Contract
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.
CONVERTIBLE
PROMISSORY NOTE
| Date: December 11, 2006 |
$
|
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.
X. Xxxxxxxxx
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 Xxxxxx’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.
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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 all of the Conversion Shares on the same terms and conditions (including
with respect to notice periods, provision of information, payment of expenses
and rights to indemnification) as are or will be set forth in the registration
rights agreement relating to the Series B Preferred Stock to be issued after
the
date hereof.
D. Mechanics
of Conversion.
(i) Automatic
Conversion.
In the
event of a conversion pursuant to the provisions of Section 5A hereof, Maker
shall deliver to the Holder at its address appearing on the records of Maker
a
written notice of the imminent conversion of this Note (the “Conversion
Notice”), requesting surrender of this Note for cancellation and written
instructions regarding the registration and delivery of certificates for the
Conversion Shares. In the event the Holder receives a Conversion Notice, the
Holder shall be required to surrender this Note for cancellation within five
business days of the Conversion Notice (the “Automatic Conversion Date”), but
the failure of the Holder so to surrender this Note shall not affect the
conversion of the outstanding Principal Amount into Conversion Shares, provided
that if the Note is not surrendered, an affidavit of lost Note shall be
provided. No holder of this Note shall be entitled upon conversion of this
Note
to have the Conversion Shares registered in the name of another person or entity
without first complying with all applicable restrictions on the transfer of
this
Note. In the event the Holder does not provide Maker with written instructions
regarding the registration and delivery of certificates for the Conversion
Shares, Maker shall issue such shares in the name of the Holder and shall
forward such certificates to the Holder at its address appearing on the records
of Maker. The person entitled to receive the Conversion Shares shall be deemed
to have become the holder of record of such shares at the close of business
on
the Conversion Date and the person entitled to receive share certificates for
the Conversion Shares shall be regarded for all corporate purposes after the
Conversion Date as the record holder of the number of Conversion Shares to
which
it is entitled upon the conversion. Maker may rely on record ownership of this
Note for all corporate purposes, notwithstanding any contrary notice. After
the
Conversion Date, this Note shall, until surrendered to Maker, represent the
right to receive the Conversion Shares; provided, however, that Maker shall
have
no obligation to issue the Conversion Shares until the Holder has delivered
either this Note or an affidavit of loss.
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E. Cash
Payments.
No
fractional shares (or scrip representing fractional shares) of Common Stock
shall be issued upon conversion of this Note. In the event that the conversion
of the Principal Amount of this Note would result in the issuance of a
fractional share of Common Stock Maker shall pay a cash adjustment in lieu
of
such fractional share to the holder of this Note based upon the Conversion
Price.
F. Stamp
Taxes, etc.
Maker
shall pay all documentary, stamp or other transactional taxes attributable
to
the issuance or delivery of shares of Common Stock upon conversion of this
Note;
provided, however, that Maker shall not be required to pay any taxes which
may
be payable in respect of any transfer involved in the issuance or delivery
of
any certificate for such shares in a name other than that of the holder of
this
Note, and Maker shall not be required to issue or deliver any such certificate
unless and until the person requesting the issuance thereof shall have paid
to
Maker the amount of such tax or shall have established to Maker’s satisfaction
that such tax has been paid.
G. Validity
of Stock.
All
shares of Series B Preferred Stock that may be issued upon conversion of this
Note will, upon issuance by Maker in accordance with the terms of this Note,
be
validly issued, free from all taxes and liens with respect to the issuance
thereof (other than those created by the holders), free from all pre-emptive
or
similar rights and fully paid and non-assessable.
6. Representations
and Warranties; Covenants; Acceleration of Maturity.
A. The
Maker
and Magical Insight Investments Ltd. (“Magical”) hereby represent and warrant
that the reverse merger by share exchange contemplated by the Share Exchange
Agreement dated as of September 6, 2006 between the Maker, Magical and the
shareholder of Magical named therein has been consummated on or prior to the
date hereof.
B. The
Maker
hereby covenants and agrees that Principal Amount hereof shall only be used
for
the working capital needs of Beihai Hi-Tech Wealth Technology Development Co.,
Ltd. (“HTW”), a subsidiary of Magical.
C. The
Maker
and HTW/Magical hereby covenant and agree that the business of the Maker and
HTW/Magical will at all times prior to the Maturity Dated be conducted in the
usual and ordinary course of business, other than with regards to any financing
transactions related to the reverse merger mentioned in Section 6A above or
any
disposal of the preexisting operations of the Maker as required by the terms
of
such reverse merger. In the event either Maker or HTW/Magical shall fail to
comply with this Section 6C, then the Maturity Date specified above may be
accelerated at the election of the Holder to a date not earlier than the date
of
such failure and all amounts due hereunder shall become due and payable
immediately, which obligation shall vest and become the direct financial
obligation of both Maker and HTW/Magical, on a joint and several
basis.
7. Amendments
and Waivers.
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A. No
failure or delay on the part of the Holder in exercising any power or right
under this Note shall operate as a waiver thereof, nor shall any single or
partial exercise of any such power or right preclude any other or further
exercise thereof or the exercise of any other power or right. No notice to
or
demand on Maker in any case shall entitle it to any notice or demand in similar
or other circumstances. No waiver or approval by the Holder shall, except as
may
be otherwise stated in such waiver or approval, be applicable to subsequent
transactions. No waiver or approval hereunder shall require any similar or
dissimilar waiver or approval thereafter to be granted hereunder.
B. To
the
extent that Maker makes a payment or payments to the Holder, and such payment
or
payments or any part thereof are subsequently for any reason invalidated, set
aside and/or required to be repaid to a trustee, receiver or any other party
under any bankruptcy law, state or federal law, common law or equitable cause,
then to the extent of such recovery, the obligation or part thereof originally
intended to be satisfied, and all rights and remedies therefor, shall be revived
and continued in full force and effect as if such payment had not been made
or
such enforcement or setoff had not occurred.
C. After
any
waiver, amendment or supplement under this section becomes effective, Maker
shall mail to the Holder a copy thereof.
8. Miscellaneous
A. Registered
Holder.
Maker
may consider and treat the person in whose name this Note shall be registered
as
the absolute owner thereof for all purposes whatsoever (whether or not this
Note
shall be overdue) and Maker shall not be affected by any notice to the contrary.
In case of transfer of this Note by operation of law, the transferee agrees
to
notify Maker of such transfer and of its address, and to submit appropriate
evidence regarding such transfer so that this Note may be registered in the
name
of the transferee. This Note is transferable only on the books of Maker by
the
Holder hereof, in person or by attorney, on the surrender hereof, duly endorsed.
Communications sent to any registered owner shall be effective as against all
Holders or transferees of the Note not registered at the time of sending the
communication.
B. Governing
Law.
This
Note shall be governed by and construed in accordance with the laws of the
State
of New York. Sections 5-1401 and 5-1402 of the General Obligations Law of the
State of New York shall apply to this Note and Maker hereby waives any right
to
stay or dismiss on the basis of forum non conveniens
any
action or proceeding brought before the courts of the State of New York sitting
in New York County or of United States of America for the Southern District
of
New York and hereby submits to the jurisdiction of such courts.
C. Notices.
Unless
otherwise provided, all notices required or permitted under this Note shall
be
in writing and shall be deemed effectively given (i) upon personal delivery
to
the party to be notified, (ii) upon confirmed delivery by Federal Express or
other nationally recognized courier service providing next-business-day
delivery, or (iii) three business days after deposit with the United States
Postal Service, by registered or certified mail, postage prepaid and addressed
to the party to be notified, in each case at the address set forth below, or
at
such other address as such party may designate by written notice to the other
party (provided that notice of change of address shall be effective upon receipt
by the party to whom such notice is addressed).
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If
sent
to Holder, notices shall be sent to the address set forth in the Subscription
Agreement.
If
sent
to Maker, notices shall be sent to the following address:
Suite
2021, 20F, Two Pacific Place
00
Xxxxxxxxx
Hong
Kong
Attention:
Xxxxx Xx
D. Parties
in Interest.
All
covenants, agreements and undertakings in this Note binding upon Maker or the
Holder shall bind and inure to the benefit of the successors and permitted
assigns of Maker and the Holder, respectively, whether so expressed or
not.
X. Xxxxxx
of Jury Trial.
THE
HOLDER AND MAKER HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY
RIGHTS THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED
HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS NOTE OR ANY OTHER
DOCUMENT OR INSTRUMENT EXECUTED AND DELIVERED IN CONNECTION HEREWITH, OR ANY
COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN),
OR
ACTIONS OF THE HOLDER OR MAKER. THIS PROVISION IS A MATERIAL INDUCEMENT FOR
THE
HOLDER’S PURCHASING THIS NOTE.
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IN
WITNESS WHEREOF, Maker has caused this Note to be signed in its name by its
duly
authorized officer.
| GENERAL COMPONENTS, INC. | ||
| |
|
|
| By: | ||
|
Name:
Xxxxx Xxxxxxx
Title:
Chief Executive Officer
|
||
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