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THIS NOTE AND THE SHARES OF PREFERRED STOCK CONTINGENTLY
ISSUABLE UPON CONVERSION OF THIS NOTE (THE "SECURITIES") HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
ANY STATE SECURITIES LAWS, AND MAY NOT BE SOLD, OFFERED FOR SALE,
PLEDGED OR HYPOTHECATED IN THE ABSENCE OF A REGISTRATION STATEMENT
IN EFFECT WITH RESPECT TO THE SECURITIES UNDER SUCH ACT AND IN
ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN
APPLICABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF SUCH ACT
AND SUCH LAWS, IN WHICH CASE THE HOLDER MUST, PRIOR TO SUCH
TRANSFER AND UPON REQUEST BY GENERAL COMPONENTS, INC. (THE
"COMPANY"), FURNISH TO THE COMPANY AN OPINION OF COUNSEL, WHICH
COUNSEL AND OPINION ARE REASONABLY SATISFACTORY TO THE COMPANY,
THAT THE SECURITIES MAY BE OFFERED, SOLD, PLEDGED, ASSIGNED OR
OTHERWISE TRANSFERRED IN THE MANNER CONTEMPLATED PURSUANT TO AN
AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS.
GENERAL COMPONENTS, INC.
CONVERTIBLE PROMISSORY NOTE
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Date: December 11, 2006
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$
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For value received, General
Components, Inc., a Nevada corporation (the
" Maker "), unconditionally promises to pay to the order of
____________________ (the " Holder "), the principal sum of
_____________
($
) (the " Principal Amount ") together with interest thereon
as hereinafter provided, pursuant to the following
terms:
1. Maker
. The term "Maker" as used in this Note shall
include the Maker and the respective successors and assigns thereto
or thereof.
2. Maturity
Date . Unless converted as provided herein,
the principal and accrued interest under this Note shall be due and
payable in full on June 11, 2007 (the " Maturity Date
").
3. Interest;
Payment .
A. Interest
(the " Interest ") shall be charged on the outstanding
Principal Amount from the date of this Note until the payment in
full of the outstanding Principal Amount, or the Note has otherwise
been converted in full pursuant to the terms hereof, at a rate
equal to two percent (2%) per month (the " Interest Rate "),
payable on the Maturity Date or the earlier conversion of such
Principal Amount. For the avoidance of doubt, Interest shall be
chargeable on the outstanding Principal Amount every day prior to
the actual Maturity Date or earlier conversion in full of the
Note.
B. All
computations of interest hereunder shall be made based on the
actual number of days elapsed in a year of 365 days (including the
first day but excluding the last day during which any such
Principal Amount is outstanding).
C. Any payment
of principal or interest which is not paid when due shall bear
interest until paid at a simple interest rate per annum which is
five percentage points (5%) in excess of the rate that would
otherwise be in effect.
D. Principal
and interest shall be payable to Holder when due in lawful money of
the United States of America in immediately available funds at such
place as Holder may from time to time notify the Maker in writing.
Whenever any payment to be made hereunder shall be due on a
Saturday, Sunday or a date on which banks in New York City, New
York are authorized or required to be closed, such payment may be
made on the next succeeding Business Day.
E. The Maker
may prepay this Note, in whole or in part, at any time after, upon
five (5) days prior notice without penalty; provided however, Maker
may withdraw any such notice, in which case this Note shall not
come due as a result of such notice of prepayment.
F. All
payments received hereunder may be applied, at Holder’s
option, first to the payment of any expenses or charges payable
hereunder and accrued interest, with the balance being applied to
principal, or in such other order as Holder shall
determine.
G. In the
event that it is determined that, under the laws relating to usury
applicable to Maker or the indebtedness evidenced by this Note
("Applicable Usury Laws"), the interest charges and fees payable by
Maker in connection herewith or in connection with any other
document or instrument executed and delivered in connection
herewith cause the effective interest rate applicable to the
indebtedness evidenced by this Note to exceed the maximum rate
allowed by law (the "Maximum Rate"), then such interest shall be
recalculated for the period in question and any excess over the
Maximum Rate paid with respect to such period shall be credited,
without further agreement or notice, to the Principal Amount
outstanding hereunder to reduce said balance by such amount with
the same force and effect as though Maker had specifically
designated such extra sums to be so applied to principal and the
Holder had agreed to accept such extra payment(s) as a premium-free
prepayment. All such deemed prepayments shall be applied to the
principal balance payable at maturity. In no event shall any
agreed-to or actual exaction as consideration for this Note exceed
the limits imposed or provided by Applicable Usury Laws in the
jurisdiction in which Maker is resident applicable to the use or
detention of money or to forbearance in seeking its collection in
the jurisdiction in which Maker is resident.
4.
Replacement . On receipt of
evidence reasonably satisfactory to the Maker of the loss, theft,
destruction or mutilation of this Note and, in the case of loss,
theft or destruction, on delivery of an indemnity agreement
reasonably satisfactory in form and substance to the Maker or, in
the case of mutilation, on surrender and cancellation of this Note,
the Maker at its expense shall execute and deliver, in lieu of this
Note, a new note of like tenor and amount.
5. Conversion of
Note .
2
A. Automatic Conversion at Option of Company . Maker shall
have the right, at its sole discretion, to convert the outstanding
Principal Amount, together with accrued and unpaid interest, into
Series B Preferred Stock at the Conversion Price upon the issue and
sale by the Maker of at least $3 million in stated value of Series
B Preferred Stock having an annual preferred dividend of 6% and
conversion rights entitling the holder thereof to convert such
shares into Common Stock of the Maker at a conversion price of
$1.00 per share (after giving effect to the contemplated 1 for 10
reverse split of the Maker’s Common Stock).
B. Conversion Price . The "Conversion Price" shall be the
price per share of Series B Preferred Stock paid by investors upon
the issuance thereof by the Maker. Such shares of Series B
Preferred Stock as shall be issued upon such conversion are herein
referred to as the "Conversion Shares."
C. Registration Rights . The Company shall treat the
Conversion Shares as entitled to the same rights to require the
filing of a registration statement under the Securities Act of
1933, as amended with the Commission as the shares of Series B
Preferred Stock to be issued after the date hereof. Accordingly,
the Company hereby agrees to register any or a
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