THIS NOTE AND THE SECURITIES TO BE ISSUED UPON ITS CONVERSION HAVE NOT BEEN
REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT"), AND MAY NOT BE OFFERED OR SOLD IN THE UNITED STATES (AS DEFINED IN
REGULATION S UNDER THE ACT) OR TO OR FOR THE ACCOUNT OR BENEFIT OF U.S. PERSONS
(AS DEFINED IN REGULATION S) EXCEPT PURSUANT TO REGISTRATION UNDER THE ACT OR AN
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE ACT AND APPLICABLE STATE
SECURITIES LAWS. MOREOVER, THIS NOTE MAY NOT BE EXERCISED BY OR ON BEHALF OF A
U.S. PERSON UNLESS REGISTERED UNDER THE ACT OR AN EXEMPTION FROM REGISTRATION IS
AVAILABLE.
APRIL 7, 2000 U.S.$10,000,000
OPAL TECHNOLOGIES, INC.
4% CONVERTIBLE NOTE
THIS NOTE is one of a duly authorized issue of Note(s) of Opal
Technologies, Inc., a corporation duly organized and existing under the laws of
the State of Nevada (the "Company"), designated as its 4% Convertible Notes due
on April 9, 2003 in an aggregate principal amount not exceeding Ten Million
United States Dollars (U.S.$10,000,000).
FOR VALUE RECEIVED, the Company promises to pay to Marlborough Gold
Limited, a wholly-owned subsidiary of United Power Investment Limited, the
registered holder hereof and its successors and assigns (the "Holder"), the
principal sum of Ten Million United States Dollars (U.S.$10,000,000) on or
before April 9, 2003 (the "Maturity Date") plus interest on the principal sum
outstanding at the rate of 4% per annum payable quarterly in arrears. Accrual of
interest shall commence from the date of any advance and shall continue until
payment in full of the principal sum has been made or duly provided for.
Interest will be paid to the person in whose name this Note (or one or more
predecessor Notes) is registered on the records of the Company regarding
registration and transfers of the Notes (the "Note Register"). The principal of,
and interest on, this Note are payable in such coin or currency of the United
States of America as at the time of payment is legal tender for payment of
public and private debts, and shall be paid by wire transfer as designated in
writing by the Holder hereof from time to time. The Company will pay the
principal of and all accrued and unpaid interest due upon this Note.
This Note is subject to the following additional provisions:
1. The Company shall be entitled to withhold from all payments of principal
of, and interest on, this Note any amounts required to be withheld under the
applicable provisions of the United States income tax or other applicable laws
at the time of such payments.
2. This Note has been issued subject to investment representations of the
original purchaser hereof and may be transferred or exchanged in the U.S. only
in compliance with the Securities Act of 1933, as amended (the "Act"), and
applicable state securities laws. Prior to due presentment for transfer of this
Note, the Company and any agent of the Company may treat the person in whose
name this Note is duly registered on the Company's Note Register as the owner
hereof for the purpose of receiving payment as herein provided and all other
purposes, whether or not this Note be overdue, and neither the Company nor any
such agent shall be affected by notice to the contrary.
3. The Holder of this Note is entitled, at its option, at any time after
October 10, 2000, to convert the original principal amount (the "Original
Amount") of this Note into fully paid and non-assessable shares of common stock,
$.001 par value, of the Company (the "Common Stock") at a conversion price (the
"Conversion Price") equal to US$0.20; provided, however, that the Company shall
be required to convert no less than US$1 million of the Original Amount.
4. Conversions of this Note shall be effectuated by surrendering the
Note(s) to be converted (with a copy, by facsimile or courier, to the Company)
to the Company with the Form of Conversion Notice (attached hereto as Exhibit A)
executed by the Holder of this Note evidencing such Xxxxxx's intention to
convert this Note or a specified portion (as above provided) hereof, and
accompanied, if required by the Company, by proper assignment hereof in blank.
No fractional or scrip representing fractions of shares will be issued on
conversion, but the number of shares issuable shall be rounded up to the nearest
whole number of shares. The date on which notice of conversion is given shall be
deemed to be the date on which the Holder has delivered this Note, with the
conversion notice duly executed, to the Company, or if earlier, the date set
forth in such notice of conversion if the Note is received by the Company within
three business days thereafter.
5. No amount of accrued but unpaid interest otherwise payable by the
Company shall be subject to conversion and the Company shall be bound to accrue
and pay all interest on all principal balances outstanding up to the date that
Notice of Conversion is served on the Company.
6. No provision of this Note shall alter or impair the obligation of the
Company, which is absolute and unconditional, to pay the principal of, and
interest on, this Note at the time, place and rate, and in the coin or currency,
herein prescribed. This Note ranks equally and ratably with all other Notes now
or hereafter issued under the terms set forth herein.
7. The Company shall be entitled, at its sole option and upon proper
notice, to automatically convert ("Forced Conversion") any amount remaining due
and payable under this Note into Common Stock, and only if, the closing bid
price of the Common Stock is greater than $2.00 for a period of at least twenty
(20) consecutive trading days ending not more than two business days prior to
giving of notice by the Company of its election to cause such Forced Conversion.
In the event the Company elects to cause a Forced Conversion, the Company shall
notify the Holder in writing ("Notice of Forced Conversion") by facsimile
transmission and by certified mail at the number and address set forth for the
Holder below, or at such other number and address as the Holder may notify the
Company of from time to time. Notice of Forced Conversion shall be deemed to
have been given as of the date such notice was transmitted by facsimile or three
business days after the date depositee in the United States mail, certified and
postage pre-paid, whichever is earlier. The Conversion Price with respect to any
such Forced Conversion shall be the then applicable Conversion Price on the date
of such Notice of Forced Conversion. Upon receipt of a Notice of Forced
Conversion, the Holder shall promptly return to the Company this Note and, upon
receipt by the Company of the Note, the Company shall issue the shares issuable
as a result of such Forced Conversion.
8. The Company hereby expressly waives demand and presentment for payment,
notice of nonpayment, protest, notice of protest, notice of dishonor, notice of
acceleration or intent to accelerate, bringing of suit and diligence in taking
any action to collect amounts called for hereunder and shall be directly and
primarily liable for the payment of all sums owing and to be owing hereon,
regardless of and without any notice, diligence, act or omission as or with
respect to the collection of any amount called for hereunder.
9. The Company agrees to pay all costs and expenses, including reasonable
attorney's fees, which may be incurred by Xxxxxx in collecting any amount due
under this Note.
10. The following shall constitute "Events of Default" under this Note:
(a) Any default in the payment of principal or interest on this Note;
(b) If the Company shall fail to perform or observe any other covenant,
term, provision, condition, agreement or obligation of the Company
under this Note and such failure shall continue uncured for a period
of seven (7) days after notice from the Holder of such failure;
(c) If the Company shall (i) become insolvent, (ii) admit in writing its
inability to pay its debts as they mature, (iii) make an assignment
for the benefit of creditors or commence proceedings for its
dissolution, or (iv) apply for or consent to the appointment of a
trustee, liquidator or receiver for it or for a substantial part of
its property or business;
(d) If 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 thirty (30) days after
such appointment;
(e) If 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 thirty (30)
days thereafter;
(f) If any money judgment, writ or warrant of attachment, or similar
process, except mechanics and materialmen's liens incurred in the
ordinary course of business, in excess of US$1,000,000 in the
aggregate shall be entered or filed against the Company or any of its
properties or other assets and shall remain unvacated, unbonded or
unstayed for a period of fifteen (15) days or in any event later than
five (5) days prior to the date of any proposed sale thereunder;
(g) If 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, stayed or bonded within ninety (90) 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
(h) The Common Stock (as a class) is suspended from being listed or dealt
with on the Bulletin Board of NASDAQ or a recognized stock exchange
for a continuos period of 14 days due to the default of the Company or
the Common Stock ceases to be listed on the Bulletin Board or a
recognized stock exchange.
Upon the occurrence of an Event of Default, 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 Note 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, and
without expiration of any period of grace, enforce any and all of the Holder's
rights and remedies provided herein or any other rights or remedies afforded by
law.
11. For so long as any amount payable under this Note remains unpaid, the
Company shall furnish to the Holder the following information:
(a) No later than ninety (90) days following the end of each fiscal year,
beginning with the fiscal year ending December 31, 2000, consolidated
balance sheets, statements of income and statements of cash flow and
shareholders' equity of the Company and its subsidiaries, if any,
prepared in accordance with generally accepted accounting principles
("GAAP"), and audited by a firm of independent public accountants
(i.e., Form 10-K or Form 10-KSB).
(b) Within forty-five (45) days after the end of each quarter (except the
fourth quarter) of each fiscal year, consolidated balance sheets,
statements of income and statements of cash flow of the Company and
its subsidiaries, if any (i.e., Form 10-Q or Form 10-QSB).
12. The Company covenants and agrees that until all amounts due under this
Note have been paid in full, by conversion or otherwise, unless the Holder
waives compliance in writing, the Company shall:
(a) Give prompt written notice to the Holder of any Event of Default as
defined in this Note or of any other matter which has resulted in, or
could reasonably be expected to result in, a materially adverse change
in its financial condition or operations.
(b) Give prompt written notice to the Holder of any claim, action or
proceeding which, in the event of any unfavorable outcome, would or
could reasonably be expected to have a material adverse effect on the
financial condition of the Company.
(c) At all times reserve and keep available out of its authorized but
unissued stock, for the purpose of effecting the conversion of this
Note such number of its duly authorized shares of Common Stock as
shall from time to time be sufficient to effect the conversion of the
outstanding principal balance of this Note into shares of Common
Stock.
(d) Upon receipt by the Company of evidence reasonably satisfactory to it
of the loss, theft, destruction or mutilation of this Note and (i) in
the case of loss, theft or destruction, of indemnity reasonably
satisfactory to it, or (ii) in the case of mutilation, upon surrender
and cancellation of this Note, the Company, at its expense, will
execute and deliver a new Note, dated the date of the lost, stolen,
destroyed or mutilated Note.
(e) In the event of a merger, consolidations or sale of substantially all
of the Company's assets or any other business combination, at the
option of the Holder, the note may be converted, in whole or in part,
into shares of common stock of the Company as provided in Paragraph 3,
except and save that the data of October 10, 2000 shall not apply. In
addition, upon the occurrence of any of the following events (the
"Relevant Event"), the conversion price specified in paragraph 3 shall
be adjusted in such manner as shall be certified by the then auditors
of the Company (the "Auditors") as fair and reasonable in the
circumstances. A copy of the certificate of the Auditors relating to
any such adjustment shall be given by the Company to the Holder within
14 days of the occurrence of the Relevant Event:
(i) any variation in the share capital of the Company arising from
any reduction, sub-division or consolidation of share capital or
the issue of any share capital (including any securities
convertible into share capital or warrants or options to
subscribe for any share capital) by way of capitalization of
profits or reserves or in connection with an offer made pro rata
to shareholders of the Company, except (a) as consideration or
part consideration for the acquisition of any assets or business
by the Company or any of its subsidiaries, or (b) pursuant to the
exercise of subscription rights under the share option plan of
the Company; or
(ii) any distribution of the Company's capital assets to shareholders
of the Company pro rata, whether in cash or specie, except
dividend paid out of the net profits attributable to shareholders
of the Company for each financial year of the Company.
(f) The Company shall not in any way modify the rights attached to the
Common Stock as a class or attach any special restrictions thereto.
(g) The Company shall not issue or pay up any securities by way of
capitalisation of profits or reserves other than (i) by the issue of
fully paid shares of Common Stock to holders of its shares of Common
Stock; or (ii) by the issue of shares of Common Stock or other
securities of the Company or any subsidiary of the Company wholly or
partly convertible into, a rights to acquire, shares of Common Stock
to offices or employees of the Company or any of its subsidiaries
pursuant to any employee or executive share scheme; or (iii) by the
issue of shares of Common Stock in lieu of a cash dividend pursuant to
a scrip dividend scheme of the Company.
(h) The Company shall not create or permit to be issued any equity share
capital other than Common Stock, provided that nothing in this
sub-paragraph shall prevent (i) any consolidation or sub-division of
the Common Stock; or (ii) the issue of equity share capital which does
not participate in dividends before a certain date, or in respect of a
certain financial period but is pari passu in all other respects with
the Common Stock; or (iii) the issue of equity share capital to
officers or employees of the Company or any of its subsidiaries
pursuant to an employee or executive option plan.
(i) The Company shall procure that (i) no securities issued by the Company
shall be converted into shares of Common Stock or exchanged for shares
of Common Stock except in accordance with the terms of issue thereof,
(ii) no securities issued by the Company without rights to convert
into shares of Common Stock or to be exchanged for shares of Common
Stock shall subsequently be granted such rights and (iii) at no time
shall there be in issue shares of Common Stock of differing nominal
values.
(j) If an offer is made to the holders of Common Stock (or such holders
other than the offeror and/or any company controlled by the offeror
and/or persons acting in concert with the offeror) to acquire all or a
portion of the Common Stock, the Company shall forthwith give notice
of such offer to the Holder and use its best endeavours to insure that
a similar offer is extended in respect of the shares issuable upon
conversion of the Note.
(k) The Company shall not make any distribution in specie to holders of
Common Stock.
(l) The Company shall use its best endeavors (a) to maintain a listing for
all the issued shares of Common Stock on the Bulletin Board of NASDAQ
or a recognized stock exchange as the Company may from time to time
determine, (b) to obtain and maintain a listing on the Bulletin Board
of NASDAQ (or a recognized stock exchange) for all shares of the
Common Stock issued on the exercise of the Conversion Rights attaching
to the Note and (c) to obtain a listing for all shares of the Common
Stock are for the time being listed and will forthwith give notice to
the holder of the Note of the listing or delisting of shares of the
Common Stock by any such stock exchanges.
(m) As soon as possible and in any event not later than seven (7) business
days after the happening of a Relevant Event, give notice to the
Holder advising it of the date on which the relevant adjustment of the
Conversion Price is likely to become effective and of the effect of
exercising its conversion rights pending such date.
The Company shall ensure that all shares of Common Stock issued upon
conversion of the Note will be duly and validly issued, credited as fully paid,
rank pari passu in all respects with the existing shares outstanding at the date
on which the conversion notice is serviced on the Company and registered in the
name of the Holder or its nominees.
13. The Holder of this Note agrees to bear the cost of any U.S. withholding
tax on interest payable under this Note.
14. No recourse shall be had for the payment of the principal of, or the
interest on, this Note, or for any claim based hereon, or otherwise in respect
hereof, against any incorporator, shareholder, 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.
15. The Holder of this Note, by acceptance hereof, agrees that this Note is
being acquired for investment and that Holder will not offer, sell or otherwise
dispose of this Note or the shares of Common Stock issuable upon exercise
thereof except under circumstances which will not result in a violation of the
Act or any applicable state Blue Sky law or similar laws relating to the sale of
securities.
16. In case any provision of this Note is held by a court of competent
jurisdiction to be excessive in scope or otherwise invalid or unenforceable,
such provision shall be adjusted rather than voided, if possible, so that it is
enforceable to the maximum extent possible, and the validity and enforceability
of the remaining provisions of this Note will not in any way be affected or
impaired thereby.
17. This Note constitutes the full and entire understanding and agreement
between the Company and the Holder with respect to the subject hereof. Neither
this Note nor any term hereof may be amended, waived, discharged or terminated
other than by a written instrument signed by the Company and the Holder.
18. This Note shall be governed by the construed in accordance with the
laws of the State of Nevada.
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed by an officer thereunto duly authorized.
OPAL TECHNOLOGIES, INC.
Dated: April 7, 2000 By:/s/ Xxxx Xxxx
--------------------------
Name:Xxxx Xxxx
Title:President
Agreed and Accepted by:
Marlborough Gold Limited
/s/ Xxxx Xxxxx
------------------------
Authorized signatory
Name:Xxxx Xxxxx
Title:Director
Dated:April 7, 2000
