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EXHIBIT 10.2
THIS PROMISSORY NOTE AND THE SECURITIES OBTAINABLE UPON
CONVERSION
HEREOF (COLLECTIVELY, THE "SECURITIES") HAVE NOT BEEN REGISTERED
UNDER
THE SECURITIES ACT OF 1933, AS AMENDED ("THE ACT"), OR THE
SECURITIES
LAWS OF ANY STATE. THE SECURITIES MAY NOT BE PLEDGED, SOLD,
ASSIGNED OR
TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT
UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS OR PURSUANT
TO AN
APPLICABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF SUCH
ACT AND
SUCH LAWS.
8% SENIOR SECURED CONVERTIBLE PROMISSORY NOTE
U.S. $400,000.00 April 22, 2005
FOR VALUE RECEIVED, Continental Beverage and Nutrition, Inc.,
a
Delaware corporation (the "Company"), hereby promises to pay to
the order of
Cornell Capital Partners, L.P. (the "Lender") the principal
amount of Four
Hundred Thousand ($400,000) Dollars (the "Principal Amount"),
together with
interest on the Principal Amount under this senior secured
convertible
promissory note (this "Note") at the per annum rate of eight
(8%) percent
(calculated daily on the basis of a 360-day year and actual
calendar days
elapsed). Subject to conversion as provided herein, the
Principal Amount and all
accrued interest on this Note shall become due and payable in
one installment on
April 1, 2006 (the "Maturity Date").
Both the Principal Amount and accrued interest shall be paid
in lawful money of the United States of America to the Lender at
101 Hudson
Street, Suite 3700, Jersey City, NJ 07302 or at such other
address as the Lender
may designate by notice in writing to the Company per Section 14
below, in
immediately available funds.
If any payment hereunder falls due on a Saturday, Sunday or
legal
holiday, it shall be payable on the next succeeding business day
and such
additional time shall be included in the computation of
interest.
This Note is issued pursuant to that certain Note Purchase
Agreement by
and between the Company and Lender, dated April 22, 2005 (the
"Note Purchase
Agreement"). All capitalized terms not defined herein shall have
the meanings
ascribed thereto in the Note Purchase Agreement.
1. Ranking. The indebtedness evidenced by this Note and the
payment of the Principal Amount and accrued interest thereon
shall be Senior (as
hereinafter defined) to, and have priority in right of payment
over, all
indebtedness of the Company. "Senior" shall be deemed to mean
that, in the event
of any default in the payment of the obligations represented by
this Note or of
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any liquidation, insolvency, bankruptcy, reorganization, or
similar proceedings
relating to the Company, all sums payable on this Note shall
first be paid in
full, with interest, if any, before any payment is made upon any
other
indebtedness, now outstanding or hereinafter incurred, and, in
any such event,
any payment or distribution of any character which shall be made
in respect of
any other indebtedness of the Company, shall be paid over to the
holder of this
Note for application to the payment hereof, unless and until the
obligations
under this Note (which shall mean the Principal Amount and other
obligations
arising out of, premium, if any, interest on, and any costs and
expenses payable
under, this Note) shall have been paid and satisfied in
full.
2. Conversion.
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(a) Conversion. At anytime, including prior to,
concurrent with, or following, the Company consolidating with,
or merging into,
another corporation or entity, or effecting any other corporate
reorganization
or other transaction or series of transactions resulting in the
transfer of 50%
or more of the outstanding voting power of the Company (a
"Merger Transaction"),
at the option of the Lender the entire Principal Amount and
accrued interest on
this Note may be converted (the "Conversion") into the Company's
(or the
successor entity's) common stock ("Equity Securities"). The
number of shares of
Equity Securities to be issued upon such conversion shall be
equal to the
quotient obtained by dividing (i) the entire principal amount of
this Note,
together with accrued interest hereon by (ii) $0.01 ("Conversion
Price"), and
concurrent with the issuance of such shares, the Lender shall be
afforded no
less than piggyback registration rights on the Equity
Securities. In addition,
if the Company has not consummated or entered into a definitive
agreement with
respect to a Merger Transaction on or before October 1, 2005,
the Conversion
Price shall be reduced to $0.005 per share. Any fraction of a
share resulting
from these calculations shall be rounded upward to the whole
share. The Company
covenants to cause such shares, when issued pursuant to this
Section 2(a), to be
fully paid and nonassessable, and free from all taxes, liens and
charges with
respect to the issuance thereof, other than any taxes, liens or
charges not
caused by the Company.
(b) Mechanics and Effect of Conversion. To exercise a
Conversion, the Lender shall surrender its Note, duly endorsed,
together with a
written conversion notice to the Company at its principal
office. At its
expense, the Company will, as soon as practicable thereafter,
issue and deliver
to such Lender, at its address, a certificate or certificates
for the number of
shares to which such Lender is entitled upon such conversion.
This Note shall be
deemed to have been converted on the date a written notice of
conversion has
been submitted to the Company and the Lender shall be treated
for all purposes
as the record holder of the Equity Securities deliverable upon
such conversion
as of the close of business on such date. In the event that the
entire Principal
Amount of the Note is not converted, the Company shall issue
Lender a new Note
for the balance of the Principal Amount and accrued interest, if
any, not so
converted.
(c) Certain Exercise Restrictions. Notwithstanding
anything contained herein to the contrary, Lender may not
convert this Note to
the extent such conversion would result in the Lender, together
with any
affiliate thereof, beneficially owning (as determined in
accordance with Section
13(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act")
and the rules promulgated thereunder) in excess of 4.999% of the
then issued and
outstanding shares of Common Stock, including shares of Common
Stock issuable
upon such conversion and held by such Lender after application
of this Section.
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Since the Lender will not be obligated to report to the Company
the number of
shares of Common Stock it may hold at the time of a conversion
hereunder, unless
the conversion at issue would result in the issuance of shares
of Common Stock
in excess of 4.999% of the then outstanding shares of Common
Stock without
regard to any other shares of Common Stock which may be
beneficially owned by
the Lender or an affiliate thereof, the Lender shall have the
authority and
obligation to determine whether the restriction contained in
this Section will
limit any particular conversion hereunder and to the extent that
the Lender
determines that the limitation contained in this Section
applies, the
determination of which portion of this Note is convertible shall
be the
responsibility and obligation of the Lender. If the Lender has
delivered a Form
of Election to Purchase for a number of shares of Equity
Securities that would
result in the issuance in excess of the permitted amount
hereunder, the Company
shall notify the Lender of this fact and shall honor the
exercise for the
maximum portion of this Note permitted to be converted on such
date of
conversion in accordance with the periods described herein and
disregard the
balance of such Form of Election to Purchase, as if never
delivered The
provisions of this Section may be waived by Lender upon not less
than 61 days
prior notice to the Company.
(d) No Impairment. The Company will not, by amendment of
its Certificate of Incorporation or through any
reorganization,
recapitalization, transfer of assets, consolidation, merger,
dissolution, issue
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 the Company, but will at all times in good faith
assist in the
carrying out of all the provisions of this Section 2 and in the
taking of all
such action as may be necessary or appropriate in order to
protect the
conversion rights of the Lender of this Note against
impairment.
3. Reservation of Shares. The Company shall at all times
have
authorized and reserved for issuance a sufficient number of
shares of its
capital stock to provide for the full conversion of this
Note.
4. Change of Control. Subject to the conversion provisions
set
forth in section 2(a) above, in the event of (i) any transaction
or series of
related transactions (including any reorganization, merger or
consolidation)
that results in the transfer of 50% or more of the outstanding
voting power of
the Company, and (ii) a sale of all or substantially all of the
assets of the
Company to another person, this Note shall be automatically due
and payable. The
Company will give the Lender not less than ten (10) business
days prior written
notice of the occurrence of any events referred to in this
Section 4.
5. Certain Adjustments. The number and class or series of
shares
into which this Note may be converted under Section 2 shall be
subject to
adjustment in accordance with the following provisions:
(a) Adjustment for Reorganization or Recapitalization.
Subject to the mandatory conversion provisions set forth in
Section 2 hereof,
if, while this Note remains outstanding and has not been
converted, there shall
be a reorganization or recapitalization, combination,
reclassification, exchange
or subdivision of shares otherwise provided for herein), all
necessary or
appropriate lawful provisions shall be made so that the Lender
shall thereafter
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be entitled to receive upon conversion of this Note, the
greatest number of
shares of stock or other securities or property that a holder of
the class of
securities deliverable upon conversion of this Note would have
been entitled to
receive in such reorganization or recapitalization if this Note
had been
converted immediately prior to such reorganization or
recapitalization, all
subject to further adjustment as provided in this Section 5. If
the per share
consideration payable to the Lender for such class of securities
in connection
with any such transaction is in a form other than cash or
marketable securities,
then the value of such consideration shall be determined in good
faith by the
Company's Board of Directors. The foregoing provisions of this
paragraph shall
similarly apply to successive reorganizations or
recapitalizations and to the
stock or securities of any other corporation that are at the
time receivable
upon the conversion of this Note. In all events, appropriate
adjustment shall be
made in the application of the provisions of this Note
(including adjustment of
the conversion price and number of shares into which this Note
is then
convertible pursuant to the terms and conditions of this Note)
with respect to
the rights and interests of the Lender after the transaction, to
the end that
the provisions of this Note shall be applicable after that
event, as near as
reasonably may be, in relation to any shares or other property
deliverable or
issuable after such reorganization or recapitalization upon
conversion of this
Note.
(b) Adjustments for Split, Subdivision or Combination of
Shares. If the Company at any time while this Note remains
outstanding and
unconverted, shall split or subdivide any class of securities
into which this
Note may be converted into a different number of securities of
the same class,
the number of shares of such class issuable upon conversion of
this Note
immediately prior to such split or subdivision shall be
proportionately
increased and the conversion price for such class of securities
shall be
proportionately decreased. If the Company at any time while this
Note, or any
portion hereof, remains outstanding and unconverted shall
combine any class of
securities into which this Note may be converted, into a
different number of
securities of the same class, the number of shares of such class
issuable upon
conversion of this Note immediately prior to such combination
shall be
proportionately decreased and the Conversion Price for such
class of securities
shall be proportionately increased.
(c) Adjustments for Dividends in Stock or Other
Securities or Property. If, while this Note remains outstanding
and unconverted,
the holders of any class of securities as to which conversion
rights under this
Note exist at the time shall have received, or, on or after the
record date
fixed for the determination of eligible stockholders, shall have
become entitled
to receive, without payment therefor, other or additional stock
or other
securities or property (other than cash) of the Company by way
of dividend, then
and in each case, this Note shall represent the right to
acquire, in addition to
the number of shares of such class of se
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