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Exhibit 10.26
SECURED CONVERTIBLE NOTE AND AGREEMENT
$200,000.00
MAXMILLIAN PARTNERS LLC
July 28, 2003
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS
AMENDED, OR ANY STATE SECURITIES LAWS. THEY MAY NOT BE SOLD,
TRANSFERRED,
PLEDGED, HYPOTHECATED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION
STATEMENT AS TO THE SECURITIES UNDER SAID ACT AND ANY APPLICABLE
STATE
SECURITIES LAWS OR THE AVAILABILITY OF AN EXEMPTION FROM
REGISTRATION UNDER
SAID ACT.
INVESTMENT IN THE NOTE HEREIN IS SPECULATIVE AND INVOLVES A HIGH
DEGREE OF
RISK. THE COMPANY IS IN ITS DEVELOPMENT STAGE, HAS NO HISTORY OF
REVENUES,
EARNINGS OR SIGNIFICANT OPERATIONS, AND IS SUBJECT TO ALL THE
RISKS INHERENT IN
A NEW BUSINESS ENTERPRISE. NO INVESTMENT IN THE NOTES SHOULD BE
MADE BY ANY
PERSON WHO IS NOT IN A POSITION TO LOSE THE ENTIRE AMOUNT OF
SUCH INVESTMENT.
RECITALS
WHEREAS, Maxmillian Partners LLC (the "Borrower"), a Delaware
limited
liability company, operating pursuant to a certain Amended and
Restated Limited
Liability Company Agreement, dated as of September 24, 2002 (the
"Operating
Agreement"); and
WHEREAS, Borrower requires short-term working capital in
connection with
current operations, and Kenneth H. Close, an individual having a
place of
business in Southport, Connecticut ("Holder"), has agreed to
lend to Borrower
$200,000, upon the terms stated herein, including without
limitation Holders'
right, but not the obligation, prior to repayment, to convert
all, or such part
as Holder shall elect, of the principal amount due hereunder,
together with the
interest then accrued thereon, into additional units of the
Company issued in
connection with any subsequent capital financing of the Company
(a
"Financing"), or such other equity securities, as shall be sold
by Borrower in
connection with the completion of the Financing, if any, upon
the same terms as
are offered to investors generally. Holder shall be issued
warrants for units
in the Borrower ("Principal Warrants"), together with certain
contingent
warrants to be issued in the event of a default hereunder
("Default Warrants",
and together with the Principal Warrants, referred to herein and
therein as the
"Warrants"), all in accordance with the terms of the Convertible
Note Warrant
Agreement ("Warrant Agreement"), of even date herein
<PAGE>
FOR VALUE RECEIVED, MAXMILLIAN PARTNERS LLC, a Delaware
limited
liability company, having a principal place of business at 372
Danbury Road,
Suite 163, Wilton, Connecticut (the "Borrower"), promises to pay
to KENNETH H.
CLOSE (the "Holder") at the offices of the Holder located in
Southport,
Connecticut, or at such other place as Holder shall designate,
the principal sum
of Two Hundred Thousand and 00/100 Dollars ($200,000.00) or, if
then prepaid in
part, the outstanding principal amount, on January 25, 2004
("Expiration Date"),
together with interest accrued upon the outstanding principal
amount advanced
hereunder from time to time, calculated on the basis of a
360-day year for the
actual number of days elapsed, at the rate of eight (8%) percent
(Interest"),
from the date of this Secured Convertible Note and Agreement
(the "Note"), until
the Expiration Date. In no event shall the Interest hereunder
exceed the maximum
rate permitted by applicable law. Any payment in excess of the
maximum rate
shall be deemed a prepayment of principal. Each payment shall be
applied first
to the payment of Interest and then to the payment of principal.
In addition to
the other remedies available to Holder herein, and the Default
Adjustment set
forth in the Warrant Agreement issued by Borrower to Holder in
connection
herewith, in the event of default, the Interest applicable to
this Note shall be
3% above that rate herein, before as well as after judgment,
order or other
determination. The principal amount of this Note shall be
advanced upon the
request of the Borrower, and at the sole discretion of the
Holder in accordance
with the conditions herein. The proceeds of this Note shall be
used for normal
short-term working capital needs of the Borrower.
ARTICLE ONE
PREPAYMENT
This Note shall not without the prior written consent of the
Holder, be
subject to prepayment in whole or in part by Borrower, at any
time prior to the
earlier of (i) the date on which the Holder waives, releases or
terminates its
option to convert this Note into the equity securities of the
Company as set
forth hereinbelow, and (ii) the Expiration Date, it being the
intention of the
parties that this Note shall either be (A) paid in full with
Interest thereon
at the Expiration Date, or (B) subject to Holder's prior demand
on account of
default, converted to units of the Company upon the date of the
closing of any
Financing, , upon the terms more fully set forth in ARTICLE TWO
below
("Conversion Units").
ARTICLE TWO
CONVERSION RIGHTS
2.1 Conversion. At any time prior to the Expiration Date, in the
event
Borrower shall propose to complete a Financing, Holder shall
have the right,
exercisable upon written notice to Borrower, to convert in whole
or in part,
any outstanding principal amount hereunder together with any and
all unpaid
Interest accrued thereon (the "Obligation") into the Units
offered by Borrower
in such Financing, upon such terms as are offered to the
investors in the
Financing generally.
<PAGE>
2.2 Conversion Mechanics. In the event Borrower shall intend to
complete
a Financing prior to the Expiration Date, and shall prepare any
term sheet for
such purpose at any time prior to the Expiration Date, Borrower
shall provide
Holder with written notice of the terms and other particulars
pertaining to such
Financing, whereupon at any time on or prior to the closing date
of such
Financing (after all applicable extensions provided in the Term
Sheet), Holder
shall have the right, exercisable by Borrower upon notice to
Borrower at any
time prior to repayment of this Note and the date of closing of
such Financing,
to convert, in whole or in part, the amount then representing
the Obligation,
into such equity securities as are sold or issued by Borrower in
connection with
the Financing, and otherwise upon the terms made part of the
offering thereof.
ARTICLE THREE
EVENTS OF DEFAULT/SECURITY
3.1 Default. In the event Borrower shall: (a) fail to pay any
amount of
the principal or accrued Interest hereupon as same shall become
due and
payable; (b) breach any of the material covenants or any
representation or
warranty of Borrower as set forth herein or in the Warrant
Agreement issued in
connection herewith; or (c) any default by Maxmillians Mixers
LLC or Drinks
Americas, Inc. (the "Guarantors") pursuant to the terms of the
Guaranties or
the Security Agreements delivered by them as security for the
Obligations
hereunder, then at the option of the Holder hereof, and in
addition to all
other remedies at law or in equity, including without
limitation, Holder's
right to exercise its security interest in accordance with the
provisions of
the Article 9 of the Uniform Commercial Code of the State of
Connecticut, all
amounts of principal and interest then accru
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