NEITHER THIS NOTE NOR THE SECURITIES INTO WHICH THIS NOTE IS CONVERTIBLE HAVE
BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES
COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY,
MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM,
OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS.
No.__ $_________
GLOBAL TECHNOLOGIES, LTD.
8% CONVERTIBLE SECURED NOTE
DUE ONE HUNDRED AND FIFTY DAYS FROM THE DATE OF ISSUANCE
THIS Note is one of a series of duly authorized and issued notes of Global
Technologies, Ltd., a Delaware corporation, having a principal place of business
at 0000 Xxxxxxxx Xxxxxx, Xxxxx 000, Xxxxxxxxxxxx, XX 00000 (the "Company"),
designated as its 8% Convertible Secured Notes, due one hundred and fifty days
from the date of issuance, in the aggregate principal amount of Seven Million
Dollars ($7,000,000) (the "Notes"). This Note is being issued in connection with
that certain Convertible Secured Note Purchase Agreement between the original
Holders and the Company of even date herewith (the "Purchase Agreement").
Capitalized terms used and not otherwise defined herein that are defined in the
Purchase Agreement shall have the meaning given to such terms in the Purchase
Agreement.
FOR VALUE RECEIVED, the Company promises to pay to _____________________,
or its registered assigns (the "Holder"), the principal sum of _____________
($___________), on March 2, 2001 or such earlier date as the Notes are required
to be repaid as provided hereunder (the "Maturity Date") and to pay simple
interest to the Holder on the aggregate unconverted and then outstanding
principal amount of this Note at the rate of 8% per annum, payable on a
quarterly basis on March 31, June 30, September 30 and December 31 of each year
while such Notes are outstanding commencing on December 31, 2000 and on each
Conversion Date (as defined herein) (each an "Interest Payment Date") for such
principal amount, commencing on the earlier to occur of a Conversion Date for
such principal amount and December 31, 2000, in cash or shares of Common Stock
(as defined in Section 6). Subject to the terms and conditions herein, the
decision whether to pay interest hereunder in shares of Common Stock or cash
shall be at the discretion of the Company, provided, that the Company shall pay
interest hereunder in cash at any time during which (as defined in Section 6),
the Underlying Shares Registration Statement (as defined in Section 6) is either
not effective or the Prospectus included in the Underlying Shares Registration
Statement may not be used by the Holder for the resale of Underlying Shares (as
defined in Section 6). Not less than ten Trading Days (as defined in Section 6)
prior to each Interest Payment Date, the Company shall provide the Holder with
written notice of its election to pay interest hereunder either in cash or
shares of Common Stock pursuant to the terms of Section 4(a)(i) (the Company may
indicate in such notice that the election contained in such notice shall
continue for later periods until revised). Failure to timely provide such
written notice shall be deemed an election by the Company to pay the interest on
such Interest Payment Date in shares of Common Stock pursuant to the terms of
Section 4(a)(i). If interest is paid by the Company in shares of its Common
Stock, then the number of shares of Common Stock issuable on account of such
interest shall equal the cash amount of such interest on such Interest Payment
Date divided by the Conversion Price (as defined below). Interest shall be
calculated on the basis of a 365-day year and shall accrue daily commencing on
the Original Issue Date (as defined in Section 6) until payment in full of the
principal sum, together with all accrued and unpaid interest and other amounts
which may become due hereunder, has been made. Interest hereunder will be paid
to the Person (as defined in Section 6) in whose name this Note is registered on
the records of the Company regarding registration and transfers of Notes (the
"Note Register"). All overdue accrued and unpaid interest to be paid in cash
hereunder shall entail a late fee at the rate of 18% per annum (or such lower
maximum amount of interest permitted to be charged under applicable law) ("Late
Fee") (to accrue daily, from the date such interest is due hereunder through and
including the date of payment), payable in cash or if such Late Fee is paid by
the Company in shares of its Common Stock, in which case the number of shares of
Common Stock issuable on account of such Late Fee shall equal the cash amount of
such Late Fee on such Late Fee payment date divided by the Conversion Price.
This Note is subject to the following additional provisions:
Section 1. This Note is exchangeable for an equal aggregate principal
amount of Notes of different authorized denominations, as requested by the
Holder surrendering the same. No service charge will be made for such
registration of transfer or exchange.
Section 2. This Note has been issued subject to certain investment
representations of the original Holder set forth in the Purchase Agreement (as
defined in Section 6) and may be transferred or exchanged only in compliance
with the Purchase Agreement. Prior to due presentment to the Company for
transfer of this Note, the Company and any agent of the Company may treat the
Person (as defined in Section 6) in whose name this Note is duly registered on
the Note Register as the owner hereof for the purpose of receiving payment as
herein provided and for all other purposes, whether or not this Note is overdue,
and neither the Company nor any such agent shall be affected by notice to the
contrary.
-2-
SECTION 3. EVENTS OF DEFAULT.
(a) "Event of Default", wherever used herein, means any one of the
following events (whatever the reason and whether it shall be voluntary or
involuntary or effected by operation of law or pursuant to any judgment, decree
or order of any court, or any order, rule or regulation of any administrative or
governmental body):
(i) any default in the payment of the principal of, interest on or
liquidated damages in respect of, any Notes, free of any claim of
subordination, as and when the same shall become due and payable (whether
on a Conversion Date or the Maturity Date or by acceleration or otherwise);
(ii) the Company shall fail to observe or perform any other covenant,
agreement or warranty contained in, or otherwise commit any material breach
of any of the Transaction Documents (as defined in Section 6), and such
failure or breach shall not have been remedied within five Business Days
after the date on which written notice of such failure or breach shall have
been given;
(iii) the Company or any of its subsidiary shall commence, or there
shall be commenced against the Company or any such subsidiary a case under
any applicable bankruptcy or insolvency laws as now or hereafter in effect
or any successor thereto, or the Company or any of its subsidiary commences
any other proceeding under any reorganization, arrangement, adjustment of
debt, relief of debtors, dissolution, insolvency or liquidation or similar
law of any jurisdiction whether now or hereafter in effect relating to the
Company or any subsidiary thereof or there is commenced against the Company
or any subsidiary thereof any such bankruptcy, insolvency or other
proceeding which remains undismissed for a period of 60 days; or the
Company or any subsidiary thereof is adjudicated insolvent or bankrupt; or
any order of relief or other order approving any such case or proceeding is
entered; or the Company or any subsidiary thereof suffers any appointment
of any custodian or the like for it or any substantial part of its property
which continues undischarged or unstayed for a period of 60 days; or the
Company or any subsidiary thereof makes a general assignment for the
benefit of creditors; or the Company shall fail to pay, or shall state that
it is unable to pay, or shall be unable to pay, its debts generally as they
become due; or the Company or any subsidiary thereof shall call a meeting
of its creditors with a view to arranging a composition, adjustment or
restructuring of its debts; or the Company or any subsidiary thereof shall
by any act or failure to act expressly indicate its consent to, approval of
or acquiescence in any of the foregoing; or any corporate or other action
is taken by the Company or any subsidiary thereof for the purpose of
effecting any of the foregoing;
(iv) the Company shall default in any of its obligations under any
other Note or any mortgage, credit agreement or other facility, indenture
agreement, factoring agreement or other instrument under which there may be
issued, or by which there may be secured or evidenced any indebtedness for
borrowed money or money due under any long term leasing or factoring
arrangement of the Company in an amount exceeding five hundred thousand
-3-
dollars ($500,000), whether such indebtedness now exists or shall hereafter
be created and such default shall result in such indebtedness becoming or
being declared due and payable prior to the date on which it would
otherwise become due and payable;
(v) the Common Stock shall either be delisted from the Nasdaq National
Market ("NASDAQ") or suspended from trading on the NASDAQ without resuming
trading and/or being relisted or thereon or listed on the New York Stock
Exchange, American Stock Exchange or Nasdaq SmallCap Market (each, a
"Subsequent Market") or having such suspension lifted, in either case, for
more than three consecutive Trading Days;
(vi) the Company shall be a party to any Change of Control Transaction
(as defined in Section 6), shall agree to sell or dispose all or in excess
of 50% of its assets in one or more transactions (whether or not such sale
would constitute a Change of Control Transaction), or shall redeem or
repurchase more than a de minimis number of shares of Common Stock or other
equity securities of the Company (other than redemptions of Underlying
Shares);
(vii) an Underlying Shares Registration Statement shall not have been
declared effective by the Commission on or prior to the 180th day after the
Original Issue Date;
(viii) if, during the Effectiveness Period (as defined in the
Registration Rights Agreement), the effectiveness of the Underlying Shares
Registration Statement lapses for any reason or the Holder shall not be
permitted to resell Registrable Securities (as defined in the Registration
Rights Agreement) under the Underlying Shares Registration Statement, in
either case, for more than an aggregate of ten consecutive Trading Days;
(ix) an Event (as defined in the Registration Rights Agreement) shall
not have been cured to the satisfaction of the Holder prior to the
expiration of 60 days from the Event Date (as defined in the Registration
Rights Agreement) relating thereto (other than an Event resulting from a
failure of an Underlying Shares Registration Statement to be declared
effective by the Commission on or prior to the 180th day after the Original
Issue Date, which shall be covered by Section 3(a)(vii));
(x) the Company shall fail for any reason to deliver certificates to a
Holder prior to the tenth Trading Day after a Conversion Date pursuant to
and in accordance with Section 4(b) or the Company shall provide notice to
the Holder, including by way of public announcement, at any time, of its
intention not to comply with requests for conversions of any Notes in
accordance with the terms hereof;
(xi) the Company shall fail for any reason to deliver the payment in
cash pursuant to a Buy-In (as defined herein) within seven (7) Business
Days after written notice thereof is delivered to the Company hereunder.
-4-
(b) If any Event of Default occurs and is continuing, the full principal
amount of this Note (and, at the Holder's option, all other Notes then held by
such Holder), together with interest and other amounts owing in respect thereof,
to the date of acceleration shall become at the Holder's election, immediately
due and payable in cash, provided however, that if the Company informs the
Holder that it will be unable to pay the amounts due in cash, the Holder may
request payment of such amount in stock. The number of shares of Common Stock
issuable in payment thereof shall be determined by dividing the aggregate amount
due to the Holder by Conversion Price. The aggregate amount payable upon an
Event of Default shall be equal to the sum of (i) the Mandatory Prepayment
Amount (as defined in Section 6) plus (ii) the product of (A) the number of
Underlying Shares issued in respect of conversions hereunder within thirty (30)
days of the date of a declaration of an Event of Default and then held by the
Holder and (B) the Closing Price (as defined in Section 6) on the date
prepayment is due or the date the full prepayment price is paid, whichever is
greater. Interest shall accrue on the prepayment amount hereunder from the
seventh day after such amount is due (being the date of an Event of Default)
through the date of prepayment in full thereof at the rate of 18% per annum (or
such lesser maximum amount that is permitted to be paid by applicable law), to
accrue daily from the date such payment is due hereunder through and including
the date of payment. All Notes and Underlying Shares for which the full
prepayment price hereunder shall have been paid in accordance herewith shall
promptly be surrendered to or as directed by the Company. The Holder need not
provide and the Company hereby waives any presentment, demand, protest or other
notice of any kind, and the Holder may immediately and without expiration of any
grace period enforce any and all of its rights and remedies hereunder and all
other remedies available to it under applicable law. Such declaration may be
rescinded and annulled by Xxxxxx at any time prior to payment hereunder. No such
rescission or annulment shall affect any subsequent Event of Default or impair
any right consequent thereon.
SECTION 4. CONVERSION.
(a) (i) Conversion at Option of Holder. (A) This Note shall be convertible
into (x) shares of the Company's Common Stock, at the option of the Holder, in
whole or in part at any time and from time to time, after the 120th day after
the Original Issue Date but prior to the Maturity Date (subject to the
limitations on conversion set forth in Section 4(a)(iv) hereof) or (y) either
shares of the Company's Common Stock or shares of common stock of U.S. Wireless
Corporation, at the option of the Holder (the Holder may elect to receive, on
any Conversion Notice, such number of shares of the Company's Common Stock
and/or shares of common stock of U.S. Wireless Corporation in such proportion as
the Holder indicates on the Conversion Notice), in whole or in part at any time
and from time to time, after the Maturity Date (subject to the limitations on
conversion set forth in Section 4(a)(iv) hereof) and until this Note shall have
been repaid in full. The Holder shall effect conversions at its option by
delivering to the Company of the form of conversion notice attached hereto as
Exhibit A (a "Conversion Notice"), specifying therein (x) the principal amount
of Notes to be converted and the date on which such conversion is to be effected
and (y) that the Note shall be convertible into either shares of the Company's
Common Stock and/or shares of common stock of U.S. Wireless Corporation, which
date may not be prior to the date such Conversion Notice is deemed to have been
delivered hereunder (a "Conversion Date") and shall contain a schedule in the
form of Schedule 1 to the Conversion Notice (as amended on each Conversion Date,
-5-
the "Conversion Schedule") reflecting the remaining principal amount of this
Note and all accrued and unpaid interest thereon subsequent to the conversion at
issue. If no Conversion Date is specified in a Conversion Notice, the Conversion
Date shall be the date that such Conversion Notice is deemed delivered
hereunder. Subject to Section 4(b), each Conversion Notice, once given, shall be
irrevocable. To effect conversions hereunder, the Holder shall not be required
to physically surrender this Note to the Company unless the aggregate principal
amount of this Note is so converted in which event such Holder shall promptly
thereafter deliver such Note to or as directed by the Company. Conversions
hereunder shall have the effect of lowering the outstanding principal amount of
this Note plus all accrued and unpaid interest thereon in an amount equal to the
applicable conversion, which shall be evidenced by entries set forth in the
Conversion Schedule. The Holder and the Company shall maintain records showing
the principal amount converted and the date of such conversions. In the event of
any dispute or discrepancy, the records of the Holder shall be controlling and
determinative in the absence of mathematical error. The Holder and any assignee,
by acceptance of this Note, acknowledge and agree that, by reason of the
provisions of this paragraph, following conversion of a portion of this Note,
the unpaid and unconverted principal amount of this Note may be less than the
amount stated on the face hereof.
(ii) Number of Underlying Shares Issuable Upon Conversion. (A) The number
of shares of Common Stock issuable upon a conversion hereunder shall be
determined by adding the sum of (i) the product of the outstanding principal
amount of this Note to be converted divided by the Conversion Price, and (ii)
the amount equal to (I) the product of (x) the outstanding principal amount of
this Note to be converted and (y) the product of (1) the quotient obtained by
dividing .08 by 365 and (2) the number of days for which such principal amount
was outstanding, divided by (II) the Conversion Price, provided, that if the
Company shall have timely elected to pay the interest due on a Conversion Date
in cash pursuant to the terms hereof, subsection (ii) shall not be used in the
calculation of the number of shares of Common Stock issuable upon a conversion
hereunder.
(B) Notwithstanding anything to the contrary contained herein, if on any
Conversion Date:
(1) the number of shares of Common Stock at the time authorized,
unissued and unreserved for all purposes, or held as treasury stock, is
insufficient to pay interest hereunder in shares of Common Stock;
(2) after the Interest Effectiveness Date (as defined in Section 6)
such shares of Common Stock (x) are not registered for resale pursuant to
an effective Underlying Shares Registration Statement and (y) may not be
sold without volume restrictions pursuant to Rule 144(k) promulgated under
the Securities Act (as defined in Section 6);
(3) the Common Stock is not listed or quoted on the NASDAQ or on a
Subsequent Market;
-6-
(4) the Company has failed to timely satisfy its conversion
obligations hereunder; or
(5) the issuance of such shares of Common Stock would result in a
violation of Section 4(a)(ii),
then, at the option of the Holder, the Company, in lieu of delivering
shares of Common Stock pursuant to Section 4(a)(i)(A)(ii), shall deliver, within
three Trading Days of each applicable Conversion Date, an amount in cash equal
to the sum of (a) the outstanding principal amount of the Notes to be converted
on such Conversion Date and (b) the product of (x) the quotient obtained by
dividing .08 by 365 and (y) the number of days for which such principal amount
was outstanding.
(iv) Certain Conversion Restrictions.
(A) A Holder may not convert Notes or receive shares of Common Stock
as payment of interest hereunder to the extent such conversion or receipt of
such interest payment would result in the Holder, together with any affiliate
thereof, beneficially owning (as determined in accordance with Section 13(d) of
the Exchange Act and the rules promulgated thereunder) in excess of 4.999% of
the then issued and outstanding shares of Common Stock, including shares
issuable upon conversion of, and payment of interest on, the Notes held by such
Holder after application of this Section. Since the Holder will not be obligated
to report to the Company the number of shares of Common Stock it may hold at the
time of a conversion hereunder, unless the conversion at issue would result in
the issuance of shares of Common Stock in excess of 4.999% of the then
outstanding shares of Common Stock without regard to any other shares which may
be beneficially owned by the Holder or an affiliate thereof, the Holder shall
have the authority and obligation to determine whether the restriction contained
in this Section will limit any particular conversion hereunder and to the extent
that the Holder determines that the limitation contained in this Section
applies, the determination of which portion of the principal amount of Notes are
convertible shall be the responsibility and obligation of the Holder. If the
Holder has delivered a Conversion Notice for a principal amount of Notes that,
without regard to any other shares that the Holder or its affiliates may
beneficially own, would result in the issuance in excess of the permitted amount
hereunder, the Company shall notify the Holder of this fact and shall honor the
conversion for the maximum principal amount permitted to be converted on such
Conversion Date in accordance with the periods described in Section 4(b) and, at
the option of the Holder, either retain any principal amount tendered for
conversion in excess of the permitted amount hereunder for future conversions or
return such excess principal amount to the Holder. The provisions of this
Section may be waived by a Holder (but only as to itself and not to any other
Holder) upon not less than 61 days prior notice to the Company. Other Holders
shall be unaffected by any such waiver.
-7-
(B) A Holder may not convert Notes or receive shares of Common Stock
as payment of interest hereunder to the extent such conversion or receipt of
such interest payment would result in the Holder, together with any affiliate
thereof, beneficially owning (as determined in accordance with Section 13(d) of
the Exchange Act and the rules promulgated thereunder) in excess of 9.999% of
the then issued and outstanding shares of Common Stock, including shares
issuable upon conversion of, and payment of interest on, the Notes held by such
Holder after application of this Section. Since the Holder will not be obligated
to report to the Company the number of shares of Common Stock it may hold at the
time of a conversion hereunder, unless the conversion at issue would result in
the issuance of shares of Common Stock in excess of 9.999% of the then
outstanding shares of Common Stock without regard to any other shares which may
be beneficially owned by the Holder or an affiliate thereof, the Holder shall
have the authority and obligation to determine whether the restriction contained
in this Section will limit any particular conversion hereunder and to the extent
that the Holder determines that the limitation contained in this Section
applies, the determination of which portion of the principal amount of Notes are
convertible shall be the responsibility and obligation of the Holder. If the
Holder has delivered a Conversion Notice for a principal amount of Notes that,
without regard to any other shares that the Holder or its affiliates may
beneficially own, would result in the issuance in excess of the permitted amount
hereunder, the Company shall notify the Holder of this fact and shall honor the
conversion for the maximum principal amount permitted to be converted on such
Conversion Date in accordance with the periods described in Section 4(b) and, at
the option of the Holder, either retain any principal amount tendered for
conversion in excess of the permitted amount hereunder for future conversions or
return such excess principal amount to the Holder. The provisions of this
Section may be waived by a Holder (but only as to itself and not to any other
Holder) upon not less than 61 days prior notice to the Company. Other Holders
shall be unaffected by any such waiver.
(C) If the Common Stock is then listed for trading on the NASDAQ or
the Nasdaq SmallCap Market and the Company has not obtained the Shareholder
Approval (as defined below), then the Company may not issue in excess of an
aggregate of 2,144,025 shares of Common Stock (which equals 19.999% of the
number of shares of Common Stock outstanding on the Trading Day immediately
preceding the Original Closing Date) upon any and all conversions of the Notes
at a price per share that is less than the Closing Price on the Trading Day
immediately preceding the Original Issue Date (such number of shares, the
"Issuable Maximum"). Each Holder shall be entitled to a portion of the Issuable
Maximum equal to the quotient obtained by dividing (x) the aggregate principal
amount of the Notes issued and sold to such Holder on the Original Issue Date by
(y) the number of the Note issued and sold by the Company on the Original Issue
Date. If any Holder shall no longer hold the Note, then such Holder's remaining
portion of the Issuable Maximum shall be allocated pro-rata among the remaining
Holders. If on any Conversion Date (A) the shares of Common Stock are listed for
trading on the NASDAQ or Nasdaq SmallCap Market, (B) the Conversion Price then
in effect is such that the aggregate number of shares of Common Stock that would
then be issuable upon conversion in full of all then outstanding Notes, together
with any shares of Common Stock previously issued upon conversion of the Note
would exceed the Issuable Maximum, and (C) the Company shall not have previously
obtained the vote of shareholders (the "Shareholder Approval"), if any, as may
be required by the applicable rules and regulations of the NASDAQ (or any
successor entity) applicable to approve the issuance of shares of Common Stock
-8-
in excess of the Issuable Maximum pursuant to the terms hereof, then the Company
shall issue to the Holder requesting a conversion a number of shares of Common
Stock equal to such Holder's pro-rata portion (which shall be calculated
pursuant to the terms hereof) of the Issuable Maximum (less any prior issuances
of Common Stock to such Holder upon conversions of Notes or payment of interest
thereon in shares of Common Stock at a conversion price less than the Closing
Price on the Trading Day immediately preceding the Original Issue Date) and,
with respect to the remainder of the aggregate principal amount of the Notes
then held by such Holder for which a conversion in accordance with the
Conversion Price would result in an issuance of shares of Common Stock in excess
of such Holder's pro-rata portion (which shall be calculated pursuant to the
terms hereof) of the Issuable Maximum (the "Excess Principal"), the converting
Holder shall have the option to require the Company to either: (1) use its best
efforts to obtain the Shareholder Approval applicable to such issuance as soon
as is possible, but in any event not later than the 75th day after such request,
or (2) pay cash to the converting Holder in an amount equal to the Excess
Principal as liquidated damages and not as penalty. If the converting Holder
shall have elected the first option pursuant to the immediately preceding
sentence and the Company shall have failed to obtain the Shareholder Approval on
or prior to the 75th day after such request, then within three Trading Days
following the request therefor by the converting Holder, the Company shall pay
cash to the such in an amount equal to the Excess Principal in full satisfaction
of its remaining conversion obligations. If the Company fails to pay the Excess
Principal in full pursuant to this Section within seven days after the date
payable, the Company will pay interest thereon at a rate of 18% per annum or
such lesser maximum amount that is permitted to be paid by applicable law, to
the converting Holder, accruing daily from the Conversion Date until such
amount, plus all such interest thereon, is paid in full. The Company and the
Holder understand and agree that shares of Common Stock issued to and then held
by the Holder as a result of conversions of Preferred Stock shall not be
entitled to cast votes on any resolution to obtain Shareholder Approval pursuant
hereto.
(b) (i) Not later than ten days after any Conversion Date, the Company
will deliver to the Holder (i) a certificate or certificates which shall be free
of restrictive legends and trading restrictions (other than those required by
the Purchase Agreement) representing the number of shares of Common Stock being
acquired upon the conversion of Notes (ii) and a bank check in the amount of
accrued and unpaid interest (if the Company has timely elected or is required to
pay accrued interest in cash). The Company shall, upon request of the Holder, if
available, use its best efforts to deliver any certificate or certificates
required to be delivered by the Company under this Section electronically
through the Depository Trust Corporation or another established clearing
corporation performing similar functions. If in the case of any Conversion
Notice such certificate or certificates are not delivered to or as directed by
the applicable Holder by the tenth day after a Conversion Date, the Holder shall
be entitled by written notice to the Company at any time on or before its
receipt of such certificate or certificates thereafter, to rescind such
conversion, in which event the Company shall immediately return the certificates
representing the principal amount of Notes tendered for conversion.
(ii) If the Company fails to deliver to the Holder such certificate or
certificates pursuant to Section 4(b)(i) by the third Trading Day after the
Conversion Date, the Company shall pay to such Holder, in cash, as liquidated
damages and not as a penalty, $5,000 for each Trading Day after such third
-9-
Trading Day until such certificates are delivered. Nothing herein shall limit a
Xxxxxx's right to declare an Event of Default pursuant to Section 3 herein for
the Company's failure to deliver certificates representing shares of Common
Stock upon conversion within the period specified herein and such Holder shall
have the right to pursue all remedies available to it at law or in equity
including, without limitation, a decree of specific performance and/or
injunctive relief.
(iii) In addition to any other rights available to the Holder, if the
Company fails to deliver to the Holder such certificate or certificates pursuant
to Section 4(b)(i) by the tenth day after the Conversion Date, and if after ten
days the Holder purchases (in an open market transaction or otherwise) Common
Stock to deliver in satisfaction of a sale by such Holder of the Underlying
Shares which the Holder anticipated receiving upon such conversion (a "Buy-In"),
then the Company shall (A) pay in cash to the Holder (in addition to any
remedies available to or elected by the Holder) the amount by which (x) the
Holder's total purchase price (including brokerage commissions, if any) for the
Common Stock so purchased exceeds (y) the product of (1) the aggregate number of
shares of Common Stock that such Holder anticipated receiving from the
conversion at issue multiplied by (2) the market price of the Common Stock at
the time of the sale giving rise to such purchase obligation and (B) at the
option of the Holder, either reissue Notes in principal amount equal to the
principal amount of the attempted conversion or deliver to the Holder the number
of shares of Common Stock that would have been issued had the Company timely
complied with its delivery requirements under Section 4(b)(i). For example, if
the Holder purchases Common Stock having a total purchase price of $11,000 to
cover a Buy-In with respect to an attempted conversion of Notes with respect to
which the market price of the Underlying Shares on the date of conversion was a
total of $10,000 under clause (A) of the immediately preceding sentence, the
Company shall be required to pay the Holder $1,000. The Holder shall provide the
Company written notice indicating the amounts payable to the Holder in respect
of the Buy-In and provide reasonable evidence thereof (which shall consist
solely of the records evidencing the establishment of the position at issue)
which shall be reasonably satisfactory to the Company. Notwithstanding anything
contained herein to the contrary, if a Holder requires the Company to make
payment in respect of a Buy-In for the failure to timely deliver certificates
hereunder and the Company timely pays in full such payment, the Company shall
not be required to pay such Holder liquidated damages under Section 4(b)(ii) in
respect of the certificates resulting in such Buy-In.
(c) (i) The conversion price (the "Conversion Price") in effect on any
Conversion Date shall equal 80% of the average of the Per Share Market Values
for the five Trading Days immediately preceding the Conversion Date (subject to
adjustment as provided herein) provided, that such five Trading Day period
shall, at the option of the Holder, be extended for the number of Trading Days
during such period in which (A) trading in the Common Stock is suspended by, or
not traded on, the NASDAQ or a Subsequent Market on which the Common Stock is
then listed, or (B) after the date declared effective by the Commission, the
Underlying Shares Registration Statement is either not effective or the
Prospectus included in the Underlying Shares Registration Statement may not be
used by the Holder for the resale of Underlying Shares.
-10-
Pursuant to Section 3.16 of the Purchase Agreement and Section 4(a)(i)
herein, in the event that a Holder seeks to convert its Note into shares of
common stock of U.S. Wireless Corporation, the conversion price to be utilized
for such contemplated conversion shall equal 80% of the average of the closing
bid prices of U.S. Wireless common stock for the five Trading Days immediately
preceding each Conversion Date.
(ii) If the Company, at any time while any Notes are outstanding, (a)
shall pay a stock dividend or otherwise make a distribution or distributions
payable in and in respect of shares of its Common Stock, or in respect of any
other equity or equity equivalent securities and payable in shares of Common
Stock, (b) subdivide outstanding shares of Common Stock into a larger number of
shares, (c) combine (including by way of reverse stock split) outstanding shares
of Common Stock into a smaller number of shares, or (d) issue by
reclassification of shares of the Common Stock any shares of capital stock of
the Company, then the Conversion Price shall be multiplied by a fraction of
which the numerator shall be the number of shares of Common Stock (excluding
treasury shares, if any) outstanding before such event and of which the
denominator shall be the number of shares of Common Stock outstanding after such
event. Any adjustment made pursuant to this Section shall become effective
immediately after the record date for the determination of stockholders entitled
to receive such dividend or distribution and shall become effective immediately
after the effective date in the case of a subdivision, combination or
re-classification.
(iii) If the Company, at any time while any Notes are outstanding,
shall issue rights, options or warrants to all holders of Common Stock (and not
to Holders) entitling them to subscribe for or purchase shares of Common Stock
at a price per share less than the Per Share Market Value at the record date
mentioned below, then the Conversion Price shall be multiplied by a fraction, of
which the denominator shall be the number of shares of the Common Stock
(excluding treasury shares, if any) outstanding on the date of issuance of such
rights or warrants plus the number of additional shares of Common Stock offered
for subscription or purchase, and of which the numerator shall be the number of
shares of the Common Stock (excluding treasury shares, if any) outstanding on
the date of issuance of such rights or warrants plus the number of shares which
the aggregate offering price of the total number of shares so offered would
purchase at such Per Share Market Value. Such adjustment shall be made whenever
such rights or warrants are issued, and shall become effective immediately after
the record date for the determination of stockholders entitled to receive such
rights, options or warrants. However, upon the expiration of any such right,
option or warrant to purchase shares of the Common Stock the issuance of which
resulted in an adjustment in the Conversion Price pursuant to this Section, if
any such right, option or warrant shall expire and shall not have been
exercised, the Conversion Price shall immediately upon such expiration be
recomputed and effective immediately upon such expiration be increased to the
price which it would have been (but reflecting any other adjustments in the
Conversion Price made pursuant to the provisions of this Section after the
issuance of such rights or warrants) had the adjustment of the Conversion Price
made upon the issuance of such rights, options or warrants been made on the
basis of offering for subscription or purchase only that number of shares of the
Common Stock actually purchased upon the exercise of such rights, options or
warrants actually exercised.
-11-
(iv) If the Company or any subsidiary thereof at any time while this
Note is outstanding, shall issue shares of Common Stock or rights, warrants,
options or other securities or debt that are convertible into or exchangeable
for shares of Common Stock ("Common Stock Equivalents"), at or entitling any
Person to acquire shares of Common Stock at a price per share less than the
Conversion Price (if the holder of the Common Stock or Common Stock Equivalent
so issued shall at any time, whether by operation of purchase price adjustments,
reset provisions, floating conversion, exercise or exchange prices or otherwise,
or due to warrants, options or rights issued in connection with such issuance,
be entitled to receive shares of Common Stock at a price less than the
Conversion Price, such issuance shall be deemed to have occurred for less than
the Conversion Price), then, at the sole option of the Holder, the Conversion
Price shall be adjusted to mirror the conversion, exchange or purchase price for
such Common Stock or Common Stock Equivalents (including any reset provisions
thereof) for such exercises as shall be indicated by the Holder, provided, that
for purposes hereof, all shares of Common Stock that are issuable upon
conversion, exercise or exchange of Common Stock Equivalents shall be deemed
outstanding immediately after the issuance of such Common Stock Equivalents.
Such adjustment shall be made whenever such shares of Common Stock or Common
Stock Equivalents are issued. No adjustment under this Section shall be made as
a result of (i) issuances of Common Stock or Common Stock Equivalents to the
extent disclosed in Schedule 2.1(c) to the Purchase Agreement, (ii) issuances
and exercises of options to purchase shares of Common Stock issued for
compensatory purposes pursuant to any of the Company's stock option or stock
purchase plans, (iii) exercises or conversions under the Series C Convertible
Preferred Stock transaction dated February 16, 2000, (iv) exercises or
conversions under the Secured Convertible Note transaction dated June 8, 2000,
(v) shares of Common Stock issuable upon conversion of the Notes, (vi) issuances
of securities as consideration in a merger, consolidation or acquisition of
assets, or in connection with any strategic partnership or joint venture (the
primary purpose of which is not to raise equity capital), or as consideration
for the acquisition of a business, product or license by the Company, and (vii)
the issuance of securities pursuant to an underwritten public offering (which
shall not include equity lines of credit or similar financing structures)
(v) If the Company, at any time while Notes are outstanding, shall
distribute to all holders of Common Stock (and not to Holders) evidences of its
indebtedness or assets or rights or warrants to subscribe for or purchase any
security, then in each such case the Conversion Price at which Notes shall
thereafter be convertible shall be determined by multiplying the Conversion
Price in effect immediately prior to the record date fixed for determination of
stockholders entitled to receive such distribution by a fraction of which the
denominator shall be the Per Share Market Value determined as of the record date
mentioned above, and of which the numerator shall be such Per Share Market Value
on such record date less the then fair market value at such record date of the
portion of such assets or evidence of indebtedness so distributed applicable to
one outstanding share of the Common Stock as determined by the Board of
Directors, in its sole discretion, in good faith. In either case the adjustments
shall be described in a statement provided to the Holders of the portion of
assets or evidences of indebtedness so distributed or such subscription rights
applicable to one share of Common Stock. Such adjustment shall be made whenever
any such distribution is made and shall become effective immediately after the
record date mentioned above.
-12-
(vi) In case of any reclassification of the Common Stock or any
compulsory share exchange pursuant to which the Common Stock is converted into
other securities, cash or property, the Holders shall have the right thereafter
to, at their option, (A) convert the then outstanding principal amount, together
with all accrued but unpaid interest and any other amounts then owing hereunder
in respect of this Note only into the shares of stock and other securities, cash
and property receivable upon or deemed to be held by holders of the Common Stock
following such reclassification or share exchange, and the Holders of the Notes
shall be entitled upon such event to receive such amount of securities, cash or
property as the shares of the Common Stock of the Company into which the then
outstanding principal amount, together with all accrued but unpaid interest and
any other amounts then owing hereunder in respect of this Note could have been
converted immediately prior to such reclassification or share exchange would
have been entitled or (B) require the Company to prepay the aggregate of its
outstanding principal amount of Notes, plus all interest and other amounts due
and payable thereon, at a price determined in accordance with Section 3(b). The
entire prepayment price shall be paid in cash. This provision shall similarly
apply to successive reclassifications or share exchanges.
(vii) All calculations under this Section 4 shall be made to the
nearest cent or the nearest 1/100th of a share, as the case may be. No
adjustments in the Conversion Price shall be required if such adjustment is less
than $0.01, provided, however, that any adjustments which by reason of this
Section are not required to be made shall be carried forward and taken into
account in any subsequent adjustment.
(viii) Whenever the Conversion Price is adjusted pursuant to any of
Section 4(c)(ii) - (v), the Company shall promptly mail to each Holder a notice
setting forth the Conversion Price after such adjustment and setting forth a
brief statement of the facts requiring such adjustment.
(ix) If (A) the Company shall declare a dividend (or any other
distribution) on the Common Stock; (B) the Company shall declare a special
nonrecurring cash dividend on or a redemption of the Common Stock; (C) the
Company shall authorize the granting to all holders of the Common Stock rights
or warrants to subscribe for or purchase any shares of capital stock of any
class or of any rights; (D) the approval of any stockholders of the Company
shall be required in connection with any reclassification of the Common Stock,
any consolidation or merger to which the Company is a party, any sale or
transfer of all or substantially all of the assets of the Company, of any
compulsory share exchange whereby the Common Stock is converted into other
securities, cash or property; (E) the Company shall authorize the voluntary or
involuntary dissolution, liquidation or winding up of the affairs of the
Company; then, in each case, the Company shall notify the Holders at their last
addresses as they shall appear upon the stock books of the Company, at least 20
calendar days prior to the applicable record or effective date hereinafter
specified, a notice stating (x) the date on which a record is to be taken for
the purpose of such dividend, distribution, redemption, rights or warrants, or
if a record is not to be taken, the date as of which the holders of the Common
-13-
Stock of record to be entitled to such dividend, distributions, redemption,
rights or warrants are to be determined or (y) the date on which such
reclassification, consolidation, merger, sale, transfer or share exchange is
expected to become effective or close, and the date as of which it is expected
that holders of the Common Stock of record shall be entitled to exchange their
shares of the Common Stock for securities, cash or other property deliverable
upon such reclassification, consolidation, merger, sale, transfer or share
exchange, provided, that the failure to mail such notice or any defect therein
or in the mailing thereof shall not affect the validity of the corporate action
required to be specified in such notice. Holders are entitled to convert Notes
during the 20-day period commencing the date of such notice to the effective
date of the event triggering such notice.
(x) In case of any (1) merger or consolidation of the Company with or
into another Person, or (2) sale by the Company of more than one-half of the
assets of the Company (on an as valued basis) in one or a series of related
transactions, a Holder shall have the right, to (A) if permitted under Section
3(b) hereof, exercise its rights of prepayment under Section 3(b) with respect
to such event, or (B) convert its aggregate principal amount of Notes then
outstanding into the shares of stock and other securities, cash and property
receivable upon or deemed to be held by holders of Common Stock following such
merger, consolidation or sale, and such Holder shall be entitled upon such event
or series of related events to receive such amount of securities, cash and
property as the shares of Common Stock into which such aggregate principal
amount of Notes could have been converted immediately prior to such merger,
consolidation or sales would have been entitled, or (C) exercise its rights to
declare an Event of Default (as defined in Section 3) pursuant to Section 3.
This provision shall similarly apply to successive such events.
(d) The Company covenants that it will at all times reserve and keep
available out of its authorized and unissued shares of Common Stock solely for
the purpose of issuance upon conversion of the Notes and payment of interest on
the Notes, each as herein provided, free from preemptive rights or any other
actual contingent purchase rights of persons other than the Holders, not less
than such number of shares of the Common Stock as shall (subject to any
additional requirements of the Company as to reservation of such shares set
forth in the Purchase Agreement) be issuable (taking into account the
adjustments and restrictions of Section 4(b)) upon the conversion of the
outstanding principal amount of the Notes and payment of interest hereunder. The
Company covenants that all shares of Common Stock that shall be so issuable
shall, upon issue, be duly and validly authorized, issued and fully paid,
nonassessable and, if the Underlying Shares Registration Statement has been
declared effective under the Securities Act, registered for public sale in
accordance with such Underlying Shares Registration Statement.
(e) Upon a conversion hereunder the Company shall not be required to issue
stock certificates representing fractions of shares of the Common Stock, but may
if otherwise permitted, make a cash payment in respect of any final fraction of
a share based on the Per Share Market Value at such time. If the Company elects
not, or is unable, to make such a cash payment, the Holder shall be entitled to
receive, in lieu of the final fraction of a share, one whole share of Common
Stock.
(f) The issuance of certificates for shares of the Common Stock on
conversion of the Notes shall be made without charge to the Holders thereof for
any documentary stamp or similar taxes that may be payable in respect of the
issue or delivery of such certificate, provided that the Company shall not be
required to pay any tax that may be payable in respect of any transfer involved
in the issuance and delivery of any such certificate upon conversion in a name
other than that of the Holder of such Notes so converted and the Company shall
not be required to issue or deliver such certificates unless or until the person
-14-
or persons requesting the issuance thereof shall have paid to the Company the
amount of such tax or shall have established to the satisfaction of the Company
that such tax has been paid.
(g) Any and all notices or other communications or deliveries to be
provided by the Holders hereunder, including, without limitation, any Conversion
Notice, shall be in writing and delivered personally, by facsimile, sent by a
nationally recognized overnight courier service or sent by certified or
registered mail, postage prepaid, addressed to the Company at 0000 Xxxxxxxx
Xxxxxx, Xxxxx 000, Xxxxxxxxxxxx, XX 00000, facsimile No.: (000) 000-0000
attention Chief Financial Officer, or such other address or facsimile number as
the Company may specify for such purposes by notice to the Holders delivered in
accordance with this Section, with a copy (other than for Conversion Notices) to
Xxxxxxxx Xxxxxxxx Xxxxx & Xxxxx XXX (facsimile number (000) 000-0000),
attention: Xxxxxxx X. Xxxxx, Esq. Any and all notices or other communications or
deliveries to be provided by the Company hereunder shall be in writing and
delivered personally, by facsimile, sent by a nationally recognized overnight
courier service or sent by certified or registered mail, postage prepaid,
addressed to each Holder at the facsimile telephone number or address of such
Holder appearing on the books of the Company, or if no such facsimile telephone
number or address appears, at the principal place of business of the Holder. Any
notice or other communication or deliveries hereunder shall be deemed given and
effective on the earliest of (i) the date of transmission, if such notice or
communication is delivered via facsimile and the party giving such notice has a
confirmation of transmission setting forth the date and time of transmission,
which was produced by the facsimile machine at the facsimile telephone number
specified in this Section prior to 6:30 p.m. (New York City time), (ii) the date
after the date of transmission, if such notice or communication is delivered via
facsimile and the party giving such notice has a confirmation of transmission
setting forth the date and time of transmission, which was produced by the
facsimile machine at the facsimile telephone number specified in this Section
later than 6:30 p.m. (New York City time) on any date and earlier than 11:59
p.m. (New York City time) on such date, (iii) four days after deposit in the
United States mail, (iv) the Business Day following the date of mailing, if sent
by nationally recognized overnight courier service, or (v) upon actual receipt
by the party to whom such notice is required to be given.
(h) Notwithstanding anything contained in this Note to the contrary, upon
receipt of an Optional Prepayment Notice, prior to the Optional Prepayment Date,
the Holder may convert no more than such amount of the Note so as to allow for
conversion of up to 1% of the Common Stock then outstanding, or up to 2% of the
U.S. Wireless Corporation common stock then outstanding; the remainder to be
redeemed or prepaid in accordance with the Optional Prepayment Notice.
SECTION 5. OPTIONAL PREPAYMENT.
(a) The Company shall have the right, exercisable from time to time after
the Original Issue Date and upon five Trading Days' prior written notice to the
affected Holders (an "Optional Prepayment Notice"), to prepay all or any portion
of the outstanding principal amount of the Notes for which Conversion Notices
have not previously been delivered. The prepayment price applicable to
-15-
prepayments under this Section 5(a) shall be paid in cash on the seventh Trading
Day following the date that the Company first delivered the Optional Prepayment
Notice (the "Optional Prepayment Date"), in accordance with the Prepayment
Amount (as defined in Section 6). Any such prepayment shall be free of any claim
of subordination. The Holders shall have the right to tender, and the Company
shall honor, Conversion Notices delivered prior to the expiration of the fifth
Trading Day after delivery of an Optional Prepayment Notice for such Notes.
(b) The Company shall not be entitled to deliver an Optional Prepayment
Notice to the Holder (and, if after delivery thereof and prior to the Optional
Prepayment Date, any of the following conditions shall cease to be met, such
notice, at the option of the Holders, shall be deemed no longer effective) if:
(i) the number of shares of Common Stock at the time authorized, unissued and
unreserved for all purposes is insufficient to satisfy the Company's conversion
obligations of the aggregate principal amount of Notes then outstanding, or (ii)
there is neither an effective Underlying Shares Registration Statement under
which the Holders can resell all of the issued Underlying Shares and all of the
Underlying Shares as are issuable upon conversion in full of the principal
amount of Notes subject to an Optional Prepayment Notice nor may all of such
issued and issuable Underlying Shares be sold by the Holders subject to such
prepayment without volume restrictions pursuant to Rule 144 promulgated under
the Securities Act, as determined by counsel to the Company pursuant to a
written opinion letter, addressed to the Company's transfer agent in the form
and substance acceptable to the Holders and such transfer agent, or (iii) the
Common Stock is not then listed for trading on the NASDAQ or on a Subsequent
Market.
(c) If any portion of the Prepayment Amount shall not be paid by the
Company by the expiration of the Optional Prepayment Date, the Company may not
again exercise any right of prepayment under this Section. In addition, the
Prepayment Amount shall be increased by 18% per annum (or such lesser maximum
amount that is permitted to be paid by applicable law) to accrue daily from the
date such interest is due hereunder through and including the date of payment
(which amount shall be paid as liquidated damages and not as a penalty). In
addition, if any portion of the Prepayment Amount remains unpaid through the
expiration of the Optional Prepayment Date, the Holder subject to such
prepayment may elect by written notice to the Company to either (x) demand
conversion in accordance with the formula and the time period therefor set forth
in Section 4 of any portion of the principal amount of Notes for which the
Prepayment Amount, plus accrued liquidated damages and accrued interest thereon,
has not been paid in full (the "Unpaid Prepayment Principal Amount"), in which
event the applicable Per Share Market Value shall be the lower of the Per Share
Market Value calculated on the Optional Prepayment Date and the Per Share Market
Value as of the Holder's written demand for conversion, or (y) invalidate AB
INITIO such optional prepayment, notwithstanding anything herein contained to
the contrary. If the Holder elects option (x) above, the Company shall, within
three Trading Days after such election is deemed delivered hereunder, deliver to
the Holder the shares of Common Stock issuable upon conversion of the Unpaid
Prepayment Principal Amount subject to such conversion demand and otherwise
perform its obligations hereunder with respect thereto. If the Holder elects
option (y) above, the Company shall promptly, and in any event not later than
three Trading Days from receipt of notice of such election, return to the Holder
new Notes for the full Unpaid Prepayment Principal Amount and shall no longer
have any prepayment rights under this Note.
-16-
SECTION 6. DEFINITIONS. For the purposes hereof, the following terms shall
have the following meanings:
"BUSINESS DAY" means any day except Saturday, Sunday and any day which
shall be a federal legal holiday in the United States or a day on which banking
institutions in the State of New York or the Commonwealth of Massachusetts are
authorized or required by law or other government action to close.
"CHANGE OF CONTROL TRANSACTION" means the occurrence of any of (i) an
acquisition after the date hereof by an individual or legal entity or "group"
(as described in Rule 13d-5(b)(1) promulgated under the Exchange Act) of
effective control (whether through legal or beneficial ownership of capital
stock of the Company, by contract or otherwise) of in excess of 50% of the
voting securities of the Company, (ii) a replacement at one time or over time of
more than one-half of the members of the Company's board of directors which is
not approved by a majority of those individuals who are members of the board of
directors on the date hereof (or by those individuals who are serving as members
of the board of directors on any date whose nomination to the board of directors
was approved by a majority of the members of the board of directors who are
members on the date hereof), (iii) the merger of the Company with or into
another entity that is not wholly-owned by the Company, consolidation or sale of
50% or more of the assets of the Company in one or a series of related
transactions, or (iv) the execution by the Company of an agreement to which the
Company is a party or by which it is bound, providing for any of the events set
forth above in (i), (ii) or (iii).
"CLOSING PRICE" means on any particular date (a) the closing sales price
per share of Common Stock on such date on the Subsequent Market on which the
shares of Common Stock are then listed or quoted, or if there is no such price
on such date, then the closing sales price on the Subsequent Market on the date
nearest preceding such date, or (b) if the shares of Common Stock are not then
listed or quoted on a Subsequent Market, the closing sales price for a share of
Common Stock in the NASDAQ, as reported by the National Quotation Bureau
Incorporated or similar organization or agency succeeding to its functions of
reporting prices) at the close of business on such date, or (c) if the shares of
Common Stock are not then reported by the National Quotation Bureau Incorporated
(or similar organization or agency succeeding to its functions of reporting
prices), then the average of the "Pink Sheet" quotes for the relevant conversion
period, as determined in good faith by the Holder, or (d) if the shares of
Common Stock are not then publicly traded the fair market value of a share of
Common Stock as determined by an Appraiser selected in good faith by the Holders
of a majority in interest of the principal amount of Notes then outstanding.
"COMMISSION" means the Securities and Exchange Commission.
"COMMON STOCK" means the common stock, $.01 par value per share, of the
Company and stock of any other class into which such shares may hereafter have
been reclassified or changed.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
-17-
"INTEREST EFFECTIVENESS DATE" means the earlier to occur of (x) the
Effectiveness Date and (y) the date that an Underlying Shares Registration
Statement is declared effective by the Commission.
"MANDATORY PREPAYMENT AMOUNT" for any Notes shall equal the sum of (i) the
greater of (A) 120% of the principal amount of Notes to be prepaid, plus all
accrued and unpaid interest thereon, and (B) the principal amount of Notes to be
prepaid, plus all accrued and unpaid interest thereon, divided by the Conversion
Price multiplied by the Closing Price on (x) the date the Mandatory Prepayment
Amount is demanded or otherwise due or (y) the date the Mandatory Prepayment
Amount is paid in full, whichever is greater, and (ii) all other amounts, costs,
expenses and liquidated damages due in respect of such Notes.
"ORIGINAL ISSUE DATE" shall mean the date of the first issuance of the
Notes regardless of the number of transfers of any Note and regardless of the
number of instruments which may be issued to evidence such Note.
"PER SHARE MARKET VALUE" means on any particular date (a) the closing bid
price per share of Common Stock on such date on the NASDAQ or on such Subsequent
Market on which the shares of Common Stock are then listed or quoted, or if
there is no such price on such date, then the closing bid price on the NASDAQ or
on such Subsequent Market on the date nearest preceding such date, or (b) if the
shares of Common Stock are not then listed or quoted on the NASDAQ or a
Subsequent Market, the closing bid price for a share of Common Stock in the
over-the-counter market, as reported by the National Quotation Bureau
Incorporated or similar organization or agency succeeding to its functions of
reporting prices) at the close of business on such date, or (c) if the shares of
Common Stock are not then reported by the National Quotation Bureau Incorporated
(or similar organization or agency succeeding to its functions of reporting
prices), then the average of the "Pink Sheet" quotes for the relevant conversion
period, as determined in good faith by the Holder, or (d) if the shares of
Common Stock are not then publicly traded the fair market value of a share of
Common Stock as determined by an Appraiser selected in good faith by the Holders
of a majority in interest of the principal amount of Notes then outstanding.
"PERSON" means a corporation, an association, a partnership, organization,
a business, an individual, a government or political subdivision thereof or a
governmental agency.
"PREPAYMENT AMOUNT" means (i) for the period from the Original Issue Date
until and including the 90th day following the Original Issue Date, 115%, (ii)
for the period from the 91st day following the Original Issue Date until and
including the 180th day following the Original Issue Date, 120%, (iii) for the
period from the 181st day following the Original Issue date until and including
the 270th day following the Original Issue Date, 130%, and (iv) on and after the
271st day following the Original Issue Date, 140%.
-18-
"PURCHASE AGREEMENT" means the Convertible Note Purchase Agreement, dated
as of the Original Issue Date, to which the Company and the original Holder are
parties, as amended, modified or supplemented from time to time in accordance
with its terms.
"REGISTRATION RIGHTS AGREEMENT" means the Registration Rights Agreement,
dated as of the Original Issue Date, to which the Company and the original
Holder are parties, as amended, modified or supplemented from time to time in
accordance with its terms.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"TRADING DAY" means (a) a day on which the shares of Common Stock are
traded on the NASDAQ or on such Subsequent Market on which the shares of Common
Stock are then listed or quoted, or (b) if the shares of Common Stock are not
listed on the NASDAQ or a Subsequent Market, a day on which the shares of Common
Stock are traded in the over-the-counter market, as reported by the OTC Bulletin
Board, or (c) if the shares of Common Stock are not quoted on the OTC Bulletin
Board, a day on which the shares of Common Stock are quoted in the
over-the-counter market as reported by the National Quotation Bureau
Incorporated (or any similar organization or agency succeeding its functions of
reporting prices); provided, that in the event that the shares of Common Stock
are not listed or quoted as set forth in (a), (b) and (c) hereof, then Trading
Day shall mean any day except a Business Day.
"TRANSACTION DOCUMENTS" shall have the meaning set forth in the Purchase
Agreement.
"UNDERLYING SHARES" means the shares of Common Stock issuable upon
conversion of Notes or as payment of interest in accordance with the terms
hereof.
"UNDERLYING SHARES REGISTRATION STATEMENT" means a registration statement
meeting the requirements set forth in the Registration Rights Agreement,
covering among other things the resale of the Underlying Shares and naming the
Holder as a "selling stockholder" thereunder.
SECTION 7. Except as expressly provided herein, no provision of this Note
shall alter or impair the obligation of the Company, which is absolute and
unconditional, to pay the principal of, interest and liquidated damages (if any)
on, this Note at the time, place, and rate, and in the coin or currency, herein
prescribed. This Note is a direct obligation of the Company. This Note ranks
pari passu with all other Notes now or hereafter issued under the terms set
forth herein. As long as there are Notes outstanding, the Company shall not,
without the consent of the Holders, (i) amend its certificate of incorporation,
bylaws or other charter documents so as to adversely affect any rights of the
Holders; (ii) repay, repurchase or offer to repay, repurchase or otherwise
acquire shares of its Common Stock or other equity securities other than as to
the Underlying Shares to the extent permitted or required under the Transaction
Documents; or (iii) enter into any agreement with respect to any of the
foregoing. The Company may voluntarily prepay the outstanding principal amount
on the Notes in accordance with Section 5 hereof.
-19-
SECTION 8. This Note shall not entitle the Holder to any of the rights of a
stockholder of the Company, including without limitation, the right to vote, to
receive dividends and other distributions, or to receive any notice of, or to
attend, meetings of stockholders or any other proceedings of the Company, unless
and to the extent converted into shares of Common Stock in accordance with the
terms hereof.
SECTION 9. If this Note shall be mutilated, lost, stolen or destroyed, the
Company shall execute and deliver, in exchange and substitution for and upon
cancellation of a mutilated Note, or in lieu of or in substitution for a lost,
stolen or destroyed Note, a new Note for the principal amount of this Note so
mutilated, lost, stolen or destroyed but only upon receipt of evidence of such
loss, theft or destruction of such Note, and of the ownership hereof, and
indemnity, if requested, all reasonably satisfactory to the Company.
SECTION 10. Except as disclosed in Schedule 2.1(c) to the Purchase
Agreement, no indebtedness of the Company is senior to this Note in right of
payment, whether with respect to interest, damages or upon liquidation or
dissolution or otherwise. The Company will not and will not permit any of its
subsidiaries to, directly or indirectly, enter into, create, incur, assume or
suffer to exist any indebtedness of any kind, on or with respect to any of its
property or assets now owned or hereafter acquired or any interest therein or
any income or profits therefrom that is senior in any respect to the Company's
obligations under the Notes.
SECTION 11. The corporate law of Delaware shall govern all issues
concerning the relative rights of the Company and its stockholders. All the
questions concerning the construction, validity, enforcement and interpretation
of this Agreement shall be governed by and construed and enforced in accordance
with the internal laws of the State of New York, without regard to the
principles of conflicts of law thereof. The Company and the Holder hereby
irrevocably submits to the jurisdiction of the state and federal courts sitting
in the City of New York, Borough of Manhattan, for the adjudication of any
dispute hereunder or in connection herewith or with any transaction contemplated
hereby or discussed herein, and hereby irrevocably waives, and agrees not to
assert in any suit, action or proceeding, any claim that it is not personally
subject to the jurisdiction of any such court, or that such suit, action or
proceeding is improper. Each of the Company and the Holder hereby irrevocably
waives personal service of process and consents to process being served in any
such suit, action or proceeding by receiving a copy thereof sent to the Company
at the address in effect for notices to it under this instrument and agrees that
such service shall constitute good and sufficient service of process and notice
thereof. Nothing contained herein shall be deemed to limit in any way any right
to serve process in any manner permitted by law.
SECTION 12. Any waiver by the Company or the Holder of a breach of any
provision of this Note shall not operate as or be construed to be a waiver of
any other breach of such provision or of any breach of any other provision of
this Note. The failure of the Company or the Holder to insist upon strict
adherence to any term of this Note on one or more occasions shall not be
considered a waiver or deprive that party of the right thereafter to insist upon
strict adherence to that term or any other term of this Note. Any waiver must be
in writing.
-20-
SECTION 13. If any provision of this Note is invalid, illegal or
unenforceable, the balance of this Note shall remain in effect, and if any
provision is inapplicable to any person or circumstance, it shall nevertheless
remain applicable to all other persons and circumstances. If it shall be found
that any interest or other amount deemed interest due hereunder shall violate
applicable laws governing usury, the applicable rate of interest due hereunder
shall automatically be lowered to equal the maximum permitted rate of interest.
The Company covenants (to the extent that it may lawfully do so) that it shall
not at any time insist upon, plead, or in any manner whatsoever claim or take
the benefit or advantage of, any stay, extension or usury law or other law which
would prohibit or forgive the Company from paying all or any portion of the
principal of or interest on the Notes as contemplated herein, wherever enacted,
now or at any time hereafter in force, or which may affect the covenants or the
performance of this indenture, and the Company (to the extent it may lawfully do
so) hereby expressly waives all benefits or advantage of any such law, and
covenants that it will not, by resort to any such law, hinder, delay or impede
the execution of any power herein granted to the Holder, but will suffer and
permit the execution of every such as though no such law has been enacted.
SECTION 14. Whenever any payment or other obligation hereunder shall be due
on a day other than a Business Day, such payment shall be made on the next
succeeding Business Day.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE PAGE FOLLOWS]
-21-
IN WITNESS WHEREOF, the Company has caused this Convertible Note to be duly
executed by a duly authorized officer as of the date first above indicated.
GLOBAL TECHNOLOGIES, LTD.
By:
-------------------------------------
Name:
Title:
-22-
EXHIBIT A
NOTICE OF CONVERSION
(To be Executed by the Registered Holder in order to Convert the Note)
The undersigned hereby elects to convert the attached Note into:
[ ] shares of common stock, $.01 par value per share (the "Common Stock"),
of Global Technologies, Ltd. (the "Company") according to the conditions hereof,
as of the date written below or ;
[ ] shares of common stock, $.01 par value per share, of U.S. Wireless
Corporation according to the conditions hereof, as of the date written below or;
[ ] shares of Common Stock, and shares of common stock, $.01 par value per
share, of U.S. Wireless Corporation according to the conditions hereof, as of
the date written below.
If shares are to be issued in the name of a person other than the undersigned,
the undersigned will pay all transfer taxes payable with respect thereto and is
delivering herewith such certificates and opinions as reasonably requested by
the Company in accordance therewith. No fee will be charged to the holder for
any conversion, except for such transfer taxes, if any.
Conversion calculations:
Date to Effect Conversion
Principal Amount of Notes to be Converted
Number of shares of Common Stock to be Issued
Conversion Price
Signature
Name
Address
ACCEPTED AND AGREED:
GLOBAL TECHNOLOGIES, LTD.
By:
--------------------------------
Name:
Title:
-23-
SCHEDULE 1
CONVERSION SCHEDULE
8% Convertible Secured Notes, due in the aggregate principal amount of
$7,000,000 issued by Global Technologies, Ltd. and convertible into shares of:
[ ] Global Technologies, Ltd., and/or [ ] U.S. Wireless Corporation, as
applicable.
Dated:
AGGREGATE PRINCIPAL
AMOUNT REMAINING
DATE OF CONVERSION AMOUNT OF CONVERSION SUBSEQUENT TO CONVERSION COMPANY ATTEST
------------------ -------------------- ------------------------ --------------
------------------ -------------------- ------------------------ --------------
------------------ -------------------- ------------------------ --------------
------------------ -------------------- ------------------------ --------------
------------------ -------------------- ------------------------ --------------
------------------ -------------------- ------------------------ --------------
------------------ -------------------- ------------------------ --------------
------------------ -------------------- ------------------------ --------------
-24-
