` Exhibit 10.23
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER
THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"). THE HOLDER HEREOF, BY PURCHASING SUCH
SECURITIES, AGREES FOR THE BENEFIT OF THE CORPORATION THAT SUCH
SECURITIES MAY BE OFFERED, SOLD OR OTHERWISE TRANSFERRED ONLY (A)
TO THE CORPORATION, (B) PURSUANT TO THE EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144
THEREUNDER, IF AVAILABLE, OR (C) IF REGISTERED UNDER THE
SECURITIES ACT.
$2,120,000.00
DATE OF ISSUANCE: April 16, 2001
EDGE TECHNOLOGY GROUP, INC.
Amended and Restated Convertible Note
EDGE TECHNOLOGY GROUP, INC., a Delaware corporation
(together with its successors, the "Corporation"), for value
received hereby promises to pay to:
CATALYST MASTER FUND, L.P.
(the "Holder") and registered assigns, the principal sum of Two
Million One Hundred Twenty Thousand Dollars ($2,120,000.00)
("Total Principal Amount"), or such amount less than the Total
Principal Amount which is outstanding from time to time if the
total amount outstanding under this Amended and Restated
Convertible Note ("Convertible Note') is less than the Total
Principal Amount, on March 31, 2002 (the "Maturity Date") and to
pay interest at such times and on such terms and conditions as
specified herein.
1. CERTAIN DEFINITIONS.
The following terms as used herein shall have the following
meanings:
"Asset Sale" means any sale, transfer or other disposition
(or series of related sales, transfers or dispositions) of the
assets of the Corporation or any Subsidiary of the Corporation
(including any sales or transfers of equity interests of other
entities owned by the Corporation or any Subsidiary of the
Corporation which equity interests do not constitute Subsidiaries
of the Corporation), or sales of capital stock of any Subsidiary
of the Corporation, including any disposition by means of a
merger, consolidation or similar transaction other than a
disposition of property or assets at fair market value in the
ordinary course of business.
"Change of Control" means (i) when any person or group of
persons (within the meaning of Sections 13 and 14 of the
Securities and Exchange Act of 1934 (the "Exchange Act") and the
rules and regulations of the Securities and Exchange Commission
(the "Commission")
relating to such Sections) other than the stockholders of the
Corporation existing as of the date of this Convertible Note
shall have acquired beneficial ownership (within the meaning of
Rules 13d-3 and 13d-5 promulgated by the Commission pursuant to
the Exchange Act) of 50.1% or more of the outstanding shares of
Common Stock of the Corporation after the date hereof, or (ii)
when individuals constituting the Board of Directors of the
Corporation on the date hereof (together with any new Directors
whose election by such Board of Directors or whose nomination for
election by the stockholders of the Corporation was approved by a
vote of at least 66% of the Directors then still in office whose
election or nomination for election was previously so approved),
cease for any reason to constitute at least two-thirds of the
Board of Directors of the Corporation then in office.
"Closing Bid Price" shall mean for any security as of any
date, the lowest closing bid price as reported by Bloomberg, L.P.
("Bloomberg") on the principal securities exchange or trading
market where such security is listed or traded or, if the
foregoing does not apply, the lowest closing bid price of such
security in the over-the-counter market on the electronic
bulletin board for such security as reported by Bloomberg, or, if
no lowest trading price is reported for such security by
Bloomberg, then the average of the bid prices of any market-
makers for such securities as reported in the "pink sheets" by
the National Quotation Bureau, Inc. (as applicable, the
"Principal Market"). If the lowest closing bid price cannot be
calculated for such security on such date on any of the foregoing
bases, the lowest closing bid price of such security on such date
shall be the fair market value as mutually determined by the
Holder and the Corporation for which the calculation of the
closing bid price requires, and in the absence of such mutual
determination, as determined by the Board of Directors of the
Corporation in good faith.
"Common Stock" means the common stock of the Corporation,
par value $.01 per share.
"Financing" means any public or private financing
consummated through the issuance of debt or equity securities
(including Derivative Securities, as such term is defined in
Section 4.3(b) below) of the Corporation or any Subsidiary of the
Corporation.
"Person" means an individual, partnership, joint venture,
corporation, trust, Tribunal, unincorporated organization, and
government, or any department, agency, or political subdivision
thereof.
"Sale Event" means one of the following: (i) the occurrence
of a Change of Control of the Corporation, (ii) a transfer of all
or substantially all of the assets of the Corporation to any
person or entity in a single transaction or series of related
transactions, or (iii) a consolidation or merger of the
Corporation with or into another person or entity in which the
Corporation is not the surviving entity or survives solely as a
wholly-owned subsidiary of another entity (other than a merger
which is effected solely to change the jurisdiction of
incorporation of the Corporation and results in a
reclassification, conversion or exchange of outstanding shares of
Common Stock solely into shares of Common Stock).
"Subsidiary" of any Person means any corporation,
partnership, joint venture, trust or estate of which (or in
which) 50% or more of:
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(a) the outstanding capital stock having voting power to elect a
majority of the board of directors of such corporation
(irrespective of whether at the time capital stock of any other
class or classes of such corporation shall or might have voting
power upon the occurrence of any contingency),
(b) the interest in the capital or profits of such partnership
or joint venture, or
(c) the beneficial interest of such trust or estate,
is at the time directly or indirectly owned by such Person, by
such Person and one or more of its Subsidiaries or by one or more
of such Person's Subsidiaries.
"Trading Day" shall mean any business day in which at least
100 shares of Common Stock are traded on the Principal Market, or
any business day in which any other automated quotation system or
exchange on which the Common Stock is then traded is open for
trading for at least four (4) hours, as applicable.
2. INTEREST AND PRINCIPAL.
2.1. Interest Rate, Payment of Interest and Calculation. The
Corporation promises to pay interest in cash on the Total
Principal Amount of this Convertible Note outstanding from time
to time at the rate of Eight Percent (8%) per annum (the
"Interest Rate") or, if less, the maximum rate permitted by
applicable law. Past due amounts (including interest, to the
extent permitted by law) will also accrue interest at the
Interest Rate plus four percent (4%) per annum or, if less, the
maximum rate permitted by applicable law, and will be payable on
demand. Interest on this Convertible Note will be calculated on
the basis of a 360-day year of twelve 30 day months. The
Corporation will pay interest on (i) the Maturity Date, (ii) each
Conversion Date (as hereafter defined), and (iii) the date the
principal amount of this Convertible Note shall be declared to be
or shall automatically become due and payable, on the principal
sum hereof outstanding, until payment in full of the principal
sum hereof has been made.
2.2. Payment of Principal.
(a) The Corporation shall repay the unpaid principal balance of
this Convertible Note on the Maturity Date.
(b) The Corporation shall be obligated to prepay all or a
portion of this Convertible Note from 100% of the net cash
proceeds available from any consummated Asset Sale or Financing.
(c) The Corporation may voluntarily prepay this Convertible Note
prior to the Maturity Date upon twenty (20) days prior notice to
the Holder, whereupon the Holder shall have the right to convert
this Convertible Note pursuant to Article 4 hereof.
2.3. Advances. The Corporation may request advances hereunder on
the basis set forth in the letter agreement dated the date hereof
between the Corporation and the Holder.
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2.4. Method of Payment. The Corporation will pay in cash all
sums becoming due on this Convertible Note for principal,
interest or otherwise by wire transfer of immediately available
funds to the Holder of this Convertible Note 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 at the address specified for such purpose below the
Holder's name above, or by such other method or at such other
address as such Holder shall have from time to time specified to
the Corporation in writing for such purpose, without the
presentation or surrender of this Convertible Note.
2.5. Collateral Security. Payment of the Convertible Note is
secured by the Security Agreement dated December 14, 2000 between
the Holder and the Corporation (as the same may be amended or
modified from time to time, the "Security Agreement").
3. REGISTRATION.
3.1. Record Ownership. The Corporation shall maintain a register
of the Holder of this Convertible Note (the "Register") showing
its name and address and the serial number and principal amount
of Convertible Note issued to or transferred of record by it from
time to time. The Register may be maintained in electronic,
magnetic or other computerized form. The Corporation may treat
the Person named as the Holder in the Register as the sole owner
of this Convertible Note. The Holder (as properly noted in the
Register) is the Person exclusively entitled to receive payments
on this Convertible Note, receive notifications with respect to
this Convertible Note, convert it into Common Stock and otherwise
exercise all of the rights and powers as the absolute owner
hereof.
3.2. Registration of Transfer. Transfers of this Convertible Note
may be registered on the Register. Transfers shall be registered
when this Convertible Note is presented to the Corporation with a
request to register the transfer hereof and the Convertible Note
is accompanied by a written instrument of transfer in form
reasonably satisfactory to the Corporation, duly executed by the
Holder thereof or his attorney duly authorized in writing,
reasonable assurances are given that the endorsements are genuine
and effective, and the Corporation has received evidence
reasonably satisfactory to it that such transfer is rightful and
in compliance with this Convertible Note and all applicable laws,
including state and Federal securities laws. When this
Convertible Note is presented for transfer and duly transferred
hereunder, it shall be canceled and a new Convertible Note
showing the name of the transferee as the record holder thereof
shall be issued in lieu hereof. When this Convertible Note is
presented to the Corporation with a reasonable request to
exchange it for an equal principal amount of Convertible Notes of
other denominations, the Corporation shall make such exchange and
shall cancel this Convertible Note and issue in lieu thereof
Convertible Notes having a total principal amount equal to the
outstanding principal amount of this Convertible Note in the
denominations requested by the Holder.
3.3. Worn and Lost Securities. If this Convertible Note becomes
worn, defaced or mutilated but is still substantially intact and
recognizable, the Corporation or its agent may issue a new
Convertible Note in lieu hereof upon its surrender bearing a
number not
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contemporaneously outstanding. Where the Holder claims that the
Convertible Note has been lost, destroyed or wrongfully taken,
the Corporation shall issue a new Convertible Note in place of
the original Convertible Note bearing a number not
contemporaneously outstanding if the Holder so requests by
written notice to the Corporation actually received by the
Corporation before it is notified that the Convertible Note has
been acquired by a bona fide purchaser and the Holder has
delivered to the Corporation an indemnity bond in such amount and
issued by such surety as the Corporation deems reasonably
satisfactory together with an affidavit of the Holder setting
forth the facts concerning such loss, destruction or wrongful
taking and such other information in such form with such proof or
verification as the Corporation may reasonably request.
4. CONVERSION AT THE OPTION OF THE HOLDER
4.1.
(a) Optional Conversion. At the option of the Holder and at any
time or from time to time, all or any portion of the outstanding
principal balance of this Convertible Note may be converted into
that certain number of fully paid and nonassessable shares of
Common Stock as is determined by dividing such applicable balance
of this Convertible Note by the Conversion Price (the "Conversion
Shares").
(b) Conversion Price. Subject to adjustment pursuant to Section
4.3 below, the "Conversion Price" shall be One Dollar and Fifty
Cents ($1.50) per share of Common Stock.
4.2. Conversion Procedures.
(a) The conversion of this Convertible Note will be deemed to
have been effected as of the close of business on the date on
which the Holder delivers a notice of conversion (including via
telecopy) to the Corporation of the conversion of this
Convertible Note (the "Conversion Date"). Within five (5)
Business Days of the Conversion Date, the Holder shall surrender
this Convertible Note at the principal office of the Corporation.
On the Conversion Date, the rights of the Holder of this
Convertible Note will cease and the Person or Persons in whose
name or names any certificate or certificates for Conversion
Shares are to be issued upon such conversion will be deemed to
have become the holder or holders of record of the shares of
Common Stock represented thereby.
(b) As soon as possible after a conversion has been effected
(but in any event within five (5) Business Days), the Corporation
will deliver to the converting Holder a certificate or
certificates representing the number of shares of Common Stock
issuable by reason of such conversion in such name or names and
such denomination or denominations as the converting Holder has
specified.
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(c) The issuance of certificates for shares of Common Stock upon
conversion of this Convertible Note will be made without charge
to the Holder for any issuance tax in respect thereof or other
cost incurred by the Corporation in connection with such
conversion and the related issuance of shares of Common Stock.
Upon conversion of this Convertible Note, the Corporation will
take all such actions as are necessary in order to insure that
the Common Stock issuable with respect to such conversion will be
validly issued, fully paid and nonassessable.
(d) If any fractional interest in a share of Common Stock would,
except for the provisions of this subparagraph (d), be
deliverable upon any conversion of this Convertible Note, the
Corporation, in lieu of delivering the fractional share therefor,
will pay an amount to the Holder thereof equal to the fair market
value of such fractional interest as of the date of conversion.
(e) All accrued unpaid interest on this Convertible Note shall
be payable upon conversion in cash; provided, however, at the
sole option of the Holder, such accrued unpaid interest may be
added to principal and converted into Conversion Shares in
connection with any conversion of this Convertible Note.
4.3. Adjustments. The Conversion Price shall be subject to
adjustment from time to time as follows:
(a) Share Reorganization. If and whenever the Corporation
shall:
(i) subdivide the outstanding shares of Common Stock into a
greater number of shares;
(ii) consolidate the outstanding shares of Common Stock into a
smaller number of shares;
(iii) issue Common Stock or securities convertible into or
exchangeable for shares of Common Stock as a stock dividend to
all or substantially all the holders of Common Stock; or
(iv) make a distribution on the outstanding Common Stock to all
or substantially all the holders of Common Stock payable in
Common Stock or securities convertible into or exchangeable for
Common Stock;
(any of such events being herein called a "Share Reorganization"),
then in each such case the Conversion Price shall be adjusted, effective
immediately after the record date at which the holders of Common Stock are
determined for the purposes of the Share Reorganization or, if no record
date is fixed, the effective date of the Share Reorganization, by multiplying
the applicable Conversion Price in effect on such record or effective
date, as the case may be, by a fraction of which:
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(I) the numerator shall be the number of shares of Common Stock
outstanding on such record or effective date (without giving
effect to the transaction); and
(II) the denominator shall be the number of shares of Common
Stock outstanding after giving effect to such Share
Reorganization, including, in the case of a distribution of
securities convertible into or exchangeable for shares of Common
Stock, the number of shares of Common Stock that would have been
outstanding if such securities had been converted into or
exchanged for Common Stock on such record or effective date.
(b) Rights Offering. If and whenever the Corporation shall
issue to all or substantially all the holders of Common Stock,
rights, options or warrants under which such holders are
entitled, during a period expiring not more than forty-five (45)
days after the record date of such issue, to subscribe for or
purchase Common Stock (or securities convertible into or
exchangeable or exercisable for equity securities (collectively,
the "Derivative Securities")), at a price per share (or, in the
case of Derivative Securities, at an exchange or conversion price
per share at the date of issue of such securities) of less than
95% of the Market Price of the Common Stock on such record date
(any such event being herein called a "Rights Offering"), then in
each such case the Conversion Price shall be adjusted, effective
immediately after the record date at which holders of Common
Stock are determined for the purposes of the Rights Offering, by
multiplying the Conversion Price in effect on such record date by
a fraction of which:
(i) the numerator shall be the sum of:
(I) the number of shares of Common Stock outstanding on such
record date; and
(II) a number obtained by dividing:
(A) either,
(x) the product of the total number of
shares of Common Stock so offered for subscription or
purchase and the price at which such shares are so offered,
or
(y) the product of the maximum number
of shares of Common Stock into or for which the convertible
or exchangeable securities so offered for subscription or
purchase may be converted or exchanged and the conversion or
exchange price of such securities,
or, as the case may be, by
(B) the Market Price of the Common Stock on
such record date; and
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(ii) the denominator shall be the sum of:
(I) the number of shares of Common Stock
outstanding on such record date; and
(II) the number of shares of Common Stock so
offered for subscription or purchase (or, in the case of
Derivative Securities, the maximum number of shares of
Common Stock for or into which the securities so offered for
subscription or purchase may be converted or exchanged).
To the extent that such rights, options or warrants are not
exercised prior to the expiry time thereof, the Conversion Price
shall be readjusted effective immediately after such expiry time
to the Conversion Price which would then have been in effect upon
the number of shares of Common Stock (or Derivative Securities)
actually delivered upon the exercise of such rights, options or
warrants. For purposes of this Convertible Note, "Market Price"
shall mean the lowest Closing Bid Price of the Common Stock
during the twenty (20) Trading Day period ending one (1) Trading
Day prior to the applicable date.
(c) Special Distribution. If and whenever the Corporation shall
issue or distribute to all or substantially all the holders of
Common Stock:
(i) shares of the Corporation of any class, other than Common
Stock;
(ii) rights, options or warrants; or
(iii) any other assets (excluding cash dividends and
equivalent dividends in shares paid in lieu of cash dividends in
the ordinary course);
and if such issuance or distribution does not constitute a Share
Reorganization or a Rights Offering (any such event being herein
called a "Special Distribution"), then in each such case the
Conversion Price shall be adjusted, effective immediately after
the record date at which the holders of Common Stock are
determined for purposes of the Special Distribution, by
multiplying the Conversion Price in effect on such record date by
a fraction of which:
(I) the numerator shall be the difference between:
(x) the product of the number of shares
of Common Stock outstanding on such record date and the
Market Price of the Common Stock on such date; and
(y) the fair market value, as
determined by the Directors (whose determination shall be
conclusive), to the holders of Common Stock of the shares,
rights, options, warrants, evidences of indebtedness or
other assets issued or distributed in the Special
Distribution (net of any consideration paid therefor by the
holders of Common Stock), and
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(II) the denominator shall be the product of the number of shares
of Common Stock outstanding on such record date and the Market
Price of the Common Stock on such date.
(d) Capital Reorganization. If and whenever there shall occur:
(i) a reclassification or redesignation of the shares of Common
Stock or any change of the shares of Common Stock into other
shares, other than in a Share Reorganization;
(ii) a consolidation or merger of the Corporation with, or into
another entity; or
(iii) the merger of the Corporation with another entity in
which the Corporation survives as a wholly-owned subsidiary of
another entity; or
(iv) the transfer of all or substantially all of the assets of
the Corporation to another entity;
(any such event being herein called a "Capital Reorganization"),
then in each such case the Holder who exercises the right to
convert this Convertible Note after the effective date of such
Capital Reorganization shall be entitled to receive and shall
accept, upon the exercise of such right, in lieu of the number of
shares of Common Stock to which such Holder was theretofore
entitled upon the exercise of the conversion privilege, the
aggregate number of shares or other securities or property of the
Corporation or of the entity resulting from such Capital
Reorganization that such Holder would have been entitled to
receive as a result of such Capital Reorganization if, on the
effective date thereof, such Holder had been the holder of the
number of shares of Common Stock to which such Holder was
theretofore entitled upon conversion of this Convertible Note;
provided, however, that no such Capital Reorganization shall be
consummated unless all necessary steps shall have been taken so
that such Holder shall thereafter be entitled to receive such
number of shares or other securities of the Corporation or of the
entity resulting from such Capital Reorganization, subject to
adjustment thereafter in accordance with provisions the same, as
nearly as may be possible, as those contained above.
(e) Purchase Price Adjustments. In case at any time and from
time to time the Corporation shall issue any shares of Common
Stock or Derivative Securities (the number of shares so issued,
or issuable upon conversion or exercise of such Derivative
Securities, as applicable, being referred to as the "Additional
Shares of Common Stock") for consideration less than the
Conversion Price at the date of issuance of such shares of Common
Stock or Derivative Securities, as applicable, in each such case
the Conversion Price shall, concurrently with such issuance, be
reduced to a price determined by multiplying the Conversion Price
immediately prior to such event by a fraction: (I) the numerator
of which shall be the sum of (x) the number of shares of Common
Stock outstanding immediately prior to the issuance of such
Additional Shares of Common
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Stock plus (y) the number of shares of Common Stock that the
aggregate consideration received by the Corporation for the
total number of such Additional Shares of Common Stock so
issued would purchase at the Conversion Price and (II) the
denominator of which shall be the sum of (x) the number of
shares of Common Stock outstanding immediately prior to the
issuance of Additional Shares of Common Stock plus (y) the
number of such Additional Shares of Common Stock so issued
or sold.
(f) Adjustment Rules. The following rules and procedures shall
be applicable to adjustments made in this Article 4:
(i) no adjustment in the Conversion Price shall be required
unless such adjustment would result in a change of at least 1% in
the Conversion Price then in effect; provided, however, that any
adjustments which, but for the provisions of this clause would
otherwise have been required to be made, shall be carried forward
and taken into account in any subsequent adjustment;
(ii) if any event occurs of the type contemplated by the
adjustment provisions of this Article 4 but not expressly
provided for by such provisions, the Corporation will give notice
of such event as provided herein, and the Corporation's Board of
Directors will make an appropriate adjustment in the Conversion
Price so that the rights of the Holder shall not be diminished by
such event; and
(iii) if a dispute shall at any time arise with respect to
any adjustment of the Conversion Price, such dispute shall be
conclusively determined by the auditors of the Corporation or, if
they are unable or unwilling to act, by a firm of independent
certified public accountants selected by the Board of Directors
of the Corporation and any such determination shall be binding
upon the Corporation and the Holder.
(g) Certificate as to Adjustment. The Corporation shall from
time to time promptly after the occurrence of any event which
requires an adjustment in the Conversion Price deliver to the
Holder a certificate specifying the nature of the event requiring
the adjustment, the amount of the adjustment necessitated
thereby, the Conversion Price after giving effect to such
adjustment and setting forth, in reasonable detail, the method of
calculation and the facts upon which such calculation is based.
(h) Notice to Holders. If the Corporation shall fix a record
date for:
(i) any Share Reorganization (other than the subdivision of
outstanding Common Stock into a greater number of shares or the
consolidation of outstanding Common Stock into a smaller number
of shares),
(ii) any Rights Offering,
(iii) any Special Distribution,
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(iv) any Capital Reorganization (other than a reclassification or
redesignation of the Common Stock into other shares),
(v) any cash dividend, or
(vi) any Sale Event; then
the Corporation shall, not less than ten (10) days prior to such
record date or, if no record date is fixed, prior to the
effective date of such event, give to the Holder notice of the
particulars of the proposed event or the extent that such
particulars have been determined at the time of giving the
notice.
4.4. Reservation of Shares. The Corporation hereby represents
and warrants that (i) the Board of Directors of the Corporation
has duly authorized the issuance of this Convertible Note by the
Corporation and the Corporation has reserved for issuance from
the authorized but unissued Common Stock of the Corporation a
sufficient number of shares of Common Stock to provide for
conversion in full of this Convertible Note (giving effect to the
option of the Holder to accept payment of all accrued and unpaid
interest as shares of Common Stock) into Conversion Shares, and
(ii) Holder shall receive upon conversion in full of this
Convertible Note duly authorized and unissued shares of Common
Stock, which shall be fully paid, non-assessable and issued free
and clear of all liens, claims and encumbrances.
5. EVENTS OF DEFAULT.
5.1. Events of Default. Any one or more of the following shall
constitute an Event of Default ("Event of Default") hereunder:
(a) failure of the Corporation to pay any installment of
principal of or interest on this Convertible Note or on any other
indebtedness of the Corporation to Holder when due; or
(b) failure of the Corporation to comply with any covenant,
agreement or other obligation set forth in the Security
Agreement; or
(c) the bankruptcy or insolvency of, the assignment for the
benefit of creditors by, or the appointment of a receiver for any
of the property of, or the liquidation, termination, dissolution
or death or legal incapacity of, the Corporation or any other
party liable for the payment of this Convertible Note, whether as
maker, endorser, guarantor, surety or otherwise.
If any Event of Default shall have occurred and be continuing,
then, and in every such occurrence, the Holder may, by notice to
the Corporation, declare this Convertible Note to be, and the
Convertible Note shall thereon become, immediately due and
payable at the Repayment Price (as hereafter defined); provided
that in the case of any of the Events of Default specified in
Section 5.1(c) above, then, without any notice to the Corporation
or any other act by Holder, the entire amount of the Convertible
Note shall become immediately due and payable at the
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Repayment Price; provided further, if any Event of Default has
occurred and is continuing, and irrespective of whether this
Convertible Note has been declared immediately due and payable
hereunder, the Holder may proceed to protect and enforce the
rights of such Holder by an action at law, suit in equity or
other appropriate proceeding, whether for the specific
performance of any agreement contained herein, or for an
injunction against a violation of any of the terms hereof, or in
aid of the exercise of any power granted hereby or by law or
otherwise. The Repayment Price shall mean the sum of (i) the
principal amount of, and all accrued and unpaid interest on, the
Convertible Note outstanding and (ii) if a positive number, the
Premium Amount, where Premium Amount means the difference, if a
positive number, between (A) the product of (x) the number of
shares of Common Stock into which the Convertible Note is then
convertible at the then current Conversion Price and (y) the
average Closing Bid Price for the five (5) Trading Days through
and including the Trading Day immediately preceding the
applicable date the Convertible Notes are repaid and (B) the
principal amount of, and accrued and unpaid interest on, the
Convertible Note outstanding.
5.2. Powers and Remedies Cumulative. No right or remedy herein
conferred upon or reserved to Holder is intended to be exclusive
of any other right or remedy, and every right and remedy shall,
to the extent permitted by law, be cumulative and in addition to
every other right and remedy given hereunder or now or hereafter
existing at law or in equity or otherwise. The assertion or
employment of any right or remedy hereunder, or otherwise, shall
not prevent the concurrent assertion or employment of any other
appropriate right or remedy. Every power and remedy given by
this Convertible Note or by law may be exercised from time to
time, and as often as shall be deemed expedient, by the Holder.
5.3. Payment of Additional Amounts.
(a) Any and all payments by the Corporation hereunder to the
Holder and each "qualified assignee" thereof shall be made free
and clear of and without deduction or withholding for any and all
present or future taxes, levies, imposts, deductions, charges or
withholdings, and all liabilities with respect thereto (all such
taxes, levies, imposts, deductions, charges, withholdings and
liabilities being hereinafter referred to as "Taxes") unless such
Taxes are required by law or the administration thereof to be
deducted or withheld. If the Corporation shall be required by
law or the administration thereof to deduct or withhold any Taxes
from or in respect of any sum payable with respect to the
Convertible Note (i) the sum payable shall be increased as may be
necessary so that after making all required deductions or
withholdings (including deductions or withholdings applicable to
additional amounts paid under this Paragraph) such Holder
receives an amount equal to the sum it would have received if no
such deduction or withholding had been made; (ii) the Corporation
shall make such deductions or withholdings; and (iii) the
Corporation shall forthwith pay the full amount deducted or
withheld to the relevant taxation or other authority in
accordance with applicable law. A "qualified assignee" of the
Holder is a person that is organized under the laws of (I) the
United States or (II) any jurisdiction other than the United
States or any political subdivision thereof and that (y)
represents and warrants to the Corporation that payments of the
Corporation to such assignee under applicable law would not be
subject to any Taxes and (z) from time to time,
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as and when requested by the Corporation, executes and
delivers to the Corporation and the Internal Revenue Service
forms, and provides the Corporation with any information,
necessary to establish such assignee's continued exemption
from Taxes under applicable law.
(b) The Corporation shall forthwith pay any present or future
stamp or documentary taxes or any other excise or property taxes,
charges or similar levies (all such taxes, charges and levies
hereinafter referred to as "Other Taxes") which arise from any
payment made under this Convertible Note or the transactions
contemplated hereby.
(c) The Corporation shall indemnify the Holder or its qualified
assignee, for the full amount of Taxes or Other Taxes (including,
without limitation, any Taxes or Other Taxes imposed by any
jurisdiction on amounts payable under this Paragraph) paid by the
Holder or its qualified assignee, and any liability (including
penalties, interest and expenses) arising therefrom or with
respect thereto, whether or not such Taxes or Other Taxes were
correctly or legally asserted. Payment under this indemnification
shall be made within thirty (30) days from the date such Holder
or assignee makes written demand therefor. A certificate as to
the amount of such Taxes or Other Taxes submitted to the
Corporation by such Holder or its assignee shall be conclusive
evidence of the amount due from the Corporation to such party.
(d) Within thirty (30) days after the date of any payment of
Taxes, the Corporation will furnish to the Holder the original or
a certified copy of a receipt evidencing payment thereof.
5.4. Modification of Convertible Note. This Convertible Note may
be modified with the written consent of the Holder and the
Corporation.
5.5. Notices. Any notice or communication to the Corporation
shall be duly given if in writing and delivered in the manner and
at the addresses specified in the Security Agreement.
5.6. Successors. All agreements of the Corporation in this
Convertible Note shall bind its successors.
5.7. Severability. In case any provision in this Convertible
Note shall be invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining provisions shall not
in any way be affected or impaired thereby, and a Holder shall
have no claim therefor against any party hereto.
5.8. Representations and Warranties of Original Holder. The
original Holder of this Convertible Note represents and warrants
to the Corporation as follows:
(a) The Holder is an "accredited investor" within the
meaning of Rule 501(a) promulgated under the Securities Act and
this Convertible Note is being acquired for its
13
own account and, as of the date hereof, not with a view
toward any distribution thereof except in compliance with
applicable United States federal and state securities laws.
(b) The Holder understands that neither the Convertible Note nor
the shares of Common Stock issuable upon conversion hereof, have
been registered under the Securities Act of 1933, as amended,
and, accordingly, such securities may not be transferred or sold
except in compliance with the terms of this Convertible Note or
pursuant to an exemption from the registration requirements of
applicable United States federal and state securities laws.
5.9. Miscellaneous. This Convertible Note shall be deemed to be
a contract made under the laws of the State of Delaware and for
all purposes shall be governed by and construed in accordance
with the laws of said State. The parties hereto, including all
guarantors or endorsers, hereby waive presentment, demand,
notice, protest and all other demands and notices in connection
with the delivery, acceptance, performance and enforcement of
this Convertible Note, except as specifically provided herein,
and assent to extensions of the time of payment, or forbearance
or other indulgence without notice. The Corporation hereby
irrevocably waives any and all right to trial by jury in any
legal proceeding arising out of or relating to this Convertible
Note.
This Convertible Note is given in amendment of the terms of
and in renewal and extension, but not extinguishment, of all
amounts left owing and unpaid under that certain Convertible Note
issued on December 14, 2000 (the "Prior Note") by the Corporation
to the Holder. All of the rights, remedies, liens, equities,
powers and privileges securing the payment of the indebtedness
under the Prior Note hereby renewed and extended are hereby
recognized, renewed, extended and preserved in full to secure
payment of this Convertible Note.
The Holder by acceptance of this Convertible Note agrees to
be bound by the provisions of this Convertible Note which are
expressly binding on such Holder.
[Signature Page Follows]
14
IN WITNESS WHEREOF, the Corporation has caused this
instrument to be duly executed.
Dated: April 16, 2001.
EDGE TECHNOLOGY GROUP, INC.
By: /s/ Graham C. Beachum II
-------------------------------
Name: Graham C. Beachum II
------------------------------
Title:
-----------------------------
CATALYST MASTER FUND, L.P.
1601 Elm Street
4000 Thanksgiving Tower
Dallas, Texas 75201
April 16, 2001
Edge Technology Group, Inc.
901 Yamato Road, Suite 175
Boca Raton, Florida 33431
Gentlemen:
We refer to the Convertible Note dated December 14, 2000
(the "Existing Note") in the stated principal amount of $620,000
issued by Edge Technology Group, Inc. ("Edge") to Catalyst Master
Fund, L.P. ("Catalyst"), which evidences a loan by Catalyst to
Edge in such amount. Edge has requested Catalyst to lend up to an
additional $1,500,000 to it in multiple advances for general working
capital purposes, which Catalyst is willing to do on the basis and
subject to the provisions hereinafter set forth.
The parties hereto agree as follows:
1. Existing Indebtedness. Edge acknowledges and agrees
that as of the date of this letter, the unpaid principal balance
of the indebtedness of Edge payable to Catalyst evidenced by the
Existing Note is $620,000 with accrued unpaid interest thereon
since the date of issuance. Edge hereby agrees that such amounts
(the "Outstanding Indebtedness") are unconditionally owing by
Edge to Catalyst, without offset, defense or counterclaim of any
kind, nature or description whatsoever.
2. Additional Advances. Catalyst agrees to make
additional advances of up to $1,500,000 in the aggregate (the
"Additional Advances") to Edge on the following basis: advances
may be requested by Edge, during the period beginning on the date
of this letter and ending on February 1, 2002, upon not fewer
than three (3) business days notice, using the form attached
hereto as Exhibit A, properly completed. Such advances shall be
in the minimum principal amount of $50,000. Catalyst shall not be
obligated to make any advance hereunder if, in its reasonable
judgment, (a) any Event of Default (as defined in the Amended and
Restated Note (as hereinafter defined)) then exists or would
occur by reason of the making of the requested advance or (b) a
material adverse change has occurred in the financial condition
or business operations of Edge since the date of this letter. The
Outstanding Indebtedness and the Additional Advances shall be
evidenced by the Amended and Restated Convertible Note executed
by Edge as of the date of this letter in the stated principal
amount of $2,120,000 (the "Amended and Restated Note"). Amounts
repaid under the Amended and Restated Note may not be reborrowed.
3. Confirmation of Security Interests. Edge hereby
acknowledges, confirms and agrees that Catalyst has and shall
continue to have valid, enforceable and perfected first priority
liens upon and security interests in the collateral security
previously granted by Edge to Catalyst, including without
limitation the Collateral set forth in the Security Agreement
dated as of December 14, 2000 (the "Security Agreement") between
Edge and Catalyst. In such regard, the Security Agreement is
amended as follows, effective as of the date of this letter:
(a) The term "Note" as used therein shall mean the Amended and
Restated Convertible Note dated the date hereof in the stated
principal amount of $2,120,000 payable by the Debtor to the
Secured Party, as the same may be amended, renewed, extended,
restated, replaced, substituted, supplemented, or otherwise
modified from time to time; and (b) the term "Obligations" as
used therein shall mean all obligations, indebtedness and
liabilities of the Debtor under the Note and under this Security
Agreement. The terms and provisions of the Security Agreement, as
amended pursuant to this paragraph, are ratified and confirmed
and shall continue in full force and effect. Edge acknowledges
and agrees that the Security Agreement and all agreements and
instruments executed in connection therewith are and shall remain
in full force and effect and are and shall continue to be the
legal, valid and binding obligations of Edge, enforceable against
it in accordance with their respective terms.
4. Representations and Warranties. In order to induce
Catalyst to enter into this letter agreement and make the
Additional Advances, Edge hereby represents and warrants to
Catalyst that, as of the date hereof, (a) no Event of Default is
in existence and (b) all representations and warranties contained
in Article III of the Security Agreement are true and correct.
CATALYST MASTER FUND, L.P.
By: /s/ J. Keith Benedict
------------------------------
Name: J. Keith Benedict
------------------------------
Title:
-----------------------------
ACKNOWLEDGED AND AGREED:
EDGE TECHNOLOGY GROUP, INC.
By: /s/ Graham C. Beachum II
------------------------------
Name: Graham C. Beachum II
-----------------------------
Title:
----------------------------