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Merlin Restructures 2000 Series A Convertible Notes |
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Burnaby, BC - May 29, 2002 - Merlin Technologies (OTCBB: MLSW)), a developer of industry leading network attached data storage and backup servers and digital video based security and loss prevention solutions, today announced that it has restructured the terms and conditions of its 2000 Series A Convertible Notes. Through agreements reached with the holders of Series A Convertible Notes, the Company has exchanged the Series A Notes and associated warrants for Series B-1 Notes and associated warrants. $1,745,880.47, representing the entire balance of principal and accrued interest outstanding under the Series A Notes has been exchanged into Series B-1 Notes, which have an eighteen-month term. Additionally, $1,500,000 of the Company's existing bridge loan facility has been converted into a Series B-2 Note with a thirty-month term. Each Series B Note has a ten percent (10%) interest rate and is convertible into common shares of the Company at a fixed price conversion of $0.40, subject to adjustment. In connection with the Series B-1 and B-2 Notes, the Company has issued a total of 2,750,000 Series B Warrants and 1,520,000 Exchange Warrants, each exercisable for five (5) years at an exercise price of $0.75. At the Company's election, each Series B Noteholder has agreed to voluntarily surrender for cancellation up to 916,666 Series B Warrants on the occurrence of one of the following events:
The Series B Noteholders have also agreed to surrender 82.5 Series B Warrants for each $100 of the outstanding principal that the Company repays within 180 days. The Company obtained an option to prepay the principal and accrued interest outstanding under the Series B Convertible Notes without a premium for 180 days, subject to the noteholders' right to elect to convert. After the first 180 days, the Company can prepay but subject to paying a 10% prepayment premium. If the Company receives financing from any source within 180 days, then it has agreed to apply 10% of any gross proceeds that exceed $3,000,000 and an additional 15% of any gross proceeds that exceed $4,000,000 to the prepayment of the principal and interest outstanding under the Series B Notes. The Company restructured the terms of its Series A Convertible Notes as part of its plan to simplify its current capital structure. The Company is working with Marco Polo Securities Inc., a New York based boutique investment bank as its financial advisor in connection with its financing plans. Marco Polo acted as advisor to Merlin on the restructuring of the Company's 2000 Series A Convertible Notes. The Series B Notes and associated warrants have not been registered under the Securities Act of 1933 and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements. About Merlin Technologies Merlin integrates leading-edge technologies into affordable, high-performance data storage/protection and security/loss prevention solutions. Designed to protect critical data, commercial assets and the people who use those assets, Merlin's products utilize state-of-the-art digital storage and backup and are easy to deploy and use. Merlin's EssentialServer is a fast and economical way to add network attached storage (NAS) or integrated data backup, recovery and storage to a LAN. It is designed specifically for small to medium-sized business, corporate departments and regional offices to ensure that critical data is secure, protected and always available. Merlin's SecurDVR is a network attached digital video recorder (DVR) designed and implemented specifically as a proactive security and loss prevention solution. Capable of managing up to 16 closed circuit television (CCTV) cameras and a host of alarm mechanisms, the SecurDVR is being deployed throughout Canada in financial institutions, retail chains, shopping centers, manufacturing facilities and commercial/residential buildings. Merlin has offices in Burnaby, British Columbia and representation in Montreal, Quebec, Toronto, Ontario, Calgary, Alberta, Seattle, Washington and Tampa, Florida. Website: http://www.merlintechnologies.com/ For more information, contact:
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