ex402.htm


    Exhibit
4.02

     

    THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR THE SECURITIES LAWS OF ANY
STATE AND MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT UNDER APPLICABLE FEDERAL AND STATE SECURITIES LAWS OR
PURSUANT TO AN APPLICABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO,
THE REGISTRATION REQUIREMENTS OF THE ACT AND IN ACCORDANCE WITH APPLICABLE STATE
SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO
SUCH EFFECT, WHICH OPINION SHALL BE REASONABLY ACCEPTABLE TO THE
ISSUER.

     

    AMBER
READY, INC.

     

    18% SUBORDINATED SECURED
CONVERTIBLE NOTE

     

    
    

     

    
      	$____________	 Rockaway, New
      Jersey


    

     

    Dated as
of:  June 30, 2009

     

    In consideration of the receipt of
$_________, the
undersigned, AMBER Ready, Inc., a Nevada corporation (“Issuer”), hereby promises
to pay, in accordance with the Subscription Agreement (the “Subscription
Agreement”), dated as of June 30, 2009, by and between Issuer and ____________
(“Purchaser”), on June 30, 2012 (the “Maturity Date”), the principal amount of
__________ ($_______) Dollars, unless this Note is earlier converted into Units
(as defined in Section 1.1(b) below) in accordance with Section 1.2 or Section
3, and interest shall accrue hereon from the date hereof and be payable as
provided herein, unless earlier converted in accordance with Section 1.2 or
Section 3 hereof or earlier repaid in accordance with Section 1.4
hereof.

     

    This Note is the subordinated secured
convertible promissory note referred to in the Subscription Agreement and is
entitled to the benefits thereof, is secured as provided in the Security
Agreement (as defined herein) and is subject to conversion as set forth in
Section 1.2 hereof.  This Note, and all representations, warranties,
covenants and agreements contained in the Subscription Agreement, shall be
binding upon Issuer and its successors and assigns.

     

    This Note is one of a series of
subordinated secured convertible promissory notes of like tenor and ranking
(collectively, the “Subordinated Notes” or the “Notes”) made by the Issuer in
favor of certain investors dated of even date herewith, and issued, from time to
time, on and after the date hereof, all upon terms set forth in that certain
Confidential Private Placement Memorandum, dated June 10, 2009, as same may be
amended or supplemented from time to time (the “Memorandum”), which have been
issued by the Issuer.

     

    By its execution of the Subscription
Agreement in the form attached to the Memorandum as Annex A, the
Purchaser has authorized Hudson Asset Partners, LLC, a Delaware limited
liability company, to act as collateral agent (the “Collateral Agent”) on behalf
of the Purchaser and other purchasers of the Notes, and in such capacity to
enter into a Security Agreement with the Issuer, as the same may be amended,
modified, restated or supplemented from time to time (the “Security Agreement”),
and to exercise for the benefit of the Purchaser all rights, powers and remedies
provided to it, under or pursuant to the Security Agreement including, without
limitation, those available upon a Default Event (as defined in Section 2
hereof), subject always to the terms, conditions, limitations and restrictions
provided in the Security Agreement.

     

    
      
        
        

      

      
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    1.           Terms of the
Note.

     

    1.1           Interest; Interest Rate;
Payment.

     

    (a) This Note shall bear interest at
the rate of eighteen (18%) percent (the “Interest Rate”) per annum based on a
360-day year.  Interest shall be payable quarterly in arrears, with
the first such payment of interest due and payable on the first business day of
the first calendar quarter following the issuance of this Note, and subsequent
payments of interest shall be due and payable on the first business day (each,
an “Interest Payment Date”) of each calendar quarter thereafter.

     

    (b) Issuer, at its option, may pay
interest in either (i) cash or (ii) units (“Units”) of its securities. Each Unit
will consist of (i) one share of common stock, par value $0.0001 per share
(“Common Stock”) of the Issuer (the “Shares”) and (ii) three (3) common stock
purchase warrants to purchase three (3) shares of Common Stock, exercisable for
a period of five (5) years at an exercise price of $1.50 per share (the
“Warrants”) provided however, that no interest payments hereunder shall be made
in cash during any such time as Issuer has elected to make interest payments
under the Senior Notes (as hereinafter defined) in the units that the Senior
Notes are convertible into.  If Issuer is paying interest through the
issuance of Units, it shall do so at the Unit Conversion Price, as defined
below.  No fractional Units shall be issued as interest.  In
lieu of any fractional securities underlying the Units to which Purchaser would
otherwise be entitled, Issuer shall round up as nearly as practicable to the
nearest whole number the number of Units to be issued as interest.

     

    (c) All monetary payments to be made by
Issuer hereunder shall be made in lawful money of the United States by check or
wire transfer of immediately available funds.

     

    (d) If all or a portion of the
principal amount of this Note or any interest payable thereon shall not be
repaid when due, whether on the Maturity Date, by acceleration or otherwise,
such overdue amounts shall bear interest at a rate per annum that is three (3%)
percent above the Interest Rate (i.e., 21%) from the
date of such non-payment until such amount is paid in full (as well after as
before judgment).

     

    1.2           Mandatory
Conversion.  In addition to the optional conversion provisions
set forth in Section 3 hereof, upon the addition by Issuer, at any time within
18 months after April 1, 2009 (the “Measuring Date”), of 500,000 new Qualified
Subscribers (as hereinafter defined) and (ii) Issuer being Cash Flow Positive
(as hereinafter defined) no later than the Measuring Date (the addition of such
minimum number of new Qualified Subscribers and Issuer being Cash Flow Positive
no later than the Measuring Date are collectively referred to as the
“Conditions”), the entire principal of and all interest accrued and owing on
this Note shall automatically be converted, without any action on the part of
Purchaser, into Units at the Unit Conversion Price (as defined hereinafter), as
of the date of the Issuer achieving the Conditions.  A Qualified
Subscriber shall mean a subscriber for Issuer’s services who has paid at least
$25.00 to Issuer during the 18 months preceding the Measuring
Date.  Issuer being “Cash Flow Positive” no later than the Measuring
Date shall mean that during any three month period prior to the Measuring Date,
Issuer’s business, operated in the ordinary course consistent with past
practice, has generated cash receipts during such period in excess of Issuer’s
cash disbursements during such period.  Issuer will notify Purchaser
of the achievement of the Conditions within a reasonable period of time
thereafter.  For purposes hereof, the “Unit Conversion Price” shall
mean $1.00 per Unit.  Upon conversion, Purchaser shall be entitled to
receive the number of Units calculated by dividing all principal and interest
accrued and owing on this Note by the Unit Conversion Price.  No
fractional Units shall be issued upon conversion.  In lieu of any
fractional securities underlying the Units to which Purchaser would otherwise be
entitled, Issuer shall, at its option, (i) pay cash in an amount equal to such
fraction multiplied by the Unit Conversion Price or (ii) round up as nearly as
practicable to the nearest whole number the number of Units to be
issued.

     

    
      
        
        

      

      
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    1.3           Conversion
Procedures.  Upon conversion of this Note as provided in
Section 1.2 hereof, Purchaser shall surrender this Note, appropriately endorsed,
to Issuer at Issuer’s principal office, accompanied by written notice to Issuer
setting forth the name or names (with address(es)) in which the Units issuable
upon such conversion shall be issued and registered on the books of
Issuer.  For purposes hereof, the “Conversion Date” shall be deemed to
be the date of the Issuer achieving the Conditions.  Within a
reasonable period of time after the Conversion Date, Issuer shall deliver to
Purchaser instruments representing the Units.  This Note shall be
marked cancelled on the books of Issuer as of the Conversion Date, whether or
not surrendered.

     

    1.4           Payment Rights Upon Merger,
Consolidation, Etc.  If, at any time, prior to the Maturity
Date, Issuer proposes to consolidate with, or merge into, another corporation or
entity, or to effect any sale or conveyance to another corporation or other
entity of all or substantially all of the assets of Issuer, or effect any other
corporate reorganization, in which the stockholders of Issuer immediately prior
to such consolidation, merger, reorganization or sale would own capital stock of
the entity surviving such merger, consolidation, reorganization or sale
representing less than fifty (50%) percent of the combined voting power of the
outstanding securities of such successor or combined entity immediately after
such consolidation, merger, reorganization or sale (a “Liquidation Event”), then
Issuer shall provide Purchaser with at least ten (10) days’ prior written notice
of any such proposed action, and Purchaser will, at its option, have the right
to demand immediate payment of all amounts due and owing under this
Note.  Purchaser will give Issuer written notice of such demand within
five (5) days after receiving notice of the Liquidation Event.  All
amounts (including all accrued and unpaid interest) due and owing under this
Note shall be paid by Issuer to Purchaser within five (5) days from the date of
such written notice by Purchaser via wire transfer(s) of immediately available
funds, in accordance with written instructions provided to Issuer by
Purchaser.

     

    1.5           Other
Assurances.  Issuer shall not, by amendment of its Articles of
Incorporation or By-laws or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issuance or sale of securities or any other
voluntary action, avoid or seek to avoid the observance or performance of any of
the terms to be observed or performed hereunder by Issuer, but shall at all
times in good faith assist in the carrying out of all the provisions of this
Note and in taking of all such actions as may be necessary or appropriate in
order to protect the rights of Purchaser herein against impairment.

     

    
      
        
        

      

      
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    1.6           Security Interest;
Subordination.

     

    (a)           This
Note shall be secured by a second lien on the assets of the Issuer, as set forth
herein and in the Security Agreement.

     

    (b)           Issuer
has previously issued $11,999,982.00 principal amount (the “Senior Principal
Amount”) of 18% senior convertible secured promissory notes (the “Senior
Notes”), the holders of which Senior Notes have a first priority lien and
security interest in and to the assets of Issuer which is senior to the lien and
security interest granted by Issuer to the Collateral Agent under the Security
Agreement. The security interest to be granted for the benefit of the Purchaser
and other holders of Subordinated Notes shall be subordinate to the security
interest for the benefit of the holders of the Senior Notes, on the terms set
forth herein and in the Security Agreement.

    


    (c)           All
obligations of the Issuer to the holders of Senior Notes under the terms of the
Senior Notes, howsoever created, arising or evidenced, whether direct or
indirect, absolute or contingent or now or hereafter existing, or due or to
become due, are referred to as “Senior Liabilities”.  All obligations
of Issuer to the Purchaser and other holders of the Subordinated Notes under the
terms thereof (in each case, including any interest, fees or penalties related
thereto), howsoever created, arising or evidenced, whether direct or indirect,
absolute or contingent or now or hereafter existing, or due or to become due,
are referred to as “Junior Liabilities”.  It is expressly understood
and agreed that the term “Senior Liabilities” shall include, without limitation,
any and all interest, fees and penalties accruing on any of the Senior
Liabilities after the commencement of any proceedings referred to in
subparagraph (f) below, notwithstanding any provision or rule of law that might
restrict the rights of the holder of Senior Notes, as against Issuer, to collect
such interest, fees or penalties, as the case may be.

     

    (d)           Except
as expressly otherwise provided herein (or as the holders of Senior Notes may
otherwise expressly consent in writing), the payment of the Junior Liabilities
shall be postponed and subordinated to the payment in full of all Senior
Liabilities. Furthermore, no payments or other distributions whatsoever in
respect of any Junior Liabilities shall be made, nor shall any property or
assets of Issuer be applied to the purchase or other acquisition or retirement
of any Junior Liability.  Notwithstanding anything to the contrary
contained in this paragraph or elsewhere herein, Issuer may make regularly
scheduled principal and interest payments, as the case may be, to the holders of
the Subordinated Notes, so long as (i) no Event of Default (as defined in the
Senior Notes) has occurred and is continuing at the time of any such payment and
(ii) the amount of such regularly scheduled principal payments and the rate of
interest, in each case, with respect to the Subordinated Notes is not increased
from that in effect on the date hereof.

     

    (e)           Purchaser
and each subsequent holder of this Subordinated Note hereby subordinates all
security interests that have been, or may be, granted by Issuer to the
Collateral Agent in respect of the Junior Liabilities, to the security interests
granted by Issuer in respect of the Senior Liabilities.

     

    
      
        
        

      

      
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    (f)           In
the event of any dissolution, winding up, liquidation, readjustment,
reorganization or other similar proceedings relating to Issuer or to its
creditors, as such, or to its property (whether voluntary or involuntary,
partial or complete, and whether in bankruptcy, insolvency or receivership, or
upon an assignment for the benefit of creditors, or any other marshalling of the
assets and liabilities of Issuer, or any sale of all or substantially all of the
assets of Issuer, or otherwise), the Senior Liabilities shall first be paid in
full before any holder of Subordinated Notes shall be entitled to receive and to
retain any payment or distribution in respect of any Junior
Liability.

     

    (g)         The
holders of Senior Notes may, from time to time, at their sole discretion and
without notice to any holder of Subordinated Notes, take any or all of the
following actions:  (a) retain or obtain a security interest in any
property to secure any of the Senior Liabilities; (b) retain or obtain the
primary or secondary obligation of any other obligor or obligors with respect to
any of the Senior Liabilities; (c) extend or renew for one or more periods
(whether or not longer than the original period), alter or exchange any of the
Senior Liabilities, or release or compromise any obligation of any nature of any
obligor with respect to any of the Senior Liabilities; and (d) release its
security interest in, or surrender, release or permit any substitution or
exchange for, all or any part of any property securing any of the Senior
Liabilities, or extend or renew for one or more periods (whether or not longer
than the original period) or release, compromise, alter or exchange any
obligations of any nature of any obligor with respect to any such property,
provided however, that at no time shall the principal amount under the Senior
Liabilities exceed the Senior Principal Amount.

     

    (i)           No
delay on the part of the holders of Senior Notes or their representatives or
agents in the exercise of any right or remedy shall operate as a waiver of such
right or remedy, and no single or partial exercise by the holders of Senior
Notes of any right or remedy shall preclude other or further exercise of such
right or remedy or the exercise of any other right or remedy; nor shall any
modification or waiver of any of the provisions hereof be binding upon the
holders of Senior Notes except as expressly set forth in a writing duly signed
and delivered on behalf of the holders of Senior Notes.

     

    (j)           No
claim or defense as to the invalidity or unenforceability of the provisions of
this Section 1.6 shall affect or impair the agreements and obligations of any
holder of Subordinated Notes under this Section 1.6.

     

    (k).         This
Section 1.6  shall be binding upon Purchaser and each subsequent
holder of Subordinated Notes and upon the heirs, legal representatives,
successors and assigns of Purchaser and each subsequent holder of Subordinated
Notes, and shall inure to the benefit of, and be enforceable by, the successors
and assigns of the holders of Senior Notes.

     


    
      
         


      

      
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    2.           Events of
Default.  If any of the following events (each, a “Default
Event”) shall occur and be continuing:

     

    (i)           Issuer
shall fail to pay any amount payable under this Note, including but limited to
installments of interest and/or principal, within three (3) business days after
such payment becomes due (at the Maturity Date, an Interest Payment Date or
other date) in accordance with the terms hereof;

     

    (ii)           Issuer
shall fail to pay when due (following the expiration of applicable notice and
cure periods), whether upon acceleration, prepayment obligation or otherwise,
any indebtedness for money due, individually or in the aggregate, involving an
amount in excess of $50,000;

     

    (iii)           Any
representation, warranty, covenant or agreement made by Issuer in the
Subscription Agreement, the Security Agreement, the Placement Agent Agreement
between Issuer and the Placement Agent or this Note was incorrect in any
material respect on or as of the date made;

     

    (iv)           Issuer
shall default, in any material respect, in the observance or performance of any
other agreement contained in this Note or any other agreement or instrument
contemplated by this Note or the Subscription Agreement, and such default shall
continue unremedied for a period of fifteen (15) days after written notice to
Issuer of such default;

     

    (v)           (a)
Issuer shall commence any case, proceeding or other action (x) under any
existing or future law of any jurisdiction, domestic or foreign, relating to
bankruptcy, insolvency, reorganization, conservatorship or relief of debtors,
seeking to have an order for relief entered with respect to it, or seeking to
adjudicate it a bankrupt or insolvent, or seeking reorganization, arrangement,
adjustment, winding-up, liquidation, dissolution, composition or other relief
with respect to it or its debts, or (y) seeking appointment or a receiver,
trustee, custodian, conservator or other similar official for it or for all or
any substantial part of its assets, or Issuer shall make a general assignment
for the benefit of its creditors; or (b) there shall be commenced against Issuer
any case, proceeding or other action of a nature referred to in clause (a) above
that (A) results in the entry of an order for relief of any such adjudication of
appointment or (B) remains undismissed, undischarged or unbonded for a period of
ninety (90) days; or (c) there shall be commenced against Issuer any case,
proceeding other action seeking issuance of a warrant of attachment, execution,
distrait or similar process against all or any substantial part of its assets
that results in the entry of an order for any such relief which shall not have
been vacated, discharged, or stayed or bonded pending appeal within ninety (90)
days from the entry thereof; or (d) Issuer shall take any action in furtherance
of, or indicating its consent to, approval of, or acquiescence in any of the
acts set forth in clauses (a), (b) or (c) above; or (e) Issuer shall generally
not, or shall be unable to, or shall admit in writing its inability to, pay its
debts as they become due, then, and in any such event, (x) if such event is a
Default Event specified in subsection (v) above of this Section 2, automatically
this Note (with all accrued and unpaid interest thereon) and all other amounts
owing under this Note shall immediately become due and payable, and (y) if such
event is any other Default Event, Purchaser may, by written notice to Issuer,
declare this Note (with all accrued and unpaid interest thereon) and all other
amounts owing under this Note to be due and payable forthwith, whereupon the
same shall immediately become due and payable.  Except as expressly
provided above in this Section 2, presentation, demand, protest and all other
notices of any kind are hereby expressly waived by Issuer.

     

    
      
        
        

      

      
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    3.           Conversion.

     

    3.1           Optional
Conversion.  The Purchaser shall be entitled, at its option, to
convert all or any part of the principal amount, plus accrued but unpaid
interest, of the Note into Units at the Unit Conversion Price.  No
fractional Units shall be issued upon conversion.  In lieu of any
fractional securities underlying the Units to which Purchaser would otherwise be
entitled, Issuer shall, at its option, (i) pay cash in an amount equal to such
fraction multiplied by the Unit Conversion Price or (ii) round up as nearly as
practicable to the nearest whole number the number of Units to be issued.  To convert this Note,
the Purchaser hereof shall deliver written notice thereof, substantially in the
form of Exhibit A to this Note, with appropriate insertions (the
“Conversion Notice”), to the Issuer at its address as set forth
herein.  The date upon which the conversion shall be effective (the
“Conversion Date”) shall be deemed to be the date set forth in the Conversion
Notice.  Any conversion of any portion of the Note to Units shall be
deemed to be a pre-payment of principal, without any penalty, and shall be
credited against any future payments of principal in the order that such
payments become due and payable.

    


    3.2           Reservation of Common
Stock.  The Issuer shall reserve and keep available out of its
authorized but unissued shares of Common Stock, solely for the purpose of
conversion of this Note and the exercise of the Warrants, that number of shares
of Common Stock equal to the sum of (i) the number of shares of Common Stock
included in the Units into which the Note is convertible based upon the
Conversion Price, plus (ii) the number of shares of Common Stock for which the
Warrants are exercisable from time to time based upon the Warrant exercise price
in effect at the Conversion Date.

    


    3.3.           Adjustment of Conversion
Price.

     

    (a)           The
Conversion Price shall be subject to adjustment from time to time upon the
occurrence of certain events described in this Section 3.3; provided, that
notwithstanding the provisions of this Section 3.3, the Issuer shall not be
required to make any adjustment if and to the extent that such adjustment would
require the Issuer to issue a number of shares of Common Stock in excess of its
authorized but unissued shares of Common Stock, less all amounts of Common Stock
that have been reserved for issue upon the conversion of all outstanding
securities convertible into shares of Common Stock and the exercise of all
outstanding options, warrants and other rights exercisable for shares of Common
Stock.  If the Issuer does not have the requisite number of authorized
but unissued shares of Common Stock to make any adjustment, the Issuer shall use
its commercially best efforts to obtain the necessary stockholder consent to
increase the authorized number of shares of Common Stock to make such an
adjustment pursuant to this Section 3.3.

     

                          (i)           Subdivision or Combination
of Stock. In case the Issuer shall at any time subdivide (whether by way
of stock dividend, stock split or otherwise) its outstanding shares of Common
Stock into a greater number of shares, the Conversion Price in effect
immediately prior to such subdivision shall be proportionately reduced, and
conversely, in case the outstanding shares of Common Stock of the Issuer shall
be combined (whether by way of stock combination, reverse stock split or
otherwise) into a smaller number of shares, the Conversion Price in effect
immediately prior to such combination shall be proportionately
increased.  The Conversion Price shall be readjusted in the same
manner upon the happening of any successive event or events described in this
Section 3.3(a)(i).

     

    
      
        
        

      

      
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                          (ii)           Dividends in Stock,
Property, Reclassification. If at any time, or from time to time, all of
the holders of Common Stock (or any shares of stock or other securities at the
time receivable upon the conversion of this Note) shall have received or become
entitled to receive, without payment therefore:

    


                                    (A)           any
shares of stock or other securities that are at any time directly or indirectly
convertible into or exchangeable for Common Stock, or any rights or options to
subscribe for, purchase or otherwise acquire any of the foregoing by way of
dividend or other distribution, or

    


                                    (B)           additional
stock or other securities or property (including cash) by way of spin-off,
split-up, reclassification, combination of shares or similar corporate
rearrangement (other than shares of Common Stock issued as a stock split or
adjustments in respect of which shall be covered by the terms of Section
3.3(a)(i) above),

    


    then and in each such case, the
Conversion Price shall be adjusted proportionately, and the Purchaser hereof
shall, upon the conversion of this Note, be entitled to receive, in addition to
the number of shares of Common Stock receivable thereupon, and without payment
of any additional consideration therefor, the amount of stock and other
securities and property (including cash in the cases referred to above) that
such Purchaser would hold on the date of such conversion had such Purchaser been
the holder of record of such Common Stock as of the date on which holders of
Common Stock received or became entitled to receive such shares or all other
additional stock and other securities and property.  The Conversion
Price shall be readjusted in the same manner upon the happening of any
successive event or events described in this Section 3.3(a)(ii).

    


                          (iii)           Reorganization,
Reclassification, Consolidation, Merger or Sale. If any recapitalization,
reclassification or reorganization of the capital stock of the Issuer, or any
consolidation or merger of the Issuer with another corporation, or the sale of
all or substantially all of its assets or other transaction shall be effected in
such a way that holders of Common Stock shall be entitled to receive stock,
securities, or other assets or property (an “Organic Change”), then, as a
condition of such Organic Change, lawful and adequate provisions shall be made
by the Issuer whereby the Purchaser hereof shall thereafter have the right to
purchase and receive (in lieu of the shares of the Common Stock of the Issuer
immediately theretofore purchasable and receivable upon the conversion of the
rights represented by this Note) such shares of stock, securities or other
assets or property as may be issued or payable with respect to or in exchange
for a number of outstanding shares of such Common Stock equal to the number of
shares of such stock immediately theretofore purchasable and receivable assuming
the full exercise of the rights represented by this Note. In the event of any
Organic Change, appropriate provision shall be made by the Issuer with respect
to the rights and interests of the Purchaser of this Note to the end that the
provisions hereof (including, without limitation, provisions for adjustments of
the Conversion Price and of the number of shares receivable upon the conversion
of this Note) shall thereafter be applicable, in relation to any shares of
stock, securities or assets thereafter deliverable upon the conversion hereof.
The Issuer will not effect any such consolidation, merger or sale unless, prior
to the consummation thereof, the successor corporation (if other than the
Issuer) resulting from such consolidation or merger or the corporation
purchasing such assets shall assume by written instrument reasonably
satisfactory in form and substance to the Purchaser executed and mailed or
delivered to the registered Purchaser hereof at the last address of such
Purchaser appearing on the books of the Issuer, the obligation to deliver to
such Purchaser such shares of stock, securities or assets as, in accordance with
the foregoing provisions, such Purchaser may be entitled to purchase. If there is an Organic Change, then the Issuer shall
cause to be mailed to the Purchaser at its
last address as it shall appear on the books and records of the Issuer, at least
10 calendar days before the effective date of the Organic Change, a notice
stating the date on which such Organic Change is expected to become effective or
close, and the date as of which it is expected that holders of the Common Stock
of record shall be entitled to exchange their shares for securities, cash, or
other property delivered upon such Organic Change; provided, that the failure to mail such notice or any defect
therein or in the mailing thereof shall not affect the validity of the corporate
action required to be specified in such notice.  The Purchaser
is entitled to convert this Note during the 10-day
period commencing on the date of such notice to the effective date of the event
triggering such notice.  In any event, the successor
corporation (if other than the Issuer) resulting from such consolidation or
merger or the corporation purchasing such assets shall be deemed to assume such
obligation to deliver to such Purchaser such shares of stock, securities or
assets even in the absence of a written instrument assuming such obligation to
the extent such assumption occurs by operation of law.

     

    
      
        
        

      

      
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                          (iv)           Adjustment of Conversion
Price Upon Issuance of Additional Shares of Common Stock. In the event
Issuer shall at any time prior to the Maturity Date, while this Note remains
outstanding, issue Additional Shares of Common Stock, as defined below, without
consideration or for a consideration per share less than the Conversion Price in
effect immediately prior to such issue, then the Conversion Price shall be
reduced, concurrently with such issue, to a price (calculated to the nearest
cent) determined by multiplying such Conversion Price by a fraction, (A) the
numerator of which shall be (1) the number of shares of Common Stock outstanding
immediately prior to such issue plus (2) the number of shares of Common Stock
which the aggregate consideration received or to be received by the Company for
the total number of Additional Shares of Common Stock so issued would purchase
at such Conversion Price; and (B) the denominator of which shall be the number
of shares of Common Stock outstanding immediately prior to such issue plus the
number of such Additional Shares of Common Stock so issued; provided that, (i)
for the purpose of this Section 3(a)(iv), all shares of Common Stock issuable
upon conversion or exchange of convertible securities outstanding immediately
prior to such issue shall be deemed to be outstanding, and (ii) the number of
shares of Common Stock deemed issuable upon conversion or exchange of such
outstanding convertible securities shall be determined without giving effect to
any adjustments to the conversion or exchange price or conversion or exchange
rate of such convertible securities resulting from the issuance of Additional
Shares of Common Stock that is the subject of this calculation.  For
purposes of this Warrant, “Additional Shares of Common Stock” shall mean all
shares of Common Stock issued by Issuer after the issuance of this Note
(including without limitation any shares of Common Stock issuable upon
conversion or exchange of any convertible securities or upon exercise of any
option or warrant, on an as-converted basis), other than: (i) shares of Common
Stock issued or issuable upon conversion or exchange of any convertible
securities or exercise of any options or warrants outstanding on the date of
issuance of this Note; (ii) shares of Common Stock issued or issuable by reason
of a dividend, stock split, split-up or other distribution on shares of Common
Stock that is covered by Sections 3(a)(i) through 3(a)(iii) above; (iii) shares
of Common Stock (or options with respect thereto) issued or issuable to
employees or directors of, or consultants to, the Company or any of its
subsidiaries pursuant to a plan, agreement or arrangement approved by the Board
of Directors of the Company; (iv) any securities issued or issuable by the
Company pursuant to the transactions contemplated by the
Memorandum.  The provisions of this Section 3(a)(iv) shall not operate
to increase the Conversion Price.

    


    (b)           Certificate as to
Adjustments. Upon the occurrence of each adjustment or readjustment
pursuant to this Section 3.3, the Issuer at its expense shall promptly compute
such adjustment or readjustment in accordance with the terms hereof and furnish
to each Purchaser of this Note a certificate setting forth such adjustment or
readjustment and showing in detail the facts upon which such adjustment or
readjustment is based. The Issuer shall promptly furnish or cause to be
furnished to such Purchaser a like certificate setting forth such adjustments
and readjustments and the Conversion Price.

     

    (c)           Certain Events. If
any event occurs as to which the other provisions of this Section 3.3 are not
strictly applicable but the lack of any adjustment would not fairly protect the
conversion rights of the Purchaser under this Note in accordance with the basic
intent and principles of such provisions, or if strictly applicable would not
fairly protect the conversion rights of the Purchaser under this Note in
accordance with the basic intent and principles of such provisions, then the
Issuer's Board of Directors will, in good faith, make an appropriate adjustment
to protect the rights of the Purchaser; provided, that no
such adjustment pursuant to this Section 3.3 will increase the Conversion Price
as otherwise determined pursuant to this Section 3.3.

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

    4.  Miscellaneous.

     

    4.1           Interest
Rate.  Any interest payable hereunder that is in excess of the
maximum interest rate permitted under applicable law shall be reduced to the
maximum interest rate permitted under such applicable law.

     

    4.2           Notices.  All
notices and other communications hereunder shall be in writing and shall be
deemed to have been given when delivered by hand or by facsimile transmission,
when telexed, or upon receipt when mailed by registered or certified mail
(return receipt requested), postage prepaid, to the parties at the following
addresses (or at such other address for a party as shall be specified by like
notice):

     

    If to
Issuer:

    


    AMBER
Ready, Inc.

    101
Roundhill Drive

    Rockaway,
New Jersey 07866

    Attn:  Kai
D. Patterson, CEO

    Facsimile:
(973) 532-0794

    


    With a
copy (which copy shall not constitute notice) to:

    


    Sichenzia
Ross Friedman Ference LLP

    61
Broadway, 32nd
Floor

    New York,
New York 10006

    Attn:  Marc
J. Ross, Esq.

    Facsimile:
(212) 930-9725

    


    If to Purchaser at
its address as furnished in the Subscription Agreement.

    


    4.3           Further
Indebtedness.  With the exception of the Senior Notes, no
indebtedness of the Issuer is senior to this Note in right of payment, whether
with respect to interest, damages or upon liquidation or dissolution or
otherwise.  Without the Purchaser’s consent, the Issuer will not,
directly or indirectly, enter into, create, incur, assume or suffer to exist any
indebtedness of any kind, on or with respect to any of its property or assets
now owned or hereafter acquired or any interest therein or any income or profits
there from that is senior or pari passu in any respect to the obligations of the
Issuer under this Note.

     

    4.4           Entire Agreement; Exercise
of Rights. (a) This Note embodies the entire agreement and understanding
of the parties hereto with respect to the subject matter hereof.  No
amendment of any provision of this Note shall be effective unless it is in
writing and signed by each of the parties; and no waiver of any provision of
this Note, nor consent to any departure by either party from it, shall be
effective unless it is in writing and signed by the affected party, and then
such waiver or consent shall be effective only in the specific instance and for
the specific purpose for which given.

     

    (b) No failure on the part of a party
to exercise, and no delay in exercising, any right under this Note, or any
agreement contemplated hereby, shall operate as a waiver hereof by such party,
nor shall any single or partial exercise of any right under this Note, or any
agreement contemplated hereby, preclude any other or further exercise thereof or
the exercise of any other right.

     

    4.5           Governing Law. This
Note shall be governed by and construed in accordance with the laws of the State
of New York applicable to agreements made and to be performed entirely within
such state.

     

    4.6           
Transferability. This
Note shall not be transferable in any manner without the express written consent
of Issuer, which consent may not be unreasonably withheld.

     


    
      
         


      

      
        10

        
          

        

      

      
         


      

    


    IN WITNESS WHEREOF, the parties hereto
have executed this Note on the date first above written.

     

     

    
      
        	 	
                AMBER
      READY, INC.

              	 
	 	 	 	 
	
                 

              	
                By:
      

              	/s/ 	 
	 	 	
                Name:
      Kai D. Patterson

                Title:
      Chief Executive Officer

              	 
	 	 	 	 
	 	 	 	 


      

    

     

    


    



    
      
         


      

      
        11

        
          

        

      

      
         


      

    

     

     

    EXHIBIT
“A”

     

     

    NOTICE OF
CONVERSION

     

     

    (To
be executed by the Holder in order to convert the Note)

     

    


    
      	
              TO:

            	 
      


    

    


    The
undersigned hereby irrevocably elects to convert $ of the principal amount of the above Note, as
well as all accrued but unpaid interest on such converted principal amount as of
the date hereof, into Units of AMBER Ready, Inc. according to the conditions
stated therein, as of the Conversion Date written below.

     

    
      	
              Conversion
      Date:

            	 
      
	 	 
	
              Signature:

            	 
      
	 	 
	
              Name:

            	 
      
	 	 
	
              Address:

            	 
      
	 	 
	
              Principal
      amount to be converted:

            	
              $                                                                                      

            
	 	 
	
              Principal
      amount of Note unconverted:

            	
              $                                                                                      

            
	 	 
	
              Please
      issue the shares of Common Stock and the Warrants in the following name
      and to the following address:

            	 
      
	 	 
	
              Issue
      to:

            	 
      
	 	 
	
              Authorized
      Signature:

            	 
      
	 	 
	
              Name:

            	 
      
	 	 
	
              Title:

            	 
      
	 	 
	
              Phone
      Number:

            	 
      
	 	 
	
              Broker
      DTC Participant Code:

            	 
      
	 	 
	
              Account
      Number:

            	 
      


    

     

    


    


     

     

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