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EXHIBIT 4.12
THIS CONVERTIBLE PROMISSORY NOTE AND THE SHARES ISSUABLE CONVERSION HEREOF HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), OR ANY STATE SECURITIES LAW. THE SECURITIES REPRESENTED
HEREBY MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT FOR SAID SECURITIES UNDER THE SECURITIES ACT
AND ANY OTHER APPLICABLE STATE SECURITIES LAWS OR RULES, UNLESS EXEMPTIONS FROM
THE REGISTRATION REQUIREMENTS OF SAID LAWS ARE AVAILABLE AND SAID OFFER, SALE OR
TRANSFER IS MADE PURSUANT TO AND IN STRICT COMPLIANCE WITH THE TERMS AND
CONDITIONS OF SAID EXEMPTIONS.
WIRELESS, INC.
CONVERTIBLE PROMISSORY NOTE
$1,000,000.00 August 17, 1999
Wireless, Inc., a California corporation (the "Company"), hereby promises
to pay to AMT Capital, Ltd., a Texas limited partnership or its successors and
assigns (the "Payee"), the principal sum of ONE MILLION AND NO/100 DOLLARS
($1,000,000.00) on September 1, 2000, together with interest accrued thereon as
hereinafter provided.
This Note is issued by the Company pursuant to the terms and provisions of
that certain Note Purchase Agreement dated as of August 17, 1999 by and between
the Company and Payee (the "Purchase Agreement"). This Note shall be deemed to
be a "Note" as that term is used in the Purchase Agreement. The Company agrees
that this Note is entitled to all of the benefits provided in the Purchase
Agreement including, without limitation, all representations, warranties and
covenants of the Company contained therein and all remedies provided therein.
Reference herein to the Purchase Agreement shall not affect or impair the
absolute and unconditional obligation of the Company to pay this Note when due.
Capitalized terms that are not defined herein shall have such meanings as are
assigned to them in the Purchase Agreement.
The unpaid principal balance of this Note shall bear interest at a rate
equal to seventeen percent (17%) per annum. Accrued interest shall be calculated
on the basis of a 365-day year. Interest accrued hereon shall be due and payable
on the first day of each December, March, June and September, beginning December
1, 1999, until the entire unpaid principal amount of this Note is repaid to
Payee.
Notwithstanding anything in this Note to the contrary, in the event the
Company obtains, no later than fourteen (14) days following the date hereof, the
final, full, irrevocable and unconditional waiver of all preemptive rights,
rights of first refusal, and similar rights regarding the issuance by the
Company to Payee of this Note and any and all capital stock upon the conversion
of this Note as provided herein (the "Waivers"), then thereafter (i) this Note
shall mature on September 1, 2004 instead of on September 1, 2000, and (ii) the
unpaid principal balance of this Note shall bear interest at a rate equal to ten
percent (10%) per annum.
From and after the maturity date of this Note, any outstanding principal of
and interest on this Note shall bear interest at a rate equal to the maximum
rate allowed by applicable law.
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Payments under this Note shall be made by wire transfer on the date due to such
bank account that Payee shall designate to the Company in writing.
At any time after October 31, 1999, the Company shall have the right to
prepay, upon 30 prior days written notice to Payee, a portion or all of the
unpaid principal of and accrued and unpaid interest on this Note. During such 30
day notice period, Payee shall have the right to exchange all or any portion of
the principal of and interest on this Note for shares of the Company's capital
stock in accordance with the provisions below.
Upon the occurrence of any default or event of default under the Purchase
Agreement, Payee shall have the option of declaring the principal balance hereof
and the interest accrued hereon to be immediately due and payable.
Payee shall have the right to convert all or any portion of the unpaid
principal amount of and interest on this Note as follows:
(a) CONVERSION PROCEDURES.
(i) CONVERSION RIGHT. Subject to and upon compliance with the terms
hereof, at any time after the date hereof, the holder of this Note may
elect, by giving written notice of such election to the Company, to convert
all or any portion of the principal amount of and interest on this Note
into shares of fully paid and non-assessable shares of the class of the
Company's preferred stock purchased by the investor(s) in the Company's
arms' length equity financing, if any, most immediately following the date
hereof (such financing being the "Next Financing" and such class of
preferred stock being the "Preferred Stock"), which number of shares shall
be determined by dividing such amount by the "Preferred Stock Conversion
Price" (as determined below) in effect at the time of conversion. The
conversion price payable for each share of Preferred Stock into which this
Note is convertible shall, subject to further adjustment as provided
herein, be equal to the lesser of (i) 125% of the per-share purchase price
paid for the Preferred Stock in the Next Financing, or (ii) $3.75 (as
applicable, such per share price, as adjusted, the "Preferred Stock
Conversion Price").
In the event (a) an Organic Change (as defined below) occurs prior to
the Next Financing, or (b) the Next Financing does not occur prior to
October 31, 1999, then in either event and subject to and upon compliance
with the terms hereof the holder of this Note may elect (at any time after
receiving notice of the Organic Change in accordance with the terms hereof
or at any time after October 31, 1999 if the Next Financing has not then
occurred), by giving written notice of such election to the Company, to
convert all or any portion of the principal amount of and interest on this
Note into shares of fully paid and non-assessable shares of the Company's
common stock (the "Common Stock"), which number of shares shall be
determined by dividing such amount by the "Common Stock Conversion Price"
(as determined below) in effect at the time of conversion. The conversion
price payable for each share of Common Stock into which this Note is
convertible shall, subject to further adjustment as provided herein, be
equal to $1.25 (as adjusted, the "Common Stock Conversion Price" and unless
otherwise specifically
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referenced, the Preferred Stock Conversion Price and the Common Stock
Conversion Price are collectively referred to herein as the "Conversion
Price").
If only a portion of this Note is converted to capital stock, the
Company shall return this Note to the Holder with a notation of the
remaining outstanding principal of this Note or, at the request of the
Holder of this Note, shall issue and deliver to such Holder, a replacement
convertible promissory note for the remaining outstanding balance hereof.
(ii) PREPAYMENT/CONVERSION RIGHT. In the event the Company notifies
the Payee that the Company has elected to exercise its right to prepay this
Note as set forth above, the Payee may elect to convert this Note into
shares of capital stock pursuant hereto at any time prior to the actual
tender of such payment by the Company in accordance with the terms hereof,
and the conversion right granted to Payee pursuant hereto shall only
terminate upon the actual tender for payment by the Company of the
prepayment price of this Note to Payee in accordance with the terms hereof.
In the event Payee elects to convert all or a portion of this Note after
the Company elects to prepay this Note, but before payment of this Note is
tendered in accordance with the terms hereof, the Company's prepayment
right with respect to the amount designated to be converted shall terminate
immediately upon Payee's notice of its election to convert, and the Note
(or appropriate portion thereof) shall be converted into shares of capital
stock in accordance with the terms hereof.
(iii) DELIVERY OF CERTIFICATES. As soon as possible after conversion
has been effected (but in any event within five business days), the Company
will deliver to the converting holder a certificate or certificates
representing the number of shares of capital stock issuable by reason of
such conversion registered in such name or names and such denomination or
denominations as the converting holder has specified.
(iv) FURTHER ASSURANCES. The issuance of certificates for shares of
capital stock upon conversion of this Note will be made without charge to
the holder of this Note for any issuance tax in respect thereof or other
cost incurred by the Company in connection with such conversion and the
related issuance of shares of stock. Upon conversion of this Note, the
Company will take all such actions as are necessary in order to ensure that
the shares issuable with respect to such conversion will be validly issued,
fully paid and nonassessable.
(v) BOOKS TO BE KEPT OPEN. The Company will not close its books
against the transfer of this Note or of capital stock issued or issuable
upon conversion of this Note in any manner which interferes with the timely
conversion of this Note.
(vi) FRACTIONAL SHARES. If any fractional interest in a share would be
deliverable upon any conversion of this Note, the Company, in lieu of
delivering the fractional share therefor, will, pay an amount to the holder
thereof equal to such fractional interest multiplied by the applicable
Conversion Price as of the date of conversion.
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(b) ADJUSTMENTS TO CONVERSION PRICE AND NUMBER OF SHARES. The Conversion
Price and the number of shares into which this Note is convertible shall be
subject to adjustment as follows:
(i) ISSUANCE OF ADDITIONAL SHARES.
(A) If the Company issues or sells shares of Preferred Stock, or
in any manner grants any warrants, options or other rights
(collectively, "Preferred Options") to purchase shares of Preferred
Stock or any other securities convertible into or exchangeable for
Preferred Stock ("Preferred Convertible Securities"), which entitles
the subscriber, or the holder of such Preferred Option or Preferred
Convertible Security, to purchase any share of Preferred Stock at less
than the then current Preferred Stock Conversion Price (if then
applicable), then the Preferred Stock Conversion Price in effect
immediately prior to such action by the Company shall be adjusted by
being multiplied by the fraction obtained:
by dividing
(X), which is the numerator obtained by adding (A) the total
number of issued and outstanding shares of Preferred Stock
immediately prior to the effectiveness of such action by the
Company, plus (B) the number of shares of Preferred Stock that
could have been acquired, at the Preferred Stock Conversion Price
in effect immediately prior thereto, with the consideration, if
any, received or deemed received by the Company in exchange for
such action,
by
(Y), which is the denominator that equals the sum of the actual
total number of issued and outstanding shares, plus the number of
shares in a Preferred Deemed Issue (defined below), of Preferred
Stock immediately after such effectiveness.
In case at any time the Company shall grant or issue any
Preferred Options or Preferred Convertible Securities, whether or not
such Preferred Options or the rights to convert or exchange any such
Preferred Convertible Securities are immediately exercisable, and the
price per share for which Preferred Stock is issuable upon the
exercise of such Preferred Options or upon the conversion or exchange
of such Preferred Convertible Securities (determined by dividing (x)
the total amount, if any, received or receivable by the Company as
consideration for the issue or grant of such Preferred Options and
Preferred Convertible Securities, plus the minimum aggregate amount of
additional consideration payable to the Company upon the exercise of
such Preferred Options and the conversion or exchange of such
Preferred Convertible Securities, including, in the case of any such
Preferred Options which relate to Preferred Convertible Securities,
the minimum aggregate amount of additional consideration, if any,
payable to the Company upon the conversion or exchange of such
Preferred Convertible
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Securities, by (y) the total maximum number of shares of Preferred
Stock issuable upon the exercise of such Preferred Options and upon
the conversion or exchange of all such Preferred Convertible
Securities) shall be less than the Preferred Stock Conversion Price in
effect immediately prior to the time of the granting of such Preferred
Options or Preferred Convertible Securities, then the total maximum
number of shares of Preferred Stock issuable upon the exercise of such
Preferred Options and upon the conversion or exchange of the total
maximum amount of such Preferred Convertible Securities (including
those issuable upon the exercise of Preferred Options) shall, as of
the date of granting of such Preferred Options and Preferred
Convertible Securities, be deemed to be outstanding and to have been
issued and sold for such price per share (a "Preferred Deemed Issue")
and the provisions of this paragraph (i) shall apply accordingly.
(B) If the Company issues or sells shares of Common Stock, or in
any manner grants any warrants, options or other rights (collectively,
"Common Options") to purchase shares of Common Stock or any other
securities convertible into or exchangeable for Common Stock ("Common
Convertible Securities"), which entitles the subscriber, or the holder
of such Common Option or Common Convertible Security, to purchase any
share of Common Stock at less than the then current Common Stock
Conversion Price (if then applicable), then the Common Stock
Conversion Price in effect immediately prior to such action by the
Company shall be adjusted by being multiplied by the fraction
obtained:
by dividing
(X), which is the numerator obtained by adding (A) the total
number of issued and outstanding shares of Common Stock
immediately prior to the effectiveness of such action by the
Company, plus (B) the number of shares of Common Stock that could
have been acquired, at the Common Stock Conversion Price in
effect immediately prior thereto, with the consideration, if any,
received or deemed received by the Company in exchange for such
action,
by
(Y), which is the denominator that equals the sum of the actual
total number of issued and outstanding shares, plus the number of
shares in a Common Deemed Issue (defined below), of Common Stock
immediately after such effectiveness.
In case at any time the Company shall grant or issue any Common
Options or Common Convertible Securities, whether or not such Common
Options or the rights to convert or exchange any such Common
Convertible Securities are immediately exercisable, and the price per
share for which Common Stock is issuable upon the exercise of such
Common Options or upon the conversion or exchange of such Common
Convertible Securities (determined by dividing (x) the
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total amount, if any, received or receivable by the Company as
consideration for the issue or grant of such Common Options and Common
Convertible Securities, plus the minimum aggregate amount of
additional consideration payable to the Company upon the exercise of
such Common Options and the conversion or exchange of such Common
Convertible Securities, including, in the case of any such Common
Options which relate to Common Convertible Securities, the minimum
aggregate amount of additional consideration, if any, payable to the
Company upon the conversion or exchange of such Common Convertible
Securities, by (y) the total maximum number of shares of Common Stock
issuable upon the exercise of such Common Options and upon the
conversion or exchange of all such Common Convertible Securities)
shall be less than the Common Stock Conversion Price in effect
immediately prior to the time of the granting of such Common Options
or Common Convertible Securities, then the total maximum number of
shares of Common Stock issuable upon the exercise of such Common
Options and upon the conversion or exchange of the total maximum
amount of such Common Convertible Securities (including those issuable
upon the exercise of Common Options) shall, as of the date of granting
of such Common Options and Common Convertible Securities, be deemed to
be outstanding and to have been issued and sold for such price per
share (a "Common Deemed Issue") and the provisions of this paragraph
(i) shall apply accordingly.
Notwithstanding anything in this Note to the contrary, this
paragraph (b)(i)(B) shall not be applicable to any of the following:
(1) shares of Common Stock issued upon conversion of any of the
Company's preferred stock;
(2) shares of Common Stock issued to officers, directors,
employees and consultants or other service providers of the
Company pursuant to a stock grant, stock option plan or
purchase plan or other employee stock incentive program or
agreement approved by the Company's Board of Directors;
(3) shares of capital stock issued or issuable in connection
with a bona fide equipment lease or bank financing
transaction approved by the Company's Board of Directors,
including without limitation shares issued upon the exercise
of warrants issued in connection with such transactions; or
(4) shares of capital stock issued or issuable in connection
with a merger or acquisition transaction.
(ii) TREATMENT OF EXPIRED OPTIONS AND UNEXERCISED CONVERTIBLE
SECURITIES. Upon the expiration of any Preferred Option or Common Option or
the termination of any right to convert or exchange any Preferred
Convertible Security or Common Convertible Security without the exercise or
conversion of any such option, convertible security or
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right, the Preferred Conversion Price or Common Conversion Price then in
effect and the number of shares into which this Note is then convertible
will be adjusted to the Preferred Conversion Price or Common Conversion
Price, as applicable, and number of shares which would have been in effect
at the time of such expiration or termination had such option or
convertible security, to the extent outstanding immediately prior to such
expiration or termination, never been issued.
(iii) TREASURY SHARES. The number of shares of capital stock
outstanding at any given time does not include shares owned or held by or
for the account of the Company, and the disposition of any shares so owned
or held will be considered an issue or sale of capital stock.
(iv) RECORD DATE. If the Company takes a record of the holders of
capital stock for the purpose of entitling them (A) to receive a dividend
or other distribution payable in capital stock, options or in convertible
securities or (B) to subscribe for or purchase capital stock, options or
convertible securities, then such record date will be deemed to be the date
of the issue or sale of the shares of capital stock deemed to have been
issued or sold upon the declaration of such dividend or upon the making of
such other distribution or the date of the granting of such right of
subscription or purchase, as the case may be.
(v) SUBDIVISION OR COMBINATION OF CAPITAL STOCK.
If the Company at any time after the date hereof subdivides (by
any stock split, stock dividend, recapitalization or otherwise) its
outstanding shares of Preferred Stock into a greater number of shares,
the Preferred Stock Conversion Price in effect immediately prior to
such subdivision will be proportionately reduced and the number of
shares of Preferred Stock into which this Note is then convertible
shall be proportionately increased, and if the Company at any time
combines (by reverse stock split or otherwise) its outstanding shares
of Preferred Stock into a smaller number of shares, the Preferred
Stock Conversion Price in effect immediately prior to such combination
will be proportionately increased and the number of shares of
Preferred Stock into which this Note is then convertible shall be
proportionately decreased.
If the Company at any time after the date hereof subdivides (by
any stock split, stock dividend, recapitalization or otherwise) its
outstanding shares of Common Stock into a greater number of shares,
the Common Stock Conversion Price in effect immediately prior to such
subdivision will be proportionately reduced and the number of shares
of Common Stock into which this Note is then convertible shall be
proportionately increased, and if the Company at any time combines (by
reverse stock split or otherwise) its outstanding shares of Common
Stock into a smaller number of shares, the Common Stock Conversion
Price in effect immediately prior to such combination will be
proportionately increased and the number of shares of Common Stock
into which this Note is then convertible shall be proportionately
decreased.
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(vi) REORGANIZATION, RECLASSIFICATION, CONSOLIDATION, MERGER OR SALE.
Any capital reorganization, reclassification, consolidation, merger or sale
of all or substantially all of the Company's assets to another person which
is effected in such a way that holders of capital stock are entitled to
receive (either directly or upon subsequent liquidation) stock, securities
or assets with respect to or in exchange for capital stock is referred to
herein as an "Organic Change." Prior to the consummation of any Organic
Change, the Company will make appropriate provisions (in form and substance
satisfactory to the holder of this Note) to ensure that such holder will
thereafter have the right to acquire and receive, in lieu of or in addition
to the shares of capital stock that immediately prior thereto are
acquirable and receivable upon the conversion of this Note, such shares of
stock, securities or assets as such holder would have received in
connection with such Organic Change if such holder had fully converted this
Note immediately prior to such Organic Change. The Company will not effect
any such consolidation, merger or sale, unless prior to the consummation
thereof, the successor (if other than the Company) resulting from
consolidation or merger or the party purchasing such assets assumes by
written instrument (in form reasonably satisfactory to the holder hereof),
the obligation to deliver to such holder such shares of stock, securities
or assets as, in accordance with the foregoing provisions, such holder may
be entitled to acquire.
(vii) CERTAIN EVENTS. If any event occurs of the type contemplated by
the provisions of this section (b) but not expressly provided for by such
provisions, then the Company's Board of Directors will make an appropriate
adjustment in the Preferred Stock Conversion Price or Common Stock
Conversion Price, as applicable, and the number of shares for which this
Note is convertible so as to protect the rights of the holder hereof;
provided, that no such adjustment will increase such conversion price as
otherwise determined pursuant hereto or decrease the number of shares of
capital stock issuable upon conversion hereof.
(viii) NOTICES.
(A) Immediately upon any adjustment of the Conversion Price or
the number of shares for which this Note is convertible, the Company will
give written notice thereof to the holder hereof.
(B) The Company will give written notice to the holder hereof at
least 10 days prior to the date on which the Company closes its books or
declares a record date (1) with respect to any dividend or distribution
upon (or any subdivision, combination or other change in the outstanding
number of shares of) any class of the Company's capital stock, (2) with
respect to any pro rata subscription offer to holders of any class of the
Company's capital stock or (3) for determining rights to vote with respect
to any Organic Change, dissolution or liquidation.
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(C) The Company also give written notice to the holder hereof at
least 30 days prior to the date on which the Next Financing or any Organic
Change will take place.
The invalidity, or unenforceability in particular circumstances, of any
provision of this Note shall not extend beyond such provision or such
circumstances and no other provision of this Note shall be affected thereby. It
is expressly stipulated and agreed to be the intent of the Company and Payee at
all times to comply with applicable state law governing the maximum rate or
amount of interest payable on or in connection with this Note (or applicable
United States federal law to the extent that it permits Payee to contract for,
charge, take, reserve or receive a greater amount of interest than under state
law). If the applicable law is ever judicially interpreted so as to render
usurious any amount called for under this Note or under any of the other
documents evidencing, securing or relating to this Note or any part thereof
(collectively, the "Note Documents"), or contracted for, charged, taken,
reserved or received with respect to the indebtedness evidenced by this Note
(the "Loan"), or if any prepayment by the Company results in the Company having
paid any interest in excess of that permitted by law, then it is the Company's
and Payee's express intent that all excess amounts theretofore collected by
Payee be credited on the principal balance of this Note (or, if this Note has
been or would thereby be paid in full, refunded to the Company), and the
provisions of this Note and the other Note Documents immediately be deemed
reformed and the amounts thereafter collectible hereunder and thereunder
reduced, without the necessity of the execution of any new document, so as to
permit the recovery of the fullest amount called for hereunder and thereunder,
while complying in all respects with the applicable law and regulations. All
sums paid or agreed to be paid to Payee for the use, forbearance or detention of
the Loan shall, to the extent permitted by applicable law, be amortized,
prorated, allocated and spread throughout the full term of the Note until
payment in full so that the rate or amount of interest on account of the Note
does not exceed the applicable usury ceiling. Notwithstanding any provision
contained in this Note or in the Note Documents that permits the compounding of
interest, including without limitation any provision by which any of the accrued
interest is added to the principal amount of this Note, the total amount of
interest that the Company is obligated to pay and Payee is entitled to receive
with respect to this Note shall not exceed the amount calculated on a simple
(i.e., non-compounded) interest basis at the maximum allowable rate on principal
amounts actually advanced to or for the account of the Company.
The Company and each surety, endorser, guarantor, and other party, if any,
now or hereafter liable for payment of any sums of money payable on this Note,
jointly and severally, waive presentment and demand for payment, notice of
intent to accelerate and notice of acceleration, protest and notice of protest
and nonpayment, and diligence in collecting or bringing suit against any party
liable hereon, and agree that their liability on this Note shall not be affected
by any
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renewal or extension in time of payment hereof, by any indulgence, or by any
release, modification, or substitution of any security for the payment of this
Note, and hereby consent to any and all extensions, renewals, replacements,
waivers, releases, or exchanges affecting this Note and the taking, release,
modification, or substitution of any security, with or without notice and before
or after maturity.
This Note shall be binding upon and inure to the benefit of the Company,
its successors and assigns, and shall inure to the benefit of the Payee, its
successors and permitted assigns, In the event this Note is placed in the hands
of an attorney for collection or suit is filed hereon or if proceedings are had
in bankruptcy, receivership, reorganization, or other legal or judicial
proceedings for the collection hereof, the Company hereby agrees to pay to the
holder of this Note reasonable attorneys' fees, and shall pay all additional
reasonable costs and expenses of collection and enforcement.
THE SUBSTANTIVE LAWS OF THE STATE OF TEXAS SHALL GOVERN THE VALIDITY,
CONSTRUCTION, ENFORCEMENT, AND INTERPRETATION OF THIS NOTE WITHOUT REGARD TO
CONFLICT ON LAWS PROVISIONS.
IN WITNESS WHEREOF, the Company has caused its duly authorized officer to
execute this Note as of the day and year first written above,
WIRELESS, INC.
By: /s/ WILLIAM E. GIBSON
-------------------------------------
Name: WILLIAM E. GIBSON
--------------------------------
Title: PRESIDENT
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