-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, EUzJAnyFKGT/oepCbIOikvVR9E/LMFQG8eoddmWGuyFzH5rResylSG+nKPwQU1rR PQhNDyMGg/3MnlWehc2Wng== /in/edgar/work/20000710/0000950147-00-001024/0000950147-00-001024.txt : 20000712 0000950147-00-001024.hdr.sgml : 20000712 ACCESSION NUMBER: 0000950147-00-001024 CONFORMED SUBMISSION TYPE: S-3 PUBLIC DOCUMENT COUNT: 6 FILED AS OF DATE: 20000710 FILER: COMPANY DATA: COMPANY CONFORMED NAME: GLOBAL TECHNOLOGIES LTD CENTRAL INDEX KEY: 0000932021 STANDARD INDUSTRIAL CLASSIFICATION: [3663 ] IRS NUMBER: 860970492 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: S-3 SEC ACT: SEC FILE NUMBER: 333-41096 FILM NUMBER: 670631 BUSINESS ADDRESS: STREET 1: 1811 CHESTNUT STREET STREET 2: SUITE 120 CITY: PHILADELPHIA STATE: PA ZIP: 19103 BUSINESS PHONE: 2159728191 MAIL ADDRESS: STREET 1: 1811 CHESTNUT STREET STREET 2: SUITE 120 CITY: PHILADELPHIA STATE: PA ZIP: 19103 S-3 1 0001.txt FORM S-3 FOR GLOBAL TECHNOLOGIES, LTD As filed with the Securities and Exchange Commission on July 10, 2000 Registration No.: 333-________ ================================================================================ SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ---------- FORM S-3 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 GLOBAL TECHNOLOGIES, LTD. (Exact Name of Registrant as specified in its Charter) Delaware 86-0970492 (State or other jurisdiction (I.R.S. Employer of incorporation) Identification Number) The Belgravia, 1811 Chestnut Street, Suite 120, Philadelphia, PA 19103 (215) 972-8191 (Address, including Zip Code, and Telephone Number, including Area Code, of Registrant's Principal Executive Offices) S. Lance Silver, General Counsel Global Technologies, Ltd. The Belgravia, 1811 Chestnut Street, Suite 120, Philadelphia, PA 19103 Telephone: (215) 972-8191 (Name and Address, including Zip Code and Telephone Number, including Area Code, of Agent for Service) Copies of all communications to: Richard P. Jaffe, Esquire Schnader Harrison Segal & Lewis LLP 1735 Market Street, 38th Floor Philadelphia, PA 19103-7598 Telephone: (215) 994-1046 Telefax: (215) 994-1111 APPROXIMATE DATE OF PROPOSED SALE TO THE PUBLIC: As soon as practicable after this Registration Statement becomes effective. If the only securities being registered on this form are being offered pursuant to dividend or interest reinvestment plans, please check the following box. [ ] If any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities offered only in connection with dividend or interest reinvestment plans, check the following box. [X] If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ] If this form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ] _______________ If the delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. [ ] ================================================================================
CALCULATION OF REGISTRATION FEE ============================================================================================= Proposed Proposed Amount of Title of Securities Amount to be Maximum Offering Maximum Aggregate Registration to be Registered Registered price per Share(3) Offering Price(3) Fee(4) - --------------------------------------------------------------------------------------------- Class A Common Stock, $0.01 par value 250,000(1) $5.96875 $1,492,187.50 $393.94 - --------------------------------------------------------------------------------------------- Class A Common Stock $0.01 par value 20,000(2) $5.96875 $ 119,375 $ 31.52 - --------------------------------------------------------------------------------------------- Total $425.46 =============================================================================================
(1) The registrant is registering for resale by certain selling stockholders (i) 125,0000 shares of Class A Common Stock that may be acquired by such selling stockholders upon the conversion, redemption or payment of certain secured convertible notes of the registrant and upon the redemption of such notes and (ii) 125,000 shares of Class A Common Stock that may be acquired by such selling stockholders upon exercise of certain warrants of the registrant issued in connection with a partial redemption of such notes. Pursuant to Rule 416 of the Securities Act of 1933, as amended, this registration statement also registers such additional number of shares of registrant's Class A Common Stock as may become issuable upon any such conversion, payment, redemption or exercise as a result of stock splits, stock dividends and similar transactions. (2) The registrant is registering for resale by certain selling stockholders shares of Class A Common Stock that may be acquired by such selling stockholders upon exercise of certain warrants of the registrant. Pursuant to Rule 416 of the Securities Act of 1933, as amended, this registration statement also registers such additional number of shares of registrant's Class A Common Stock as may become issuable upon exercise of the warrants as a result of stock splits, stock dividends and similar transactions. (3) Estimated solely for the purpose of computing the registration fee pursuant to Rule 457(c) under the Securities Act of 1933, as amended. The proposed maximum offering price per share is based upon the average of the high and low sales prices of the Class A Common Stock as quoted on the Nasdaq National Market System as of the close of trading on July 5, 2000. (4) Calculated by multiplying the aggregate offering amount by .000264. The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the SEC acting pursuant to said Section 8(a), may determine. INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE. SUBJECT TO COMPLETION, DATED JULY 10, 2000 PROSPECTUS GLOBAL TECHNOLOGIES, LTD. 270,000 SHARES CLASS A COMMON STOCK This Prospectus relates to the offer for sale from time to time of up to 270,000 shares of Class A Common Stock, par value $0.01 per share, of Global Technologies, Ltd., a Delaware corporation, by (i) stockholders who hold secured convertible notes and warrants issued in connection with a partial redemption of such notes and (ii) other stockholders who received warrants of the company in connection with the issuance of such notes. Although we would receive certain benefits from the conversion of the notes and would receive exercise proceeds from the exercise of the warrants, we will not receive any of the proceeds from the resale of these shares by the selling stockholders. For more information on the selling stockholders, the notes and the warrants, please see "Selling Security Holders" beginning on Page 22. Global's Class A Common Stock is traded on the Nasdaq National Market under the symbol "GTLL." The closing sale price of our Class A Common Stock as reported by the Nasdaq National Market on July 5, 2000 was $5.9375 per share. PLEASE SEE "RISK FACTORS" BEGINNING ON PAGE 6 FOR A DISCUSSION OF CERTAIN FACTORS YOU SHOULD CONSIDER IN CONNECTION WITH ANY DECISION TO PURCHASE SHARES IN THIS OFFERING. The selling stockholders may sell the shares of Class A Common Stock described in this prospectus in public or private transactions, on or off the Nasdaq National Market, at prevailing market prices, or at privately negotiated prices. The selling stockholders may sell shares directly to purchasers or through brokers or dealers. Brokers or dealers may receive compensation in the form of discounts, concessions or commissions from the selling stockholders. For more information on how the shares may be distributed, please see "Plan of Distribution" beginning on Page 25. NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED ON THE ADEQUACY OR ACCURACY OF THE PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. The date of this Prospectus is __________ __, 2000. TABLE OF CONTENTS FORWARD-LOOKING STATEMENTS AND ASSOCIATED RISKS........................... 4 AN OVERVIEW OF OUR BUSINESS............................................... 5 RISK FACTORS.............................................................. 6 RISKS PARTICULAR TO GLOBAL................................................ 6 RISKS PARTICULAR TO OUR PARTNER COMPANIES................................. 16 USE OF PROCEEDS........................................................... 22 SELLING SECURITY HOLDERS.................................................. 22 PLAN OF DISTRIBUTION...................................................... 24 DISCLOSURE OF THE SEC'S POSITION ON INDEMNIFICATION FOR SECURITIES ACT LIABILITIES............................................... 25 LEGAL MATTERS............................................................. 26 EXPERTS................................................................... 27 2 Throughout this prospectus, "Global Technologies," "Global," "we," "us," and "our," and other possessive and other derivations thereof, refer to Global Technologies, Ltd. and its consolidated subsidiaries, unless the context otherwise requires. All trademarks and trade names appearing in this prospectus are the property of Global, unless otherwise indicated. This prospectus is part of a registration statement we filed with the SEC. Global may amend or supplement this prospectus from time to time by filing amendments or supplements as required. Please read this entire prospectus and any amendments or supplements carefully before making your investment decision to purchase shares in this offering. You should rely only on the information provided in, and incorporated by reference into, this prospectus. You should not assume that the information in this prospectus is accurate as of any date other than the date on the front of the document. We have authorized no one to provide you with different information. We are not making an offer of these securities in any state where the offer is not permitted. WHERE YOU CAN FIND MORE INFORMATION We file annual, quarterly and special reports, proxy statements and other information with the SEC. You may read and copy any such documents that we have filed. You may do so at the Commission's public reference room, Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549. These documents are also available at the following Regional Office: 7 World Trade Center, Suite 1300, New York, New York 10048. Please call the Commission at 1-800-SEC-0330 for further information on the public reference rooms. Our SEC filings are also available to the public on the Commission's web site at http://www.sec.gov. Our web site can be found at http://www.gtll.com. INCORPORATION OF DOCUMENTS BY REFERENCE The SEC allows us to "incorporate by reference" into this registration statement some of the information we have already filed with the SEC. As a result, we can disclose important information to you by referring you to those documents. These incorporated documents contain important business and financial information about us that is not contained in or delivered with this prospectus. The information incorporated by reference is considered to be part of this prospectus. Moreover, later information filed with the SEC by us in the future will update and supersede this information and similarly be considered to be a part of this prospectus. We incorporate by reference the documents listed below, all filings made by us with the SEC under Section 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934 after the date of the initial registration statement, as amended, and prior to effectiveness of the registration statement, and any future filings made by us with the SEC under Section 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934: * Our Annual Report on Form 10-KSB for the fiscal year ended October 31, 1998. * Our Quarterly Report on Form 10-QSB for the fiscal quarter ended January 31, 1999. * Our Current Report on Form 8-K filed on June 1, 1999. * Our Quarterly Report on Form 10-QSB for the fiscal quarter ended April 30, 1999. * Our Amended Current Report on Form 8-K filed on August 2, 1999. * Our Definitive Proxy Statement filed August 17, 1999. 3 * Our Current Report on Form 8-K filed on August 31, 1999. * Our Definitive Proxy Statement filed September 16, 1999. * Our Transition Report on Form 10-KSB for the transition period ended June 30, 1999. * Our Quarterly Report on Form 10-QSB for the fiscal quarter ended September 30, 1999. * Our Quarterly Report on Form 10-QSB for the fiscal quarter ended December 31, 1999. * Our Two Amended Quarterly Reports on Form 10-QSB for the fiscal quarter ended December 31, 1999. * Our Current Report on Form 8-K filed on February 28, 2000. * Our Quarterly Report on Form 10-QSB for the fiscal quarter ended March 31, 2000. * Our Definitive Proxy Statement filed April 17, 2000. * The description of the Class A Common Stock as set forth in our registration statement on Form 8-A filed with the SEC on December 31, 1994, as amended by our registration statement on Form 8-A/A filed with the SEC on March 8, 1995, and any other amendments or reports thereto filed with the SEC for the purpose of updating such description. We will provide, without charge, to each person to whom a prospectus is delivered, a copy of these documents that are incorporated by reference into, but not delivered with, this prospectus. You may request a copy of these filings by writing or telephoning us at the following address: S. Lance Silver, General Counsel Global Technologies, Ltd. The Belgravia, 1811 Chestnut Street, Suite 120 Philadelphia, PA 19103 Telephone number: 215-972-8191 FORWARD-LOOKING STATEMENTS AND ASSOCIATED RISKS This prospectus, and certain information incorporated herein by reference, include "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. This act provides a "safe harbor" for forward-looking statements to encourage companies to provide prospective information about themselves so long as they identify these statements as forward-looking and provide meaningful cautionary statements identifying important factors that could cause actual results to differ from the projected results. All statements other than statements of historical fact we make in this prospectus or in any document incorporated by reference are forward-looking. In particular, the statements herein, and in the incorporated information, regarding our future results of operations or financial position are forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as "may," "will," "should," "expect," "plan," "anticipate," "believe," "estimate," "predict," "potential," or "continue" or the negative of such terms or other comparable terminology. 4 Forward-looking statements reflect our current expectations and are inherently uncertain. For these statements, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. You should understand that future events, in addition to those discussed elsewhere in this prospectus, particularly under "Risk Factors," and also in other filings made by us with the Securities and Exchange Commission, could affect our future operations and cause our results to differ materially from those expressed in our forward-looking statements. The cautionary statements made in this prospectus and in the incorporated information should be read as being applicable to all related forward-looking statements contained in this prospectus and the incorporated information. AN OVERVIEW OF OUR BUSINESS We are a technology incubator that invests in, develops and manages emerging growth companies in the e-commerce, Internet, networking solutions, information and entertainment systems, telecommunications and gaming industries. We currently hold common stock and convertible preferred stock representing approximately 80% of the outstanding common stock of The Network Connection, Inc. on a fully converted basis. The Network Connection is publicly traded on the Nasdaq SmallCap Market under the ticker symbol "TNCX." The Network Connection provides an Internet information and video and audio entertainment system for the away-from-home market and has expertise in providing content, e-commerce and connectivity for communities of people in hotels, cruise ships, trains and corporate training centers. The Network Connection's systems are designed to deliver to users a personal, on-demand, full-motion video and audio experience via high performance networks in trains (TrainView(TM)), cruise ships (CruiseView(TM)) and hotels (InnView(TM)), as well as the education and corporate training markets (EduView(R)). This is achieved by the use of TNCi's family of Cheetah(R) video servers and transPORTAL tools. We also hold 3,000,000 shares of common stock representing approximately 14% of the outstanding common stock of U.S. Wireless Corporation based on the number of outstanding shares of U.S. Wireless common stock disclosed in its annual report filed with the Securities and Exchange Commission on June 26, 2000. U.S. Wireless is publicly traded on the Nasdaq National Market under the ticker symbol "USWC." U.S. Wireless has developed proprietary network-based wireless location technology designed to enable wireless carriers and others to provide their customers with location-based services and applications. These services include enhanced 411 and 911 services, live navigation assistance, asset and vehicle tracking, intelligent transportation systems, location sensitive billing and network management systems. U.S. Wireless' RadioCamera(TM) location system is a geographic location system that pinpoints the locations of mobile telephone subscribers within a wireless network. The RadioCamera(TM) system measures the radio frequency pattern or the phase (i.e., the timing and the amplitude path) of all the radio frequency signals from a caller to a single cell site. We also hold 27.5% of Inter Lotto (UK) Limited, a United Kingdom company that is licensed to operate lotteries on behalf of charities in Great Britain. GTL Management Limited, a wholly owned subsidiary of Global, has an exclusive contract with Inter Lotto to provide management services in connection with the operation of these lotteries. The UK lottery, called "The Daily Number," was officially launched on April 4, 2000. We also hold an approximately 4% equity interest in Shop4Cash.com, Inc., a privately held, cash-incentive, Internet shopping portal with a growing base of approximately 250 affiliated merchants. 5 RISK FACTORS Making an investment in the Class A Common Stock of Global Technologies, Ltd. is highly speculative and involves a high degree of risk. Before making an investment, you should be aware of the following risk factors and should review carefully the financial and other information about us provided or incorporated into this prospectus. RISKS PARTICULAR TO GLOBAL WE PLAN TO SELL OR FURTHER BORROW AGAINST SOME OF OUR INVESTMENTS TO MEET OUR FINANCIAL OBLIGATIONS OVER THE NEXT 90 DAYS AND THERE IS RISK THAT WE MAY NOT BE ABLE TO DO SO AT TIMES OR PRICES NECESSARY TO MEET THESE OBLIGATIONS. As of July 5, 2000, we had an obligation of approximately $2.8 million in connection with the purchase of the hardware and software that serves as the network operating center of the on-line lottery system that we have deployed in the United Kingdom, and the terminals through which lottery players purchase lottery tickets. In addition, we currently anticipate that our lottery project will require approximately $300,000 per month in the three month period ending September 30, 2000 to continue operations. We are also obligated to lend The Network Connection up to $5.0 million pursuant to a revolving credit facility agreement. As of July 5, 2000, The Network Connection had drawn $5.0 against this line of credit, of which we converted $1.85 million of the outstanding balance under the facility into 1,233,333 shares of The Network Connection common stock, leaving an outstanding balance of $3.15 million. The Network Connection has recently received orders to install its InnView(TM) interactive information and entertainment system in four hotels. The Network Connection recently entered into a $12.0 million equity purchase agreement contemplating purchases of its common stock by an investor. If The Network Connection does not obtain any proceeds from purchases, it will likely continue to draw on the credit facility with us to finance the production of some or all of the equipment necessary for such installations, as well as to cover other commitments and operating expenses. The lottery equipment purchase obligation and losses that we expect to fund, together with projected draws under The Network Connection credit facility and other operating expenses, exceed the sum of our currently available cash, cash equivalents and currently remaining available credit under the line of credit with Merrill Lynch, which sum totaled $1.3 million as of July 7, 2000 (after the redemption of the convertible secured notes discussed below). Although we recently obtained $10.0 million in equity financing from the issuance of our Series C Convertible Preferred Stock, obtained a $10 million line of credit facility with Merrill Lynch, which has been secured with a pledge of one million of our shares of common stock of U.S. Wireless, and obtained $4.0 million from the issuance of convertible notes secured by the pledge of an additional one million of our shares of common stock of U.S. Wireless (of which we redeemed $2.0 million of the principal amount on July 7, 2000 for a total redemption cost of approximately $2.2 million and the issuance of warrants described below), we plan to sell or further borrow against some of our investments to cover our financial obligations and to continue to execute on our business strategy of investing in, developing and managing emerging growth companies in the e-commerce, Internet, networking solutions, information and entertainment systems, telecommunications and gaming industries. In this regard, we entered into a collateral loan agreement on June 28, 2000 relating to a loan of $16.0 million against a pledge of the third million of our three million shares of U.S. Wireless common stock. We expect funding to occur on or about 6 July 12, 2000 (a more detailed discussion of this transaction is set forth three risk factors below). We provide no assurance that funding will occur as scheduled in connection with this loan or that we will be able to sell or borrow against other of our assets at planned times or for prices necessary to meet our financial obligations or to take advantage of investment or acquisition opportunities consistent with our business strategy. Failure to do so may prevent or delay further development of our business and/or cause us to default under the credit facility to The Network Connection. Such failure, delay and/or default would have a material adverse effect on the growth of our business, The Network Connection's and our financial condition, and may subject us to legal liability. ONE MILLION OF OUR SHARES OF COMMON STOCK OF U.S. WIRELESS CORPORATION, WHICH WE HAVE PLEDGED TO SECURE THE MERRILL LYNCH CREDIT FACILITY, MAY BE LIQUIDATED TO SATISFY OUR OBLIGATIONS TO MERRILL LYNCH AND COULD ALSO RESULT IN ADVERSE TAX CONSEQUENCES. On April 5, 2000, we entered into a line of credit facility with Merrill Lynch in which Merrill Lynch agreed to advance up to $10.0 million based upon a percentage of the value of securities pledged as collateral to secure amounts drawn under the line of credit. Principal amounts borrowed under the line, together with accrued interest at an annual rate equal to the London Inter-bank Offer Rate (LIBOR) plus 1.25%, are payable upon demand by Merrill Lynch. As of July 5, 2000, we had an outstanding balance of $6.8 million under the Merrill Lynch line of credit facility. To secure such borrowing, we have pledged 1,000,000 of our shares of common stock of U.S. Wireless to Merrill Lynch. If the amount owed under the Merrill Lynch credit facility at any time exceeds 35% of the market value of the shares of U.S. Wireless pledged to Merrill Lynch, we will be subject to a maintenance call which would require us to pledge additional securities which are acceptable to Merrill Lynch as collateral or require us to reduce the outstanding balance owed under the Merrill Lynch credit facility through payment in cash. We provide no assurance that we would have sufficient additional collateral or funds necessary to pay outstanding amounts owed under the Merrill Lynch credit facility in the event of a maintenance call or upon demand for payment by Merrill Lynch, the failure of either of which would result in the liquidation of our shares of U.S. Wireless pledged to Merrill Lynch to satisfy outstanding obligations under the Merrill Lynch credit facility, adverse tax consequences resulting from such liquidation, and a material adverse effect on our financial condition. ANOTHER ONE MILLION OF OUR SHARES OF COMMON STOCK OF U.S. WIRELESS CORPORATION, WHICH WE HAVE PLEDGED TO SECURE THE SECURED CONVERTIBLE NOTES, MAY BE LIQUIDATED TO SATISFY OUR OBLIGATIONS TO THE HOLDERS OF THE NOTES AND COULD ALSO RESULT IN ADVERSE TAX CONSEQUENCES. On June 8, 2000, we issued $4.0 million of secured convertible notes to Advantage Fund II Ltd. and Koch Investment Group, Ltd. The notes bear interest at 6% per annum and mature on December 7, 2001. The notes are convertible into shares of our Class A Common Stock at a conversion rate of two dollars per share, subject to customary adjustments. To secure such borrowing, we pledged 1,000,000 of our shares of common stock of U.S. Wireless to the holders of the notes. One event of default under the notes occurs if U.S. Wireless common stock trades at less than $5.00 per share at any time during each of five trading days (which need not be consecutive) within any consecutive 30-day period and certain other conditions are met. A default by us under the notes would allow the 7 holders to accelerate our repayment obligations. Our failure to repay on an accelerated basis in a default situation could result in the liquidation of our shares of U.S. Wireless pledged in connection with the issuance of the notes to satisfy outstanding obligations under the notes, adverse tax consequences resulting from such liquidation, and a material adverse effect on our financial condition. On July 7, 2000, we redeemed $2.0 million of the principal amount of these notes. The notes require that in connection with such redemption we issue warrants for 125,000 shares, in the aggregate, of our Class A Common Stock to the holders of the notes. These warrants have a four-year term and an exercise price of $4.00 per share. For a more detailed discussion of this transaction, see "Selling Security Holders" on page 22 below. THE THIRD MILLION OF OUR THREE MILLION SHARES OF COMMON STOCK OF U.S. WIRELESS CORPORATION, WHICH WE HAVE AGREED TO PLEDGE TO SECURE A $16.0 MILLION LOAN, MAY BE LIQUIDATED TO SATISFY OUR OBLIGATIONS TO THE LENDERS AND COULD ALSO RESULT IN ADVERSE TAX CONSEQUENCES. On June 28, 2000, we entered into a collateral loan agreement in connection with a $16.0 million loan from an institutional lender. This loan is to be funded on or about July 12, 2000, at which time we will issue a promissory note to the lender in the amount of $16.0 million. The loan bears interest at LIBOR plus 1% per annum, payable quarterly in arrears, and matures on June 27, 2002. We currently contemplate using the proceeds of this loan for potential acquisitions, working capital and other corporate purposes. To secure such borrowing, we have agreed to pledge 1,000,000 of our shares of common stock of U.S. Wireless to the lender. A default by us on any of our obligations under the collateral loan agreement or promissory note, could result in the liquidation of our shares of U.S. Wireless pledged as security for the loan to satisfy outstanding loan obligations, adverse tax consequences resulting from such liquidation, and a material adverse effect on our financial condition. OUR PARTNER COMPANIES ARE GROWING RAPIDLY AND WE MAY HAVE DIFFICULTY ASSISTING THEM MANAGE THEIR GROWTH. Our partner companies have grown, and we expect them to continue to grow rapidly. This growth requires our partner companies to: * hire new employees; * aggressively advertise and promote their products and services; * modify and expand the current array of products and services offered; and * push product into new markets where we believe that significant market share and profitability may be achieved. Such growth is placing a strain on the limited resources of our partner companies and the limited resources we can allocate to assist them. The funds required to support this growth may require us to forego acquisition opportunities that would otherwise be consistent with our business strategy of investing in, developing and managing emerging growth companies in the e-commerce, Internet, networking solutions, information and entertainment systems, telecommunications and gaming industries. 8 WE ARE A DEFENDANT IN A MULTI-DISTRICT CLASS ACTION LAWSUIT THAT IF DECIDED ADVERSELY TO US COULD RESULT IN A LOSS OF OUR ASSETS. The business strategy under former management was the development, assembly, installation and operation of computer-based, in-flight entertainment networks that provided passengers the opportunity to view movies, play computer games and gamble, where legally permissible, through an in-seat video touch-screen. The main contract with respect to that entertainment network was with Swissair. On September 2, 1998, Swissair flight 111 crashed. The aircraft involved in the crash was a McDonnell Douglas MD-11 equipped with the entertainment network developed by former management. A large number of claims have been filed by the families of the victims of the crash. These claims have been consolidated into a multi-district class action litigation in which we, together with Swissair, Boeing, DuPont and a number of other companies, are a defendant. Our aviation insurer is defending us in the action. We have $10.0 million in insurance coverage related to the action. We also have an umbrella policy for an additional $10.0 million in coverage; however, we are currently litigating the applicability of this policy to the action. If we do not settle the multi-district litigation within our policy limits, or if we are found liable for an amount in excess of these limits, our business would be adversely affected. If found liable for an amount substantially in excess of the limits of our coverage, we could lose all of our assets. WE HAVE A LIMITED OPERATING HISTORY UPON WHICH YOU MAY EVALUATE US. We were formed in February 1994. Until May 1998, we were engaged in the business of development, assembly, installation and operation of computer-based, in-flight entertainment networks, at which time former management decided to exit that business and to pursue opportunities in the dry-cleaning industry. In September 1998, the former board of directors of Global resigned from office and was replaced by our current board. The current board then appointed a new management team and put together our current business strategy of investing in, developing and managing emerging growth companies in the e-commerce, Internet, networking solutions, information and entertainment systems, telecommunications and gaming industries. We have a limited operating history under our new business strategy and new management on which you will be able to evaluate our business and prospects. Each of our partner companies is in the early stage of its development. Our business and prospects must be considered in light of the risk, expense and difficulties frequently encountered by companies in early stages of development, particularly companies in new and rapidly evolving markets such as e-commerce, Internet, networking solutions and telecommunications. If we are unable to effectively allocate our resources and help grow existing partner companies, we may be unable to execute our business strategy and our stock price may be adversely affected. OUR BUSINESS DEPENDS ENTIRELY ON THE PERFORMANCE OF OUR PARTNER COMPANIES, WHICH IS UNCERTAIN. We own interests in and help our partner companies operate their respective businesses. Each of our partner companies is engaged in a different operating business, and consequently is subject to a set of risks particular to its business. Material risks relating to our partner companies are set forth below under "Risks Particular to our Partner Companies." If our partner companies do not succeed, the value of our investments in such companies and our stock price could decline. 9 Our $158.4 million in total assets as of March 31, 2000 included approximately $129.3 million of assets of our consolidated subsidiaries and investments in our other partner companies. The carrying value of our partner company ownership interests includes our original acquisition cost and the effect of accounting for certain of our partner companies under the equity method of accounting. The carrying value of our partner companies will be impaired and decrease if one or more of our partner companies do not succeed. Also, the carrying value of our investment in U.S. Wireless is marked to market, and, therefore, a decline in its market price will impact our financial position. Our other publicly traded investment, The Network Connection, is not marked to market, and, as such, a decline in the market value of that company will not impact our financial position. However, such a decline would likely affect our stock price. WE HAVE A HISTORY OF LOSSES AND EXPECT CONTINUED LOSSES IN THE FORESEEABLE FUTURE. For the quarters ended March 31, 2000, December 31, 1999 and September 30, 1999 we lost approximately $9.3 million, $6.0 million and $0.5 million, respectively. The September quarter loss included a profit from the approximately $5.3 million sale by The Network Connection of 195 Cheetah(TM) multimedia video servers to schools in Georgia. Without the effect of this gain on our net results we would have incurred significantly greater losses for that quarter. We changed our fiscal year end from October 31 to June 30. For the eight-month transition period ended June 30, 1999 we lost $2.4 million. In addition, under prior management, we incurred net losses of $7.3 million in 1998 and $51.0 million in 1997. Excluding the effect of any future non-operating gains, we expect to continue to incur losses for the foreseeable future and, if we ever have profits, we may not be able to sustain them. We expect to have a significant net loss for the quarter ended June 30, 2000. Our expenses will increase as we continue to implement our business model. Specifically, expenses will increase: * in the event we hire additional employees and lease more office space to broaden our partner company support capabilities; * in connection with the continued operation of our UK lottery project, which will require significant expenditures for progress payments under the purchase agreement for the equipment that comprises the infrastructure of the lottery, and for payments to the company that manages and maintains the infrastructure; * with respect to The Network Connection, in the event that it continues to draw on the credit facility for funds to hire additional management personnel and to finance production and installation of its systems and other operating expenses; * as we explore acquisition opportunities and alliances with other companies; and * as we facilitate business arrangements among our partner companies. Expenses are also expected to increase due to the potential effect of goodwill amortization and other charges resulting from potential future acquisitions. If any of these and other expenses are not accompanied by increased revenue, our losses will be greater than we anticipate. 10 OUR REVENUES ARE SUBSTANTIALLY DEPENDENT ON OUR OPERATING SUBSIDIARIES. Our consolidated financial statements include our accounts and the accounts of our wholly-owned subsidiaries: * GlobalTech Holdings Limited * GTL Management Limited * Interactive Flight Technologies (Gibraltar) Limited * GTL Lottoco, Inc. * GTL Subco, Inc. * GTL Investments * GTL Leasing Limited * Lottery Sales Company Limited * MTJ Corp. and our majority-owned and controlled subsidiary, The Network Connection, and its wholly-owned subsidiary TNCi UK Limited. The ownership interest of minority shareholders in The Network Connection are recorded as "minority interest" on our condensed consolidated financial statements. We generally would not consolidate with our results of operations the results of operations of a partner company in which we held less than a 50% voting interest and otherwise did not maintain management control. For the quarters ended March 31, 2000, December 31 and September 30, 1999, the revenues of The Network Connection represented 100% of our total revenues, and for the eight-month transition period ended June 30, 1999, revenues from The Network Connection represented approximately 61% of our revenues. At July 5, 2000, we owned approximately 80% of the aggregate voting interests of The Network Connection. If our voting ownership of any of our operating subsidiaries, particularly The Network Connection, were to decrease below 50% and we did not maintain management control, we would most likely not continue to consolidate their results of operations with our results of operations. While this would affect our earnings per share only to the extent of our ownership change, the presentation of our consolidated statement of operations and balance sheet would change dramatically. In addition, fluctuations and decreases in the revenues of any of our subsidiaries, particularly The Network Connection, will have a correlative effect on our revenues. 11 WE MAY NOT HAVE OPPORTUNITIES TO ACQUIRE INTERESTS IN ADDITIONAL COMPANIES. We may be unable to identify companies that complement our strategy. Even if we identify a company that complements our strategy, we may be unable to acquire an interest in the company for many reasons, including: * failure to agree on the terms of the acquisition; * incompatibility between our management and management of the company; * competition from other potential acquirers; and * lack of capital resources needed to acquire an interest in the company. If we cannot acquire interests in additional companies, our strategy to build a network of technology partner companies that will enhance stockholder value may not succeed. WE MAY BE UNABLE TO MANAGE NEWLY ACQUIRED PARTNER COMPANIES. We plan to continue to acquire interests in e-commerce, Internet, telecommunications, networking solutions and gaming companies to complement our business strategy. Any additional acquisitions will likely place strain on our limited resources and our ability to manage our partner companies. Risks related to future acquisitions include: * disruption in our ongoing support of our partner companies, distracting our management and other resources and making it difficult to maintain our standards, controls and procedures; * acquisition of interests in companies in markets in which we have little experience; and * increased debt or issuance of equity securities to fund future acquisitions, which may be dilutive to existing stockholders. OUR SUCCESS DEPENDS UPON OUR SENIOR MANAGEMENT AND THE KEY PERSONNEL OF OUR PARTNER COMPANIES. Our success depends upon the continued employment of and performance by our senior management, particularly our Chairman and Chief Executive Officer, Irwin L. Gross, and the key personnel of our partner companies. It could have a material adverse effect on us if our senior management team do not continue their relationships with us, or if our partner companies are unable to hire and retain a sufficient number of qualified management, professional, technical and marketing personnel. THE MARKET PRICE FOR OUR STOCK IS AND WILL LIKELY CONTINUE TO BE VOLATILE. The market price for our stock has been volatile and has fluctuated significantly to date. The trading price of our stock is likely to continue to be highly volatile. In addition, the stock market in general and the market for technology companies in particular, have experienced extreme price and volume fluctuations. These broad market and industry factors may materially and adversely affect the market price of our common stock, regardless of our actual operating performance. In the past, following periods of volatility in the market price of a company's securities, securities class-action litigation has 12 often been instituted against such companies. Such litigation, if instituted, could result in substantial costs and a diversion of management's attention and resources, which would have a material adverse effect on our business, financial condition and results of operations. FLUCTUATIONS IN OUR QUARTERLY RESULTS WILL LIKELY CAUSE FLUCTUATIONS IN OUR STOCK PRICE. We expect that our quarterly results will fluctuate significantly due to many factors, including: * the operating results of our operating subsidiaries; * changes in equity, losses or income and amortization of goodwill related to the acquisition or divestiture of interests in partner companies; * changes in our methods of accounting for our partner company interests, which may result from changes in our ownership percentages of our partner companies; * changes in the market price of our investment in U.S. Wireless, which is marked to market; * sales of equity securities by our partner companies, which could cause us to recognize gains or losses under applicable accounting rules; * the pace of development or a decline in growth of the markets in which our partner companies operate and competition with respect to the technologies, products and services offered by our partner companies; * exchange rate fluctuations, to the extent that we generate revenues from foreign operations; * intense competition from other potential acquirers of prospective partner companies, which could increase our cost of acquiring interests in additional companies; and * our ability effectively to manage our growth and the growth of our partner companies. If our operating results in one or more quarters do not meet securities analysts' or your expectations, the price of our stock could decrease. In addition, we expect that the price of our common stock will fluctuate in response to announcements by us or our competitors with respect to acquisitions, divestitures and other corporate developments. WE MAY HAVE TO BUY, SELL OR RETAIN ASSETS WHEN WE WOULD OTHERWISE NOT WISH TO IN ORDER TO AVOID REGISTRATION UNDER THE INVESTMENT COMPANY ACT OF 1940. Generally, a company may be required to register under the Investment Company Act and comply with significant restrictions if its investment securities exceed 40% of the company's total assets, or if it holds itself out as being primarily engaged in the business of investing, reinvesting or trading in securities. A company is generally not required to register under the Investment Company Act if less than 45% of its total assets consist of, and less than 45% of its net income is derived from, securities other than government securities and securities of majority-owned subsidiaries and companies primarily controlled by it. 13 We believe that we are not an investment company, as that term is defined under the Investment Company Act, because our interests in partner companies that are not majority owned or primarily controlled by us make up less than 45% of our total assets and net income. It is not feasible for us to register as an investment company because the Investment Company Act regulations are inconsistent with our strategy of acquiring interests in, developing, operating and managing our partner companies. As the values of our currently held investment and non-investment securities change, and if we acquire additional investment securities, it is possible that we could be subject to regulation under the Investment Company Act. If that were to happen, we could ask for exemptive relief from the Securities and Exchange Commission. We are also able to rely once every three years on a one-year temporary exemption from the registration requirements of the Investment Company Act. If we were not able to obtain exemptive relief and the one-year temporary exemption were no longer available, we might need to take certain actions to avoid regulation under the Investment Company Act. We might be compelled to acquire additional income or loss generating assets that we might not otherwise have acquired, be forced to forego opportunities to acquire interests in companies that would be important to our strategy or be forced to forego the sale of minority interests we would otherwise want to sell. In addition, we might need to sell some assets considered to be investment securities, including interests in partner companies. Any of these actions could adversely affect our business. WE MAY BE UNABLE TO OBTAIN MAXIMUM VALUE FOR OUR PARTNER COMPANY INTERESTS. We have significant positions in our partner companies. While we do not anticipate selling significant portions of our investments in our partner companies in the foreseeable future, if we were to divest all or part of an investment in a partner company, we may not receive maximum value for this position. For partner companies with publicly traded stock, we may be unable to sell our interest, or portions thereof, at then-quoted market prices. Furthermore, for those partner companies that do not have publicly traded stock, the realizable value of our interests may ultimately prove to be lower than the carrying value currently reflected in our consolidated financial statements. OUR GLOBAL PRESENCE EXPOSES US TO CULTURAL DIFFERENCES, CURRENCY FLUCTUATIONS AND POLITICAL INSTABILITY. We have invested in foreign operations and may consider additional projects outside the United States. Our international presence exposes us to several risks, including the following: * CULTURAL DIFFERENCES. In transacting business in foreign countries, we seek to partner with entities from those countries and to hire professional consultants to help us determine whether products and services we propose to offer will be accepted by the people who live there. This process does not, however, ensure acceptance. Our failure to choose acceptable products and services to offer abroad will have an adverse effect on our business. 14 * CURRENCY FLUCTUATIONS. When we purchase interests in non-United States partner companies for cash, we will likely have to pay for the interests using the currency of the country where the prospective partner company is located. Similarly, although it is our intention to act as a long-term partner to our partner companies, if we sold an interest in a non-United States partner company we might receive foreign currency. To the extent that we transact in foreign currencies, fluctuations in the relative value of these currencies and the United States dollar may adversely impact our financial results. * COMPLIANCE WITH LAWS. We are subject to the laws of the UK, with respect to our lottery project, and may become subject to the laws and regulations of other foreign countries in the future. These laws are different than those of the United States and we are less familiar with them. We must go to the expense of hiring legal counsel in each foreign country in which we operate to comply with their laws and regulations. The laws of these foreign countries may change at any time, which would likely require us to incur additional legal expenses to comply with such changes, or could even force us to discontinue operations. * POLITICAL INSTABILITY. We have, and may in the future purchase, interests in foreign partner companies that are located, or transact business in, parts of the world that experience political instability. Political instability may have an adverse impact on the subject country's economy, and may limit or eliminate a partner company's ability to conduct business. IF WE DO NOT HAVE ENOUGH SHARES AUTHORIZED OR DO NOT OBTAIN STOCKHOLDER APPROVAL FOR THE ISSUANCE OF CLASS A COMMON STOCK UPON CONVERSION OF OUR SERIES C CONVERTIBLE PREFERRED STOCK AND/OR SECURED CONVERTIBLE NOTES IN EXCESS OF 19.999% OF OUR OUTSTANDING CLASS A COMMON STOCK, WE MAY BE FORCED TO REDEEM THE SERIES C CONVERTIBLE PREFERRED STOCK AND/OR THE SECURED CONVERTIBLE NOTES FROM THE HOLDERS. Pursuant to the terms of the convertible preferred stock purchase agreement that we entered to with Advantage Fund II Ltd. and Koch Investment Group Ltd. on February 16, 2000, in the event of a "triggering event," as defined in the Certificate of Designations, relating to the Series C Convertible Preferred Stock, such as if we do not have enough shares of Class A Common Stock authorized for issuance upon conversion of the Preferred Stock or do not obtain stockholder approval for the issuance of Class A Common Stock upon conversion of our Series C Convertible Preferred Stock held by these investors in excess of 19.999% of the outstanding shares of Class A Common Stock immediately prior to consummation of the sale of the Series C Convertible Preferred Stock as required under the Nasdaq listing rules and regulations, we may be forced to redeem the Series C Convertible Preferred Stock from them. We may not have the resources available to do so. As of July 5, 2000 the Series C Convertible Preferred Stock represented approximately 6% of our Class A Common Stock on a fully converted basis. If we were required to redeem the Series C Convertible Preferred Stock, it could have a material adverse effect on our business. The same risks are present in the event that we default on our obligations under the private placement purchase agreement that we entered into with, or the secured convertible notes that we issued to, Advantage and Koch on June 8, 2000. As of July 7, 2000, after the redemption of $2 million of the secured convertible notes, the remaining secured convertible notes represented approximately 9.5% of our Class A Common Stock on a fully converted basis. For a more detailed discussion of this transaction, see "Selling Security Holders" on page 22 below. 15 WE FACE GENERAL RISKS RELATED TO DOING BUSINESS THAT ARE BEYOND OUR CONTROL. Our success will depend in part on certain factors that are beyond our control and that cannot clearly be predicted at this time. These factors include general economic conditions, both nationally and internationally, changes in tax laws, fluctuating operating expenses, changes in governmental regulations, changes in technology, and trade laws. RISKS PARTICULAR TO OUR PARTNER COMPANIES FLUCTUATION IN THE PRICE OF THE COMMON STOCK OF OUR PUBLICLY TRADED PARTNER COMPANIES COULD AFFECT THE PRICE OF OUR STOCK. The Network Connection and U.S. Wireless are our two publicly traded partner companies. The price of their common stock has been highly volatile. The market value of our holdings in these partner companies changes with these fluctuations. Fluctuations in the price of The Network Connection's and U.S. Wireless' common stock are likely to affect the price of our Class A Common Stock. THE NETWORK CONNECTION. The price of The Network Connection's common stock may fluctuate in response to announcements by it or its competitors regarding sales of products and services, product enhancements and other corporate developments. The Network Connection's results of operations, and accordingly the price of its common stock, may be adversely affected by the following factors: * the company's ability to implement its new business strategy, which requires obtaining and expending a great deal of capital to develop compelling content and new applications for its interactive entertainment and information technologies, and to penetrate new markets; * the company's ability to integrate, retain and manage the new management team that it has put in place to lead it in the implementation of its new business strategy; * the company's ability to generate revenues from the markets in which it is currently operating, and to do so on a profitable basis; * the company's ability to procure and provide desirable content through its interactive entertainment and information systems; and * the company's ability to favorably resolve its issues with Carnival Cruise Lines relating to recovery by Carnival of amounts paid to the company, recorded as deferred revenue, the company's recovery of its inventory costs, potential warranty/de-installation obligations, discussions with respect to a new agreement between the company and Carnival which would cover the installation of the company's latest CruiseView(TM) technology on a Carnival ship and contractual terms more favorable to the company than the previous agreement with Carnival, including a longer-term and multiple ship arrangement. While the company is optimistic about the discussions, there is no assurance that it will be successful in reaching a mutually satisfactory resolution of these issues and in securing a new, more favorable long term contract with Carnival. 16 U.S. WIRELESS. U.S. Wireless currently has no revenues because it is in the process of developing networks to support its proprietary wireless location technology, RadioCamera(TM), which is designed to enable wireless carriers and others to provide their customers with location-based services and applications. U.S. Wireless developed its RadioCamera(TM)technology to capitalize on the market that it expects to develop in response to the Federal Communication Commission's mandate, which requires geolocation of mobile phone subscribers dialing 911. The price of U.S. Wireless' common stock may be adversely affected by the following factors: * additional mandates or other legislation or regulation negatively affecting the FCC mandate; * the development of the market for wireless location technologies, which currently is almost completely dependent upon the FCC mandate; * results of the testing of its RadioCamera(TM)wireless location-technology; * U.S.Wireless' ability to build out a nationwide network to allow for use of the RadioCamera (TM) system on a nationwide basis, which will require substantial capital commitment, and developing additional applications and offerings of value-added services in connection with the RadioCamera(TM) technology; * the level of acceptance of U.S. Wireless' RadioCamera(TM)technology as a solution to the FCC mandate and of any additional services the company develops for use in connection with that technology; * announcements by U.S. Wireless or its competitors with respect to system and service enhancements, strategic and other agreements, and other corporate developments; * competitors' abilities to develop and implement their systems in response to the FCC mandate, and the level of acceptance of competitors' systems, in the event that any are developed and implemented; and * U.S. Wireless' ability to obtain the financing necessary for it to carry out its business plan. An additional factor that may affect the volatility of the stock price of either of our publicly traded partner companies is the extent to which there are outstanding shares available for resale and derivative securities outstanding that could convert to shares available for resale. The sale of a significant number of shares of either of our publicly traded partner companies into the market could cause a decrease in the price per share of that partner company. THE NETWORK CONNECTION HAS A HISTORY OF LOSSES AND EXPECTS CONTINUED LOSSES. The Network Connection generated revenues of $11.1 million and $18.8 million for the fiscal years ended October 31, 1997 and 1998, respectively, and realized net losses for those years of $53.2 million and $7.2 million, respectively. For the eight-month transition period ended June 30, 1999, The Network Connection generated revenues of $0.9 million, and realized net income of $2.3 million. This net income was due entirely to reversal of prior accruals. 17 For the nine months ended March 31, 2000, The Network Connection generated revenues of $5.7 million on which it realized a net loss of $4.3 million. Almost all of the revenues generated in the nine months ended March 31, 2000 came from the sale of 195 Cheetah(R) video servers in connection with the Georgia Metropolitan Regional Education Services Agency (MRESA) Net 2000 project. Without these sales, The Network Connection would have had a loss of $6.3 million for that period. As of March 31, 2000, The Network Connection's accumulated deficit was $87.4 million and working capital was $0.1 million. Prior management of The Network Connection entered into an agreement with Carnival Cruise Lines, which obligated The Network Connection to install CruiseView(TM) systems on all ships designated by Carnival through December 2002. Since the installation of the CruiseView(TM) system on two Carnival cruise ships, and beginning in the quarter ended March 31, 2000, the Network Connection experienced costs in excess of those recoverable under the Carnival agreement. Given these costs, and ongoing technical issues, The Network Connection notified Carnival of its desire to renegotiate their agreement. During these discussions, Carnival notified The Network Connection in a letter dated April 24, 2000 that it sought to terminate the agreement and sought to assert certain remedies thereunder. The Network Connection and Carnival are in discussions seeking to resolve issues under the agreement regarding recovery of amounts paid by Carnival recorded as deferred revenue, The Network Connection's recovery of its inventory costs, potential warranty/de-installation obligations and other matters. Concurrently, The Network Connection and Carnival are in discussions with respect to a new agreement that would cover the installation of the latest CruiseView(TM) technology on a Carnival ship, and contractual terms more favorable to The Network Connection than the previous agreement, including a longer-term and multiple ship arrangement. While The Network Connection is optimistic about the discussions, there is no assurance that it will be successful in reaching a mutually satisfactory resolution of the Carnival issues and in securing a new, more favorable long-term contract with Carnival. The Network Connection has received only four orders for installation of its InnView(TM) system. We do not believe that The Network Connection's sales to date are sufficient to determine whether there is meaningful demand for its products. The Network Connection intends to continue to devote significant resources to its sales and marketing efforts in an effort to promote interest in its products. There is no assurance that The Network Connection will be successful with these efforts or that significant market demand for its products will ever develop. DELISTING OF THE COMMON STOCK OF THE NETWORK CONNECTION FROM TRADING ON THE NASDAQ SMALLCAP MARKET WOULD REDUCE THE MARKETABILITY OF OUR HOLDINGS IN THE NETWORK CONNECITON. The Network Connection common stock is listed for trading on the Nasdaq SmallCap Market under the symbol "TNCX." A listed company may be delisted if it fails to maintain minimum levels of stockholders' equity, shares publicly held, bid price, number of stockholders or aggregate market value, or if it violates other aspects of its listing agreement. At March 31, 2000 The Network Connection did not satisfy the minimum level of net tangible assets required to be listed ($2.0 million), nor did The Network Connection have sufficient non-affiliate market capitalization ($35.0 million) or net income ($500,000 for two of the past three years). The Network Connection is seeking additional capital and attempting to effect other equity transactions to, among other things, increase its net tangible assets to at least the minimum level required. There can be no 18 assurance that it will be able to raise this additional capital, or if it is able to raise additional capital, that such capital will be on terms satisfactory to it, or to effect other equity transactions currently under consideration. If The Network Connection fails to satisfy the criteria for continued listing, its common stock may be delisted. If The Network Connection common stock is delisted, public trading, if any, would thereafter be conducted in the over-the-counter market in the so-called "pink sheets," or on the NASD's "Electronic Bulletin Board." In this event, it may be more difficult to dispose of, or even to obtain quotations as to the price of, The Network Connection common stock and the price, if any, offered for its common stock may be substantially reduced. A decline in the market value of The Network Connection will not impact our financial position. However, such a decline would likely affect our stock price. MANY OF OUR PARTNER COMPANIES OPERATE IN MARKETS CHARACTERIZED BY RAPID TECHNOLOGICAL CHANGE. The markets in which many of our partner companies operate are characterized by rapid technological change, frequent new product and service introductions and evolving industry standards. Significant technological changes could render their existing technologies, products and services obsolete. Growth and intense competition in the networking solutions, telecommunications and e-commerce markets exacerbate these conditions. If our technology-oriented partner companies are unable to successfully respond to these developments or do not respond in a cost-effective way, our business, financial condition and operating results could be adversely affected. To be successful, these partner companies must adapt to their rapidly changing markets by continually improving the responsiveness, services and features of their products and services and by developing new features to meet the needs of their customers. Our success will depend, in part, on the abilities of our partner companies to enhance their existing products and services and develop new offerings and technology that address the needs of their customers. Our technology-oriented partner companies will also need to respond to technological advances and emerging industry standards in a cost-effective and timely manner. OUR TECHNOLOGY ORIENTED PARTNER COMPANIES' PRODUCTS COULD EXPERIENCE TECHNICAL DIFFICULTIES. The products of our technology-oriented partner companies are highly specialized and involve intricate technologies and electronic components that may be subject to technical difficulties. These technical difficulties could occur at any time as a result of component malfunction or some other reason. Although our technology oriented partner companies generally utilize quality control procedures and test products before marketing them, there is no assurance that all defects will be identified. We believe that reliability will be an important consideration for customers of our partner companies. Failure to detect and prevent defects and design flaws in the products of these partner companies could adversely affect our business, financial condition and operating results. THE SUCCESS OF OUR TECHNOLOGY-ORIENTED PARTNER COMPANIES IS DEPENDENT TO A LARGE DEGREE ON THE ACCEPTANCE OF E-COMMERCE AS A MEANS OF DOING BUSINESS. The success of our technology-oriented partner companies is dependent on the continued growth of intranets and the Internet as media for commercial transactions. The development of the e-commerce market is in its early stages. 19 If widespread commercial acceptance of e-commerce and use of the Internet does not continue to develop, or if intranets and the Internet do not develop as effective media for providing products and services, our technology-oriented partner companies may not succeed. A number of factors could impede acceptance of e-commerce and the Internet as a medium for doing business, including: * the unwillingness of businesses to shift from traditional processes to intranet-based and/or Internet-based processes; * the failure to continue the development of the necessary network infrastructure for substantial growth in usage of the Internet; * increased government regulation or taxation may adversely affect the viability of intranets and the Internet as media for commercial transactions; and * the growth in bandwidth may not keep pace with the growth in on-line traffic, which could result in slower response times for the users of intranet-based and Internet-based commercial transactions. THE UK LOTTERY PROJECT IS A START-UP VENTURE, HAS GENERATED INSIGNIFICANT REVENUES SINCE LAUNCH, IS BASED ON A GAME NEVER TRIED IN THE UK, AND MUST GENERATE SUFFICIENT CASH FLOW TO PAY A LARGE WEEKLY CONTRACTUAL OBLIGATION. Our UK lottery project is a start-up venture. It began operations on March 27, 2000, and was officially launched on April 4, 2000 in conjunction with the start of a media campaign. The UK lottery project has generated insignificant revenues to date, and we can give no assurance that it will ever generate meaningful revenues. Our partner companies involved in the lottery project have installed the approximately 3,500 terminals that complete Phase I of the project, and continue to promote the lottery and redistribute unproductive terminals to other retail outlets in an effort to maximize ticket sales. The lottery business and its prospects, therefore, must be considered in light of the risk, expense and difficulties frequently encountered by companies in early stages of development. In addition, the game on which the lottery is based has never been offered in the UK. We therefore have no basis on which to determine the level of acceptance, if any, that the game will achieve. If our lottery partner companies are unsuccessful in carrying out any post-launch tasks, or, in the event that the lottery does not achieve a significant degree of acceptance, the business of our lottery partner companies would be materially adversely affected, which, in turn, would have a material adverse effect on our business. We currently anticipate that the lottery enterprise will require funding of approximately $300,000 per month in the three month period ending September 30, 2000 to continue operations. Additionally, GTL Management Limited, a subsidiary of ours, entered into an agreement with International Lottery and Totalizator Systems, Inc. pursuant to which International Lottery and Totalizator Systems will provide certain facilities management services and technological support in connection with the networking hardware, software and terminals that we, through another subsidiary, purchased from them and that will serve as the infrastructure of the lottery. This agreement requires that we pay them $72,000 per week, plus additional amounts based on any terminals in excess of 3,500 being installed and a percentage of average daily sales. This obligation commenced on March 27, 2000 with the sale of the first ticket in connection with the lottery. The inability of the lottery to generate revenues sufficient to cover this obligation would adversely affect the business of our lottery partner companies. 20 ALL OF OUR PARTNER COMPANIES COULD BE ADVERSELY AFFECTED BY COMPETITION IN THE MARKETS IN WHICH THEY OPERATE. The markets in which our partner companies operate are highly competitive. Many of the competitors of our partner companies have longer operating histories and significantly greater financial, technical, marketing and other resources than they do. These competitors are therefore able to respond more quickly and efficiently to new or changing opportunities, technologies and customer requirements. For instance, with respect to our UK lottery project, the National Lottery of the United Kingdom has been operating a weekly lottery for at least five years and is extremely well funded. The National Lottery does not currently operate a lottery game similar to the lottery we expect to offer, but it would have a distinct competitive advantage if it chose and received the necessary regulatory approval to do so. If our partner companies' products and services do not achieve a significant level of acceptance in the marketplace, or their competitors develop products and services rendering theirs obsolete, our partner companies, and, in turn, we, would be adversely affected. INTELLECTUAL PROPERTY ISSUES, GOVERNMENT REGULATION AND LEGAL UNCERTAINTIES THAT COULD AFFECT OUR PARTNER COMPANIES. * INTELLECTUAL PROPERTY. Our partner companies utilize certain proprietary technologies and other intellectual property that are valuable to them. They protect this intellectual property in a variety of ways, such as through patent, trademark and copyright law. U.S. Wireless has filed 14 patent applications with the Patent & Trademark Office and has received notices of allowance for two of these applications. There is no assurance that any of the remaining patents will be granted. In addition, our partner companies rely on confidentiality agreements with key employees to prevent disclosure of important intellectual property to third parties. There is no assurance that any of these protections will prove sufficient to prevent third parties from using our partner companies' intellectual property either through legal or illegal means. Use by third parties of intellectual property of one of our partner companies could adversely affect that partner company's business. In addition, we give no assurance that any particular aspect of any of our partner companies' intellectual property will not be claimed to infringe the intellectual property rights of a third party. Intellectual property infringement litigation for or against any of our partner companies would likely have an adverse effect on that partner company's business. * GOVERNMENT REGULATION AND LEGAL UNCERTAINTIES. Our partner companies are subject, both directly or indirectly, to various laws and governmental regulations relating to their businesses. Our partner companies that operate abroad are subject to the laws and regulations of foreign countries with which we are not familiar. We believe that our partner companies maintain compliance with these laws and regulations, and that, while there is expense incurred in doing so, these laws and regulations do not have a material impact on the operations of our partner companies; however, as a result of rapid technology growth and other related factors, laws and regulations may be adopted which significantly impact our partner companies' businesses, and, in turn, our business. 21 USE OF PROCEEDS We will not receive any proceeds from the sale of the Class A Common Stock offered pursuant to this prospectus by the selling stockholders. We may receive exercise proceeds from the issuance of shares to the selling stockholders upon exercise of the warrants held by certain of the selling stockholders, which proceeds would be used for general working capital. SELLING SECURITY HOLDERS RECENT FINANCING On June 8, 2000, Advantage Fund II Ltd. and Koch Investment Group Ltd. purchased an aggregate of $4,000,000 of secured convertible notes from us in a private placement transaction. Advantage and Koch received two notes each, which may be converted into our Class A Common Stock at a conversion price of $2.00 per share, subject to customary anti-dilution adjustments. As described below, Advantage and Koch received warrants in connection with a partial redemption of the notes on July 7, 2000. Only a portion of the shares underlying the notes that remain outstanding and all of the shares underlying the warrants issued in connection with stock redemption are being offered pursuant to this prospectus as more fully described below. The notes mature on December 7, 2001 and bear interest at 6% per annum payable at maturity or on conversion in cash or stock, but only if a registration statement covering such stock has been filed and is effective. Stock is valued for interest payment purposes at the average of the last sale prices per share as reported by Nasdaq for each of the five days preceding the date on which the interest payment is made. The notes are redeemable by us at any time and from time to time, for a premium that increases with the length of time that the notes are outstanding, and the issuance of warrants or stock, also based on how long the notes are outstanding. We redeemed $2.0 million of the aggregate principal amount of the notes on July 7, 2000 for a total redemption cost of approximately $2.2 million and the issuance of certain warrants. The warrants issued in connection with the redemption are exercisable for, in the aggregate, 125,000 shares of our Class A Common Stock at an exercise price of $4 per share until July 7, 2004. The notes were secured by a pledge of 1,000,000 of our shares of the common stock of U.S. Wireless. We are obligated to register the shares of our Class A Common Stock issuable upon any conversion, redemption or payment of the notes, as well as any shares underlying the warrants issued in connection with the partial redemption of such notes described above. The remaining principal amount of the notes is currently convertible into, in the aggregate, 1,000,000 shares of our Class A Common Stock. Pursuant to an agreement with Advantage and Koch entered into in connection with the redemption described above, we are not currently registering more than 125,000 of the shares of our Class A Common Stock issuable upon the conversion, redemption or payment of the notes because we intend to redeem the remaining principal amount of the notes within the next 30 days. In connection with any such redemption, we shall be required to issue to the holders of the notes, in the aggregate, 125,000 shares of our Class A Common Stock, in which case the shares to be sold in the offering by each of the holders of the notes would represent the sum of the shares underlying the warrants discussed above and the shares issued in connection with such redemption. If we fail to so redeem the notes, we will amend this Registration Statement or file an additional Registration Statement to include the estimated number of additional shares of our Class A Common Stock issuable upon any conversion, redemption or payment of the notes. 22 Neither holder of the notes or related warrants may convert them into or exercise them for shares of our Class A Common Stock if after the conversion or exercise, such holder, together with any of its affiliates, would beneficially own over 4.999% of the outstanding shares of our common stock. This restriction may be waived by each holder on not less than 61 days' notice to us. On February 16, 2000, Advantage and Koch purchased $10 million of our Series C 5% Convertible Preferred Stock. As long as our Class A Common Stock is listed for trading on Nasdaq, we may not, without obtaining prior stockholder approval in order to comply with Nasdaq listing requirements, issue in connection with the conversion or payment of the notes more than 2,065,000 shares of our Class A Common Stock (approximately 19.999% of the outstanding Class A Common Stock immediately prior to the sale of the notes) less any shares of that stock previously issued (i) on conversion of the Series C Preferred Stock held by Advantage and Koch or (ii) the exercise of warrants received in connection with any redemption of such preferred stock at an exercise price less than the closing sale price of a share of our Class A Common Stock on February 15, 2000. The Class A Common Stock underlying the Series C 5% Convertible Preferred Stock is not being offered under this prospectus. Genesee International Inc., of which Mr. Donald R. Morken is the controlling stockholder, has voting and investment power over the securities beneficially owned by Advantage. Koch Industries, Inc., of which Messrs. Charles Koch and David Koch are controlling stockholders, have voting and investment power over the securities beneficially owned by Koch. In connection with the issuance of the convertible secured notes, designees of Reedland Capital Partners, a division of Financial West Group, received warrants to purchase an aggregate of 20,000 shares of our common stock at $5.8125 per share for Reedland Capital Partners' role as sales agent. The 20,000 shares underlying these warrants are also being offered to the public by means of this prospectus. SELLING STOCKHOLDERS The following table sets forth for each selling stockholder (a) the name of the selling stockholder, (b) the number of shares of our Class A Common Stock owned by the selling stockholder before the offering (in some cases, as noted in the footnotes to the table, some or all shares underlie convertible preferred stock or warrants, and/or secured convertible notes held by the selling stockholder), (c) the number of shares of our Class A Common Stock offered by the selling stockholder under this prospectus, (d) the number of shares of our Class A Common Stock that will be owned by the selling stockholder assuming that all shares of our Class A Common Stock registered hereby on that stockholder's behalf are sold, and (e) the percentage of our outstanding shares of Class A Common Stock that those remaining shares will represent. Each of the selling stockholders is a party to an agreement by which we agreed to register their shares of our Class A Common Stock. Registration of these shares enables the selling stockholders to sell the shares from time to time in any manner described in "Plan of Distribution" below, but does not necessarily mean that the selling stockholders will sell all or any of the shares. 23
PERCENTAGE OF OUTSTANDING CLASS NUMBER OF SHARES NUMBER OF SHARES A COMMON STOCK BENEFICIALLY BENEFICIALLY BENEFICIALLY NAME OF OWNED BEFORE NUMBER OF SHARES TO OWNED AFTER OWNED AFTER SELLING STOCKHOLDER OFFERING BE SOLD IN OFFERING OFFERING OFFERING (3) ------------------- -------- ------------------- -------- ------------ Advantage Fund II, Ltd. 521,612(1) 125,000(2) -0- * Koch Investment Group Ltd. 521,612(1) 125,000(2) -0- * Robert K. Schacter (4) 47,600 13,600 -0- * Thomas J. Griesel (4) 11,900 3,400 -0- * Financial West Group (4) 3,500 1,000 -0- * Donald & Co. Securities, Inc. (4) 2,100 600 -0- * Andrew Reiser (4) 4,200 1,200 -0- * Edward F. Duffy (4) 700 200 -0- *
- ---------- * Less than 1% (1) The number of shares of our Common Stock listed as being beneficially owned by Advantage and Koch includes the shares of our Class A Common Stock that are issuable to each of them, subject to the 4.999% limitation described above, upon conversion of their preferred stock, exercise of their warrants and conversion, payment and/or redemption of their notes. However, the 4.999% limitation would not prevent Advantage or Koch from acquiring and selling in excess of 4.999% of our common stock through a series of conversions and sales under the preferred stock and acquisitions and sales under the warrants, and conversions and sales of the notes. (2) The number of shares to be sold in the offering by each of Advantage and Koch represents (i) 62,500 shares issuable upon the conversion, payment and/or redemption of the secured convertible notes that each of them purchased from us on June 8, 2000 in the transaction described above in "Recent Financing" and (ii) 62,500 shares issuable upon the exercise of the warrants issued in connection with the partial redemption of the notes described above in "Recent Financing". We currently intend to redeem the remaining notes outstanding within 30 days in which event we would be required to issue, in the aggregate, 125,000 shares of our Class A Common Stock to the holders of the notes in connection with such redemption, in which case the 125,000 shares to be sold in the offering by each of Advantage and Koch would represent the sum of the shares underlying the warrants discussed above and the shares issued in connection with such redemption. (3) Percentages are based on 10,434,334 shares of Class A Common Stock outstanding as of July 5, 2000. (4) Designees of Reedland Capital Partners, which received warrants exercisable for an aggregate of 20,000 shares of our Class A Common Stock at an exercise price of $5.8125 per share in consideration of certain financial advisory services provided to us. These warrants expire on June 8, 2004. PLAN OF DISTRIBUTION The selling stockholders and any of their pledgees, assignees and successors-in-interest may, from time to time, sell any or all of their shares of Class A Common Stock on any stock exchange, market or trading facility on which the shares are traded or in private transactions. These sales may be at fixed or negotiated prices. The selling stockholders may use any one or more of the following methods when selling shares: * ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers; * block trades in which the broker-dealer will attempt to sell the shares as agent but may position and resell a portion of the block as principal to facilitate the transaction; * purchases by a broker-dealer as principal and resale by the broker-dealer for its account; * an exchange distribution in accordance with the rules of the applicable exchange; 24 * privately negotiated transactions; * broker-dealers may agree with the selling stockholders to sell a specified number of such shares at a stipulated price per share; * a combination of any such methods of sale; and * any other method permitted pursuant to applicable law. The selling stockholders may also sell shares under Rule 144 under the Securities Act, if available, rather than under this prospectus. Broker-dealers engaged by the selling stockholders may arrange for other brokers-dealers to participate in sales. Broker-dealers may receive commissions or discounts from the selling stockholders or, if any broker-dealer acts as agent for the purchaser of shares, from the purchaser, in amounts to be negotiated. The selling stockholders do not expect these commissions and discounts to exceed what is customary in the types of transactions involved. The selling stockholders and any broker-dealers or agents that are involved in selling the shares may be deemed to be "underwriters" within the meaning of the Securities Act of 1933 in connection with such sales. In such event, any commissions received by such broker-dealers or agents and any profit on the resale of the shares purchased by them may be deemed to be underwriting commissions or discounts under the Securities Act. We are required to pay all fees and expenses incident to the registration of the shares, including up to $15,000 of the fees and disbursements of counsel to the selling stockholders. We have agreed to indemnify the selling stockholders against certain losses, claims, damages and liabilities, including liabilities under the Securities Act. DISCLOSURE OF THE SEC'S POSITION ON INDEMNIFICATION FOR SECURITIES ACT LIABILITIES Our bylaws provide that we will indemnify our directors, officers, employees and agents to the fullest extent permitted by Delaware law. In addition, our certificate of incorporation provides that, to the fullest extent permitted by Delaware law, our directors will not be liable for monetary damages for breach of the directors' fiduciary duty to us and our stockholders. This provision of the certificate of incorporation does not eliminate the duty of care. In appropriate circumstances, equitable remedies such as an injunction or other forms of non-monetary relief are available under Delaware law. This provision also does not affect a director's responsibilities under any other laws, such as the federal securities laws. Each director will continue to be subject to liability for: * breach of the director's duty of loyalty to us; * acts or omissions not in good faith or involving intentional misconduct; * knowing violations of law; * any transaction from which the director derived an improper personal benefit; * improper transactions between the director and us; and * improper distributions to stockholders and improper loans to directors and officers. 25 In addition to the protections provided by our bylaws and certificate of incorporation, we have entered into employment agreements with certain of our executive officers that provide them with indemnity against expenses and losses incurred in connection with certain with certain claims brought against them. We maintain approximately $20.0 million of coverage under a directors' and officers' liability insurance policy. There is no pending litigation or proceeding involving a director or officer as to which indemnification is being sought. We are not aware of any pending or threatened litigation that may result in claims for indemnification by any director or officer. Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to our directors, officers and control persons pursuant to the foregoing provisions, or otherwise, we have been advised that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act of 1933, and is, therefore, unenforceable. LEGAL MATTERS The validity of the shares being offered pursuant to this prospectus will be passed upon for us by Schnader Harrison Segal & Lewis LLP, Philadelphia, Pennsylvania. EXPERTS The consolidated financial statements of Global Technologies, Ltd. as of June 30, 1999 and October 31, 1998, and for the transition period ended June 30, 1999 and each of the years in the two year period ended October 31, 1998 have been incorporated by reference in this prospectus in reliance upon the report of KPMG LLP, independent certified public accountants, incorporated by reference herein, and upon the authority of said firm as experts in accounting and auditing. ---------- No dealer, salesman or other person has been authorized to give any information or to make any representations other than those contained in this prospectus and, if given or made, such information or representations must not be relied upon as having been authorized by us or the selling shareholders. This prospectus does not constitute an offer to sell or a solicitation of an offer to buy to any person in any jurisdiction in which such offer or solicitation would be unlawful or to any person to whom it is unlawful. Neither the delivery of this prospectus nor any offer or sale made hereunder shall, under any circumstances, create any implication that there has been no change in our affairs or that information contained herein is correct as of any time subsequent to the date hereof. 26 PART II INFORMATION NOT REQUIRED IN PROSPECTUS ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION The expenses of the offering, which are to be borne by us, are estimated as follows: SEC registration fee $ 425.46 Legal services and expenses 10,000.00 Accounting services 5,000.00 Miscellaneous 5,000.00 ---------- Total $20,425.46 ========== ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS Under Section 145 of the Delaware General Corporation Law, we have broad powers to indemnify our directors and officers against liabilities they may incur in such capacities, including liabilities under the Securities Act. Our Certificate of Incorporation provides for the elimination of liability for monetary damages for breach of the directors' fiduciary duty of care to us and our stockholders. These provisions do not eliminate the directors' duty of care and, in appropriate circumstances, equitable remedies such as injunctive or other forms of non-monetary relief will remain available under Delaware law. In addition, each director will continue to be subject to liability for breach of the director's duty of loyalty to us, for acts or omissions not in good faith or involving intentional misconduct, for knowing violations of law, for any transaction from which the director derived an improper personal benefit, and for payment of dividends or approval of stock repurchases or redemptions that are unlawful under Delaware law. The provision does not affect a director's responsibilities under any other laws, such as the federal securities laws or state or federal environmental laws. In addition to the protections provided by our bylaws and certificate of incorporation, we have entered into employment agreements with certain of our executive officers that provide them with indemnity against expenses and losses incurred in connection with certain claims brought against them. We maintain approximately $20.0 million of coverage under a directors' and officers' liability insurance policy. ITEM 16. EXHIBITS Exhibit No. Description 4.1* Private Placement Purchase Agreement among Registrant and the Investors signatory thereto, dated as of June 8, 2000 4.2* Form of Secured Convertible Note issued to Investors 4.3* Form of Warrant to be issued to holders of Secured Convertible Notes in the event of certain redemptions 5.1* Legal Opinion of Schnader Harrison Segal & Lewis LLP 23.1* Consent of Schnader Harrison Segal & Lewis LLP (included in legal opinion filed as Exhibit 5.1) 23.2* Consent of KPMG LLP - ---------- * Filed herewith. II-1 ITEM 17. UNDERTAKINGS The undersigned registrant hereby undertakes: (1) To file, during any period in which offers or sales are being made, a post-effective amendment to this Registration Statement (i) to include any prospectus required by Section 10(a)(3) of the Securities Act of 1933; (ii) to reflect in the prospectus any facts or events arising after the effective date of the Registration Statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the Registration Statement; (iii) to include any material information with respect to the plan of distribution not previously disclosed in the Registration Statement or any material change to such information in the Registration Statement; PROVIDED, HOWEVER, that clauses (1)(i) and (1)(ii) above do not apply if the information required to be included in the post-effective amendment by those paragraphs is contained in periodic reports filed by the Registrant pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in the Registration Statement. (2) That, for the purpose of determining any liability under the Securities Act of 1933, each post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of those securities at that time shall be deemed to be the initial bona fide offering thereof. (3) To remove from registration by means of a post-effective amendment any of the securities being registered that remain unsold at the end of the offering. II-2 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the Registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Philadelphia, Commonwealth of Pennsylvania on July 10, 2000. GLOBAL TECHNOLOGIES, LTD. Date: July 10, 2000 By: /s/ Irwin L. Gross ------------------------------------------- Irwin L. Gross, Chief Executive Officer Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated. Date Signature and Title ---- ------------------- July 10, 2000 /s/ Irwin L. Gross ------------------------------------------- Irwin L. Gross, Chief Executive Officer and Chairman of the Board of Directors (principal executive officer) July 10, 2000 /s/ Patrick J. Fodale ------------------------------------------- Patrick J. Fodale, Vice President and Chief Financial Officer (principal financial and accounting officer) July 10, 2000 /s/ James W. Fox ------------------------------------------- James W. Fox, President, Chief Operating Officer and Director July 10, 2000 /s/ Charles T. Condy ------------------------------------------- Charles T. Condy, Director July 10, 2000 /s/ M. Moshe Porat ------------------------------------------- M. Moshe Porat, Director July 10, 2000 /s/ Stephen Schachman ------------------------------------------- Stephen Schachman, Director II-3 EX-4.1 2 0002.txt PRIVATE PLACEMENT PURCHASE AGREEMENT Private Placement Purchase Agreement Private Placement Purchase Agreement, dated as of June 8, 2000 (this "Agreement"), between Global Technologies, Ltd., a Delaware corporation (the "Company"), and the investors signatory hereto (each, a "Subscriber" and collectively, the "Subscribers"). In consideration of the mutual covenants contained in this Agreement and for other good and valuable consideration the receipt and sufficiency of which are hereby acknowledged, the Company and the Subscribers hereby agree as follows: 1. Certain Representations; Opinion of Counsel; Certain Confirmations. (a) The Company represents and warrants to the Subscribers as follows: (i) All filings which the Company has made with the Securities Exchange Commission ("SEC") during the past 12 months are correct and accurate in all material respects and in all material respects state all facts necessary to make such filings not misleading. There has been no material adverse change in the business, assets or financial condition of the Company since the most recent such filing. (ii) The Company has the full power and authority to enter into this Agreement and to carry out the transactions contemplated hereby, all proceedings required to be taken by it or its Common Stockholders to authorize the execution, delivery and performance of this Agreement and the agreements relating hereto have been properly taken and this Agreement and the Note constitute valid and binding obligations of the Company, enforceable in accordance with their respective terms. (iii) Neither the execution, delivery nor performance of this Agreement by the Company will, with or without the giving of notice or the passage of time, or both, conflict with, result in a default, right to accelerate or loss of rights under, or result in the creation of any lien, charge or encumbrance pursuant to, any provision of the Company's certificate of incorporation or by-laws or any franchise, mortgage, deed of trust, lease, license, agreement, understanding, law, rule or regulation or any order, judgment or decree to which the Company is a party or by which it may be bound or affected. (iv) The Company acquired the full record and beneficial ownership of and made full payment for the USW Collateral Shares (as defined in Section 3(a)) on or before April 6, 1999. The Company's holding period under Rule 144 ("Rule 144") promulgated under the Securities Act of 1933, as amended (the "Securities Act") for the USW Collateral Shares began no later than April 6, 1999. (v) The Company owns the entire record and beneficial interest in the USW Collateral Shares, free and clear of all liens, claims and encumbrances. (vi) The security interest which the Company is granting to Subscriber in the USW Collateral Shares under Section 3 is a perfected first and prior security interest under the Uniform Commercial Code of the State of New York (the "Uniform Commercial Code"). (vii) No financing statements are on file against the Company with respect to any Collateral (as defined in Section 3). (viii) The Company confirms that neither it nor any other person acting on its behalf has provided any Subscriber or agent or counsel thereof with any information that constitutes or might constitute material non-public information. The Company understands and confirms that the Subscribers shall be relying on this representation in effecting transactions in securities of the Company. (ix) The foregoing representations and warranties will continue to be true and correct on the Closing Date and will survive conversion of the Notes. (b) Counsel to the Company is concurrently herewith rendering an opinion to Subscriber in respect of the validity of the securities issued hereby and on certain other matters. (c) The Rule 144 holding period of Subscriber, as pledgee of the USW Collateral Shares under this Agreement, commenced on April 6, 1999 and on foreclosure Subscriber will be permitted publicly to sell the USW Collateral Shares, subject to compliance with the non-holding period requirements of Rule 144. 2. Purchase of Units. (a) At a closing (the "Closing") to occur at the offices of Robinson Silverman Pearce Aronsohn & Berman LLP, 1290 Avenue of the Americas, New York, NY 10104 simultaneously herewith or at such other time as the parties may agree (the "Closing Date"), each Subscriber will severally and not jointly for $1,000,000 per Unit (as defined below) purchase from the Company, and the Company will sell to each Subscriber, the number of Units set forth below opposite such Subscriber's name below. Each Unit consists of a secured convertible note of the Company in the form of Exhibit A and in the principal amount of $1,000,000 (the "Notes"). Such purchase by the Subscribers is part of an offering in which an aggregate of 4 Units will be sold simultaneously with such sale to Subscriber. The full purchase price, less the (fees contemplated in Section 6(a)) will be paid in full and in cash at the Closing. (b) As more fully set forth in the Note, the principal of each Note and the accrued interest thereunder is convertible into shares ("Conversion Shares") of Class A common stock of the Company , par value $.01 per share ("Common Stock"), at an initial Conversion Price (subject to adjustment) of $2 per Conversion Share. (c) The Note sets forth terms and conditions under which the Company has the right to prepay the Note, no less than $1,000,000 of the then outstanding principal amount under the Note, upon payment of a prepayment premium which consists of cash and certain shares of Common Stock ("Prepayment Shares") or warrants in the form of Exhibit A ("Prepayment Warrants"). (d) As more fully set forth in Section 3, the Company's secured obligations (as defined in such Section) are collateralized by certain shares ("USW Collateral Shares") of common stock of USW. (e) The Conversion Shares, the Prepayment Shares and the shares ("Warrant Shares") issuable on exercise of the Prepayment Warrants are hereinafter sometimes collectively referred to as the "Note Shares." (f) Note Shares shall be issued free of all restrictive legends if the conversion of the Notes, exercise of the Warrants or issuance of the Prepayment Shares occurs at any time while a Registration Statement (as defined below) is effective under the Securities Act or, in the event there is not an effective Registration Statement at such time, if no legend is required under applicable requirements of the Securities Act. The Company agrees that, in the event any Note Shares are issued with a legend in accordance with this Section, it will, within three trading days after request therefor by a Subscriber, replace such Note Shares with unlegended shares at such time as such legend would not have been required under this Section had such issuance occurred on the date of such request. The Company may not make any notation on its records or give instructions to any transfer agent of the Company which enlarge the restrictions of transfer set forth in this Section. 2 3. GRANT OF SECURITY INTERESTS (a) To secure the obligations of the Company to Subscriber under the Note and under this Agreement, including with respect to conversion (the "secured obligations"), the Company hereby grants to Subscriber, for each Unit, a security interest in 250,000 shares of common stock of USW, which the Company owns free and clear of any transfer restrictions (the "USW Collateral Shares"), and in all dividends and distributions which USW at any time makes with respect to the USW Collateral Shares, and in the proceeds thereof. The collateral aforesaid is hereinafter collectively referred to as the "Collateral." (b) To perfect Subscribers' security interest in the Collateral, the Company will concurrently herewith in the State of New York deliver to the Subscribers stock certificates for the USW Collateral Shares, together with a stock power therefor endorsed in blank with a medallion signature guarantee and certified board resolutions with a medallion signature guarantee. As soon as possible after the Closing, the Company shall cause the USW Collateral Shares to be registered in the name of the Subscribers as pledge. (c) Upon default by the Company under any of the secured obligations, Subscribers shall be entitled to all rights afforded under the Uniform Commercial Code to a secured creditor upon default by his debtor, including, without limitation, the right to recover costs of collection, it being understood that the Company hereby also grants to Subscribers such rights and waivers as under the Uniform Commercial Code a debtor may make available to a secured creditor by express agreement or waiver. (d) The Company shall be entitled to vote the Collateral until default, and Subscribers shall be entitled to vote the Collateral from and after default. (e) Certain other Provisions. (i) The Company agrees that until Discharge of the Notes (as hereinafter defined), the Company will not assign or transfer any interest in the Collateral or grant any security interests in the Collateral. "Discharge of the Notes" shall occur when the Company shall have paid in full all principal, interest and other amounts owing under all Notes issued to all Purchasers. (ii) In no event shall the Company seek or obtain any injunctive or similar relief against any sale or proposed sale by Subscribers of any Collateral. The Company expressly waives its rights to any such relief, and it acknowledges that recovery of damages constitutes sufficient remedy for any such sale which is found to be improper. (iii) The security interests granted hereunder shall not be discharged or in any way affected by the extension or other modification of any of the secured obligations, or by any other act or omission (other than Discharge of the Notes) which would otherwise discharge the security interest at law or in equity. (iv) Upon Discharge of the Notes, Subscribers shall release, to the Company all Collateral on which Subscribers have not theretofore foreclosed. (v) Subscribers shall at their option and as they deem appropriate determine whether and when to proceed against any one or more obligors, guarantors or kind or types of collateral, and it shall not thereby release or discharge any other obligor, guarantor or collateral. 3 4. Registration. (a) The Company represents that it is eligible to file registration statements on Form S-3 for resales of securities by shareholders of the Company. (b) The Company will within 30 days after the Closing Date file a registration statement on Form S-3 (or on Form S-1 if Form S-3 is not available) (the "Registration Statement") for the non-underwritten public sale by Subscribers of all Conversion Shares, Prepayment Shares and Warrant Shares which have theretofore been issued or which may thereafter be issued. (c) The Company shall use its best efforts to cause the Registration Statement to become effective not later than 90 days after the date of filing, and to remain effective for two years. The registration shall, if necessary, be accompanied by blue sky clearances in such states as Subscriber may reasonably request. (d) The Company shall pay all expenses of the registration hereunder, other than Subscriber's brokerage fees, discounts or commissions, and transfer taxes, if any. (e) Subscriber may assign its registration rights to assignees of the Note or of the Note Shares. The provisions of this Section (e) are for the benefit of the Subscriber and Subscriber's personal representatives and permitted assigns. (f) In connection with registration under this Section, the Company and the Subscribers agree to the terms set forth in Annex A as to indemnity. (g) Should Subscriber from time to time or times give to the Company notice that it has assigned all or any part of the Note or the Note Shares, the Company shall, at no cost to Subscribers, within five business days file a supplement to the registration statement to reflect the name(s) of the transferee(s) as (a) selling shareholder(s). 5. Certain Additional Representations. Each Subscriber for itself and for no other Subscriber represents and warrants to the Company as follows: (a) Such Subscriber is purchasing the Units solely for investment solely for its own account and not with a view to or for the resale or distribution or of Units, or of the Note or any Note Shares. Such Subscriber is acquiring the securities offered and sold under this Agreement in the ordinary course of its business and does not have any agreement or understanding, directly or indirectly, with any person or entity to distribute any of such securities. (b) Such Subscriber understands that it may sell or otherwise transfer the Units, the Note, the Note Shares and the USW Collateral Shares only if such transaction is duly registered under the Securities Act under the Registration Statement or otherwise, or if such Subscriber shall have received the favorable opinion of counsel to Subscriber (a copy which will be delivered to the Company prior to such sale or transfer) to the effect that such sale or other transfer may be made in the absence of registration under the Securities Act and registration or qualification in every applicable state. Nothing in the preceding sentence shall detract or limit from the representations and warranties made by the Company in Section 1(a). Such Subscriber realizes that such securities are not a liquid investment. (c) Such Subscriber has not relied upon the advice of a "Purchaser Representative" (as defined in Regulation D of the Securities Act) in evaluating the risks and merits of this investment. Such Subscriber has the 4 knowledge and experience to evaluate the Company and the risks and merits relating thereto. (d) Such Subscriber is an "accredited investor" as such term is defined in Rule 501(c) of the Securities Act and shall be such on the date any shares are issued to Subscriber; such Subscriber acknowledges that such Subscriber is able to bear the economic risk of losing Subscriber's entire investment in the shares and understands that an investment in the Company involves substantial risks; such Subscriber has the power and authority to enter into this agreement, and the execution and delivery of, and performance under this agreement shall not conflict with any rule, regulation, judgment or agreement applicable to such Subscriber; and Subscriber has invested in previous transactions involving restricted securities. (f) Such Subscriber represents and warrants that it has had the opportunity to ask questions of, and to receive answers from, officers of the Company as to all matters relating to the Company. Nothing in the preceding sentence, and nothing that any Subscriber has discovered or may have discovered in the course of any due diligence examinations, in any way relieves or limits the liability of the Company for representations and warranties by the Company in this Agreement. 6. Fees and Expenses. (a) The Company will at Closing pay a total of $15,000 to Robinson Silverman Pearce Aronsohn & Berman LLP for their services as counsel to the Subscribers in connection herewith. (b) Except as aforesaid, each party shall bear its own expenses in connection with this transaction. Each party represents to the other that no broker has acted in respect of this transaction at the instance of the representing party. 7. This Agreement may not be changed or terminated except by written agreement of the Company and a majority-in-interest of the Purchasers. It shall be binding on the parties and on their personal representatives and permitted assigns. It sets forth all agreements of the parties. Except as set forth in Section 3(f)(ii), it shall be enforceable by decrees of specific performance (without posting bond or other security) as well as by other available remedies. This Agreement may be signed in counterparts. This Agreement shall be governed by the internal laws of the State of New York. The federal and state court courts in New York City shall have exclusive jurisdiction over this instrument and the enforcement thereof. Service of process shall be effective if by certified mail, return receipt requested. Trial by jury is waived. IN WITNESS WHEREOF, the parties hereto have caused this Private Placement Purchase Agreement to be duly executed by their respective authorized signatories as of the date first indicated above. GLOBAL TECHNOLOGIES, LTD. By: ---------------------------------------- Name: Patrick J. Fodale Title: Vice President [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK 5 [SIGNATURE PAGE FOR SUBSCRIBERS FOLLOW] 6 ADVANTAGE FUND II LTD. By: ---------------------------------------- Name: Title: Purchase Price for Units: $2,000,000 Address for Notice: c/o CITCO Kaya Flamboyan 9 Curacao, Netherlands Antilles Facsimile: 011-599-9732-2008 Attention: W.R. Weber With copies to: Genesee International Inc. 10500 NE 8th Street Suite 1920 Bellevue, WA 98004 Facsimile: (425) 462-4645 Attention: Howard Coleman Robinson Silverman Pearce Aronsohn & Berman LLP 1290 Avenue of the Americas New York, NY 10104 Facsimile No.: (212) 541-4630 and (212) 541-1432 Attn: Eric L. Cohen, Esq. 7 KOCH INVESTMENT GROUP LTD. By: ---------------------------------------- Name: Title: Purchase Price for Units: $2,000,000 Address for Notice: 4111 East 37th Street North Wichita, Kansas 67270 Facsimile: (316) 828-7947 Attention: Josh Taylor 8 ANNEX A INDEMNIFICATION The Company and the Subscribers hereby agree that the following terms and conditions shall apply to any action or litigation arising from the Registration Statement. (a) INDEMNIFICATION BY THE COMPANY. The Company shall, notwithstanding any termination of this Agreement, indemnify and hold harmless each Subscriber, the officers, directors, agents, brokers (including brokers who offer and sell Conversion shares, Prepayment Shares and Warrant Shares (for purposes of this Annex, "Registrable Securities") as principal as a result of a pledge or any failure to perform under a margin call of Common Stock), investment advisors and employees of each of them, each person who controls any such Subscriber (within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act of 1934, as amended) and the officers, directors, agents and employees of each such controlling person, to the fullest extent permitted by applicable law, from and against any and all losses, claims, damages, liabilities, costs (including, without limitation, reasonable costs of preparation and attorneys' fees) and expenses (collectively, "Losses"), as incurred, arising out of or relating to any untrue or alleged untrue statement of a material fact contained in the Registration Statement, any prospectus or any form of prospectus or in any amendment or supplement thereto or in any preliminary prospectus, or arising out of or relating to any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein (in the case of any prospectus or form of prospectus or supplement thereto, in light of the circumstances under which they were made) not misleading, except to the extent, but only to the extent, that (1) such untrue statements or omissions are based solely upon information regarding such Subscriber furnished in writing to the Company by such Subscriber expressly for use therein, or to the extent that such information relates to such Subscriber or such Subscriber's proposed method of distribution of Registrable Securities and was reviewed and expressly approved in writing by such Subscriber expressly for use in the Registration Statement, such prospectus or such form of prospectus or in any amendment or supplement thereto or (2) the use by such Subscriber of an outdated or defective prospectus after the Company has notified such Subscriber in writing that the prospectus is outdated or defective (an "Advice") and prior to the receipt by such Subscriber of written notice from the Company that such prospectus is again current and complete. The Company shall notify the Subscribers promptly of the institution, threat or assertion of any proceeding, litigation or other legal action of which the Company is aware in connection with the transactions contemplated by this Agreement. (b) INDEMNIFICATION BY SUBSCRIBERS. Each Subscriber shall, severally and not jointly, indemnify and hold harmless the Company, its directors, officers, agents and employees, each person who controls the Company (within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act), and the directors, officers, agents or employees of such controlling persons, to the fullest extent permitted by applicable law, from and against all Losses (as determined by a court of competent jurisdiction in a final judgment not subject to appeal or review) arising solely out of or based solely upon any untrue statement of a material fact contained in the Registration Statement, any prospectus, or any form of prospectus, or in any amendment or supplement thereto, or arising solely out of or based solely upon any omission of a material fact required to be stated therein or necessary to make the statements therein not misleading to the extent, but only to the extent, that such untrue statement or omission is contained in any information so furnished in writing by such Subscriber to the Company specifically for inclusion in the Registration Statement or such prospectus or to the extent that such information relates to such Subscriber or such Subscriber's proposed method of distribution of Registrable Securities and was reviewed and expressly approved in writing by such Subscriber expressly for use in the Registration Statement, such prospectus or such form of prospectus, or in any amendment or supplement thereto or to the extent such Loss was directly caused by such Subscriber's failure, subsequent to its receipt of the Advice contemplated in paragraph 9 (a) above in this Annex, to discontinue disposition of the Registrable Securities and such Loss would have been avoided by such Subscriber's compliance with such Advice. In no event shall the liability of any selling Subscriber hereunder be greater in amount than the dollar amount of the net proceeds received by such Subscriber upon the sale of the Registrable Securities giving rise to such indemnification obligation. (c) CONDUCT OF INDEMNIFICATION PROCEEDINGS. If any Proceeding shall be brought or asserted against any person or entity entitled to indemnity hereunder (an "Indemnified Party"), such Indemnified Party shall promptly notify the person or entity from whom indemnity is sought (the "Indemnifying Party") in writing, and the Indemnifying Party shall assume the defense thereof, including the employment of counsel reasonably satisfactory to the Indemnified Party and the payment of all fees and expenses incurred in connection with defense thereof; provided, that the failure of any Indemnified Party to give such notice shall not relieve the Indemnifying Party of its obligations or liabilities pursuant to this Agreement, except (and only) to the extent that it shall be finally determined by a court of competent jurisdiction (which determination is not subject to appeal or further review) that such failure shall have proximately and materially adversely prejudiced the Indemnifying Party. (d) An Indemnified Party shall have the right to employ separate counsel in any such Proceeding and to participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense of such Indemnified Party or Parties unless: (1) the Indemnifying Party has agreed in writing to pay such fees and expenses; or (2) the Indemnifying Party shall have failed promptly to assume the defense of such Proceeding and to employ counsel reasonably satisfactory to such Indemnified Party in any such Proceeding; or (3) the named parties to any such Proceeding (including any impleaded parties) include both such Indemnified Party and the Indemnifying Party, and such Indemnified Party shall have been advised by counsel that a conflict of interest is likely to exist if the same counsel were to represent such Indemnified Party and the Indemnifying Party (in which case, if such Indemnified Party notifies the Indemnifying Party in writing that it elects to employ separate counsel at the expense of the Indemnifying Party, the Indemnifying Party shall not have the right to assume the defense thereof and such counsel shall be at the expense of the Indemnifying Party). The Indemnifying Party shall not be liable for any settlement of any such Proceeding effected without its written consent, which consent shall not be unreasonably withheld. No Indemnifying Party shall, without the prior written consent of the Indemnified Party, effect any settlement of any pending Proceeding in respect of which any Indemnified Party is a party, unless such settlement includes an unconditional release of such Indemnified Party from all liability on claims that are the subject matter of such Proceeding. (e) All fees and expenses of the Indemnified Party (including reasonable fees and expenses to the extent incurred in connection with investigating or preparing to defend such Proceeding in a manner not inconsistent with this Annex) shall be paid to the Indemnified Party, as incurred, within ten Business Days of written notice thereof to the Indemnifying Party (regardless of whether it is ultimately determined that an Indemnified Party is not entitled to indemnification hereunder; PROVIDED, that the Indemnifying Party may require such Indemnified Party to undertake to reimburse all such fees and expenses to the extent it is finally judicially determined that such Indemnified Party is not entitled to indemnification hereunder). (f) CONTRIBUTION. If a claim for indemnification under paragraph (a) or (b) of this Annex is unavailable to an Indemnified Party (by reason of public policy or otherwise), then each Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall contribute to the amount paid or payable by such Indemnified Party as a result of such Losses, in such proportion as is appropriate to reflect the relative fault of the Indemnifying Party and Indemnified Party in connection with the actions, statements or omissions that resulted in such Losses as well as any other relevant equitable considerations. The relative fault of such Indemnifying Party and Indemnified Party shall be determined by reference to, among other things, whether any action in question, including any untrue or alleged untrue statement of a material fact or omission or alleged omission of a material 10 fact, has been taken or made by, or relates to information supplied by, such Indemnifying Party or Indemnified Party, and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such action, statement or omission. The amount paid or payable by a party as a result of any Losses shall be deemed to include, subject to the limitations set forth in paragraph (c) to this Annex, any reasonable attorneys' or other reasonable fees or expenses incurred by such party in connection with any Proceeding to the extent such party would have been indemnified for such fees or expenses if the indemnification provided for in this Section was available to such party in accordance with its terms. (g) The parties hereto agree that it would not be just and equitable if contribution pursuant to this Annex were determined by PRO RATA allocation or by any other method of allocation that does not take into account the equitable considerations referred to in the immediately preceding paragraph. Notwithstanding the provisions of this Annex, no Subscriber shall be required to contribute, in the aggregate, any amount in excess of the amount by which the proceeds actually received by such Subscriber from the sale of the Registrable Securities subject to the Proceeding exceeds the amount of any damages that such Subscriber has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. (h) The indemnity and contribution agreements contained in this Section are in addition to any liability that the Indemnifying Parties may have to the Indemnified Parties 11 EX-4.2 3 0003.txt $1,000,000 SECURED CONVERTIBLE NOTE THIS NOTE AND THE NOTE SHARES (AS HEREINAFTER DEFINED) HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AND MAY NOT BE SOLD, PLEDGED, HYPOTHECATED, OR OTHERWISE TRANSFERRED, DISPOSED OF OR OFFERED FOR SALE, IN WHOLE OR IN PART, IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THAT ACT COVERING THIS NOTE AND/OR THE NOTE SHARES, OR AN OPINION OF COUNSEL OF HOLDER THAT AN EXEMPTION FROM REGISTRATION IS AVAILABLE. Principal Sum: $1,000,000 Holder: ADVANTAGE FUND II LTD. Address: C/O CITCO, KAYA FLAMBOYAN 9, CURACAO, NETHERLANDS ANTILLES. SECURED CONVERTIBLE NOTE (the "Note") GLOBAL TECHNOLOGIES, LTD. GLOBAL TECHNOLOGIES, LTD., a Delaware corporation (hereinafter called the "Corporation" or the "Company"), hereby promises to pay the Principal Sum to the order of Holder on the date (the "Maturity Date") which is the first to occur of (i) December 7, 2001 or (ii) the date on which Holder gives an Acceleration Declaration (as defined in Section 5(b)). This Note shall accrue interest until the Maturity Date at the rate of 6% per annum, compounding annually, payable at maturity (including accelerated maturity) or on conversion (each, an "interest payment date"). Interest shall be computed on the basis of a 360-day year. Interest shall be payable in cash. Notwithstanding the foregoing, interest payable at scheduled maturity shall at the option of the Company be payable either in cash or in shares of Class A Common Stock of the Company ("Common Stock") which on the date of the interest payment have a value equal to the payment to be made, but only if the public sale thereof of such shares is permitted under a then effective registration statement. The value of each share of Common Stock for the purposes of any interest payment shall be equal to the average of the last reported sales prices therefor on the NASDAQ Small Cap Market on the last five trading days prior to the date of the payment. This Note shall accrue interest after the Maturity Date at the rate of 18% per annum (or, if less, the highest rate permitted by law), payable on demand. This Note may not be prepaid except as expressly provided below. 1. This Note is being issued under a Private Placement Purchase Agreement between the Company and the Holder (the "Subscription Agreement"). The terms "Registration Statement" and "Note Shares" shall have the meaning attributed thereto in the Subscription Agreement, and the term "Effective Date" means the date on which the Securities and Exchange Commission shall declare the Registration Statement to be effective. The Holder is entitled to the benefits of the Subscription Agreement, including, without limitation, the security interests granted thereunder. 2. Conversion Rights. (a) CONVERSIONS. (i) Subject to the other provisions of this Section 2, the principal and accrued interest on this Note are convertible by Holder from time to time, in whole or in part, into shares of Common Stock at a price (the "Conversion Price") equal to $2.00 per share. The Conversion Price is subject to adjustment from time to time as set forth below. (ii) This Note shall be subject to the following restrictions on conversion: (1) A Holder may not convert this Note or receive shares of Common Stock as payment of interest hereunder to the extent such conversion or receipt of such interest payment would result in the Holder, together with any affiliate thereof, beneficially owning (as determined in accordance with Section 13(d) of the Securities Exchange Act of 1934 (the "Exchange Act") and the rules promulgated thereunder) in excess of 4.999% of the then issued and outstanding shares of Common Stock, including shares issuable upon conversion of, and payment of interest on, the Notes held by such Holder after application of this Section. Since the Holder will not be obligated to report to the Company the number of shares of Common Stock it may hold at the time of a conversion hereunder, unless the conversion at issue would result in the issuance of shares of Common Stock in excess of 4.999% of the then outstanding shares of Common Stock without regard to any other shares which may be beneficially owned by the Holder or an affiliate thereof, the Holder shall have the authority and obligation to determine whether the restriction contained in this Section will limit any particular conversion hereunder and to the extent that the Holder determines that the limitation contained in this Section applies, the determination of which portion of the principal amount of Notes are convertible shall be the responsibility and obligation of the Holder. If the Holder has delivered a conversion notice for a principal amount of Notes that, without regard to any other shares that the Holder or its affiliates may beneficially own, would result in the issuance in excess of the permitted amount hereunder, the Company shall notify the Holder of this fact and shall honor the conversion for the maximum principal amount permitted to be converted and, at the option of the Holder, either retain any principal amount tendered for conversion in excess of the permitted amount hereunder for future conversions or return such excess principal amount to the Holder. The provisions of this Section may be waived by a Holder (but only as to itself and not to any other Holder) upon not less than 61 days prior notice to the Company. Other Holders shall be unaffected by any such waiver. (2) A Holder may not convert this Note or receive shares of Common Stock as payment of interest hereunder to the extent such conversion or receipt of such interest payment would result in the Holder, together with any affiliate thereof, beneficially owning (as determined in accordance with Section 13(d) of the Exchange Act and the rules promulgated thereunder) in excess of 9.999% of the then issued and outstanding shares of Common Stock, including shares issuable upon conversion of, and payment of interest on, the Notes held by such Holder after application of this Section. Since the Holder will not be obligated to report to the Company the number of shares of Common Stock it may hold at the time of a conversion hereunder, unless the conversion at issue would result in the issuance of shares of Common Stock in excess of 9.999% of the then outstanding shares of Common Stock without regard to any other shares which may be beneficially owned by the Holder or an affiliate thereof, the Holder shall have the authority and obligation to determine whether the restriction contained in this Section will limit any particular conversion hereunder and to the extent that the Holder determines that the limitation contained in this Section applies, the determination of which portion of the principal amount of Notes are convertible shall be the responsibility and obligation of the Holder. If the Holder has delivered a conversion notice for a principal amount of Notes that, without regard to any other shares that the Holder or its affiliates may beneficially own, would result in the issuance in excess of the permitted amount hereunder, the Company shall notify the Holder of this fact and shall honor the conversion for the maximum principal amount permitted to be converted and, at the option of the Holder, either retain any principal amount tendered for conversion in excess of the permitted amount hereunder for future conversions or return such excess principal amount to the Holder. The provisions of this Section may be waived by a Holder (but only as to itself and not to any other Holder) upon not less than 61 days prior notice to the Company. Other Holders shall be unaffected by any such waiver. 2 (3) If the Common Stock is then listed for trading on the Nasdaq National Market or Nasdaq SmallCap Market and the Company has not obtained the Shareholder Approval (as defined below), then the Company is precluded from issuing at in excess of 2,065,000 shares of Common Stock, less any shares of Common Stock previously issued upon either conversion of the shares of Series C Convertible Preferred Stock or exercise of Redemption Warrants (as defined in the terms governing the Series C Convertible Preferred Stock) at a conversion price or exercise price (as the case may be) that was less than the closing sales price of the Common Stock on February 15, 2000 (the "Issuable Maximum") upon conversion of the Notes and as payment of interest thereon. The Issuable Maximum equals 19.999% of the number of shares of Common Stock outstanding immediately prior to the closing of transactions set forth in the Subscription Agreement. Accordingly, if on any date of conversion (A) the Common Stock is listed for trading on the Nasdaq National Market or the Nasdaq SmallCap Market and (B) the Company shall not have previously obtained the vote of shareholders (the "Shareholder Approval"), if any, as may be required by the applicable rules and regulations of the Nasdaq Stock Market (or any successor entity) applicable to approve the issuance of a number of shares of Common Stock in excess of the Issuable Maximum, then the Company shall issue to the Holder requesting a conversion a number of shares of Common Stock equal to the lesser of (x) the number of shares of Common Stock issuable upon such conversion at the Conversion Price and (y) the Issuable Maximum less all shares of Common Stock previously issued upon conversion of the Notes and as payment of interest thereon and all shares of Common Stock previously issued upon conversion of shares of Series C Convertible Preferred Stock of the Company at a conversion price less than the closing sales price of the Common Stock on February 15, 2000. With respect to the principal amount of Notes tendered for conversion at issue for which delivery of conversion shares is precluded by virtue of this Section (the "Excess Principal"), the converting Holder shall have the option to require the Company to either (1) use its best efforts to obtain the Shareholder Approval applicable to such issuance as soon as is possible, but in any event not later than the 75th day after such request (such date the "Approval Date"), or (2) pay cash to the converting Holder in an amount equal to the Redemption Price for the Excess Principal. If the converting Holder shall have elected the first option pursuant to the immediately preceding sentence and the Company shall have failed for any reason to obtain the Shareholder Approval on or prior to the Approval Date, then within three days of the Holder's demand therefore, which may be given at any time following the Approval Date, the Company shall pay cash to the converting Holder in an amount equal to the Mandatory Prepayment Amount for the Excess Principal. If the Company fails to pay the Redemption Price for the Excess Principal in full pursuant to this Section within seven days of the date payable, the Company will pay interest thereon at a rate of 18% per annum (or such lesser maximum amount that is permitted to be paid by applicable law) to the converting Holder, accruing daily from the date of conversion until such amount, plus all such interest thereon, is paid in full. In the event there is more than one holder of Notes, the Issuable Maximum applicable to each Note shall be determined pro rata by reference to the percentage of the principal amount of all Notes held by such Holder, provided that if one or more Notes shall have been prepaid or converted without having been issued its pro rata allocated portion of the Issuable Maximum such unissued shares shall be allocated pro rata to the remaining Holders. It is understood and agreed that shares of Common Stock delivered to and held by the Holder or one of its affiliates on account of conversion hereunder may not cast votes on the matter of Shareholder Approval. The Company, notwithstanding the foregoing, will use its best efforts to obtain the Shareholder Approval contemplated by this Section in its next meeting of Shareholders. 3 (iii) In the event that the Holder elects to exercise its conversion rights hereunder as to any shares, such conversion shall be effective when Holder shall give to the Company written notice of such election (which may be effected by facsimile). The Company shall, within three business days after receipt by the Company of notice of conversion, deliver to the Holder (or, at Holder's request, DWAC) a certificate for the shares into which such conversion was made. (b) SUBDIVISION OR COMBINATION OF COMMON STOCK AND COMMON STOCK DIVIDEND. In case the Company shall at any time subdivide its outstanding shares of Common Stock into a greater number of shares or declare a dividend upon its Common Stock payable solely in shares of Common Stock, the Conversion Price in effect immediately prior to such subdivision or declaration shall be proportionately reduced. Conversely, in case the outstanding shares of Common Stock of the Company shall be combined into a smaller number of shares, the Conversion Price in effect immediately prior to such combination shall be proportionately increased. (c) DILUTIVE ISSUANCES. If the Company or any subsidiary thereof, as applicable with respect to Common Stock Equivalents (as defined below), at any time while Notes are outstanding, shall issue shares of Common Stock or rights, warrants, options or other securities or debt that are convertible into or exchangeable for shares of Common Stock ("Common Stock Equivalents") entitling any person to acquire shares of Common Stock at a price per share less than the Conversion Price (if the holder of the Common Stock or Common Stock Equivalent so issued shall at any time, whether by operation of purchase price adjustments, reset provisions, floating conversion, exercise or exchange prices or otherwise, or due to warrants, options or rights issued in connection with such issuance, be entitled to receive shares of Common Stock at a price less than the Conversion Price, such issuance shall be deemed to have occurred for less than the Conversion Price), then, at the sole option of the Holder, either (1) the Conversion Price shall be multiplied by a fraction, the numerator of which shall be the number of shares of Common Stock outstanding immediately prior to the issuance of such shares of Common Stock or such Common Stock Equivalents plus the number of shares of Common Stock which the offering price for such shares of Common Stock or Common Stock Equivalents would purchase at the Conversion Price, and the denominator of which shall be the sum of the number of shares of Common Stock outstanding immediately prior to such issuance plus the number of shares of Common Stock so issued or issuable, or (2) the Company will use 50% of the proceeds from such issuance or sale to prepay principal amount under this Note (pro-rata with the secured convertible notes issued to other Subscribers in connection with the Subscription Agreement) in accordance with Section 3(g). Such adjustment shall be made whenever such shares of Common Stock or Common Stock Equivalents are issued. No adjustment will be made under this paragraph as a result of the grant or issuance of shares of Common Stock pursuant to any duly authorized employee stock option plan of the Company. (d) NOTICE OF ADJUSTMENT. Promptly after adjustment of the Conversion Price or any increase or decrease in the number of shares purchasable upon conversion of this Note, the Company shall give written notice thereof, by first class mail, postage prepaid, addressed to the Holder at the address of such Holder as shown on the books of the Company. The notice shall be signed by an authorized officer of the Company and shall state the effective date of the adjustment and the Conversion Price resulting from such adjustment and the increase or decrease, if any, in the number of shares purchasable at such price upon the exercise of this conversion of this Note, setting forth in reasonable detail the method of calculation and the facts upon which such calculation is based. (e) OTHER NOTICES. If at any time: the Company shall declare any cash dividend upon its Common Stock; the Company shall declare any dividend upon its Common Stock payable in Common Stock (other than a dividend payable solely in shares of Common Stock) or make any special dividend or other distribution to the holders of its Common Stock; there shall be any consolidation or merger of the Company with another corporation, or a sale of all or substantially all of the Company's assets to another corporation; or there shall be a voluntary or involuntary dissolution, liquidation or winding-up of the Company; then, in any one or more of said cases, the Company shall give, by 4 certified or registered mail, postage prepaid, addressed to the registered holder of this Note at the address of such holder as shown on the books of the Company, (i) at least 10 days prior written notice of the date on which the books of the Company shall close or a record shall be taken for such dividend, distribution or subscription rights or for determining rights to vote in respect of any such dissolution, liquidation or winding-up, (ii) at least 10 days prior written notice of the date on which the books of the Company shall close or a record shall be taken for determining rights to vote in respect of any such reorganization, reclassification, consolidation, merger or sale, and (iii) in the case of any such reorganization, reclassification, consolidation, merger, sale, dissolution, liquidation or winding-up, at least 10 days written notice of the date when the same shall take place. Any notice given in accordance with clause (i) above shall also specify, in the case of any such dividend, distribution or option rights, the date on which the holders of Common Stock shall be entitled thereto. Any notice given in accordance with clause (iii) above shall also specify the date on which the holders of Common Stock shall be entitled to exchange their Common Stock for securities or other property deliverable upon such reorganization, reclassification, consolidation, merger, sale, dissolution, liquidation or winding-up, as the case may be. (f) CHANGES IN COMMON STOCK. In case the Company shall be a party to any transaction (including, without limitation, a merger, consolidation, sale of all or substantially all of the Company's assets or recapitalization of the Common Stock) in which the previously outstanding Common Stock shall be changed into or exchanged for different securities of the Company or Common Stock or other securities of another corporation or interests in a noncorporate entity or other property (including cash) or the Company shall make a distribution on its shares, other than regular cash dividends on its outstanding Common Stock, or any combination of any of the foregoing (each such transaction being herein called the "Transaction" and the date of consummation of the Transaction being herein called the "Consummation Date"), then, as a condition of the consummation of the Transaction, lawful and adequate provisions shall be made so that this Note shall after the Consummation Date be convertible at the then Conversion Price (subject to further adjustment as provided herein) for the number of shares of Common Stock or other securities or property (including cash) to which the Common Stock issuable upon conversion at such Conversion Price (at the time of such Combination) would have been entitled pursuant to such Combination had such Common Stock been outstanding. The provisions of this Section (f) shall similarly apply to successive Transactions. 3. Certain Redemptions. (a) The Company may at any time prior to the Maturity Date redeem from time to time not less than $1,000,000 of the then outstanding principal under the Notes (or such lesser amount then outstanding) for the Redemption Price (as hereinafter defined) in accordance with the procedures set forth in this Section 3. (b) In the event that Holder has given a Share Price Default Notice under Section 5(a)(ii), the Company shall thereafter be entitled to effect such redemption by payment of the Redemption Price without any prior notice, in which event the date of such payment is referred to herein as the "Redemption Date." (c) In all other events, the Company may effect such redemption only upon five days' prior written notice to Holder during the first 30 days after the date hereof, 15 days' prior written notice to Holder during the second 30 days after the date hereof and 30 days' prior written notice to Holder thereafter. The giving of such notice shall obligate the Company to pay the Redemption Price on the date (the "Redemption Date") which notice shall fix for redemption (which shall not be later than the 30th day after the date of such notice). The cash portion of the Redemption Price shall accrue interest from and after the Redemption Date at 18% per annum, payable on demand, until the Redemption Price is paid in full. (d) The Holder shall be entitled to convert the outstanding principal amount of this Note subject to a Company Redemption Notice under this Section from and after the date of delivery by the Company of a 5 Redemption Notice and prior to such time as the Redemption Price and all interest accrued thereon has been duly paid in full. (e) The Redemption Price for Redemption Dates within the first 30 days after the date of this Note means the sum of the following: (i) an amount in cash equal to sum of 110% of the principal amount of this Note and 110% of the accrued and unpaid interest on this Note, plus (ii) 6,250 Warrants for each $100,000 in principal redeemed (pro rated for amounts of less than $100,000). Such Warrants shall be deemed "paid" when delivered by the Company to Holder . (f) The Redemption Price for Redemption Dates after the first 30 days after the date of this Note means the sum of the following: (i) an amount in cash equal to sum of 120% of the principal amount of this Note and 120% of the accrued and unpaid interest on this Note, plus (ii) 6,250 shares of registered and unrestricted shares of Common Stock for each $100,000 in principal redeemed (pro rated for amounts of less than $100,000). Such shares shall be deemed "paid" when delivered by the Company to Holder by DWAC on the Redemption Date. (g) The Redemption Price for a prepayment of principal amount under this Note pursuant to section 2(c)(2) means the sum of the following: (i) an amount in cash equal to sum of 122% of the principal amount of this Note and 122% of the accrued and unpaid interest on this Note, plus (ii) 6,250 shares of registered and unrestricted shares of Common Stock for each $100,000 in principal redeemed (pro rated for amounts of less than $100,000). Such shares shall be deemed "paid" when delivered by the Company to Holder by DWAC on the Redemption Date. (h) The Company shall prepay principal amount under this Note (pro rata with the secured convertible notes issued to other Subscribers in connection with the Subscription Agreement), in accordance with either Section 3(e) or 3(f) (as applicable)), equal to the sum of (a) the net proceeds to the Company from sales of the USW common stock owned by the Company and not subject to the pledge under the Subscription Agreement and (b) the net proceeds to the Company from any pledge of shares of USW common stock owned by the Company and not subject to the pledge under the Subscription Agreement or subject to the pledge by the Company under its loan facility with Merrill Lynch Private Finance. Any prepayment under this Section shall be due and payable within five business days of the date of the receipt of the net proceeds described in (a) and (b) above. 4. Certain Remedies. (a) If the Effective Date has not occurred by the 90th day after the date of this Note, then, in addition to the Holder's other remedies: (i) the interest rate under the Note shall be increased to 18% per annum (or, if less, the highest rate permitted by law) until the Effective Date, (ii) the Company shall pay to the Holder an amount in cash as liquidated damages and not as a penalty equal to 2% of the principal amount under the Note on the day following such failure 6 and on each 30 day anniversary thereof until the Effective Date, and (iii) at Holder's option, the Note shall not be repaid by the Company and shall remain convertible and accrue interest, until such date as is designated by Holder but not later than 360 days after the Effective Date. (b) In the event the Company fails timely to deliver or DWAC a certificate for shares of Common Stock as required under this Note, or if the Company fails timely to make a redemption payment as required under this Note, then, without limiting Holder's other rights and remedies (including, without limitation, rights and remedies available to Holder upon an event of default), the Company shall forthwith pay to the Holder an amount accruing at the rate of $1,000 per day for each day of such breach for each $100,000 principal amount of this Note, with pro rata payments for principal amounts of more or less than $100,000 or any multiple thereof. 5. Events of Default and Acceleration of the Note. (a) An "event of default" with respect to this Note shall exist if any of the following shall occur, if: (i) The Company shall breach or fail to comply with any provision of this Note or the Subscription Agreement and such breach or failure shall continue for 20 days after written notice by any Holder of any Note to the Company. (ii) Any shares of common stock of US Wireless Corp. ("USW") shall have traded (on NASDAQ if such stock then trades on NASDAQ) at less than $5 per share (subject to equitable adjustment for the stock splits and like events) at any time during each of five trading days (which need not be consecutive) within any consecutive 30-day period, the Holder shall have given notice thereof (a "Share Price Default Notice") to the Company within 20 days after the fifth such day, and the Company shall have failed to redeem this Note and to pay the full Redemption Price therefor by the close of business on the seventh day after the date of such notice; (iii) A receiver, liquidator or trustee of the Company or of a substantial part of its properties shall be appointed by court order and such order shall remain in effect for more than 20 days; or the Company shall be adjudicated bankrupt or insolvent; or a substantial part of the property of the Company shall be sequestered by court order and such order shall remain in effect for more than 30 days; or a petition to reorganize the Company under any bankruptcy, reorganization or insolvency law shall be filed against the Company and shall not be dismissed within 60 days after such filing. (iv) The Company shall file a petition in voluntary bankruptcy or request reorganization under any provision of any bankruptcy, reorganization or insolvency law, or shall consent to the filing of any petition against it under any such law. (v) The Company shall make an assignment for the benefit of its creditors, or admit in writing its inability to pay its debts generally as they become due, or consent to the appointment of a receiver, trustee or liquidator of the Company, or of all or any substantial part of its properties. (vi) The Company shall enter into any agreement pursuant to which (x) the Company would not be the surviving entity in a merger or other business combination or (y) the Company would sell or otherwise dispose of in excess of 50% of its assets. (vii) The Common Stock shall not be traded on any of the Nasdaq National Market, Nasdaq SmallCap Market, American Stock Exchange or the New York Stock Exchange for more than three trading days (which need not be consecutive Trading Days). 7 (viii) The Company shall fail for any reason to deliver certificates representing the Note Shares issuable upon a conversion hereunder that comply with the provisions hereof and the Subscription Agreement prior to the tenth day after the date of conversion or the Company shall provide notice to any Holder, including by way of public announcement, at any time, of its intention not to comply with requests for conversion of principal amounts hereunder in accordance with the terms hereof. (ix) If, during the time that the Registration Statement is required to kept effective under the Subscription Agreement, the Registration Statement lapses for any reason for more than an aggregate of ten consecutive trading days, or the Holder shall not be permitted to resell Registrable Securities under the Registration Statement for more than ten consecutive trading days. (x) The Registration Statement shall fail to be declared effective by the SEC on or prior to the 180th day after the original date of this Note. (xi) There has occurred a Triggering Event under the Series A Convertible Preferred Stock of the Company. (b) If an event of default referred to in Section (a) shall occur, the Holder may at any time thereafter, in addition to such Holder's other remedies, by written notice to the Company (an "Acceleration Declaration"), declare the principal amount of this Note, together with all interest accrued thereon, to be due and payable immediately. Upon any such declaration, an amount equal to the sum of (i) 122% of the principal amount of Notes to be prepaid, plus all accrued and unpaid interest thereon, plus 6,250 shares of Common Stock for each $100,000 in principal due and payable (the "Mandatory Prepayment Amount"), and (ii) all other amounts, costs, expenses and liquidated damages due in respect of such Notes, such amount shall become immediately due and payable and the Holder shall have all such rights and remedies provided for under the terms of this Note and the Subscription Agreement, including without limitation the security interest granted thereunder. 6. Other Obligations. (a) The Company shall at all times reserve for issuance on conversion of this Note the number of shares of Common Stock which are then issuable on conversion of this Note. (b) The Company shall use its best efforts promptly to list on NASDAQ all shares of Common Stock which are issuable upon conversion of this Note. (c) The Company covenants and agrees that all shares of Common Stock which may be issued upon conversion of this Note will, upon issuance, be duly and validly issued, fully paid and non-assessable and no personal liability will attach to the holder thereof. 7. Miscellaneous. (a) All notices and other communications required or permitted to be given hereunder shall be in writing and shall be given (and shall be deemed to have been duly given upon receipt) by delivery in person, by telegram, by facsimile, recognized overnight mail carrier, e-mail, or by registered or certified mail, postage prepaid, return receipt requested, addressed as follows: (a) if to the Holder, to such address as is set forth in the Subscription Agreement or as such Holder shall furnish to the Company in accordance with this Section, or (b) if to the Company, to it at its headquarters office, or to such other address as the Company shall furnish to the Holder in accordance with this Section. (b) This Note shall be governed and construed in accordance with the laws of the State of New York applicable to agreements made and to be performed entirely within such state. 8 (c) The Company waives protest, notice of protest, presentment, dishonor, notice of dishonor and demand. (d) If any provision of this Note shall for any reason be held to be invalid or unenforceable, such invalidity or unenforceability shall not affect any other provision hereof, but this Note shall be construed as if such invalid or unenforceable provision had never been contained herein. (e) The waiver of any event of default or the failure of the Holder to exercise any right or remedy to which it may be entitled shall not be deemed a waiver of any subsequent event of default or of the Holder's right to exercise that or any other right or remedy to which the Holder is entitled. (f) The Holder of this Note shall be entitled to recover its legal and other costs of collecting on this Note, and such costs shall be deemed added to the principal amount of this Note. (g) In no event shall the Company seek or obtain any injunctive or similar relief against any sale or action or inaction by Holder hereunder. The Company expressly waives its rights to any such relief, and it acknowledges that recovery of damages constitutes sufficient remedy for any such action or inaction which is found to be improper. In addition to all other remedies to which the Holder may be entitled hereunder, Holder shall also be entitled to injunctive relief and decrees of specific performance without posting bond or other security. The federal and state court courts in New York City shall have exclusive jurisdiction over this instrument and the enforcement thereof. Service of process shall be effective if by certified mail, return receipt requested. Trial by jury is waived. (h) The Note may be changed or terminated only in writing executed by the party against whom such modification is sought to be enforced. IN WITNESS WHEREOF, the Company has caused this Note to be duly executed on the date set forth below Dated: ---------------------------- GLOBAL TECHNOLOGIES, LTD. By -------------------------------- EX-4.3 4 0004.txt STOCK PURCHASE WARRANT THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED, OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL, REASONABLY SATISFACTORY TO THE COMPANY, THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933. WARRANT To Purchase Shares of Common Stock of Global Technologies, Ltd. DATED: [applicable Redemption Date] Number of Shares: 125,000 Holder: KOCH INVESTMENT GROUP LTD. Address: 4111 EAST 37TH STREET NORTH, WICHITA, KANSAS 67220. THIS CERTIFIES that, for value received the holder of this Warrant ("Holder"), is entitled, upon the terms and subject to the conditions hereinafter set forth, to purchase from Global Technologies, Ltd., a Delaware corporation (the "Company"), the number of fully paid and nonassessable shares of the Company's shares of Common Stock (the "shares of Common Stock") set forth above at the purchase price per share as set forth in Section 1 below ("Exercise Price"). The number of shares and Exercise Price are subject to adjustment as provided herein. 1. NUMBER OF SHARES; EXERCISE PRICE. (a) Subject to adjustments as provided herein, this Warrant shall be exercisable for the number of shares of Common Stock set forth above, at an Exercise Price per share of $4. (b) This Warrant shall be exercisable during the period commencing on the date hereof and ending on the fourth anniversary of the date of this Warrant (the "Expiration Date"). (c) The Holder is entitled to the benefits of a Private Placement Purchase Agreement dated June 8, 2000, including the registration rights thereunder. 2. EXERCISE OF WARRANT. The purchase rights represented by this Warrant are exercisable by the registered holder hereof, in whole or in part, at any time, or from time to time, during the term hereof as described in Section l above, by faxed or other written notice thereof, so long as such notice is followed within three business days by the surrender of this Warrant and a standard notice of exercise duly completed and executed on behalf of the holder hereof, at the office of the Company (or such other office or agency of the Company as it may designate by notice in writing to the registered holder hereof at the address of such holder appearing on the books of the Company), and payment of the purchase price of the shares thereby purchased in cash or check reasonably acceptable to the Company. Within two business days after exercise of the Warrant, the Company shall deliver (or, at Holder's request) DWAC to Holder a certificate for the number of shares so purchased and, if this Warrant is exercised in part, a receipt acknowledging tender of the Warrant, with a new Warrant for the unexercised portion of this Warrant to be issued as soon as reasonably practicable. The Company agrees that, upon exercise of this Warrant in accordance with the terms hereof, the shares so purchased shall be deemed to be issued to such holder as the record owner of such shares as of the close of business on the date on which this Warrant shall have been exercised. In the event the Company fails to deliver or DWAC certificates for any shares of Common Stock upon exercise of this Warrant within such time, then without limiting Holder's other rights and remedies, the Company shall forthwith pay to the Holder an amount accruing at the rate of $250 per day for each 10,000 such shares of Common Stock subject to this Warrant, with pro rata payments for shares in an amount less than 10,000. The Company covenants that all shares which may be issued upon the exercise of rights represented by this Warrant will, upon exercise of the rights represented by this Warrant and payment of the Exercise Price, be fully paid and nonassessable and free from all taxes, liens and charges in respect of the issue thereof (other than taxes in respect of any transfer occurring contemporaneously or otherwise specified herein). Exercise of this Warrant is subject to the following restrictions: (a) A Holder may not exercise this Warrant to the extent such exercise would result in the Holder, together with any affiliate thereof, beneficially owning, (as determined in accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act") and the rules promulgated thereunder) in excess of 4.999% of the then issued and outstanding shares of Common Stock, including shares issuable upon such exercise and held by such Holder after application of this Section. Since the Holder will not be obligated to report to the Company the number of shares of Common Stock it may hold at the time of an exercise hereunder, unless the exercise at issue would result in the issuance of shares of Common Stock in excess of 4.999% of the then outstanding shares of Common Stock without regard to any other shares which may be beneficially owned by the Holder or an affiliate thereof, the Holder shall have the authority and obligation to determine whether the restriction contained in this Section will limit any particular exercise hereunder and to the extent that the Holder determines that the limitation contained in this Section applies, the determination of which portion of this Warrant is exercisable shall be the responsibility and obligation of the Holder. If the Holder has delivered an election notice for a number of Warrant Shares that, without regard to any other shares that the Holder or its affiliates may beneficially own, would result in the issuance in excess of the permitted amount hereunder, the Company shall notify the Holder of this fact and shall honor the exercise for the maximum portion of this Warrant permitted to be exercised on such date of exercise in accordance with the periods described herein and, at the option of the Holder, either keep the portion of the Warrant tendered for exercise in excess of the permitted amount hereunder for future exercises or return such excess portion of the Warrant to the Holder. The provisions of this Section may be waived by a Holder (but only as to itself and not to any other Holder) upon not less than 61 days prior notice to the Company. Other Holders shall be unaffected by any such waiver. (b) A Holder may not exercise this Warrant to the extent such exercise would result in the Holder, together with any affiliate thereof, beneficially owning, (as determined in accordance with Section 13(d) of the Exchange Act and the rules promulgated thereunder) in excess of 9.999% of the then issued and outstanding shares of Common Stock, including shares issuable upon such exercise and held by such Holder after application of this Section. Since the Holder will not be obligated to report to the Company the number of shares of Common Stock it may hold at the time of an exercise hereunder, unless the exercise at issue would result in the issuance of shares of Common Stock in excess of 9.999% of the then outstanding shares of Common Stock without regard to any other shares which may be beneficially owned by the Holder or an affiliate thereof, the Holder shall have the authority and obligation to determine whether the restriction contained in this Section will limit any particular exercise hereunder and to the extent that the Holder determines that the limitation contained in this Section applies, the determination of which portion of this Warrant is exercisable shall be the responsibility and obligation of the Holder. If the Holder has delivered an election notice for a number of Warrant Shares that, without regard to any other shares that the Holder or its affiliates may beneficially own, would result in the issuance in excess of the permitted amount hereunder, the Company shall notify the Holder of this fact and shall honor the exercise for the maximum portion of this Warrant permitted to be exercised on such date of exercise in accordance with the periods described herein and, at the option of the Holder, either keep the portion of the Warrant tendered for exercise in excess of the permitted amount hereunder for future exercises or -2- return such excess portion of the Warrant to the Holder. The provisions of this Section may be waived by a Holder (but only as to itself and not to any other Holder) upon not less than 61 days prior notice to the Company. Other Holders shall be unaffected by any such waiver. 3. ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF SHARES. The Exercise Price and the number of shares purchasable upon the exercise of this Warrant shall be subject to adjustment from time to time upon the occurrence of certain events described in this Section 3. 3.1 SUBDIVISION OR COMBINATION OF COMMON STOCK AND COMMON STOCK DIVIDEND. In case the Company shall at any time subdivide its outstanding shares of Common Stock into a greater number of shares or declare a dividend upon its Common Stock payable solely in shares of Common Stock, the Exercise Price in effect immediately prior to such subdivision or declaration shall be proportionately reduced, and the number of shares issuable upon exercise of the Warrant shall be proportionately increased. Conversely, in case the outstanding shares of Common Stock of the Company shall be combined into a smaller number of shares, the Exercise Price in effect immediately prior to such combination shall be proportionately increased, and the number of shares issuable upon exercise of the Warrant shall be proportionately reduced. 3.2 DILUTIVE ISSUANCES. If the Company or any subsidiary thereof, as applicable with respect to Common Stock Equivalents (as defined below), at any time while this Warrant is outstanding, shall issue shares of Common Stock or rights, warrants, options or other securities or debt that is convertible into or exchangeable for shares of Common Stock ("Common Stock Equivalents"), entitling any person to acquire shares of Common Stock at a price per share less than the Exercise Price (if the holder of the Common Stock or Common Stock Equivalent so issued shall at any time, whether by operation of purchase price adjustments, reset provisions, floating conversion, exercise or exchange prices or otherwise, or due to warrants, options or rights issued in connection with such issuance, be entitled to receive shares of Common Stock at a price less than the Exercise Price, such issuance shall be deemed to have occurred for less than the Exercise Price), then the Exercise Price shall be multiplied by a fraction, the numerator of which shall be the number of shares of Common Stock outstanding immediately prior to the issuance of such Common Stock or such Common Stock Equivalents plus the number of shares of Common Stock which the offering price for such shares of Common Stock or Common Stock Equivalents would purchase at the Exercise Price, and the denominator of which shall be the sum of the number of shares of Common Stock outstanding immediately prior to such issuance plus the number of shares of Common Stock so issued or issuable, PROVIDED, that for purposes hereof, all shares of Common Stock that are issuable upon conversion, exercise or exchange of Common Stock Equivalents shall be deemed outstanding immediately after the issuance of such Common Stock Equivalents. Such adjustment shall be made whenever such Common Stock or Common Stock Equivalents are issued. No adjustment will be made under this paragraph as a result of the grant or issuance of shares of Common Stock pursuant to any duly authorized employee stock option plan of the Company. 3.3 NOTICE OF ADJUSTMENT. Promptly after adjustment of the Exercise Price or any increase or decrease in the number of shares purchasable upon the exercise of this Warrant, the Company shall give written notice thereof, by first class mail, postage prepaid, addressed to the Holder at the address of such Holder as shown on the books of the Company. The notice shall be signed by an authorized officer of the Company and shall state the effective date of the adjustment and the Exercise Price resulting from such adjustment and the increase or decrease, if any, in the number of shares purchasable at such price upon the exercise of this Warrant, setting forth in reasonable detail the method of calculation and the facts upon which such calculation is based. -3- 3.4 OTHER NOTICES. If at any time: (a) the Company shall declare any cash dividend upon its Common Stock; (b) the Company shall declare any dividend upon its Common Stock payable in Common Stock (other than a dividend payable solely in shares of Common Stock) or make any special dividend or other distribution to the holders of its Common Stock; (c) there shall be any consolidation or merger of the Company with another corporation, or a sale of all or substantially all of the Company's assets to another corporation; or (d) there shall be a voluntary or involuntary dissolution, liquidation or winding-up of the Company; then, in any one or more of said cases, the Company shall give, by certified or registered mail, postage prepaid, addressed to the registered holder of this Warrant at the address of such holder as shown on the books of the Company, (i) at least 10 days prior written notice of the date on which the books of the Company shall close or a record shall be taken for such dividend, distribution or subscription rights or for determining rights to vote in respect of any such dissolution, liquidation or winding-up, (ii) at least 10 days prior written notice of the date on which the books of the Company shall close or a record shall be taken for determining rights to vote in respect of any such reorganization, reclassification, consolidation, merger or sale, and (iii) in the case of any such reorganization, reclassification, consolidation, merger, sale, dissolution, liquidation or winding-up, at least 10 days written notice of the date when the same shall take place. Any notice given in accordance with clause (i) above shall also specify, in the case of any such dividend, distribution or option rights, the date on which the holders of Common Stock shall be entitled thereto. Any notice given in accordance with clause (iii) above shall also specify the date on which the holders of Common Stock shall be entitled to exchange their Common Stock for securities or other property deliverable upon such reorganization, reclassification, consolidation, merger, sale, dissolution, liquidation or winding-up, as the case may be. 3.5 CHANGES IN COMMON STOCK. In case at any time prior to the Expiration Date, the Company shall be a party to any transaction (including, without limitation, a merger, consolidation, sale of all or substantially all of the Company's assets or recapitalization of the Common Stock) in which the previously outstanding Common Stock shall be changed into or exchanged for different securities of the Company or Common Stock or other securities of another corporation or interests in a noncorporate entity or other property (including cash) or the Company shall make a distribution on its shares, other than regular cash dividends on its outstanding Common Stock, or any combination of any of the foregoing (each such transaction being herein called the "Transaction" and the date of consummation of the Transaction being herein called the "Consummation Date"), then, as a condition of the consummation of the Transaction, lawful and adequate provisions shall be made so that each Holder shall have the right thereafter to (A) exercise this Warrant for 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 Common Stock for which this Warrant could have been exercised immediately prior to such merger, consolidation or sales would have been entitled, or (B) in the case of a merger or consolidation, (x) require the surviving entity to issue common stock purchase warrants equal to the number Warrant Shares to which this Warrant then permits, which new warrant shall be identical to this Warrant, and (y) simultaneously with the issuance of such warrant, shall have the right to exercise such warrant 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 (B), the exercise price for such new warrant shall be based upon the amount of securities, cash and property that each share of Common Stock would receive in such transaction and the Exercise Price of this Warrant 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 continue to give the Holder the right to receive the securities, cash and property set forth in this Section upon any conversion or redemption following such event. This provision shall similarly apply to successive such events. -4- 4. NO FRACTIONAL SHARES. No fractional shares shall be issued upon the exercise of this Warrant. In lieu of any fractional share to which such holder would otherwise be entitled, such holder shall be entitled, at its option, to receive either (i) a cash payment equal to the excess of fair market value for such fractional share above the Exercise Price for such fractional share (as mutually determined by the Company and the holder) or (ii) a whole share if the holder tenders the Exercise Price for one whole share. 5. CHARGES, TAXES AND EXPENSES. Issuance of certificates for shares upon the exercise of this Warrant shall be made without charge to the holder hereof for any issue or transfer tax or other incidental expense in respect of the issuance of such certificates, all of which taxes and expenses shall be paid by the Company, and such certificates shall be issued in the name of the holder of this Warrant or in such name or names as may be directed by the holder of this Warrant (with the prior written consent of the Company); provided, however, that in the event certificates for shares are to be issued in a name other than the name of the holder of this Warrant, this Warrant when surrendered for exercise shall be accompanied by the Assignment Form attached hereto duly executed by the holder hereof and the Notice of Exercise duly completed and executed and stating in whose name and certificates are to be issued; and provided further, that such assignment shall be subject to applicable laws and regulations. Upon any transfer involved in the issuance or delivery of any certificates for shares of the Company's securities, the Company may require, as a condition thereto, the payment of a sum sufficient to reimburse it for any transfer tax incidental thereto. 6 NO RIGHTS AS COMMON STOCKHOLDER. This Warrant does not entitle the holder hereof to any voting rights, dividend rights or other rights as a Common Stockholder of the Company prior to the exercise hereof. 7. EXCHANGE AND REGISTRY OF WARRANT. The Company shall maintain a registry showing the name and address of the registered holder of this Warrant. This Warrant may be surrendered for exchange, transfer or exercise, in accordance with its terms, at the office of the Company, and the Company shall be entitled to rely in all respects, prior to written notice to the contrary, upon such registry. 8. LOSS, THEFT, DESTRUCTION OR MUTILATION OF WARRANT. Upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant, and in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it, and upon reimbursement to the Company of all reasonable expenses incidental thereto, and upon surrender and cancellation of this Warrant, if mutilated, the Company will make and deliver a new Warrant of like tenor and dated as of such cancellation, in lieu of this Warrant. 9. PAYMENT OF EXERCISE PRICE. The Holder shall pay the Exercise Price in one of the following manners: (a) CASH EXERCISE. The Holder may deliver immediately available funds; or (b) CASHLESS EXERCISE. At any time after the earlier to occur of the date that the Registration Statement (as defined under the Subscription Agreement) is first declared effective by the SEC and the date that it is required to be declared effective, when a registration statement covering the resale of the Warrant Shares and naming the Holder as a selling stockholder thereunder is not then effective, the Holder may surrender this Warrant to the Company together with a notice of cashless exercise, in which event the Company shall issue to the Holder the number of Warrant Shares determined as follows: -5- X = Y [(A-B)/A] where: X = the number of Warrant Shares to be issued to the Holder. Y = the number of Warrant Shares with respect to which this Warrant is being exercised. A = the average of the closing sale prices of the Common Stock for the five (5) trading days immediately prior to (but not including) the Date of Exercise. B = the Exercise Price. For purposes of Rule 144 promulgated under the Securities Act, it is intended, understood and acknowledged that the Warrant Shares issued in a cashless exercise transaction shall be deemed to have been acquired by the Holder, and the holding period for the Warrant Shares shall be deemed to have been commenced, on the issue date. 10. MISCELLANEOUS. (a) GOVERNING LAW. This Warrant shall be binding upon any successors or assigns of the Company. This Warrant shall constitute a contract under the laws of New York and for all purposes shall be construed in accordance with and governed by the laws of said state, without giving effect to the conflict of laws principles. The federal and state court courts in New York City shall have exclusive jurisdiction over this instrument and the enforcement thereof. Service of process shall be effective if by certified mail, return receipt requested. Trial by jury is waived. (b) RESTRICTIONS. THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED, OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL TO THE COMPANY, THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933. Under an agreement of even date herewith, the Company is required to file a registration statement (the "Registration Statement") with respect to the shares issuable hereunder. (c) AMENDMENTS. This Warrant may be amended and the observance of any term of this Warrant may be waived only with the written consent of the Company and the registered holder hereof. (d) NOTICE. Any notice required or permitted hereunder shall be deemed effectively given upon personal delivery to the party to be notified or upon faxed transmission, or upon deposit with the United States Post Office, by certified mail, postage prepaid and addressed to the party to be notified at the address indicated below for such party, or at such other address as such other party may designate by ten-day advance written notice. IN WITNESS WHEREOF, Global Technologies, Ltd. has caused this Warrant to be executed by its officer thereunto duly authorized. Dated: GLOBAL TECHNOLOGIES, LTD. By: Name: Title: EX-5.1 5 0005.txt OPINION OF SCHNADER HARRISON SEGAL & LEWIS SCHNADER HARRISON SEGAL & LEWIS LLP 1735 MARKET STREET SUITE 3800 PHILADELPHIA, PA 19103-7598 July 10, 2000 Securities and Exchange Commission Judiciary Plaza 450 Fifth Street, N.W. Washington, D.C. 20549 Re: Global Technologies, Ltd. Registration Statement on Form S-3 Dear Sir/Madam: As counsel to Global Technologies, Ltd., a Delaware corporation (the "Company"), we are familiar with the corporate proceedings relating to the proposed registration on Form S-3, as amended (the "Registration Statement"), which was initially filed with the Securities and Exchange Commission on or about July 10, 2000, of 270,000 shares of the Company's Class A Common Stock, par value $.01 per share (the "Shares"), which includes, without limitation, 125,000 Shares to be issued upon the conversion, payment and/or redemption of the secured convertible notes (the "Notes") referred to in the Registration Statement, 125,000 Shares to be issued upon the exercise of certain warrants (the "Redemption Warrants") issued in connection with a partial redemption of the Notes referred to in the Registration Statement and 20,000 Shares to be issued upon the exercise of the certain other warrants (together with the Redemption Warrants, the "Warrants") of the Company referred to in the Registration Statement (all as more fully set forth in the Registration Statement). We have examined the Company's Certificate of Incorporation, as amended, the Company's Bylaws, as amended, and related consents of and minutes of action taken by the Board of Directors of the Company, and such other documents and corporate records relating to the Company and the issuance and sale of the Shares, the Notes and Warrants as we deemed appropriate for purposes of rendering this opinion. Based upon the foregoing, it is our opinion that the Shares, when issued and paid for upon the due conversion, payment and/or redemption of the Notes or due exercise of the Warrants in accordance with the terms of the Notes or Warrants, as the case may be, will be validly issued, fully paid and non-assessable. We hereby consent to the filing of this opinion as Exhibit 5.1 of the Registration Statement. Very truly yours, /s/SCHNADER HARRISON SEGAL & LEWIS LLP EX-23.2 6 0006.txt CONSENT OF KPMG LLP INDEPENDENT AUDITORS' CONSENT The Stockholders and Board of Directors Global Technologies, Ltd.: We consent to the use of our reports incorporated by reference herein and to the reference to our firm under the heading "Experts" in the registration statement on Form S-3. /s/ KPMG LLP Phoenix, Arizona July 10, 2000 -----END PRIVACY-ENHANCED MESSAGE-----