EXHIBIT 10.71
CONVERSION AGREEMENT
Vertex Interactive, Inc. (the "Company") is the maker of a convertible
promissory note in the amount of $5,000,000 (the "Note" dated June 19, 2001, as
modified, in favor of MidMark Capital II, L.P. (the "Holder"). Capitalized
terms not otherwise defined shall have the meaning assinged in the Note.
Under the terms of the Note, the Note was to be converted into Conversion
Shares at the Conversion Price upon the Company obtaining any required
Shareholder Approval. The Company represents and warrants that (1) Shareholder
Approval is not required under either the Laws of the State of New Jersey or
Nasdaq National Market, and (2) Pitney Xxxxx Inc. has not purchased additional
capital stock and/or related warrants or other convertible securities of the
Company for an aggregate purchase price of at least $9,000,000. The Holder
agrees, as of the date hereof, to convert $805,755 of the interest and principal
outstanding under its Note into the Company Series Convertible Preferred Stock,
at a conversion price of $1,000 for each share. The remaining balance due under
the Note shall be evidenced by an Amended and Restated Note in the form attached
as Exhibit A.
Date; March 7, 2002
Vertex Interactive, Inc. MidMark Capital II, L.P.
by MidMark Associates II, LLC,
its general partner
By: Xxxxxxxx X. X. Xxxx By: Xxxxx X. Xxxxxxxxx
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Xxxxxxxx X. X. Xxxx Name: XXXXX X. XXXXXXXXX
President Title: MANAGING DIRECTOR
Amount of principal and interest outstanding
under the Note as of March 7, 2002: $5,204,791.67
Number of Shares of Series C Convertible
Preferred Shares to be issued: 805
THE SECURITIES REPRESENTED BY THIS INSTRUMENT HAVE BEEN ACQUIRED FOR
INVESTMENT AND NOT WITH VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION
THEREOF. THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR ANY APPLICABLE STATE SECURITIES LAWS. THEY MAY NOT BE SOLD,
OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF A REGISTRATION
STATEMENT IN EFFECT WITH RESPECT TO THE SECURITIES UNDER SUCH ACT AND APPLICABLE
LAWS OR SOME OTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF SUCH ACT AND
APPLICABLE LAWS OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH
REGISTRATION IS NOT REQUIRED.
VERTEX INTERACTIVE, INC.
AMENDED AND RESTATED CONVERTIBLE PROMISSORY NOTE
$4,399,036.67 Fairfield, New Jersey
as of March 7, 2002
VERTEX INTERACTIVE, INC., a New Jersey corporation (the "Company"), for
value received hereby promises to pay to the order MidMark Capital II, L.P.,
(the "Lender"), in lawful money of the United States, the principal sum of four
million three hundred ninety nine thousand thirty six dollars and sixty seven
cents ($4,399,036.67), plus any unpaid accrued interest thereon as determined in
accordance with Section 2 below, on the Maturity Date. The Maturity Date means
September 30, 2003. This Convertible Promissory Note (this "Note") is issued in
connection with the transactions described in Article I of the Note Purchase
Agreement, dated as of June 19, 2001, between the Company and the Purchasers
named therein, as the same may from time to time be amended, modified or
supplemented (the "Agreement"). All capitalized terms used but not otherwise
defined herein shall have the meanings ascribed to them in the Agreement. This
Note amends and restates the obligations of the Company under the Convertible
Promissory Note issued in favor of the Lender on June 19, 2001 as amended.
1. Conversion. This Note shall be converted, at the election of the Lender,
into the Company's Series C Preferred Shares at a conversion price of $1,000 for
each share. Upon surrender of this Note to the Company for cancellation the
Company shall promptly issue to Lender a share certificate or certificates
representing the Shares bearing the legend described in Section 1.04 of the
Agreement.
2. Interest. Unless earlier converted in accordance with the provisions
hereof, the principal amount outstanding under this Note plus any unpaid accrued
interest hereon shall be paid on the Maturity Date. Interest shall accrue at the
prime borrowing rate as quoted in the Wall Street Journal and shall be computed
on the basis of a 360-day year applied to actual days elapsed. Promptly
following payment in full of the principal and any accrued interest payable in
accordance with the terms of this Note, Lender shall surrender this Note to the
Company for cancellation.
3. Prepayment. This Note shall not be prepaid without the prior written
consent of Lender.
4. Payments. All payments to be made by the Company in respect of this Note
shall be made by wire transfer to an account designated by Lender by written
notice to the Company. If the due date of any payment in respect of this Note
would otherwise fall on a day that is not a business day, such due date shall be
extended to the next succeeding business day. All amounts payable under this
Note shall be paid free and clear of, and without reduction by reason of, any
deduction, setoff, or counterclaim.
5. Assignment. Neither this Note nor any right, interest or obligation
hereunder may be assigned by any party hereto without the prior written consent
of the other party hereto and any attempt to do so will be void, except for
assignments and transfers by operation of Law. Subject to the preceding
sentence, this Agreement is binding upon, inures to the benefit of and is
enforceable by the parties hereto and their respective successors and assigns.
6. Amendment. This Agreement may be amended, supplemented or modified only
by a written instrument duly executed by of on behalf of each party hereto.
7. Transfer of This Note or Securities Issuable upon Conversion. With
respect to any offer, sale or other disposition of this Note or securities into
which such Note may be converted, Lender shall give written notice to the
Company prior to such offer, sale or other disposition, describing briefly the
manner thereof, together with a written opinion reasonably satisfactory to the
Company of Lender's counsel, to the effect that such offer, sale or other
distribution may be effected without registration or qualification (under any
federal or state law then in effect). Promptly upon receiving such written
notice and reasonably satisfactory opinion, if so requested, the Company, as
promptly as practicable, shall notify Lender that it may sell or otherwise
dispose of this Note or such securities, all in accordance with the terms of the
notice delivered to the Company. If a determination has been made pursuant to
this Section 7 that the opinion of counsel for Lender is not reasonably
satisfactory to the Company, the Company shall so notify Lender promptly after
such determination has been made. Each Note thus transferred and each
certificate representing the securities thus transferred shall bear a legend as
to the applicable restrictions on transferability in order to ensure compliance
with the Securities Act, unless in the opinion of counsel for the Company such
legend is not required. The Company may issue stop transfer instructions to its
transfer agent in connection with such restrictions.
8. Notices. Any notice, request or other communication required or
permitted hereunder shall be made in accordance with Section 5.02 of the
Agreement.
9. No Stockholder Rights. Nothing contained in this Note shall be construed
as conferring upon Lender or any other person the right to vote or to consent or
to receive notice as a stockholder in respect of meetings of stockholders for
the election of directors of the Company or any other matters or any rights
whatsoever as a stockholder of the Company; and no dividends or interest shall
be payable or accrued in respect of this Note or the interest represented hereby
or the Shares obtainable hereunder until, and only to the extent that, this Note
shall have been converted.
10. Governing Law. This Note shall be governed by and construed in
accordance with the Laws of the State of New York applicable to a contract
executed and performed in such State, without giving effect to the conflicts of
laws principles thereof.
11. Headings. The headings used in this Note have been inserted for
convenience of reference only and do not define or limit the provisions hereof.
12. Invalid Provisions. If any provision of this Note is held to be
illegal, invalid or unenforceable under any present or future Law, and if the
rights or obligations of any party hereto under this Note will not be materially
and adversely affected thereby, (a) such provision will be fully severable, (b)
this Note will be construed and enforced as if such illegal, invalid or
unenforceable provision had never comprised a part hereof, and (c) the remaining
provisions of this Note will remain in full force and effect and will not be
affected by the illegal, invalid or unenforceable provision or by its severance
herefrom.
IN WITNESS WHEREOF, the Company has caused this Note to be issued as of
this 7th day of March, 2002.
VERTEX INTERACTIVE, INC.
By: Xxxxxxxx Xxxx
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Name: Xxxxxxxx Xxxx
Title: CEO
