EXHIBIT - 99
THE SECURITIES EVIDENCED HEREBY HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "1933 ACT"),
AND MAY NOT BE SOLD, TRANSFERRED,
ASSIGNED OR HYPOTHECATED UNLESS THERE IS AN
EFFECTIVE REGISTRATION STATEMENT
UNDER THE 1933 ACT COVERING SUCH SECURITIES
OR THE COMPANY RECEIVES AN OPINION
OF COUNSEL FOR THE HOLDER OF THESE
SECURITIES, REASONABLY SATISFACTORY TO THE
COMPANY, STATING THAT SUCH SALE, TRANSFER,
ASSIGNMENT OR HYPOTHECATION IS EXEMPT
FROM THE REGISTRATION AND PROSPECTUS
DELIVERY REQUIREMENTS OF THE 1933 ACT.
BESTNET COMMUNICATIONS CORP.
A Nevada corporation
CONVERTIBLE PROMISSORY NOTE
Scottsdale, Arizona
$110,000
March 23, 2005
FOR VALUE RECEIVED, BESTNET COMMUNICATIONS
CORP., a Nevada corporation (the
"Company"), hereby promises to pay to
Anthony Silverman, whose address is 2747
Paradise Rd. #903, Las Vegas, NV 89109, or
registered assigns (hereinafter
referred to as the "Holder"), the principal
sum of $110,000. Interest shall
accrue on the unpaid principal sum and on
any accrued but unpaid interest at the
rate of 10% per annum, to be paid monthly
in arrears.
This Convertible Promissory Note (the
"Note") is being issued in consideration
of certain indebtedness of the Company to
the Payee evidenced by a certain
promissory note dated February 13, 2004, in
the principal amount of $50,000 and
a certain promissory note dated May 3, 2004
in the principal amount of $60,000
(the "Prior Notes"). Both of the Prior
Notes have been cancelled and the
indebtedness evidenced thereby is now
evidenced by this Note
1. Payment. Unless earlier
converted pursuant to Section 5 hereof, the
principal of and any accrued interest under this Note shall be due
and
payable on March 31, 2006. Payment shall be made in lawful money
of
the United States of America at the address of the Holder, or at
such
other place as the Holder may designate in writing or, if earlier,
an
Event of Default (as defined below). Prepayment of principal
and
accrued interest may be made upon thirty (30) days' prior
written
notice to the Holder.
2. Default. If any of the
following events (hereafter called "Events of
Default") shall occur:
(a) the Company shall
default in the payment of any principal or
accrued interest due under this Note, whether at maturity or by
acceleration or otherwise; or
(b) the Company shall
default in the payment of any principal or
accrued interest due under any other promissory note or other
instrument evidencing debt for funds borrowed by the Company;
(c) upon any breach by
the Company of any representation, warranty or
covenant in this Note; provided that, in the event of such
breach, to the extent that such breach is susceptible to cure,
such breach shall not have been cured by the Company within 30
days after the earlier to occur of (a) written notice to the
Company of such breach or (b) the Company's knowledge of such
breach; or
(d) the Company shall
make a general assignment for the benefit of
creditors; or
(e) the Company shall
file a voluntary petition in bankruptcy, or
shall be insolvent or adjudicated bankrupt, or shall file any
petition or answer seeking any reorganization, arrangement,
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composition, readjustment, liquidation, dissolution or similar
relief under the present or any future federal bankruptcy act
or
other applicable federal, state or other statute, law or
regulation, or shall file any answer admitting the material
allegation of a petition filed against the Company in such
proceeding, or shall seek or consent to or acquiesce in the
appointment of any trustee, receiver or liquidator of the
Company
of all or any substantial part of the properties of the
Company,
or the Company shall commence the winding up or the dissolution
or liquidation of the Company; or
(f) within sixty (60)
days after the commencement of an action
against the Company (and service of process in connection
therewith on the Company) seeking any bankruptcy, insolvency,
reorganization, liquidation, dissolution or similar relief
under
any present or future statute, law or regulation, such action
shall not have been resolved in favor of the Company or all
orders or proceedings thereunder affecting the operations or
the
business
of the Company stayed, or if the stay of any such order
or proceeding shall thereafter be set aside, or if, within
sixty
(60) days after the appointment without the consent or
acquiescence of the Company of any trustee, receiver or
liquidator of the Company or of all or any substantial part of
the properties of the Company, such appointment shall not have
been vacated; or
(g) the Company,
without the Holder's prior written consent, grants a
security interest in its assets, or any portion thereof: to any
person, except for the grant of a security interest in a
purchase
money financing in which the Company grants a lien on an asset
in
connection with financing the purchase of that; or
(h) the Company (i)
redeems, purchases or otherwise acquires for
value, any share or shares of its equity securities other than
shares issued to officers, directors, employees and consultants
of the Company pursuant to agreements obligating the Company to
repurchase such shares upon termination of employment with or
service to the Company, or (ii) declares or pays any dividends
on
or declares or makes any other distribution (other than a
dividend payable on the common stock solely in shares of common
stock) on account of any of its equity securities or sets apart
any sum for any such purpose;
then, and in
each and every such case, the Holder of this Note may, by
written notice
to the Company, declare all amounts under this Note to be
forthwith due
and payable (except that, in the case of an Event of Default
under either
Section 2(a), Section 3(d) or Section 2(f), this Note shall
become
immediately due and payable without notice, and in the case of
a
default under
Section 2(a) and 2(b) the Holder of this Note may by written
notice declare
all amounts under this Note due and payable and the balance
shall become so
due and payable, without presentation, protest or further
demand or notice
of any kind, all of which are hereby expressly waived. The
Company shall
give promptly a written notice to the Holder of the
occurrence or
the approval by the Company or its Board of Directors of any
and all of the
foregoing events.
3. Conversion.
(a) Grant of Right. Subject to the terms of
Section 3(d) hereof, any Holder of
this Note has the right, at the Holder's
option, at any time prior to payment in
full of the principal balance of and
accrued interest under this Note including
without limitation during the thirty (30)
day period mentioned above, to
convert, in accordance with the provisions
of this Section 3, (i) the principal
amount of this Note, in whole but not in
part, and (ii) at the Holder's option,
the unpaid interest under the Note accrued
to the date of such conversion in
(i), above, into fully paid and
non-assessable shares ("Shares") of the Common
Stock, $.001 par value. The number of
Shares into which this Note may be
converted shall be determined by dividing
the aggregate principal amount of the
Note and/or accrued unpaid interest under
the Note by the conversion price
("Conversion Price") in effect at the time
of such conversion. The initial
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Conversion Price shall be $0.12 per Share,
determined as being equal to the
closing price for the Common Stock as
reported on the OTC BULLETIN BOARD at the
close of business on the date of this
Note.
(b) Notice of Conversion. Before the Holder
shall be entitled to convert this
Note into Shares, he shall surrender this
Note at the office of the Company and
shall give written notice by mail, postage
prepaid, to the Company at its
principal corporate office, of the election
to convert the same, if the Holder
is electing to convert pursuant to Section
5 (a), and shall state therein on the
Notice of Conversion annexed to this Note
the entire principal amount of the
Note to be converted and the accrued and
unpaid interest on such principal
amount that is also to be converted.
(c) Satisfaction with Requirements of
Securities Act of 1933. Notwithstanding
anything to the contrary contained herein,
each and every conversion of this
Note is contingent upon the Company's
satisfaction that the issuance of Common
Stock upon the conversion is exempt from
the requirements of the Securities Act
of 1933, as amended, and all applicable
state securities laws. The Holder agrees
to execute any and all documents deemed
necessary by the Company to effect a
conversion of this Note.
(d) Mechanics and Effect of Conversion. No
fractional Shares shall be issued
upon conversion of this Note. In lieu of
the Company issuing any fractional
Shares to the Holder upon the conversion of
this Note, the Company shall pay to
the Holder, when it is due, the amount of
outstanding principal that is not so
converted. Upon the conversion of this Note
pursuant to Section 3(a) above, the
Holder shall surrender this Note, duly
endorsed, at the principal office of the
Company. At its expense, the Company shall,
as soon as practicable thereafter,
issue and deliver to such Holder at such
principal office a certificate or
certificates evidencing the number of
Shares to which the Holder shall be
entitled upon such conversion (bearing such
legends as are required by
applicable state and federal securities
laws in the opinion of counsel to the
Company), together with any other
securities and property to which the Holder is
entitled upon such conversion under the
terms of this Note, including a check
payable to the Holder for any cash amounts
payable for unpaid and accrued
interest and for fractional shares as
described above. In the event of any
conversion of this Note pursuant to Section
3(a) above, such conversion shall be
deemed to have been made immediately prior
to the closing of the issuance of
such Common Stock and on and after such
date the Holder of this Note entitled to
receive the shares of such Common Stock
issuable upon such conversion shall be
treated for all purposes as the record
holder of such shares. Upon conversion of
this Note, the Company shall be forever
released from all its obligations and
liabilities under this Note, except that
the Company shall be obligated to pay
the Holder within ten (10) days after the
date of such conversion any cash
amounts resulting from fractional shares as
described above, and any unpaid and
accrued interest (not converted under the
Note) to and including the date of
such conversion, and no more.
4. Conversion Price Adjustments.
(a) Stock Splits and Combinations. If the
Company shall at any time subdivide or
combine its outstanding shares of Common
Stock, this Note shall, after that
subdivision or combination, evidence the
right to convert into the number of
shares of Common Stock that would have been
issuable as a result of that change
with respect to the Shares of Common Stock
which were issuable upon conversion
of this Note immediately before that
subdivision or combination. If the Company
shall at any time subdivide the outstanding
shares of Common Stock, the
Conversion Price then in effect immediately
before that subdivision shall be
proportionately decreased, and, if the
Company shall at any time combine the
outstanding shares of Common Stock, the
Conversion Price then in effect
immediately before that combination shall
be proportionately increased. Any
adjustment under this section shall become
effective at the close of business on
the date the subdivision or combination
becomes effective.
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(b) Reclassification, Exchange and
Substitution. If the Common Stock issuable
upon conversion of this Note shall be
changed into the same or a different
number of shares of any other class or
classes of stock, whether by capital
reorganization, reclassification, or
otherwise (other than a subdivision or
combination of shares provided for above),
the holder of this Note shall, on its
conversion be entitled to receive in lieu
of the Common Stock which the Holder
would have become entitled to receive but
for such change, a number of shares of
such other class or classes of stock
equivalent to the number of shares of
Common Stock that would have been received
by the holder on conversion of this
Note immediately before that change.
(c) Reorganizations, Mergers,
Consolidations or Sale of Assets. If at any time
there shall be a capital reorganization of
the Company's Common Stock (other
than a combination, reclassification,
exchange, or subdivision of shares
provided for elsewhere above) or merger or
consolidation of the Company with or
into another corporation, or the sale of
the Company's properties and assets as,
or substantially as, an entirety to any
other person, then, as a part of such
reorganization, merger, consolidation or
sale, lawful provision shall be made so
that the holder of this Note shall
thereafter be entitled to receive upon
conversion of this Note, the number of
shares of Common Stock or other
securities or property of the Company, or
of the successor corporation resulting
from such merger or consolidation, to which
a holder of the Common Stock
deliverable upon conversion of this Note
would have been entitled in such
capital reorganization, merger, or
consolidation or sale if this Note had been
converted immediately before that capital
reorganization, merger, consolidation,
or sale. In any such case, appropriate
adjustment (as determined in good faith
by the Company's Board of Directors) shall
be made in the application of the
provisions
