Document:

exh101.htm

 

NEITHER THESE SECURITIES NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE CONVERTIBLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION 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.

 

THIS NOTE DOES NOT REQUIRE PHYSICAL SURRENDER OF THE NOTE IN THE EVENT OF A PARTIAL REDEMPTION OR CONVERSION.  AS A RESULT, FOLLOWING ANY REDEMPTION OR CONVERSION OF ANY PORTION OF THIS NOTE, THE OUTSTANDING PRINCIPAL AMOUNT REPRESENTED BY THIS NOTE MAY BE LESS THAN THE PRINCIPAL AMOUNT AND ACCRUED INTEREST SET FORTH BELOW.

 

10% CONVERTIBLE NOTE DUE SEPTEMBER 3RD, 2014

 

OF

 

WILESS CONTROLS, INC.

 

 

Principal Amount: $150,000 USD

Issue Date: March 3rd, 2014

Original Principal Amount: $150,000 USD

 

 

 

This Note (“Note”) is a duly authorized Note of WILESS CONTROLS, INC., a corporation duly organized and existing under the laws of the State of Nevada (the “Company”), designated as the Company's 10% Convertible Note Due September 3rd, 2014 (“Maturity Date”) in the principal amount of One Hundred Fifty Thousand U.S. Dollars (U.S. $150,000) (the “Note”).

 

    FOLLOWING THE DEBT ASSIGNMENT made between Capex Investment Limited, and the Company, the Company hereby promises to pay to the order of Capex Investment Limited or its registered assigns or successors-in-interest (“Holder”) the principal sum of One Hundred Fifty Thousand U.S. Dollars (U.S. $150,000) together with all accrued but unpaid interest thereon, if any, on the Maturity Date, to the extent such principal amount and interest has not been repaid or converted into the Company's Common Stock, $0.00001 par value per share (the “Common Stock”), in accordance with the terms hereof.  Interest on the unpaid principal balance hereof shall accrue at the rate of 10% per annum from the date of original issuance hereof (the “Issuance Date”) until the same becomes due and payable on the Maturity Date, or such earlier date upon acceleration or by conversion or redemption in accordance with the terms hereof or of the other Agreements.  Notwithstanding anything contained herein, this Note shall bear interest on the due and unpaid Principal Amount from and after the occurrence and during the continuance of an Event of Default pursuant to Section 2(a) at the rate (the “Default Rate”) equal to the lower of eighteen (18%) per annum or the highest rate permitted by law.  Unless otherwise agreed or required by applicable law, payments will be applied first to any unpaid collection costs, then to unpaid interest and fees and any remaining amount to principal.

 

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All payments of principal and interest on this Note shall be made in lawful money of the United States of America by wire transfer of immediately available funds to such account as the Holder may from time to time designate by written notice in accordance with the provisions of this Note or by Company check.  This Note may not be prepaid in whole or in part except as otherwise provided herein.  Whenever any amount expressed to be due by the terms of this Note is due on any day which is not a Business Day (as defined below), the same shall instead be due on the next succeeding day which is a Business Day.

 

Capitalized terms used herein and not otherwise defined shall have the meanings set forth in the Exchange Agreement dated on or about the Issuance Date pursuant to which the Notes were originally issued (the “Exchange Agreement”). For purposes hereof the following terms shall have the meanings ascribed to them below:

 

“Bankruptcy Event” means any of the following events: (a) the Company or any subsidiary commences a case or other proceeding under any bankruptcy, reorganization, arrangement, adjustment of debt, relief of debtors, dissolution, insolvency or liquidation or similar law of any jurisdiction relating to the Company or any subsidiary thereof; (b) there is commenced against the Company or any subsidiary any such case or proceeding that is not dismissed within 60 days after commencement; (c) the Company or any subsidiary is adjudicated insolvent or bankrupt or any order of relief or other order approving any such case or proceeding is entered; (d) the Company or any subsidiary suffers any appointment of any custodian or the like for it or any substantial part of its property that is not discharged or stayed within 60 days; (e) the Company or any subsidiary makes a general assignment for the benefit of creditors; (f) the Company or any subsidiary fails to pay, or states that it is unable to pay or is unable to pay, its debts generally as they become due; (g) the Company or any subsidiary calls a meeting of its creditors with a view to arranging a composition, adjustment or restructuring of its debts; or (h) the Company or any subsidiary, by any act or failure to act, expressly indicates its consent to, approval of or acquiescence in any of the foregoing or takes any corporate or other action for the purpose of effecting any of the foregoing.

 

“Business Day” shall mean any day other than a Saturday, Sunday or a day on which commercial banks in the City of New York are authorized or required by law or executive order to remain closed.

 

“Change in Control Transaction” will be deemed to exist if (i) there occurs any consolidation, merger or other business combination of the Company with or into any other corporation or other entity or person (whether or not the Company is the surviving corporation), or any other corporate reorganization or transaction or series of related transactions in which in any of such events the voting stockholders of the Company prior to such event cease to own 50% or more of the voting power, or corresponding voting equity interests, of the surviving corporation after such event (including without limitation any “going private” transaction under Rule 13e-3 promulgated pursuant to the Exchange Act or tender offer by the Company under Rule 13e-4 promulgated pursuant to the Exchange Act for 20% or more of the Company's Common Stock), (ii) there is a replacement of more than one-half of the members of the Company’s Board of Directors which is not approved by those individuals who are members of the Company's Board of Directors on the date thereof, (iii) in one or a series of related transactions, there is a sale or transfer of all or substantially all of the assets of the Company, determined on a consolidated basis, or (iv) the Company enters into any agreement providing for an event set forth in (i), (ii), (iii) or (iv) above.

 

 

 

 

 

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 “Conversion Price”

 

(a) The conversion price (the “Conversion Price”) will be determined within 90 days after loan disbursement following approval by both parties.

 

“Convertible Securities” means any convertible securities, warrants, options or other rights to subscribe for or to purchase or exchange for, shares of Common Stock.

 

“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.

 

 “Payment Date” shall mean the first day of each calendar month beginning on March 1, 2014 and the Maturity Date, provided that if any such day is not a Business Day, then such Payment Date shall mean the next succeeding day which is a Business Day.

 

“Per Share Selling Price” shall include the amount actually paid by third parties for each share of Common Stock in a sale or issuance by the Company.  If a fee is paid by the Company in connection with such transaction directly or indirectly to such third party or its affiliates, any such fee shall be deducted from the selling price pro rata to all shares sold in the transaction to arrive at the Per Share Selling Price.  A sale of shares of Common Stock shall include the sale or issuance of rights, options, warrants or convertible, exchangeable or exercisable securities under which the Company is or may become obligated to issue shares of Common Stock, and in such circumstances the Per Share Selling Price of the Common Stock covered thereby shall also include the exercise, exchange or conversion price thereof (in addition to the consideration received by the Company upon such sale or issuance less the fee amount as provided above).  In case of any such security issued in a Variable Rate Transaction or an MFN Transaction, the Per Share Selling Price shall be deemed to be the lowest conversion or exercise price at which such securities are converted or exercised or might have been converted or exercised in the case of a Variable Rate Transaction, or the lowest adjustment price in the case of an MFN Transaction, over the life of such securities.  If shares are issued for a consideration other than cash, the Per Share Selling Price shall be the fair value of such consideration as determined in good faith by independent certified public accountants mutually acceptable to the Company and the Purchaser.  If the Company directly or indirectly effectively reduces the conversion, exercise or exchange price for any Convertible Securities which are currently outstanding, then the Per Share Selling Price shall equal such effectively reduced conversion, exercise or exchange price.

 

“Principal Amount” shall refer to the sum of (i) the original principal amount of this Note, (ii) all accrued but unpaid interest hereunder, and (iii) any default payments owing under the Agreements but not previously paid or added to the Principal Amount.

 

“Principal Market” shall mean the OTC Bulletin Board or such other principal market or exchange on which the Common Stock is then listed for trading.

 

“Securities Act” shall mean the Securities Act of 1933, as amended.

 

“Trading Day” shall mean a day on which there is trading on the Principal Market.

 

 

 

 

 

 

 

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“Underlying Shares” means the shares of Common Stock into which the Note is convertible (including interest or principal payments in Common Stock as set forth herein) in accordance with the terms hereof.

 

“Variable Rate Transaction” shall mean a transaction in which the Company issues or sells, or agrees to issue or sell (a) any debt or equity securities that are convertible into, exchangeable or exercisable for, or include the right to receive additional shares of, Common Stock either (x) at a conversion, exercise or exchange rate or other price that is based upon and/or varies with the trading prices of or quotations for the Common Stock at any time after the initial issuance of such debt or equity securities, (y) with a fixed conversion, exercise or exchange price that is subject to being reset at some future date after the initial issuance of such debt or equity security or upon the occurrence of specified or contingent events directly or indirectly related to the business of the Company or the market for the Common Stock (but excluding standard stock split anti-dilution provisions), or (z) under a warrant exercisable for a number of shares based upon and/or varying with the trading prices of or quotations for the Common Stock at any time after the initial issuance of such warrant, or (b) any securities of the Company pursuant to an “equity line” structure which provides for the sale, from time to time, of securities of the Company which are registered for sale or resale pursuant to the 1933 Act (which for the purpose of this definition shall include a sale of the Company’s securities “off the shelf” in a registered offering, whether or not such offering is underwritten).

 

The following terms and conditions shall apply to this Note:

 

Section 1. Conversion.

 

(a) Conversion Right.  The Holder shall have the right from time to time, and at any time, according to conversion conditions described under Conversion Price section (a) above, during the period beginning on the date which is one (1) day following the date of this Note and ending on the later of: (i) the Maturity Date and (ii) the date of payment of the Default Amount (as defined in Article II) pursuant to Section 2.0(a) or Article II, each in respect of the remaining outstanding principal amount of this Note to convert all or any part of the outstanding and unpaid principal amount of this Note into fully paid and non- assessable shares of Common Stock, as such Common Stock exists on the Issue Date, or any shares of capital stock or other securities of the Borrower into which such Common Stock shall hereafter be changed or reclassified at the conversion price (the “Conversion Price”) determined as provided herein (a “Conversion”); provided, however, that in no event shall the Holder be entitled to convert any portion of this Note in excess of that portion of this Note upon conversion of which the sum of (1) the number of shares of Common Stock beneficially owned by the Holder and its affiliates (other than shares of Common Stock which may be deemed beneficially owned through the ownership of the unconverted portion of the Notes or the unexercised or unconverted portion of any other security of the Borrower subject to a limitation on conversion or exercise analogous to the limitations contained herein) and (2) the number of shares of Common Stock issuable upon the conversion of the portion of this Note with respect to which the determination of this proviso is being made, would result in beneficial ownership by the Holder and its affiliates of more than 4.99% of the outstanding shares of Common Stock. For purposes of the proviso to the immediately preceding sentence, beneficial ownership shall be determined in accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and Regulations 13D-G thereunder. Subject to the terms hereof and restrictions and limitations contained herein, the Holder shall have the right, at the Holder's option, to convert the outstanding Principal Amount under this Note in whole or in part by delivering to the Company a fully executed notice of conversion in the form of conversion notice attached hereto as Exhibit A (the “Conversion Notice”), which may be transmitted by facsimile

 

 

 

 

 

  

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(b) The date of any Conversion Notice hereunder and any Payment Date shall be referred to herein as the “Conversion Date”.  If the Holder is converting less than all of the outstanding Principal Amount hereunder pursuant to a Conversion Notice, the Company shall promptly deliver to the Holder (but no later than five Trading Days after the Conversion Date) a Note for such outstanding Principal Amount as has not been converted if this Note has been surrendered to the Company for partial conversion.  The Holder shall not be required to physically surrender this Note to the Company upon any conversion hereunder unless the full outstanding Principal Amount represented by this Note is being converted or repaid.  The Holder and the Company shall maintain records showing the outstanding Principal Amount so converted and repaid and the dates of such conversions or repayments or shall use such other method, reasonably satisfactory to the Holder and the Company, so as not to require physical surrender of this Note upon each such conversion or repayment.

 

(i) Stock Certificates or DWAC.  The Company will deliver to the Holder not later than five (5) Trading Days after the Conversion Date, a certificate or certificates (which certificate(s) shall be free of restrictive legends and trading restrictions) representing the number of shares of Common Stock being acquired upon the conversion of this Note.  In lieu of delivering physical certificates representing the shares of Common Stock issuable upon conversion of this Note, provided the Company's transfer agent is participating in the Depository Trust Company (“DTC”) Fast Automated Securities Transfer (“FAST”) program, upon request of the Holder, the Company shall use commercially reasonable efforts to cause its transfer agent to electronically transmit such shares issuable upon conversion to the Holder (or its designee), by crediting the account of the Holder’s (or such designee’s) prime broker with DTC through its Deposits and Withdrawal at Custodian (DWAC) program (provided that the same time periods herein as for stock certificates shall apply).  If in the case of any conversion hereunder, such certificate or certificates are not delivered to or as directed by the Holder by the fifth Trading Day after the 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 this Note tendered for conversion.  If the Company fails to deliver to the Holder such certificate or certificates (or shares through DTC) pursuant to this Section 3(b) (free of any restrictions on transfer or legends) in accordance herewith, prior to the eighth Trading Day after the Conversion Date, the Company shall pay to the Holder as liquidated damages, in cash, an amount equal to 2% of the Principal Amount per month.

 

(c) Reservation and Issuance of Underlying Securities.  The Company covenants that it will at all times reserve and keep available out of its authorized and unissued Common Stock solely for the purpose of issuance upon conversion of this Note (including repayments in stock), free from preemptive rights or any other actual contingent purchase rights of persons other than the Holder, not less than such number of shares of Common Stock as shall (subject to any additional requirements of the Company as to reservation of such shares set forth in the Exchange Agreement) be issuable (taking into account the adjustments under this Section 3 but without regard to any ownership limitations contained herein) upon the conversion of this Note hereunder in Common Stock (including repayments in stock).  The Company covenants that all shares of Common Stock that shall be so issuable shall, upon issue, be duly authorized, validly issued, fully paid, nonassessable and freely tradeable.

 

 

 

  

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(d) No Fractions.  Upon a conversion hereunder the Company shall not be required to issue stock certificates representing fractions of shares of Common Stock, but may if otherwise permitted, make a cash payment in respect of any final fraction of a share based on the closing price of a share of Common Stock 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.

 

(e) Charges, Taxes and Expenses.  Issuance of certificates for shares of Common Stock upon the conversion of this Note (including repayment in stock) shall be made without charge to the Holder for any issue or transfer tax or other incidental expense in respect of the issuance of such certificate, all of which taxes and expenses shall be paid by the Company, and such certificates shall be issued in the name of the Holder or in such name or names as may be directed by the Holder; provided, however, that in the event certificates for shares of Common Stock are to be issued in a name other than the name of the Holder, this Note when surrendered for conversion shall be accompanied by an assignment form; and provided further, that the Company shall not be required to pay any tax or taxes which may be payable in respect of any such transfer.

 

(f) Cancellation.  After all of the Principal Amount (including accrued but unpaid interest and default payments at any time owed on this Note) have been paid in full or converted into Common Stock, this Note shall automatically be deemed canceled and the Holder shall promptly surrender the Note to the Company at the Company’s principal executive offices.

 

(g) Notices Procedures.  Any and all notices or other communications or deliveries to be provided by the Holder hereunder, including, without limitation, any Conversion Notice, shall be in writing and delivered personally, by confirmed facsimile, or by a nationally recognized overnight courier service to the Company at the facsimile telephone number or address of the principal place of business of the Company as set forth in the Exchange Agreement.  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, or by a nationally recognized overnight courier service addressed to the Holder at the facsimile telephone number or address of the 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 delivered (i) upon receipt, when delivered personally, (ii) when sent by facsimile, upon receipt if received on a Business Day prior to 5:00 p.m. (Eastern Time), or on the first Business Day following such receipt if received on a Business Day after 5:00 p.m. (Eastern Time) or (iii) upon receipt, when deposited with a nationally recognized overnight courier service.

 

(h) Conversion Limitation.  Notwithstanding anything to the contrary contained herein, the number of shares of Common Stock that may be acquired by the Holder upon conversion pursuant to the terms hereof shall not exceed a number that, when added to the total number of shares of Common Stock deemed beneficially owned by the Holder (other than by virtue of the ownership of securities or rights to acquire securities (including this Note) that have limitations on the Holder’s right to convert, exercise or purchase similar to the limitation set forth herein), together with all shares of Common Stock deemed beneficially owned at such time (other than by virtue of the ownership of securities or rights to acquire securities that have limitations on the right to convert, exercise or purchase similar to the limitation set forth herein) by the Holder’s “affiliates” at such time (as defined in Rule 144 of the Act) (“Aggregation Parties”) that would be aggregated for purposes of determining whether a group under Section 13(d) of the Securities Exchange Act of 1934 as amended, exists, would exceed 4.9% of the total issued and outstanding shares of the Common Stock (the “Restricted Ownership Percentage”).  The Holder shall have the right (w) at any time and from time to time to reduce its Restricted Ownership Percentage immediately upon notice to the Company and (x) (subject to waiver) at any time and from time to time, to increase its Restricted Ownership Percentage immediately in the event of the announcement as pending or planned, of a Change in Control Transaction.

 

 

 

  

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Section 2. Defaults and Remedies.

 

(a) Events of Default.                                An “Event of Default” is:  (i) a default in payment of any amount due hereunder which default continues for more than 5 business days after the due date thereof; (ii) a default in the timely issuance of Underlying Shares upon and in accordance with terms hereof, which default continues for five Business Days after the Company has received written notice informing the Company that it has failed to issue shares or deliver stock certificates within the fifth day following the Conversion Date; (iii) failure by the Company for fifteen (15) days after written notice has been received by the Company to comply with any material provision of any of the Notes or the Exchange Agreement (including without limitation the failure to issue the requisite number of shares of Common Stock upon conversion hereof and the failure to redeem Notes upon the Holder’s request following a Change in Control Transaction pursuant to Section 3(c)(v); (iv) a material breach by the Company of its representations or warranties in the Exchange Agreement,; (v) any default after any cure period under, or acceleration prior to maturity of, any mortgage, indenture or instrument under which there may be issued or by which there may be secured or evidenced any indebtedness for money borrowed by the Company for in excess of $100,000 or for money borrowed the repayment of which is guaranteed by the Company for in excess of $100,000, whether such indebtedness or guarantee now exists or shall be created hereafter; or (vi) if the Company is subject to any Bankruptcy Event.

 

(b) Remedies.  If an Event of Default occurs and is continuing with respect to the Note, the Holder may declare all of the then outstanding Principal Amount of this Note, including any interest due thereon, to be due and payable immediately, except that in the case of an Event of Default arising from events described in clauses (v) and (vi) of Section 4(a), this Note shall become due and payable without further action or notice.  In the event of such acceleration, the amount due and owing to the Holder shall be the greater of (1) 100% of the outstanding Principal Amount of the Notes held by the Holder (plus all accrued and unpaid interest, if any) and (2) the product of (A) the highest closing price for the five (5) Trading days immediately preceding the Holder’s acceleration and (B) the Conversion Ratio.  In either case the Company shall pay interest on such amount in cash at the Default Rate to the Holder if such amount is not paid within 7 days of Holder’s request.  The remedies under this Note shall be cumulative.

 

 

 

 

 

 

  

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Section 3.   General.

 

(a) Payment of Expenses.  The Company agrees to pay all reasonable charges and expenses, including attorneys' fees and expenses, which may be incurred by the Holder in successfully enforcing this Note and/or collecting any amount due under this Note.

 

(b) Savings Clause.  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.  In no event shall the amount of interest paid hereunder exceed the maximum rate of interest on the unpaid principal balance hereof allowable by applicable law.  If any sum is collected in excess of the applicable maximum rate, the excess collected shall be applied to reduce the principal debt.  If the interest actually collected hereunder is still in excess of the applicable maximum rate, the interest rate shall be reduced so as not to exceed the maximum allowable under law.

 

(c) Amendment.  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.

 

(d) Assignment, Etc.  The Holder may assign or transfer this Note to any transferee only with the prior written consent of the Company, which may not be unreasonably withheld or delayed, provided that (i) the Holder may assign or transfer this Note to any of such Holder's affiliates without the consent of the Company and (ii) upon any Event of Default, the Holder may assign or transfer this Note without the consent of the Company.  The Holder shall notify the Company of any such assignment or transfer promptly.  This Note shall be binding upon the Company and its successors and shall inure to the benefit of the Holder and its successors and permitted assigns.

 

(e) No Waiver.  No failure on the part of the Holder to exercise, and no delay in exercising any right, remedy or power hereunder shall operate as a waiver thereof, nor shall any single or partial exercise by the Holder of any right, remedy or power hereunder preclude any other or future exercise of any other right, remedy or power.  Each and every right, remedy or power hereby granted to the Holder or allowed it by law or other agreement shall be cumulative and not exclusive of any other, and may be exercised by the Holder from time to time.

 

(f) Governing Law; Jurisdiction.

 

(i) Governing Law.  THIS NOTE WILL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE PROVINCE OF QUEBEC WITHOUT REGARD TO ANY CONFLICTS OF LAWS PROVISIONS THEREOF THAT WOULD OTHERWISE REQUIRE THE APPLICATION OF THE LAW OF ANY OTHER JURISDICTION.

 

 

 

 

  

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(ii) Jurisdiction.  The Company irrevocably submits to the exclusive jurisdiction of any Provincial or Federal Court in the Province of Quebec over any suit, action, or proceeding arising out of or relating to this Note.  The Company irrevocably waives, to the fullest extent permitted by law, any objection which it may now or hereafter have to the laying of the venue of any such suit, action, or proceeding brought in such a court and any claim that suit, action, or proceeding has been brought in an inconvenient forum.

 

The Company agrees that the service of process upon it mailed by certified or registered mail (and service so made shall be deemed complete three days after the same has been posted as aforesaid) or by personal service shall be deemed in every respect effective service of process upon it in any such suit or proceeding.  Nothing herein shall affect the Holder's right to serve process in any other manner permitted by law.  The Company agrees that a final non-appealable judgement in any such suit or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on such judgment or in any other lawful manner.

 

(III) NO JURY TRIAL.  THE COMPANY HERETO KNOWINGLY AND VOLUNTARILY WAIVES ANY AND ALL RIGHTS IT MAY HAVE TO A TRIAL BY JURY WITH RESPECT TO ANY LITIGATION BASED ON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS NOTE.

 

(g) Replacement Notes.  This Note may be exchanged by the Holder at any time and from time to time for a Note or Notes with different denominations representing an equal aggregate outstanding Principal Amount, as reasonably requested by the Holder, upon surrendering the same.  No service charge will be made for such registration or exchange.  In the event that Holder notifies the Company that this Note has been lost, stolen or destroyed, a replacement Note identical in all respects to the original Note (except for registration number and Principal Amount, if different than that shown on the original Note), shall be issued to the Holder, provided that the Holder executes and delivers to the Company an agreement reasonably satisfactory to the Company to indemnify the Company from any loss incurred by it in connection with this Note.  If such replacement occurs, the term “Note” as used herein shall be deemed to refer to any such replacement Note.

 

 

[Signature Page Follows]

 

 

 

 

 

 

 

 

 

  

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IN WITNESS WHEREOF, the Company has caused this Note to be duly executed on the day and in the year first above written.

 

	 	 Wiless Controls, Inc.
	 	 
	 	 By: 	 _________________________________________________________
	 	 	 Name: Michel St-Pierre
	 	 	Title: President and CEO
	 	 
	 	 Capex Investment Limited
	 	 
	 	By:	__________________________________________________________
	 	 	 Name: Claude Pellerin, Esquire
	 	 	 Title: Attorney for Capex Investment Ltd.
	 	 	 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

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EXHIBIT A

 

 

CONVERSION NOTICE

 

 

(To be executed by the Holder in order to Convert the Debenture)

 

 

	
TO: Michel St-Pierre,

Wiless Controls Inc.

 

The undersigned hereby irrevocably elects to convert _________________ of the principal amount of Debenture into Shares of Common Stock of Wiless Controls, Inc. according to the conditions stated therein, as of the Conversion Date written below.

 

	
Conversion Date:

	
   ___________________________________________

	
Conversion Amount to be converted:

	
$ ___________________________________________

	
Conversion Price:

	
$ ___________________________________________

	
Number of shares of Common Stock to be issued:

	   ___________________________________________
	  	   ___________________________________________
	  	   ___________________________________________
	  	  

 

	
Please issue the shares of Common Stock in the following name and to the following address:

	
Issue to:

 

Capex Investment Limited located at

Level 3, Alexander House,

35 Cybercity,

Ebene, Mauritus

 

	   ____________________________________________ 
	
Authorized Signature:

	   ____________________________________________
	
Name:

	   ____________________________________________ 
	
Title:

	   ____________________________________________
	  	   ____________________________________________ 
	
Account Number:

	
   ____________________________________________

 

 

 

 

  

- 11 -Exhibit1022014PSUGrantAgreement

Exhibit 10.2

WESTELL TECHNOLOGIES, INC.

PERFORMANCE STOCK UNIT AWARD AGREEMENT

THIS PERFORMANCE STOCK UNIT AWARD AGREEMENT (the “Agreement”) is granted by WESTELL TECHNOLOGIES, INC. (the “Company”) to _____________________ (the “Participant”) this ____ day of ________, _____ (the “Grant Date”) pursuant to the Company’s 2004 Stock Incentive Plan (the “Plan”).  The applicable terms of the Plan are incorporated herein by reference.  All capitalized terms not otherwise defined in this Agreement shall have the meanings assigned to such terms in the Plan.
WHEREAS, the Company believes it to be in the best interests of the Company and its stockholders for its officers and other executives to have an incentive tied to the Company’s __________ and __________ (the "Performance Targets"); and
WHEREAS, the Company has determined to grant the Participant units consisting of Performance Stock Units (“Performance Stock Units”) which assuming certain conditions and other requirements specified below are satisfied convert into shares of the Company’s Class A Common Stock (“Common Stock”) pursuant to the terms of the Plan and this Agreement; 
NOW, THEREFORE, in consideration of the premises and of the services to be performed by the Participant and other conditions required hereunder, the Company and the Participant intending to be legally bound hereby agree as follows:
1.Performance Stock Units.  The Company hereby grants to the Participant _______ Performance Stock Units.  The Performance Stock Units granted under this Agreement are units that will be reflected in a book account maintained by the Company until they convert to Common Stock and are issued to the Participant or have been forfeited. The number of shares of Common Stock to be issued to the Participant will be based upon the number of Performance Stock Units granted under this Section 1, the Performance Multiplier described in Section 2 and the Participant’s vesting percentage in Section 3.  
2.Performance Multiplier.  
		
	(a)
	The number of Performance Stock Units that may become vested pursuant to the vesting calculation in Section 3 is determined by the “Performance Multiplier” described on Exhibit 1 attached hereto.  The Performance Multiplier is determined and calculated by using a “point system” that compares the Company’s actual ______ and _______ for fiscal years 20XX, 20XX, 20XX and 20XX to pre-established performance goals established by the Committee.  For purposes of this Agreement, the Performance Targets shall be defined in Exhibit 1.  Following the close of each fiscal year, the Committee will compare the Company’s performance to the pre-established performance goals to determine the number of points that are earned.  The points will be added and the total divided by 100 to determine the Performance Multiplier that will apply to the original Performance Stock 

1    

Units.  The Participant shall only receive points for a fiscal year if the Participant is employed on the relevant Certification Date, as defined in Section 3(a).
		
	(b)
	In calculating the Performance Multiplier, the Committee shall determine the Company’s ________ and _________ in accordance with generally accepted accounting principles (except as otherwise stated in Exhibit 1); provided that the Committee shall, to the extent desirable, make appropriate adjustments (as determined by the Committee in its sole discretion) to the operating profit calculation or the pre-established performance goals to eliminate the effects of acquisitions, divestitures and similar transactions.

		
	(c)
	The Committee’s determination shall be final, conclusive and binding on the Company and the Participant.

3.Vesting Percentage.  
		
	(a)
	The vesting percentage for the Performance Stock Units shall be based upon the Participant’s continued employment with the Company.  The Performance Stock Units will vest according to the following schedule:

	
		
	Vesting Date
	Vesting Percentage

	Certification Date for FY 20XX
	25%

	Certification Date for FY 20XX
	50%

	Certification Date for FY 20XX
	75%

	Certification Date for FY 20XX
	100%

The “Certification Date” for purposes of this Agreement shall be each date on which the Company’s audited financial statements are accepted by the Audit Committee and the results under this Agreement are determined for each of the four fiscal years; provided that such date shall not be more than three months after the end of the Company’s fiscal year.  For example, if the Participant is employed by the Company on the date on which the Company’s audited financial statements for the fiscal year ending March 31, 20XX are accepted by the Audit Committee and the results under this Agreement are determined, the Participant’s vesting percentage will be 25%.  Similarly, the Participant’s vesting percentage will be 50% if the Participant is employed by the Company on the Certification Date for the fiscal year ending March 31, 20XX.  Except as provided in (b) below, no portion of the award which is unvested at the Participant’s termination of employment shall thereafter become vested.

		
	(b)
	Notwithstanding the foregoing, for purposes of this Section 3(b), the vesting percentage shall be 100% in the event of a Participant’s termination of employment due to:

		
	(i)
	Death;

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	(ii)
	Disability;

		
	(iii)
	Retirement after age 65 or as determined by the Committee; 

		
	(iv)
	The disposition of a subsidiary or operating unit that employed the Participant;

		
	(v)
	A termination of the Participant’s employment by the Company without Cause no more than three months prior to and in anticipation of a Change in Control; 

		
	(vi)
	A Triggering Event following a Change in Control; or 

		
	(vii)
	A termination event causing accelerated vesting under any employment agreement between the Company and the Participant.

If a Participant becomes 100% vested as a result of an event described in this Section 3(b), the Participant shall receive a distribution under Section 4 based upon the Participant’s Performance Multiplier as of the date of such termination.
		
	(c)
	For purposes of this Agreement, “Change in Control”, “Triggering Event”, “Good Reason” and “Cause” shall have the following meanings:

		
	(i)
	A “Change in Control” shall be deemed to have occurred as of the first day that any one or more of the following conditions shall have been satisfied:

		
	(A)
	the consummation of the purchase by any person, entity or group of persons, within the meaning of Section 13(d) or 14(d) of the Securities Exchange Act of 1934, as amended, except the Voting Trust (together with its affiliates) formed pursuant to the Voting Trust Agreement dated February 23, 1994, as amended from time to time, among Robert C. Penny III and Melvin J. Simon, as co-trustees, and certain members of the Penny family and the Simon family, of ownership of shares representing more than 50% of the combined voting power of the Company’s voting securities entitled to vote generally (determined after giving effect to the purchase);

		
	(B)
	a reorganization, merger or consolidation of the Company, in each case, with respect to which persons who were shareholders of the Company immediately prior to such reorganization, merger or consolidation do not, immediately thereafter, own 50% or more of the combined voting power entitled to vote generally of the Company or the surviving or resulting entity (as the case may be); or

		
	(C)
	a sale of all or substantially all of the Company’s assets, except that a Change in Control shall not exist under this clause (c) if the Company or persons who were shareholders of the 

3    
 

Company immediately prior to such sale continue to collectively own 50% or more of the combined voting power entitled to vote generally of the acquirer.
		
	(ii)
	A “Triggering Event” shall be deemed to have occurred as of the first day that any one or more of the following conditions shall have been satisfied:

		
	(A)
	the Participant resigns from and terminates employment with the Company for Good Reason following a Change in Control by notifying the Company or its successor within ninety (90) days after the initial occurrence of the event constituting Good Reason specifying in reasonable detail the basis for the Good Reason. 

		
	(B)
	the Company or its successor terminates the Participant’s employment with the Company without Cause within two years of the date on which a Change in Control occurred.

		
	(iii)
	“Good Reason” means that concurrent with or within twelve months following a Change in Control, the Participant’s base salary is reduced or the Participant’s total compensation and benefits package is materially reduced without the Participant’s written approval, or the Participant’s primary duties and responsibilities prior to the Change in Control are materially reduced or modified in such a way as to be qualitatively beneath the duties and responsibilities befitting of a person holding a similar position with a company of comparable size in the Company’s business in the United States, without the Participant’s written approval (other than may arise as a result of the Company ceasing to be a reporting company under the Exchange Act or ceasing to be listed on NASDAQ), or the Participant is required, without his consent, to relocate his principal office to a location, or commence principally working out of another office located, more than 30 miles from the Company’s office which represented the Participant’s principal work location.  

		
	(iv)
	“Cause” means (A) the failure by the Participant to comply with a particular directive or request from the Board of the Company regarding a matter material to the Company, and the failure thereafter by the Participant to reasonably address and remedy such noncompliance within thirty (30) days (or such shorter period as shall be reasonable or necessary under the circumstances) following the Participant’s receipt of written notice from the Board confirming the Participant’s noncompliance; (B) the taking of an action by the Participant regarding a matter material to the Company, which action the Participant knew at the time the action was taken to be specifically contrary to a particular directive or request from the Board, (C) the failure by the Participant to comply with the written policies of the Company regarding a matter material to the Company, including 

4    
 

expenditure authority, and the failure thereafter by the Participant to reasonably address and remedy such noncompliance within thirty (30) days (or such shorter period as shall be reasonable or necessary under the circumstances) following the Participant’s receipt of written notice from the Board confirming the Participant’s noncompliance, but such opportunity to cure shall not apply if the failure is not curable; (D) the Participant’s engaging in willful, reckless or grossly negligent conduct or misconduct which, in the good faith determination of the Company’s Board, is materially injurious to the Company monetarily or otherwise; (E) the aiding or abetting a competitor or other breach by the Participant of his fiduciary duties to the Company; (F) a material breach by the Participant of his obligations of confidentiality or nondisclosure or (if applicable) any breach of the Participant’s obligations of noncompetition or nonsolicitation under any agreement between the Participant and the Company; (G) the use or knowing possession by the Participant of illegal drugs on the premises of the Company; or (H) the Participant is convicted of, or pleads guilty or no contest to, a felony or a crime involving moral turpitude.
		
	(d)
	Solely for purposes of the definitions of “Triggering Event”, “Good Reason” and “Cause” under this Section 3 (and not for purposes of the definition of “Change in Control” hereunder), the Company shall be deemed to include any of Westell Technologies, Inc.’s direct and indirect subsidiary companies and the term Board shall be deemed to include the Board of Directors of any such subsidiary. 

4.Conversion of Performance Stock Units to Common Stock and Distribution.  
		
	(a)
	The vested Performance Stock Units shall be converted to shares of Common Stock following the Certification Date for each of the four fiscal years.  

		
	(b)
	The number of shares of Common Stock to be issued to the Participant following a Certification Date shall be equal to the number of Performance Shares in Section 1 times the Multiplier determined in Section 2 times the vesting percentage determined in Section 3 and less any shares of Common Stock issued for prior fiscal years.  If the calculation would result in issuance of a fractional number of shares, any fraction of 0.5 or greater will be rounded up to the next whole share, and any fraction of less than 0.5 will be rounded down to the next whole share.  Exhibit 2 contains examples illustrating how the number of shares of Common Stock to be issued to the Participant in each year is calculated.

		
	(c)
	The shares of Common Stock shall be distributed by the Company within 30 days following the Certification Date.  Following the issuance of the Common Stock, the Company shall have no further obligations under this Agreement.

5.Rights Prior to Conversion.  Prior to the date on which the Performance Stock Units are converted to shares of Common Stock as described in Section 4, the Participant will not have 

5    
 

any right to vote the Performance Stock Units.  The Participant will not be deemed a stockholder of the Company with respect to any of the Performance Stock Units.  The Performance Stock Units may not be sold, assigned, transferred, pledged, encumbered or otherwise disposed of prior to the issuance of the Common Stock.  After Performance Stock Units are converted to shares of Common Stock, the Participant shall receive a cash payment or payments from the Company equal to any cash dividends paid with respect to the number of shares of Common Stock relating to Performance Stock Units that are earned hereunder during the period beginning with the date of this Agreement through the date the Common Stock becomes issued and outstanding.
6.Interpretation by Committee.  The Participant agrees that any determination, calculation, interpretation, challenge, dispute or disagreement that may arise in connection with this Agreement shall be resolved by the Committee, in its sole discretion, and that any interpretation by the Committee of the terms of this Agreement or the Plan and any determination made by the Committee under this Agreement or such plan may be made in the sole discretion of the Committee.
7.Withholding Taxes.  The Company shall be entitled to withhold the amount of any tax attributable to any shares deliverable under the Plan after giving the person entitled to receive the shares notice as far in advance as practicable and the Company may defer making delivery until indemnified to its satisfaction.  The Committee may, in its discretion and subject to rules which it may adopt, require the Participant to pay all or a portion of the taxes arising in connection with the award by withholding shares of Common Stock from the shares otherwise deliverable to the Participant, having a fair market value equal to the amount to be withheld; provided, however that the value of the shares which may be withheld shall not exceed the Company’s minimum statutory federal, state and local tax withholding obligations for the Participant.
8.Clawback. The Performance Stock Units granted under this Agreement and any Common Stock issued under Section 4 shall be subject to the terms of any Company’s clawback policy that may be in effect from time to time.
9.Miscellaneous.
		
	(a)
	This Agreement shall be governed and construed in accordance with the laws of the State of Delaware applicable to contracts made and to be performed therein between residents thereof.

		
	(b)
	This Agreement may not be amended or modified except by the written consent of the parties hereto.

		
	(c)
	The captions of this Agreement are inserted for convenience of reference only and shall not be taken into account in construing this Agreement.

		
	(d)
	This Agreement is intended to satisfy the requirements for the deferral of compensation under Code section 409A or qualify for an exclusion therefrom.  All terms used in this Agreement shall be interpreted to the maximum extent possible to satisfy Code section 409A.  

IN WITNESS WHEREOF, the parties hereto have, personally or by a duly authorized representative, executed this Agreement as of the Grant Date first above written.

6    
 

Westell Technologies, Inc.
 
By:                           
Name:                           
Its:                           

_______________________________________ 
        Participant

7

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