NEITHER THESE SECURITIES NOR THE SECURITIES ISSUABLE UPON CONVERSION HEREOF
HAVE BEEN REGISTERED WITH THE UNITED STATES SECURITIES AND EXCHANGE
COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE OR UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"). THE SECURITIES ARE
RESTRICTED AND MAY NOT BE OFFERED, RESOLD, PLEDGED OR TRANSFERRED EXCEPT AS
PERMITTED UNDER THE ACT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT OR
AN EXEMPTION FROM SUCH REGISTRATION REQUIREMENTS.
NO. US $
WORLDWIDE WIRELESS NETWORKS, INC.
7% CONVERTIBLE DEBENTURE DUE JUNE 30, 2003
THIS DEBENTURE is issued by Worldwide Wireless Networks, Inc., a
corporation organized and existing under the laws of the State of Nevada (the
"Company") and is designated as its 7% Convertible Debenture Due June 30, 2003.
FOR VALUE RECEIVED, the Company promises to pay to [ ]
or permitted assigns (the "Holder"), the principal sum _______________ and
00/100 (US $xx,000) Dollars on June 30, 2003 (the "Maturity Date") and to pay
interest on the principal sum outstanding from time to time quarterly in arrears
at the rate of 7% per annum accruing from the date of initial issuance. The
Company shall have the right to cause the Holder to accept Common Stock in
exchange for interest otherwise payable in cash pursuant to this Debenture;
provided, however, that the Holder shall have the right to request interest
- - - -------- -------
payments in cash if there has been an occurrence of an Event of Default as
defined below. The exact number of Common Stock into which such interest
payment is convertible shall be determined as set forth in Section 3 hereof.
Accrual of interest shall commence on the first business day to occur after the
date of initial issuance and continue until payment in full of the principal sum
has been made or duly provided for. Quarterly interest payments shall be due
and payable on September 1, December 1, March 1 and June 1 of each year,
commencing with September 1, 2000. If any interest payment date or the Maturity
Date is not a business day in the State of New York, then such payment shall be
made on the next succeeding business day. The forwarding of such check, shall
constitute a payment of principal and interest hereunder and shall satisfy and
discharge the liability for principal and interest on this Debenture to the
extent of the sum represented by such check plus any amounts so deducted.
This Debenture is subject to the following additional provisions:
1. The Company shall be entitled to withhold from all
payments of interest on this Debenture any amounts required to be withheld under
the applicable provisions of the United States income tax laws or other
applicable laws at the time of such payments, and Holder shall execute and
deliver all required documentation in connection therewith.
1
2. This Debenture has been issued subject to investment
representations of the original purchaser hereof and may be transferred or
exchanged only in compliance with the Securities Act of 1933, as amended (the
"Act"), and other applicable state and foreign securities laws. The Holder
shall deliver written notice to the Company of any proposed transfer of this
Debenture. In the event of any proposed transfer of this Debenture, the Company
may require, prior to issuance of a new Debenture in the name of such other
person, that it receive reasonable transfer documentation including legal
opinions that the issuance of the Debenture in such other name does not and will
not cause a violation of the Act or any applicable state or foreign securities
laws. Prior to due presentment for transfer of this Debenture, the Company and
any agent of the Company may treat the person in whose name this Debenture is
duly registered on the Company's Debenture Register as the owner hereof for the
purpose of receiving payment as herein provided and for all other purposes,
whether or not this Debenture be overdue, and neither the Company nor any such
agent shall be affected by notice to the contrary. This Debenture has been
executed and delivered pursuant to the Convertible Debenture and Warrants
Purchase Agreement dated as of June 30, 2000 between the Company and the
original Holder (the "Purchase Agreement"), and is subject to the terms and
conditions of the Purchase Agreement, which are, by this reference, incorporated
herein and made a part hereof. Capitalized terms used and not otherwise defined
herein shall have the meanings set forth for such terms in the Purchase
Agreement.
3. The Holder of this Debenture is entitled, at its option,
to convert at any time commencing on the date hereof, the principal amount of
this Debenture or any portion thereof, into shares of Common Stock of the
Company ("Conversion Shares") at a conversion price for each share of Common
Stock ("Conversion Price") equal to the lesser of (i) $____ (101% of the Market
Price on the Closing Date)(the "Set Price")(subject to adjustment for stock
splits and the like) and (ii) 80% of the Market Price on the Conversion Date;
provided, however, in the event the Conversion Price is less than $7.00
- - - -------- -------
(adjusted for stock splits and the like), the Company may, upon seven (7)
calendar days' notice to the Investor, honor all or any part of such conversion
notice in cash, and such notice shall specify the dollar amount that shall be
paid in cash on any subsequent conversions.
4. Intentionally omitted.
5. The Company shall also have the right to deliver to the
Holder a written notice of the Company's intent to redeem all or any part of the
entire outstanding amount of this Debenture at a price equal to the greater of
(i) 150% of the outstanding principal balance, plus all accrued but unpaid
interest and (ii) the Market Price on the Redemption Notice Date multiplied by
the number of Conversion Shares that would be issuable such Redemption Notice
Date without regard to any of the restrictions set forth herein. The Company
shall make the redemption payment to the Holder six (6) Trading Days after the
notice of redemption is tendered ("Redemption Payment Date"), or else the
redemption notice shall be void, and the Company shall thereafter not have any
further right to redeem this Debenture. The Holder shall have the right to
convert this Debenture as set forth in Section 8 until the Trading Day prior to
the Redemption Payment Date.
6. Intentionally omitted.
7. On the Maturity Date, provided that (i) the closing bid
price of the Common Stock is greater than $7.00 for ten (10) consecutive Trading
Days, (ii) the trading volume of the Common Stock on the Principal Market
exceeds 100,000 shares of Common Stock on such Trading Days and (iii) the
Registration Statement has been effective during such ten (10) consecutive
Trading Days and is effective on the date notice is given pursuant to this
Section 7, the entire principal amount of this Debenture then outstanding shall
automatically convert into shares of Common Stock of the Company as provided in
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Section 3 hereof. Conversion shall be deemed to have occurred as of the
Conversion Date, which shall be the conversion date set forth in the notice,
which shall not be prior to the date the notice is tendered. Upon receipt of
the notice, the Holder shall promptly tender the Debenture for conversion to
shares as provided in Section 8 of this Agreement. In the event that the
foregoing conditions to this Section 7 are not met, the Company will pay the
principal of and any accrued but unpaid interest due upon this Debenture on the
Maturity Date, less any amounts required by law to be deducted, to the
registered holder of this Debenture and addressed to such holder at the last
address appearing on the Debenture Register
8. (a) Conversion shall be effectuated by surrendering
this Debenture to the Company (if such Conversion will convert all outstanding
principal) together with the form of conversion notice attached hereto as
Exhibit A (the "Notice of Conversion"), executed by the Holder of this Debenture
evidencing such Holder's intention to convert this Debenture or a specified
portion (as above provided) hereof, and accompanied, if required by the Company,
by proper assignment hereof in blank. Interest accrued or accruing from the
date of issuance to the date of conversion shall be paid in cash as set forth
above. No fraction of a share or scrip representing a fraction of a share will
be issued on conversion, but the number of shares issuable shall be rounded to
the nearest whole share. The date on which Notice of Conversion is given (the
"Conversion Date") shall be deemed to be the date on which the Holder faxes the
Notice of Conversion duly executed to the Company. Facsimile delivery of the
Notice of Conversion shall be accepted by the Company at facsimile number (714)
937-2485.: Charles C. Bream. Certificates representing Common Stock upon
conversion will be delivered to the Holder within three (3) Trading Days from
the date the Notice of Conversion is delivered to the Company. Delivery of
shares upon conversion shall be made to the address specified by the Holder in
the Notice of Conversion.
(b) The Company understands that a delay in the issuance
of shares of Common Stock upon a conversion beyond the three (3) Trading Day
period described in Paragraph 8(a) could result in economic loss to the Holder.
As compensation to the Holder for such loss, the Company agrees to pay late
payments to the Holder for late issuance of shares of Common Stock upon
conversion in accordance with the following schedule (where "No. Trading Days
Late" is defined as the number of Trading Days beyond three (3) Trading Days
from the date the Notice of Conversion is delivered to the Company).
No. Trading Days Late Late Payment for Each
$5,000 of Principal Amount
Being Converted
1 $100
2 $200
3 $300
4 $400
5 $500
6 $600
7 $700
8 $800
9 $900
10 $1,000
More than 10 $1,000 +$100 for each Trading Day
Late beyond 10 Trading Days
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The Company shall pay any payments incurred under this Paragraph
8(b) in immediately available funds upon demand. Nothing herein shall limit
Holder's right to pursue injunctive relief and/or actual damages for the
Company's failure to issue and deliver Common Stock to the holder, including,
without limitation, the Holder's actual losses occasioned by any "buy-in" of
Common Stock necessitated by such late delivery. Furthermore, in addition to
any other remedies which may be available to the Holder, in the event that the
Company fails for any reason to effect delivery of such shares of Common Stock
within three (3) Trading Days from the date the Notice of Conversion is
delivered to the Company, the Holder will be entitled to revoke the relevant
Notice of Conversion by delivering a notice to such effect to the Company,
whereupon the Company and the Holder shall each be restored to their respective
positions immediately prior to delivery of such Notice of Conversion, and in
such event no late payments shall be due in connection with such withdrawn
conversion.
(c) If at any time (a) the Company challenges, disputes or
denies the right of the Holder to effect the conversion of this Debenture into
Common Stock or otherwise dishonors or rejects any Notice of Conversion properly
delivered in accordance with this Paragraph 8 or (b) any Company stockholder who
is not and has never been an Affiliate (as defined in Rule 405 under the
Securities Act of 1933, as amended) of the Holder obtains a judgment or any
injunctive relief from any court or public or governmental authority which
denies, enjoins, limits, modifies, delays or disputes the right of the holder
hereof to effect the conversion of this Debenture into Common Stock, then the
Holder shall have the right, by written notice, to require the Company to
promptly redeem this Debenture for cash at a redemption price equal to one
hundred fifty percent (150%) of the outstanding principal amount hereof and all
accrued and unpaid interest hereon. Under any of the circumstances set forth
above, the Corporation shall indemnify and hold harmless the holder and be
responsible for the payment of all costs and expenses of the holder, including
its reasonable legal fees and expenses, as and when incurred in disputing any
such action or pursuing its rights hereunder (in addition to any other rights of
the holder). In the event a Holder of this Debenture shall elect to convert any
or all of the outstanding principal amount hereof, the Company may not refuse
conversion based on any claim that the Holder or any one associated or
affiliated with the Holder of has been engaged in any violation of law, unless,
an injunction from a court, on notice, restraining and or enjoining conversion
of all or part of this Debenture shall have been sought and obtained and the
Company posts a surety bond for the benefit of the Holder in the amount of 150%
of the principal amount of this Debenture outstanding, which is subject to the
injunction, which bond shall remain in effect until the completion of
arbitration/litigation of the dispute and the proceeds of which shall be payable
to such holder of any shares of Series A Convertible Preferred Stock to the
extent it obtains judgment. In the absence of an injunction precluding the
same, the Company shall issue shares upon a properly noticed conversion.
9. No provision of this Debenture shall alter or impair the
obligation of the Company, which is absolute and unconditional, to pay the
principal of, and interest on, this Debenture at the time, place, and rate, and
in the coin or currency herein prescribed. This Debenture is a direct
obligation of the Company.
10. No recourse shall be had for the payment of the principal
of, or the interest on, this Debenture, or for any claim based hereon, or
otherwise in respect hereof, against any incorporator, shareholder, employee,
officer or director, as such, past, present or future, of the Company or any
successor corporation, whether by virtue of any constitution, statute or rule of
law, or by the enforcement of any assessment or penalty or otherwise, all such
liability being, by the acceptance hereof and as part of the consideration for
the issue hereof, expressly waived and released.
11. 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, the Holder shall have the right to (A) deem such an occurrence an
4
Event of Default and exercise its rights of prepayment pursuant to Paragraph 14
herein, (B) convert its aggregate principal amount of this Debenture 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 the 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 this Debenture could have been converted immediately prior to such
merger, consolidation or sales would have been entitled, or (C) in the case of a
merger or consolidation, (x) require the surviving entity to issue shares of
convertible preferred stock or convertible debentures with such aggregate stated
value or in such face amount, as the case may be, equal to the aggregate
principal amount of this Debenture then held by the Holder, plus all accrued and
unpaid interest and other amounts owing thereon, which newly issued shares of
preferred stock or debentures shall have terms identical (including with respect
to conversion) to the terms of this Debenture (except, in the case of preferred
stock, as may be required to reflect the differences between equity and debt)
and shall be entitled to all of the rights and privileges of the Holder of this
Debenture set forth herein and the agreements pursuant to which this Debenture
was issued (including, without limitation, as such rights relate to the
acquisition, transferability, registration and listing of such shares of stock
other securities issuable upon conversion thereof), and (y) simultaneously with
the issuance of such convertible preferred stock or convertible debentures,
shall have the right to convert such instrument only into shares of stock and
other securities, cash and property receivable upon or deemed to be held by
holders of Common Stock following such merger or consolidation. In the case of
clause (C), the conversion price applicable for the newly issued shares of
convertible preferred stock or convertible debentures shall be based upon the
amount of securities, cash and property that each share of Common Stock would
receive in such transaction and the Conversion Price in effect immediately prior
to the effectiveness or closing date for such transaction. The terms of any
such merger, sale or consolidation shall include such terms so as to continue to
give the Holder the right to receive the securities, cash and property set forth
in this Paragraph upon any conversion or redemption following such event. This
Paragraph shall similarly apply to successive such events.
12. The Holder of the Debenture, by acceptance hereof, agrees
that this Debenture is being acquired for investment and that such Holder will
not offer, sell or otherwise dispose of this Debenture or the Shares of Common
Stock issuable upon conversion thereof except under circumstances which will not
result in a violation of the Act or any applicable state Blue Sky or foreign
laws or similar laws relating to the sale of securities.
13. This Debenture shall be governed by and construed in
accordance with the laws of the State of New York. Each of the parties consents
to the jurisdiction of the federal courts whose districts encompass any part of
the City of New York or the state courts of the State of New York sitting in the
City of New York in connection with any dispute arising under this Agreement and
hereby waives, to the maximum extent permitted by law, any objection, including
any objection based on forum non conveniens, to the bringing of any such
proceeding in such jurisdictions.
14. The following shall constitute an "Event of Default":
a. The Company shall default in the payment of principal or
interest on this Debenture and same shall continue for a
period of four (4) days; or
b. Any of the material representations or warranties made by
the Company herein, in the Purchase Agreement, the
Registration Rights Agreement, or in any agreement,
certificate or financial statements heretofore or hereafter
furnished by the Company in connection with the execution
and delivery of this Debenture or the Purchase Agreement
shall be false or misleading in any material respect at the
time made; or
5
c. The Company fails to issue shares of Common Stock to the
Holder or to cause its Transfer Agent to issue shares of
Common Stock upon proper exercise by the Holder of the
conversion rights of the Holder in accordance with the terms
of this Debenture, fails to transfer or to cause its
Transfer Agent to transfer any certificate for shares of
Common Stock issued to the Holder upon conversion of this
Debenture as and when required by this Debenture or the
Registration Rights Agreement, and such transfer is
otherwise lawful, or fails to remove any restrictive legend
or to cause its Transfer Agent to transfer any certificate
or any shares of Common Stock issued to the Holder upon
conversion of this Debenture as and when required by this
Debenture, the Purchase Agreement or the Registration Rights
Agreement and such legend removal is otherwise lawful, and
any such failure shall continue uncured for five (5)
business days; or
d. The Company shall fail to perform or observe, in any
material respect, any other covenant, term, provision,
condition, agreement or obligation of the Company under the
Purchase Agreement, the Registration Rights Agreement or
this Debenture and such failure shall continue uncured for a
period of thirty (30) days after written notice from the
Holder of such failure; or
e. The Company shall (1) admit in writing its inability to pay
its debts generally as they mature; (2) make an assignment
for the benefit of creditors or commence proceedings for its
dissolution; or (3) apply for or consent to the appointment
of a trustee, liquidator or receiver for its or for a
substantial part of its property or business; or
f. A trustee, liquidator or receiver shall be appointed for the
Company or for a substantial part of its property or
business without its consent and shall not be discharged
within sixty (60) days after such appointment; or
g. Any governmental agency or any court of competent
jurisdiction at the instance of any governmental agency
shall assume custody or control of the whole or any
substantial portion of the properties or assets of the
Company and shall not be dismissed within sixty (60) days
thereafter; or
h. Any money judgment, writ or warrant of attachment, or
similar process in excess of One Hundred Thousand ($100,000)
Dollars in the aggregate shall be entered or filed against
the Company or any of its properties or other assets and
shall remain unpaid, unvacated, unbonded or unstayed for a
period of sixty (60) days or in any event later than five
(5) days prior to the date of any proposed sale thereunder;
or
i. Bankruptcy, reorganization, insolvency or liquidation
proceedings or other proceedings for relief under any
bankruptcy law or any law for the relief of debtors shall be
instituted by or against the Company and, if instituted
against the Company, shall not be dismissed within sixty
(60) days after such institution or the Company shall by any
action or answer approve of, consent to, or acquiesce in any
such proceedings or admit the material allegations of, or
default in answering a petition filed in any such
proceeding; or
j. The Company shall have its Common Stock suspended or
delisted from trading on a Principal Market for in excess of
five (5) Trading Days;
6
Then, or at any time thereafter, and in each and every such case, unless such
Event of Default shall have been waived in writing by the Holder (which waiver
shall not be deemed to be a waiver of any subsequent default) at the option of
the Holder and in the Holder's sole discretion, the Holder may consider this
Debenture immediately due and payable, without presentment, demand, protest or
notice of any kind, all of which are hereby expressly waived, anything herein or
in any note or other instruments contained to the contrary notwithstanding, and
the Holder may immediately enforce any and all of the Holder's rights and
remedies provided herein or any other rights or remedies afforded by law.
15. Nothing contained in this Debenture shall be
construed as conferring upon the Holder the right to vote or to receive
dividends or to consent or receive notice as a shareholder in respect of any
meeting of shareholders or any rights whatsoever as a shareholder of the
Company, unless and to the extent converted in accordance with the terms hereof.
16. In no event shall the Holder be permitted to convert
this Debenture for shares of Common Stock upon which, (x) the number of shares
of Common Stock owned by such Holder (other than shares of Common Stock issuable
upon conversion of this Debenture) plus (y) the number of shares of Common Stock
issuable upon conversion of this Debenture, would be equal to or exceed 9.9% of
the number of shares of Common Stock then issued and outstanding, including
shares issuable upon conversion of this Debenture held by such Holder after
application of this Paragraph 16. As used herein, beneficial ownership shall be
determined in accordance with Section 13(d) of the Securities Exchange Act of
1934, as amended, and the rules and regulations thereunder. To the extent that
the limitation contained in this Paragraph 16 applies, the determination of
whether this Debenture is convertible (in relation to other securities owned by
the Holder) and of which a portion of this Debenture is convertible shall be in
the sole discretion of such Holder, and the submission of a Notice of Conversion
shall be deemed to be such Holder's determination of whether this Debenture is
convertible (in relation to other securities owned by such holder) and of which
portion of this Debenture is convertible, in each case subject to such aggregate
percentage limitation, and the Company shall have no obligation to verify or
confirm the accuracy of such determination. Nothing contained herein shall be
deemed to restrict the right of a holder to convert this Debenture into shares
of Common Stock at such time as such conversion will not violate the provisions
of this Paragraph 16. The provisions of this Paragraph 16 may be waived by the
Holder of this Debenture upon not less than 75 days' prior notice to the
Company, and the provisions of this Paragraph 16 shall continue to apply until
such 75th day (or such later date as may be specified in such notice of waiver).
No conversion of this Debenture in violation of this Paragraph 16 but otherwise
in accordance with this Debenture shall affect the status of the Common Stock
issued upon such conversion as validly issued, fully-paid and nonassessable. If
instead of receiving cash on the Maturity Date the Holder instead exercises its
right to convert this Debenture into Common Stock pursuant to Paragraph 3 by
delivery of a Notice of Conversion prior to receipt of payment, and such
conversion would cause the limit contained in the first sentence of this
Paragraph 16 to be exceeded, such conversion of this Debenture shall occur up to
such limit and the remaining unconverted portion of this Debenture shall be
converted into Common Stock (1) in accordance with one or more Notices of
Conversion delivered by the Holder or (2) 65 days after the Maturity Date,
whichever is earlier. Notwithstanding anything contained herein to the
contrary, no interest shall accrue after the Maturity Date on any such
unconverted portion of this Debenture.
7
IN WITNESS WHEREOF, the Company has caused this instrument to
be duly executed by an officer thereunto duly authorized.
Dated: June 30 __, 2000
WORLDWIDE WIRELESS NETWORKS, INC.
BY: /s/ Jack Tortorice
--------------
Jack Tortorice
Chairman & CEO
Attest:
_______________________
8
EXHIBIT A
NOTICE OF CONVERSION
(To be Executed by the Registered Holder in order to Convert the Debenture)
The undersigned hereby irrevocably elects to convert $ _______________
of the principal amount of the above Debenture No. ___ into Shares of Common
Stock of Worldwide Wireless Networks, Inc. (the "Company") according to the
Conditions hereof, as of the date written below.
Date of Conversion * ___________________________________________________________
Conversion Price * ____________________________________________________
Accrued Interest________________________________________________________________
Signature_______________________________________________________________________
[Name]
Address:________________________________________________________________________
________________________________________________________________________
*If such conversion represents the remaining principal balance of the Debenture,
the original Debenture must accompany this notice within three Trading Days.