor any

interest in either, may be sold, assigned, pledged, hypothecated, encumbered or

in any other manner transferred or disposed of, in whole or in part, except in

compliance with applicable U.S. federal and state securities or blue sky laws

and the terms and conditions hereof.  Each

certificate for the Common Stock issued pursuant to the conversion hereof,

shall bear a legend substantially in the form as set forth on the face hereof.

 

(d)           Company Liquidation.  In the event a voluntary or involuntary dissolution, liquidation

or winding up of the Company (other than in connection with a consolidation,

merger or sale of all or substantially all of the assets of the Company) is at

any time proposed, the Company shall give at least ten (10) days’ written

notice to Payee prior to the record date as of which holders of Common Stock

will be entitled to receive distributions as a result of the proposed

transaction.  Such notice shall

contain:  (i) the date on which the

transaction is to take place, (ii) the record date as of which holders of

Common Stock will be entitled to receive distributions as a result of the

transaction, (iii) a brief description of the transaction, (iv) a brief

description of the distributions to be made to holders of Common Stock as a

result of the transaction, and (v) an estimate of the fair value of the distributions.  On the date of the transaction, if it

actually occurs, the Conversion Right granted under this Note shall terminate.

 

(e)           No Fractional Shares.  No fractional shares of Common Stock shall be issued upon

conversion of this Note.  Instead of any

fractional share that would otherwise be issuable upon conversion, the Company

will pay a cash adjustment with respect to such fractional share in an amount

equal to the same fraction of the then effective conversion rate.

 

(f)            Reservation of Shares.  The Company shall at all times reserve and hold available

sufficient shares of Common Stock to satisfy all conversion rights of this

Note.  Shares of Common Stock

deliverable upon the conversion of this Note shall, at delivery, be fully paid

and nonassessable, free from all taxes, liens and charges arising out of their

issuance.  In the case of the conversion

of less than all of the indebtedness of this Note, the Company shall cancel

this Note and execute and deliver a new Note of like tenor and date for the

balance of the unpaid and unconverted indebtedness.

 

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4.             Registration Rights.

 

(a)           Demand Registration Rights.

 

(i)            Request for Registration.  At any time after the date that is six (6)

months from the date hereof, upon the written request of Payee for the Company

to register under the Securities Act of 1933, as amended (the “Securities

Act”), all or any portion of the Common Stock issuable upon conversion hereof

for sale in the manner specified in such notice, Payee shall be obligated to

convert this Note into shares of Common Stock and the Company shall be

obligated to file a registration statement with respect to such shares of

Common Stock within sixty (60) days of such request and shall use its reasonable

best efforts to have such registration statement declared effective as soon

thereafter as practicable; provided, however, that the Company

shall not be required to file more than one (1) registration statement in total

under this Section 3(a).  Notwithstanding

anything to the contrary contained herein, the Company shall not be obligated

to effect a registration pursuant to this Section 3(a) within ninety

(90) days after the effective date of a registration statement filed by the

Company covering a firm commitment underwritten public offering in which Payee

shall have been entitled to join pursuant to Section 3(b).

 

(ii)           Limitations on Demand Registrations.

 

(A)          The Company may postpone the filing of any registration

statement requested under this Section 3 for a reasonable period of

time, not to exceed ninety (90) days after receipt of the request if the

Company furnishes to Payee requesting a registration statement a certificate

signed by the Company’s Chief Executive Officer or Chairman of the Board stating

that, in the judgment of the Board of Directors of the Company, a required

registration would be seriously detrimental to the Company and the Board of

Directors of the Company concludes, as a result, that it is in the best

interests of the Company to defer the filing of such registration statement at

such time; provided, however, that the Company shall not defer

its obligation in this manner more than once in any twelve-month period.

 

(B)           Notwithstanding anything herein to the contrary, if a

required registration requested under this Section 3 is withdrawn or

otherwise fails to become effective, such request for registration shall not be

considered in calculating the number of required registrations available to

Payee hereunder if (i) the failure for such registration statement to become

effective is a result of the failure of the Company to comply with its

covenants and agreements hereunder, (ii) such registration is withdrawn by

Payee because it has learned of a material adverse change in the condition,

business or prospects of the Company not known to Payee at the time of its

request, of which the Company had knowledge at the time of the request; or

(iii) such registration is withdrawn by Payee requesting such registration

because of market conditions outside the control of the Company or Payee.

 

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(b)           Piggyback Registration.

 

(i)            Each time that the Company proposes for any reason to

register any of its Common Stock under the Securities Act in connection with

the proposed offer and sale of its Common Stock for money either for its own

account or on behalf of any other security holder (each, a “Proposed

Registration”), other than pursuant to a registration statement on Form S-3,

Form S-4, or Form S-8, or any successor forms thereto, the Company shall

promptly give written notice of such Proposed Registration to Payee and shall

offer Payee the right to request inclusion of the Common Stock issuable upon

conversion hereof in the Proposed Registration.

 

(ii)           Payee shall have thirty (30) days from the receipt of such

notice to deliver to the Company a written request specifying the number of

shares of Common Stock Payee intends to sell and the holder’s intended method

of disposition.

 

(iii)          In the event that the Proposed Registration by the Company

is, in whole or in part, an underwritten public offering, the Company shall so

advise as part of the written notice given pursuant to Section 3(b)(i),

and any request under Section 3(b)(ii) must specify that the shares of

Common Stock be included in the underwriting on the same terms and conditions

as the shares of Common Stock, if any, otherwise being sold through

underwriters under such registration.

 

(iv)          Upon receipt of a written request pursuant to Section

3(b)(ii), the Company shall promptly use its best efforts to cause all such

shares of Common Stock held by Payee to be registered under the Securities Act

(and included in any related qualifications under blue sky laws or other

compliance), to the extent required to permit sale or disposition as set forth

in the Proposed Registration.

 

(v)           In the event that the offering is to be an underwritten

offering, the Payee proposing to distribute its shares of Common Stock through

such underwritten offering agrees to enter into an underwriting agreement and a

customary lock-up agreement with the underwriter or underwriters selected for

such underwriting by the Company.

 

(vi)          If in the good faith judgment of the managing underwriter

in any underwritten offering, the inclusion of all of the shares of Common

Stock and any other Common Stock held by Payee requested to be registered would

interfere with the success of such offering, then the number of shares of

Common Stock held by Payee and other Common Stock to be included in the

offering (except for shares to be issued by the Company in an offering

initiated by the Company) shall be reduced to such smaller number as, in the

opinion of such underwriter, can successfully be sold with the participation in

such offering by Payee and the other holders of Common Stock.

 

5.             Waiver. 

Except as otherwise set forth herein, the Company and all endorsers,

sureties, and guarantors hereof hereby jointly and severally waive all

exemption rights under any applicable law, and also waive presentment for

payment, demand, notice of nonpayment, valuation, appraisement, protest,

demand, dishonor, notice of protest, notice of intent to accelerate, notice of

acceleration, and all other notices, and without further notice hereby consent

to all renewals, extensions, or partial payments either before or after

maturity.

 

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6.             Highest Lawful Rate.  It is expressly stipulated and agreed to be the intent of Company

and Payee at all times to comply with the applicable state and federal law

governing the maximum rate or amount of interest payable on or in connection

with this Note (or applicable United States federal law to the extent that it

permits Payee to contract for, charge, take, reserve or receive a greater amount

of interest than under state law).  If

the applicable law is ever judicially interpreted so as to make the amount of

interest exceed any applicable law or regulation, or render usurious any amount

called for under this Note, or under any of the other documents evidencing or

relating to this Note or any part thereof (collectively, the “Agreements”), or

contracted for, charged, taken, reserved or received with respect to the

indebtedness evidenced by this Note (the “Loan”), or if acceleration of the maturity

of this Note or if any prepayment by the Company results in the Company having

paid any interest in excess of that permitted by law, then it is the Company’s

and Payee’s express intent that all excess amounts theretofore collected by

Payee be credited on the principal balance of this Note (or, if this Note has

been or would thereby be paid in full, refunded to The Company), and the

provisions of this Note and the other Agreements immediately be deemed reformed

and the amounts thereafter collectible hereunder and thereunder reduced,

without the necessity of the execution of any new document, so as to permit the

recovery of the fullest amount called for hereunder and thereunder, while

complying in all respects with applicable law. 

The right to accelerate the maturity of this Note does not include the

right to accelerate any interest which has not otherwise accrued on the date of

such acceleration, and Payee does not intend to collect any unearned interest

in the event of acceleration.  All sums

paid or agreed to be paid to Payee for the use, forbearance or detention of the

Loan shall, to the extent permitted by applicable law, be amortized, prorated,

allocated and spread throughout the full term of the Loan until payment in full

so that the rate or amount of interest on account of the Loan does not exceed

the applicable usury ceiling. 

Notwithstanding any provision contained in this Note or in any of the

other Agreements that permits the compounding of interest, including without

limitation any provision by which any of the accrued interest is added to the

principal amount of this Note, the total amount of interest that the Company is

obligated to pay and Payee is entitled to receive with respect to this Note

shall not exceed the amount calculated on a simple (i.e.,

non-compounded) interest basis at the Highest Lawful Rate on principal amounts

actually advanced to or for the account of the Company, including the initial

principal amount of this Note and any advances made pursuant to any of the

Agreements (such as for the payment of taxes, insurance premiums and the

like).  As used herein, the term

“Highest Lawful Rate” shall mean the maximum non-usurious rate of interest

which may be lawfully contracted for, charged, taken, reserved or received by

Payee from the Company in connection with the Loan under the applicable state

law (or applicable United States federal law, to the extent that it permits

Payee to contract for, charge, take, reserve or receive a greater amount of

interest than under state law).

 

7.             Business Purposes.  The Company hereby represents and warrants to Payee that the loan

evidenced hereby is a “contract under which credit is extended for business,

commercial, investment, or other similar purpose,” and is not a loan for

“personal, family, household, or agricultural use,” within the meaning of the

applicable Texas statutes.

 

8.             GOVERNING LAW.  THIS NOTE

SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF

TEXAS.

 

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9.             No Rights as Shareholder.  This instrument does not entitle the holder

to any voting rights or other rights as a shareholder of the Company, or to any

other rights whatsoever except the rights herein expressed.  No dividends are payable or will accrue on this

instrument or the shares of Common Stock into which the principal amount hereof

may be converted until, and except to the extent that, the conversion right

granted in this instrument is exercised.

 

10.           Severability. 

If any provisions of this Note or any payments pursuant to the terms

hereof shall be invalid or unenforceable to any extent, the remainder of this

Note and any other payments hereunder shall not be affected thereby and shall

be enforceable to the greatest extent permitted by law.

 

IN WITNESS WHEREOF, the

Company has caused this Note to be executed on the date first written above.

 

	

   

  	

   

  
	

   

  	

  EPICEDGDE, INC.

  
	

   

  	

   

  
	

   

  	

   

  
	

   

  	

  By:

  	

  /s/ Paul Ruiz

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  Its:

  	

  Chief Financial Officer 

  	

   

  

 

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CONVERSION FORM

The undersigned hereby:

 

(1)           Irrevocably elects to convert $                        of the indebtedness of this instrument into

shares of the Common Stock of EpicEdge, Inc. in accordance with the terms of

said instrument;

 

(2)           Requests that a certificate for such shares be issued in

the name of the undersigned and delivered to the undersigned at the address

below; and

 

(3)           Requests that, if such indebtedness is not all the unpaid

indebtedness under said instrument, a new instrument of like tenor for the

balance of the unpaid and unconverted indebtedness of said instrument be issued

in the name of the undersigned and delivered to the undersigned at the address

below.

 

	

  Date:

  	

   

  	

   

  	

  SIGNATURE:

  
	

   

  	

   

  
	

   

  	

   

  
	

   

  	

   

  	

   

  
	

   

  	

  (Please sign exactly as

  name appears on face of

  instrument)

  
	

   

  	

   

  
	

   

  	

  Address:

  
	

   

  	

   

  	

   

  
	

   

  	

   

  
	

   

  	

   

  	

   

  
	

   

  	

   

  
	

   

  	

  Taxpayer Identification

  Number:

  
	

   

  	

   

  
	

   

  	

   

  	

   

  

 

8AMENDMENT TO PROMISSORY NOTE

EXHIBIT 4.14

 

AMENDMENT TO PROMISSORY NOTE

 

This AMENDMENT TO PROMISSORY NOTE (the

“Amendment”) is made this 31st day of August 2001, between EpicEdge, Inc., a

Texas corporation (“Maker”), and Carl R. Rose (“Payee”).

 

PREAMBLE

 

WHEREAS, Maker executed a Convertible Promissory

Note on the 7th day of November, 2000 whereby it promised to pay to

the order of Payee the sum of $400,000, (the “Original Note”), and

 

WHEREAS, in order to maximize the purposes for which

the Original Note was procured, Maker and Payee have agreed to amend the

payment terms.

 

NOW, THEREFORE, in exchange for ten and

no/100 dollars ($10), the mutual promises contained herein, and other good and

valuable consideration, the receipt and sufficiency of which are hereby

acknowledged, the parties hereto agree to amend the Original Note as follows:

 

1.       Section (a) of the introductory paragraph

of the Original Note shall be amended to reflect that interest shall be paid

based on the principal amount plus accrued interest commencing September 1, 2001;

 

2.       Section 1(b) of the Original Note shall

be deleted;

 

3.       Section 3(a) of the Original Note shall

be amended to increase the conversion rate from fifty cents ($.50) to one

dollar ($ 1.00);

 

4.       Section 2 of the Original Note shall be

amended to increase the cure period upon written notice of an event of default

from ten (10) days to thirty (30) days;

 

5.       Section (b) of introductory paragraph of

the Original Note shall be amended to reflect that the principal shall mature

on December 1, 2002.  If the company

defaults, the Payee has at its sole discretion the right to either convert the

note at $.50 per share, demand payment or to extend the maturity date until

December 1, 2003.  If the company again

defaults, the Payee has at its sole discretion the right to either convert the

note at $.25 per share, demand payment or extend the maturity date until

December 1, 2004.

 

6.                    All other terms of the

Original Note shall remain unmodified.

 

 

IN WITNESS WHEREOF, each of the parties hereto

has executed this Amendment or has caused this Amendment to be executed on its

behalf by a representative duly authorized, all as of the date first above set

forth.

 

MAKER:

 

EPICEDGE, INC.

	

   

  	

   

  
	

  By:

  	

   /s/ Richard Carter

  	

   

  	

   

  
	

  Name:

  	

   Richard Carter

  	

   

  	

   

  
	

  Title:

  	

   CEO

  	

   

  	

   

  
	

   

  	

   

  
	

  PAYEE:

  	

   

  
	

   

  	

   

  
	

  /s/ Carl R. Rose

  	

   

  	

   

  
	

  CARL R.

  ROSE

  	

   

  
							

 

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