Document:

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

CONVERTIBLE HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF

EXHIBIT

4.15

 

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.

 

$1,000,000.00

 

Date: December 1, 2000

 

FOR VALUE RECEIVED, EpicEdge, Inc., a Texas

corporation (the “Company”), promises to pay to the registered holder, Fleck

T.I.M.E. Fund, L.P., its successors and assigns (in each case, “Payee”), the

sum of One Million Dollars ($1,000,000), 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

pre-payment 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.

 

1

 

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

 

2

 

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.

 

3

 

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.

 

4

 

(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.

 

5

 

6.             Highest

Lawful Rate.  If 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 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.

 

6

 

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 in to 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 WITHNESS WHEREOF, the

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

 

	

   

  	

  EPICEDGE, INC.

  
	

   

  	

   

  
	

   

  	

  By:

  	

  /s/ Paul Ruiz

  
	

   

  	

   

  	

   

  
	

   

  	

  Its:

  	

  Chief Financial Officer

  

 

7

 

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 Indentification

  Number:

  
	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  

 

8February 7, 2002

EXHIBIT 4.16

 

February 7, 2002

 

Patrick Loche c/o Gerald C. Allen

5858 Westheimer, Suite 708

Houston, TX 77057

 

John Paul Deloria

P.O. Box 3454 D

Las Vegas, NV 89133

 

Fleck T.I.M.E. Fund, LP

289 Greenwich Avenue

Greenwich, CT 06830

Attn: Kathryn Fleck

 

Gentlemen:

 

EpicEdge, Inc. (“EpicEdge”) would like to

inform you of renegotiated terms, which will allow EpicEdge to complete the

funding contemplated in our June 21, 2001 letter agreement (the “Letter

Agreement”).  In light of EpicEdge’s

need to satisfy immediate cash requirements, EpicEdge has worked with Edgewater

to produce what we hope will be mutually beneficial terms to all parties.

 

Please review the enclosed updated Memorandum

of Terms and the associated exhibits. 

The differences in the negotiated terms from those contemplated in the

Letter Agreement include, but are not limited to:

 

1)     An increase in the preference payout rate

for the Preferred A and B shares from 2.5 to 2.75, which will increase to 3 if

a liquidity event is not realized within 24 months.

2)     The conversion rate on the Preferred B

shares will remain at $.25, however, the Preferred B shares now also have the

option of receiving the preference payout and participating with the common

shares at a conversion rate of $.75.

3)     In light of these enhancements, the

cumulative dividend has been removed.

4)     The bonus pool available to employees will

start at an equity value of $12,000,000.

5)     The value of the bonus pool was decreased

to 10% of the preference value at $12,000,000, but will increase to 20%

incrementally as the equity value approaches $20 million, and remain at 20%

above this value.

6)     The Preferred A and B preference payout

will now be pari passu with each other.

7)     There will be no board participation from

the Allen Group.

8)     The Allen group will be released from its

obligation to provide a minimum of $950,000 in additional funding.

 

Each of you hereby agree to (a) be bound by

the terms of the attached Memorandum of Terms and the exhibits thereto, (b)

terminate the Letter Agreement, and (c) cancel and

 

 

June

21, 2001

 

Mr. John Paul Deloria

P.O. Box 3454 D

Las Vegas, Nevada 89133

 

Fleck T.I.M.E. Fund, LP

289 Greenwich Avenue

Greenwich, Connecticut 06830

 

Gentlemen:

 

This letter agreement (the

“Agreement”) is by and among John Paul Deloria (“Deloria”), Fleck T.I.M.E.

Fund, LP (“Fleck”), (together, the “Lenders”), and EpicEdge, Inc., (the

“Company”), collectively the “Parties”.

 

The Lenders have agreed to

provide the Company an initial funding in the amount of $800,000, pursuant to

the Secured Promissory Note attached hereto as Exhibits “A” (the “Initial

Funding”).

 

As security for the Initial

Funding, the Company hereby grants to the Lenders a continuing security

interest in the assets of the Company subject only to that certain lien held by

GE Access, and to file documents perfecting such lien as soon as possible.

 

The Lenders have agreed to

provide the Company subsequent funding (the “Subsequent Funding”) for an

aggregate loan of up to $3,000,000, but not less than $2,000,000 pursuant to

the following documents to be negotiated by the parties:

 

1.             Convertible Secured

Loan Agreement

2.             Convertible Note

3.             Certificate of

Designation for Series A Preferred Stock

4.             Registration Rights

Agreement

 

Lenders may arrange for any portion of such

funding from additional parties acceptable to the Company.

 

Such documents shall contain

the terms set forth on Exhibit “B” attached hereto and made a part hereof for

all purposes, and any additional terms agreed upon by the parties.  It is the intention of the Parties that the

Secured Promissory Note evidencing the Initial Funding shall be rolled into the

Convertible Secured Bridge Loan Agreement and a new covertible Note evidencing

the Initial funding shall be issued.

 

The validity, construction

and effect of this Agreement and its enforcement shall be determined by the

laws of the State of Texas.

 

 

Should any provision of this

Agreement be or become invalid or unenforceable, the remaining provisions of

this Agreement shall continue to be fully effective.

 

This Agreement, and the

other documents referred to herein, contain the entire understanding of the

parties hereto in respect of its subject matter and supersedes all prior and

contemporaneous agreement and understandings, oral and written, between the

parties with respect to such subject matter.

 

This Agreement may be

executed in any number of counterparts, each of which when so executed and

delivered, shall be an original, but all such counterparts shall together

constitute one and the same instrument. 

One or more counterparts of this Agreement may be delivered by

facsimile, with the intention that delivery by such means shall have the same

effect as delivery of an original counterpart thereof.

 

Please confirm your

agreement to the foregoing by signing below.

 

	

   

  	

   

  	

  Very truly yours,

  
	

   

  	

   

  	

   

  
	

   

  	

   

  	

  /s/ Richard Carter

  
	

   

  	

   

  	

  Richard Carter

  
	

   

  	

   

  	

  Chief Executive Officer

  
	

   

  	

   

  	

   

  
	

  ACCEPTED AND AGREED as of

  the date first 

  above written

  	

   

  	

   

  
	

   

  	

   

  	

   

  
	

  /s/ John Paul Deloria

  	

   

  	

   

  	

   

  
	

  John Paul Deloria

  	

   

  	

   

  
	

   

  	

   

  	

   

  
	

  Fleck T.I.M.E. Fund, LP

  	

   

  	

   

  
	

   

  	

   

  	

   

  
	

  By: 

  	

  [ILLEGIBLE]

  	

   

  	

   

  	

   

  
	

  Its: 

  	

  CEO

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