THIS NOTE AND THE COMMON SHARES
ISSUABLE UPON CONVERSION OF THIS NOTE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE
SECURITIES LAWS. THE COMMON SHARES ISSUABLE UPON CONVERSION
OF THIS NOTE MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THIS NOTE
UNDER SAID ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR AN
OPINION OF COUNSEL REASONABLY SATISFACTORY TO 360 GLOBAL WINE
COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.
SECURED CONVERTIBLE TERM
NOTE
FOR VALUE RECEIVED, 360 GLOBAL WINE
COMPANY, a Nevada corporation (the “ Company ”),
promises to pay to Wynthrop Barrington, Inc. of 1800 E. Sahara,
Suite 107, Las Vegas, Nevada 89104 (the “ Holder
”) or its registered assigns or successors in interest, the
principal sum of Ten Million Dollars ($10,000,000), together with
any accrued and unpaid interest hereon, on June 27, 2008 (the
“ Maturity Date ”) if not sooner paid. Interest
on the Note shall be seven percent (7%) annually, with one half of
said annual amount of Three Hundred and Fifty Thousand Dollars
($350,000) paid monthly in advance at the rate of Twenty Nine
Thousand Six Hundred and Sixty Seven Dollars ($29,667); the balance
of said annual amount of Three Hundred and Fifty Thousand Dollars
($350,000) shall accrue at the stated rate.
Capitalized terms used herein without
definition shall have the meanings ascribed to such terms in that
certain Security and Purchase Agreement dated as of the date hereof
by and between the Companies and the Holder (as amended, modified
and/or supplemented from time to time, the “ Security
Agreement ”).
The following terms shall apply to this
Secured Convertible Term Note (this “ Note
”):
ARTICLE I
CONTRACT RATE AND AMORTIZATION
CONVERSION AND REDEMPTION
1.1
Payment
Payment in Common Stock
. The Note may be converted into shares
of Common Stock pursuant to Section 3.2) When payment
is made , the number of such shares to be issued by the Company to
the Holder on such Date , shall be the number determined by
dividing (i) the portion of the Amount to be converted into shares
of Common Stock, by (ii) the then applicable Fixed Conversion
Price. For purposes hereof, subject to Section 3.6 hereof,
the initial “ Fixed Conversion Price ” means $
0.33.
1.2
No Effective Registration
.
Notwithstanding anything to the contrary
herein, none of the Company’s obligations to the Holder may
be converted into Common Stock unless (a) either (i) an effective
current Registration Statement (as defined in the Registration
Rights Agreement) covering the shares of Common Stock to be issued
in connection with satisfaction of such obligations exists or (ii)
an exemption from registration for resale of all of the Common
Stock issued and issuable is available pursuant to Rule 144 of the
Securities Act and (b) no Event of Default (as hereinafter defined)
exists and is continuing, unless such Event of Default is cured
within any applicable cure period or otherwise waived in writing by
the Holder.
1.3
Optional Redemption in Cash
.
The Company may prepay this Note (“
Optional Redemption ”) by paying to the Holder a sum
of money equal to one hundred twenty eight percent (128%) of the
Principal Amount outstanding at such time together with accrued but
unpaid interest thereon and any and all other sums due, accrued or
payable to the Holder arising under this Note, the Security
Agreement or any other Ancillary Agreement (the “
Redemption Amount ”) outstanding on the Redemption
Payment Date (as defined below). The Company shall deliver to
the Holder a written notice of redemption (the “ Notice of
Redemption ”) specifying the date for such Optional
Redemption (the “ Redemption Payment Date ”),
which date shall be ten (10) business days after the date of the
Notice of Redemption (the “ Redemption Period
”). A Notice of Redemption shall not be effective with
respect to any portion of this Note for which the Holder has
previously delivered a Notice of Conversion (as hereinafter
defined) or for conversions elected to be made by the Holder
pursuant to Section 3.3 during the Redemption Period. The
Redemption Amount shall be determined as if the Holder’s
conversion elections had been completed immediately prior to the
date of the Notice of Redemption. On the Redemption Payment
Date, the Redemption Amount must be paid in good funds to the
Holder. In the event the Company fails to pay the Redemption
Amount on the Redemption Payment Date as set forth herein, then
such Redemption Notice will be null and void.
ARTICLE II
HOLDER’S CONVERSION RIGHTS
2.1
Optional Conversion
. Subject to the terms set forth in
this Article III, the Holder shall have the right, but not the
obligation, to convert all or any portion of the issued and
outstanding Principal Amount and/or accrued interest and fees due
and payable into fully paid and nonassessable shares of Common
Stock at the Fixed Conversion Price. The shares of Common
Stock to be issued upon such conversion are herein referred to as,
the “ Conversion Shares. ”
2.2
Mechanics of Holder’s
Conversion .
In the event that the Holder elects to
convert this Note into Common Stock, the Holder shall give notice
of such election by delivering an executed and completed notice of
conversion in substantially the form of Exhibit A hereto
(appropriate completed) (“ Notice of Conversion
”) to the Company and such Notice of Conversion shall provide
a breakdown in reasonable detail of the Principal Amount, accrued
interest and fees that are being converted. On each
Conversion Date (as hereinafter defined) and
in accordance with its Notice of
Conversion, the Holder shall make the appropriate reduction to the
Principal Amount, accrued interest and fees as entered in its
records and shall provide written notice thereof to the Company
within two (2) business days after the Conversion Date. Each
date on which a Notice of Conversion is delivered or telecopied to
the Company in accordance with the provisions hereof shall be
deemed a Conversion Date (the “ Conversion Date
”). Pursuant to the terms of the Notice of Conversion,
the Company will issue instructions to the transfer agent
accompanied by an opinion of counsel within one (1) business day of
the date of the delivery to the Company of the Notice of Conversion
and shall cause the transfer agent to transmit the certificates
representing the Conversion Shares to the Holder by crediting the
account of the Holder’s designated broker with the Depository
Trust Corporation (“ DTC ”) through its Deposit
Withdrawal Agent Commission (“ DWAC ”) system
within three (3) business days after receipt by the Company of the
Notice of Conversion (the “ Delivery Date ”).
In the case of the exercise of the conversion rights set
forth herein the conversion privilege shall be deemed to have been
exercised and the Conversion Shares issuable upon such conversion
shall be deemed to have been issued upon the date of receipt by the
Company of the Notice of Conversion. The Holder shall be
treated for all purposes as the record holder of the Conversion
Shares, unless the Holder provides the Company written instructions
to the contrary.
2.3
Conversion Mechanics
. The number of shares of Common
Stock to be issued upon each conversion of this Note shall be
determined by dividing that portion of the amount to be converted,
if any, by the then applicable Fixed Conversion Price.
2.4
Adjustment Provisions
. The Fixed Conversion Price and
number and kind of shares or other securities to be issued upon
conversion determined pursuant to this Note shall be subject to
adjustment from time to time upon the occurrence of certain events
during the period that this conversion right remains outstanding,
as follows:
(a)
Reclassification
. If the Company at any time shall,
by reclassification or otherwise, change the Common Stock into the
same or a different number of securities of any class or classes,
this Note, as to the unpaid Principal Amount and accrued interest
thereon, shall thereafter be deemed to evidence the right to
purchase an adjusted number of such securities and kind of
securities as would have been issuable as the result of such change
with respect to the Common Stock (i) immediately prior to or (ii)
immediately after, such reclassification or other change at the
sole election of the Holder. However, in no event shall the number
of shares so reclassified, be less than two million (2,000,000)
until the Note is fully paid or converted.
(b)
Stock Splits, Combinations and
Dividends . If the
shares of Common Stock are subdivided or combined into a greater or
smaller number of shares of Common Stock, or if a dividend is paid
on the Common Stock or any preferred stock issued by the Company in
shares of Common Stock, the Fixed Conversion Price shall be
proportionately reduced in case of subdivision of shares or stock
dividend or proportionately increased in the case of combination of
shares, in each such case by the ratio which the total number of
shares of Common Stock outstanding immediately after such event
bears to the total number of shares of Common Stock outstanding
immediately prior to such event, however in no event shall the
number of shares of Common Stock so adjusted be less than two
million (2,000,000) until the Note is fully paid or
converted.
(c)
Share Issuances
. Subject to the provisions of this
Section 3.6, if the Company shall at any time prior to the
conversion or repayment in full of the Principal Amount issue any
shares of Common Stock or securities convertible into Common Stock
to a Person other than the Holder (except (i) pursuant to Sections
3.6(a) or (b) above; (ii) pursuant to options, warrants, or other
obligations to issue shares outstanding on the date hereof as
disclosed to the Holder in writing; or (iii) pursuant to options
that may be issued under any employee incentive stock option and/or
any qualified stock option plan adopted by the Company) for a
consideration per share (the “ Offer Price ”)
less than the Fixed Conversion Price in effect at the time of such
issuance, then the Fixed Conversion Price shall be immediately
reset to
