THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR
APPLICABLE STATE SECURITIES LAWS, NOR THE SECURITIES LAWS OF ANY OTHER
JURISDICTION. IT MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN
THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THOSE SECURITIES LAWS
OR AN OPINION OF COUNSEL, SATISFACTORY TO THE COMPANY, THAT SUCH REGISTRATION IS
NOT REQUIRED.
CBCOM, INC.
Convertible Promissory Note
Due April 24, 2001
$53,000 (plus Date: April 23, 2000
additional Loaned Funds)
CBCOM, INC. (the "Company"), a Delaware corporation, for value
received, hereby promises to pay to Max Sun ("Lender"), the amount of the Loaned
Funds (as defined below) unpaid and outstanding from time to time, with interest
on the unpaid balance of such principal amount as described below. The full
unpaid principal amount of the Loaned Funds plus interest will be due and
payable on April 23, 2001 (the "Maturity Date"). Payment of interest and
principal shall be made in lawful money of the United States of America at the
principal office of the Lender or at such other place as the Lender shall have
designated to the Company in writing. In the event the Maturity Date is not a
business day in Los Angeles, California, payment shall be made on the next
succeeding business day.
1. Loaned Funds. Lender has extended credit to the Company, and is expected to
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continue to extend credit to the Company ("Loan"), which Loan is evidenced by
this Note. The principal amount of the Loan shall include (a) the initial loan
of $53,000, and (b) any other loans or advances Lender agrees, in its sole
discretion, to make to the Company that are not covered by any other agreement
between the Company and Lender. Each month that Lender makes advances or loans
to the Company, the Company shall enter the amount of those advances or loans at
Exhibit A of this Note, and shall have Lender acknowledge that installment on
that exhibit. The aggregate of unpaid loans and advances listed on Exhibit A
from time to time shall be referred to as "Loaned Funds."
2. Interest . This Note shall bear interest at the rate of seven percent (7%)
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per annum on the unpaid principal balance of Loaned Funds outstanding from time
to time. Interest will commence on any installment of Loaned Funds from the date
set forth in Exhibit A, and continue through the date on which such unpaid
principal balance is repaid in full. Throughout the term of this Note, interest
shall be calculated on the basis of a 365-day year and shall be computed for the
actual number of days in the period for which interest is charged.
3. Conversion.
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3.1 Conversion Rights. The unpaid principal amount of this Note may be
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converted into shares of the Company's Common Stock, at the election of the
Lender, at any time prior to the close of business on the business day prior to
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the Maturity Date, at the conversion price of $1.00 per share, as may be
adjusted in accordance with section 4 hereof (such conversion price, as so
adjusted and in effect at any time, herein called the "Conversion Price"), into
the number of fully paid and nonassessable shares of the Company's Common Stock
determined by dividing the principal amount to be so converted by the Conversion
Price in effect at the time of such conversion. If the Lender converts some or
all of this Note from time to time, he shall be entitled to receive the interest
accrued to the conversion date on that portion of this Note so converted, in
cash or in stock at the Company's option.
3.2 Notice of Conversion; New Note. This Note may be converted in full
-------------------------------
or in part by the Lender prior to the Maturity Date by surrender of this Note
with the notice of conversion annexed hereto duly executed by Lender (specifying
the portion of the principal amount thereof to be converted in the case of a
partial conversion) to the Company. Upon any partial conversion of this Note,
the Company will make the appropriate entry evidencing such partial conversion
at Exhibit A, and the amount of principal and interest (if any) represented by
such conversion shall be reduced from the then-outstanding amount of Loaned
Funds. Each conversion shall be deemed to have been effected immediately prior
to the close of business on the date on which this Note and notice of conversion
shall have been so surrendered to the Company.
3.3 Delivery of Stock Certificates; Fractional Shares. As promptly as
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practicable after the conversion of this Note in full or in part, and in any
event within 30 days thereafter, the Company at its expense will issue and
deliver to the Lender a certificate or certificates for the number of full
shares of Common Stock issuable upon such conversion, plus, in lieu of any
fractional share to which the Lender would otherwise be entitled, cash equal to
such fraction of the Conversion Price.
4. Adjustment of Conversion Price.
------------------------------
4.1 Adjustments for Stock Splits, etc. In the event the Company shall
at any time undergo a stock split, stock dividend or other combination or
subdivision that does not involve payment of consideration for such shares, the
Conversion Price in effect immediately prior to such change shall be
proportionately decreased. In the event the Company shall at any time combine
its outstanding Common Stock, the Conversion Price in effect immediately prior
to such combination shall be proportionately increased. Any adjustment shall
become effective at the close of business on the date that such subdivision or
combination shall become effective.
4.2 Certificate as to Adjustments. In the case of each adjustment or
------------------------------
readjustment of the Conversion Price pursuant to this Section 4, the Company
will promptly compute such adjustment or readjustment in accordance with the
terms hereof and cause a certificate setting forth such adjustment or
readjustment and showing in detail the facts upon which such adjustment or
readjustment is based to be delivered to the Lender.
4.3 Notices. In the event of: (a) any capital reorganization of the
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Company, any reclassification or recapitalization of the capital stock of the
Company or any transfer of all or substantially all of the assets of the Company
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to any other person or any consolidation or merger involving the Company, or (b)
any voluntary or involuntary dissolution, liquidation or winding-up of the
Company, the Company will mail to the Lender at least 10 days prior to the
earliest date specified therein, a notice specifying the date and a brief
description of the event in question.
4.4 Reservation of Stock Issuable on Conversion. The Company will at
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all times prior to the Maturity Date reserve and keep available, solely for
issuance and delivery upon the conversion of this Note, all shares of Common
Stock from time to time issuable upon the conversion of this Note. All shares of
Common Stock issuable upon conversion of this Note shall be duly authorized and,
when issued, validly issued, fully paid and nonassessable.
5. Consolidation, Merger, Sale of Assets, Reorganization, etc. In case the
----------------------------------------------------------
Company consolidates with or merges into any other corporation and shall not be
the continuing or surviving corporation of such consolidation or merger, the
Company, at its option, may redeem the Note or make proper provision so that the
Lender will upon conversion of this Note receive shares of equity securities of
the surviving entity as nearly equivalent as possible in kind and value to the
Common Stock into which this Note would otherwise be convertible immediately
prior to the date of such consolidation or merger, provided that in the second
case the surviving entity shall agree to remain liable under the Note until such
conversion is finished.
6. Default.
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6.1 Events of Default. Each of the following events shall be an Event
-----------------
of Default hereunder: (a) default in the payment of any principal or interest on
the Note when due, continued for 30 days; or (b) if the Company or any
subsidiary shall make an assignment for the benefit of creditors, or shall file
a voluntary petition in bankruptcy, or shall be adjudicated a bankrupt or
insolvent, or shall file any petition or answer seeking for itself any
reorganization, arrangement, composition, readjustment, liquidation, dissolution
or similar relief under any present or future statue, law or regulation, or
shall seek or consent to or acquiesce in the appointment of any trustee,
receiver or liquidator of the Company or of all or any substantial part of the
properties of the Company, or commence voluntary or involuntary dissolution
proceedings. If an event of default under the Note occurs and is continuing for
a period of more than ten days, the Lender of the Note may declare the Note
immediately due and payable.
6.2 Remedies on Default, etc. In case of a default in the payment of
--------------------------
any principal of or interest on this Note, the Company will pay to the Lender
thereof the amount owing together with (a) simple interest at the rate per annum
equal to the lower of (x) 15% and (y) the maximum rate permitted under
applicable law on the amounts past due, and (b) such additional amount as shall
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be sufficient to cover the cost and expenses of collection, including, without
limitation, reasonable attorneys' fees, expenses and disbursements. No right,
power or remedy conferred by this Note upon Lender shall be exclusive of any
other right, power or remedy referred to herein or therein or now or hereafter
available at law, in equity, by statute or otherwise.
7. Application of Payments. Payments received by Lender pursuant to the terms
-----------------------
hereof shall be applied in the following manner: First, to the payment of all
out of pocket expenses, charges, costs and fees incurred by or payable to Lender
and for which the Company is obligated pursuant to the terms hereof; second, to
the payment of all interest accrued to the date of such payment; and third, to
the payment of principal. Notwithstanding anything to the contrary contained
herein, after the occurrence and during the continuation of an Event of Default,
all amounts received by Lender from any party shall be applied in such order as
Lender, in its sole discretion, may elect.
8. Amendment of Note. The provisions of this Note may be amended or modified
-----------------
only with written consent of the Company and the Lender.
9. Waiver. The Company hereby waives diligence, presentment, protest and demand,
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notice of protest, dishonor and nonpayment of this Note and expressly agrees
that, without in any way affecting the liability of the Company hereunder,
Lender may extend any maturity date or the time for payment of any installment
due hereunder, accept additional security, release any party liable hereunder
and release any security now or hereafter securing this Note. The Company
further waives, to the full extent permitted by law, the right to plead any and
all statutes of limitations as a defense to any demand on this Note.
10. Attorney's Fees. If this Note is not paid when due or if any Event of
----------------
Default occurs, the Company promises to pay all costs of enforcement and
collection, including, but not limited to, Lender's attorney's fees, whether or
not any action or proceeding is brought to enforce the provisions hereof.
11. Severability. Every provision of this Note is intended to be severable. In
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the event any term or provision hereof is declared by a court of competent
jurisdiction to be illegal or invalid for any reason whatsoever, such illegality
or invalidity shall not affect the balance of the terms and provisions hereof,
which terms and provisions shall remain binding and enforceable.
12. Choice of Law. This Note shall be governed by and construed in accordance
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with the laws of the State of California. Any and all disputes arising under
this Note shall be adjudicated in the appropriate court in the county of Los
Angeles, California, and all parties submit to jurisdiction of such court for
resolution of such disputes.
13. Interest Rate Limitation. It is the intent of the Company and Lender in the
------------------------
execution of this Note and all other instruments securing this Note that the
loan evidenced hereby be exempt from the restrictions of the usury laws of the
State of California. In the event that, for any reason, it should be determined
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that the California usury law is applicable to the loan, the Company and Lender
stipulate and agree that none of the terms and provisions contained herein shall
ever be construed to create a contract for the use, forbearance or detention of
money requiring payment of interest at a rate in excess of the maximum interest
rate permitted to be charged by the laws of the State of California. In such
event, if the Lender shall collect monies which are deemed to constitute
interest which would otherwise increase the effective interest rate on this Note
to a rate in excess of the maximum rate permitted to be charged by the laws of
the State of California, all such sums deemed to constitute interest in excess
of such maximum rate shall, at the option of Lender, be credited to the payment
of the sums due hereunder or returned to the Company.
14. Entire Agreement. This Note constitutes the entire agreement among the
-----------------
parties with regard to the subjects hereof, and supersedes and replaces any
prior or contemporaneous negotiations, discussions, contracts or agreements,
written or oral. The terms and conditions of this Note shall inure to the
benefit of, and be binding upon, the respective successors and assigns of the
parties. Nothing in this Note is intended to confer on any third party any
rights, liabilities or obligations, except as specifically provided.
IN WITNESS WHEREOF, the Company has executed this Note as of the date first
above written.
CBCOM, INC.
By
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Charles Lesser,
Chief Financial Officer and
Secretary
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NOTICE OF CONVERSION
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[To Be Signed Only upon Conversion of Note]
TO CBCOM, INC.:
The undersigned, the Lender of the foregoing Note, hereby
surrenders such the Note for conversion into shares of Common Stock of CBCOM,
INC., to the extent of $ unpaid principal amount of such Note, and
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requests that the certificates for such shares be issued in the name of, and
delivered to, , whose address is
--------------------- ----------------------------.
Dated:
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(Signature must conform in all respects
to name of Lender as specified on the
face of the Note.)
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(Address)
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EXHIBIT A
SCHEDULE OF LOANED FUNDS
Date of Loan Amount Notes
------------ ------ -----
April 24, 2000 $53,000
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