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
