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EXHIBIT 4.2
THIS NOTE AND THE COMMON SHARES ISSUABLE UPON CONVERSION OF
THIS NOTE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF
1933, AS AMENDED. THIS NOTE AND THE COMMON SHARES ISSUABLE
UPON
CONVERSION OF THIS NOTE MAY NOT BE SOLD, OFFERED FOR SALE,
PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT AS TO THIS NOTE UNDER SAID ACT OR AN
OPINION OF COUNSEL REASONABLY SATISFACTORY TO MOBILE REACH
INTERNATIONAL, INC. THAT SUCH REGISTRATION IS NOT REQUIRED.
CONVERTIBLE NOTE
----------------
FOR VALUE RECEIVED, MOBILE REACH INTERNATIONAL, INC., a
Delaware
corporation (hereinafter called "Borrower"), hereby promises to
pay to (the
"Holder") or order, without demand, the sum of Seventy-Five
Thousand Dollars
($75,000.00), with simple interest accruing on April 1, 2006
(the "Maturity
Date"), if not paid sooner.
This Note has been entered into pursuant to the terms of a
subscription
agreement between the Borrower and the Holder, dated of even
date herewith (the
"Subscription Agreement"), and shall be governed by the terms of
such
Subscription Agreement. Unless otherwise separately defined
herein, all
capitalized terms used in this Note shall have the same meaning
as is set forth
in the Subscription Agreement. The following terms shall apply
to this Note:
ARTICLE I
GENERAL PROVISIONS
1.1 Payment Grace Period. The Borrower shall have a ten (10) day
grace
period to pay any monetary amounts due under this Note, after
which grace period
a default interest rate of fifteen percent (15%) per annum shall
apply to the
amounts owed hereunder.
1.2 Conversion Privileges. The Conversion Privileges set forth
in Article
II shall remain in full force and effect immediately from the
date hereof and
until the Note is paid in full regardless of the occurrence of
an Event of
Default. The Note shall be payable in full on the Maturity Date,
unless
previously converted into Common Stock in accordance with
Article II hereof.
1.3 Interest Rate. Simple interest payable on this Note shall
accrue at the
annual rate of eight percent (8%) commencing from the issue date
of this Note
and will be payable, at the Borrower's election, in cash or
shares of Common
Stock valued at the Conversion Price, upon each Conversion, June
1, 2005 and
semi-annually thereafter, and on the Maturity Date, accelerated
or otherwise,
when the principal and remaining accrued but unpaid interest
shall be due and
payable, or sooner as described below.
<PAGE>
THIS NOTE AND THE COMMON SHARES ISSUABLE UPON CONVERSION OF
THIS NOTE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF
1933, AS AMENDED. THIS NOTE AND THE COMMON SHARES ISSUABLE
UPON
CONVERSION OF THIS NOTE MAY NOT BE SOLD, OFFERED FOR SALE,
PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT AS TO THIS NOTE UNDER SAID ACT OR AN
OPINION OF COUNSEL REASONABLY SATISFACTORY TO MOBILE REACH
INTERNATIONAL, INC. THAT SUCH REGISTRATION IS NOT REQUIRED.
CONVERTIBLE NOTE
----------------
FOR VALUE RECEIVED, MOBILE REACH INTERNATIONAL, INC., a
Delaware
corporation (hereinafter called "Borrower"), hereby promises to
pay to (the
"Holder") or order, without demand, the sum of Fifty Thousand
Dollars
($50,000.00), with simple interest accruing on April 1, 2006
(the "Maturity
Date"), if not paid sooner.
This Note has been entered into pursuant to the terms of a
subscription
agreement between the Borrower and the Holder, dated of even
date herewith (the
"Subscription Agreement"), and shall be governed by the terms of
such
Subscription Agreement. Unless otherwise separately defined
herein, all
capitalized terms used in this Note shall have the same meaning
as is set forth
in the Subscription Agreement. The following terms shall apply
to this Note:
ARTICLE I
GENERAL PROVISIONS
1.1 Payment Grace Period. The Borrower shall have a ten (10) day
grace
period to pay any monetary amounts due under this Note, after
which grace period
a default interest rate of fifteen percent (15%) per annum shall
apply to the
amounts owed hereunder.
1.2 Conversion Privileges. The Conversion Privileges set forth
in Article
II shall remain in full force and effect immediately from the
date hereof and
until the Note is paid in full regardless of the occurrence of
an Event of
Default. The Note shall be payable in full on the Maturity Date,
unless
previously converted into Common Stock in accordance with
Article II hereof.
1.3 Interest Rate. Simple interest payable on this Note shall
accrue at the
annual rate of eight percent (8%) commencing from the issue date
of this Note
and will be payable, at the Borrower's election, in cash or
shares of Common
Stock valued at the Conversion Price, upon each Conversion, June
1, 2005 and
semi-annually thereafter, and on the Maturity Date, accelerated
or otherwise,
when the principal and remaining accrued but unpaid interest
shall be due and
payable, or sooner as described below.
<PAGE>
ARTICLE II
CONVERSION RIGHTS
The Holder shall have the right to convert the principal due
under this
Note into Shares of the Borrower's Common Stock, $.0001 par
value per share
("Common Stock") as set forth below.
2.1. Conversion into the Borrower's Common Stock.
(a) The Holder shall have the right from and after the date of
the
issuance of this Note and then at any time until this Note is
fully paid, to
convert any outstanding and unpaid principal portion of this
Note, and accrued
interest, at the election of the Holder (the date of giving of
such notice of
conversion being a "Conversion Date") into fully paid and
nonassessable shares
of Common Stock as such stock exists on the date of issuance of
this Note, or
any shares of capital stock of Borrower into which such Common
Stock shall
hereafter be changed or reclassified, at the conversion price as
defined in
Section 2.1(b) hereof (the "Conversion Price"), determined as
provided herein.
Upon delivery to the Borrower of a completed Notice of
Conversion, a form of
which is annexed hereto, Borrower shall issue and deliver to the
Holder within
three (3) business days from the Conversion Date (such third day
being the
"Delivery Date") that number of shares of Common Stock for the
portion of the
Note converted in accordance with the foregoing in the form
described in Section
7.1(a) of the Subscription Agreement. At the election of the
Holder, the
Borrower will deliver accrued but unpaid interest on the Note in
the manner
provided in Section 1.3 through the Conversion Date directly to
the Holder on or
before the Delivery Date (as defined in the Subscription
Agreement). The number
of shares of Common Stock to be issued upon each conversion of
this Note shall
be determined by dividing that portion of the principal of the
Note and interest
to be converted, by the Conversion Price.
(b) Subject to adjustment as provided in Section 2.1(c) hereof,
the
Conversion Price per share shall be equal to the lesser of (i)
70% of the
average of the closing bid prices of the Common Stock as
reported by Bloomberg,
L.P. for the Principal Market (as defined in Section 9.1(b) of
the Subscription
Agreement) for the three trading days immediately preceding the
Closing Date (as
defined in Section 1 below), or (ii) the average of the three
lowest closing bid
prices for the ten trading days preceding a Conversion Date.
(c) The Conversion Price and number and kind of shares or
other
securities to be issued upon conversion determined pursuant to
Section 2.1(a),
shall be subject to adjustment from time to time upon the
happening of certain
events while this conversion right remains outstanding, as
follows:
A. Merger, Sale of Assets, etc. If the Borrower at any time
shall
consolidate with or merge into or sell or convey all or
substantially all its
assets to any other corporation, this Note, as to the unpaid
principal portion
thereof and accrued interest thereon, shall thereafter be deemed
to evidence the
right to purchase such number and kind of shares or other
securities and
property as would have been issuable or distributable on account
of such
consolidation, merger, sale or conveyance, upon or with respect
to the
securities subject to the conversion or purchase right
immediately prior to such
consolidation, merger, sale or conveyance. The foregoing
provision shall
similarly apply to successive transactions of a similar nature
by any such
successor or purchaser. Without limiting the generality of the
foregoing, the
anti-dilution provisions of this Section shall apply to such
securities of such
successor or purchaser after any such consolidation, merger,
sale or conveyance.
<PAGE>
B. Reclassification, etc. If the Borrower at any time shall,
by
reclassification or otherwise, change the Common Stock into the
same or a
different number of securities of any class or classes that may
be issued or
outstanding, this Note, as to the unpaid principal portion
thereof and accrued
interest thereon, shall thereafter be deemed to evidence the
right to purchase
an adjusted number of such securities and kind of securities as
would have been
issuable as the result of such change with respect to the Common
Stock
immediately prior to such reclassification or other change.
C. Stock Splits, Combinations and Dividends. If the shares
of
Common Stock are subdivided or combined into a greater or
smaller number of
shares of Common Stock, or if a dividend is paid on the Common
Stock in shares
of Common Stock, the Conversion Price shall be proportionately
reduced in case
of subdivision of shares or stock dividend or proportionately
increased in the
case of combination of shares, in each such case by the ratio
which the total
number of shares of Common Stock outstanding immediately
afte
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