Exhibit 10.3 - Convertible Note dated December 16, 2009
 
$100,000.00
Dated as of: December 16, 2009

 
CONVERTIBLE NOTE
 
SECTION 1. PROMISE TO PAY: For value received, Celestial Jets, Inc.
(“Celestial”), with offices at 425 Madison Avenue, New York, NY 10017, promises
to pay to the order of Celestial Jets, LLC (the “Lender”) at its office at 25
Ellicott Place, Staten Island, New York 10301, or at such other place as the
holder hereof may designate in writing, in lawful money of the United States,
the principal sum of One Hundred Thousand Dollars, plus interest on the
principal sum outstanding from the date hereof until paid, all as set forth
below.
 
SECTION 2. INTEREST: The rate of interest under this Note shall be ten per cent
(10%) per annum.
 
SECTION 3. PAYMENT AMOUNTS: On June 1, 2011, Celestial shall pay to the holder
hereof all interest accrued on this Note through May 31, 2010, and no payments
shall be due on this Note prior to June 1, 2011. On the first day of each month
thereafter, Celestial shall pay to the Lender a monthly payment equal to the
interest owed for the prior month. The entire remaining principal balance of
this Note plus any unpaid interest and all other amounts owing under this Note
or the Mortgage, unless previously converted pursuant to Section 5, will be due
and payable in full on December 16, 2011 (the “Maturity Date”). Notwithstanding
such Maturity Date, the full principal balance and all accrued but unpaid
interest on Note shall be payable on demand upon the occurrence of any of the
following events:
 

 
a.
any registration statement filed under the Securities Act of 1933 (the “Act”)
with respect to any securities of Celestial or any successor entity becomes
effective;
       
b.
Celestial engages in any merger transaction in which Celestial is not the
surviving entity.

 
Payments received hereunder shall be applied first to the payment of any
advances, penalties or late charges owed by or made for the account of Celestial
whether pursuant to this Note or otherwise and other amounts owed as the result
of any default by Celestial, then to interest due on this Note, and then to the
reduction of the principal sum due. Celestial agrees to pay forthwith a late
charge of 5% of each payment that is not paid within 10 days of its due date.
The late charge shall be calculated as a percentage of all principal and
interest due.
 
SECTION 4. PREPAYMENT: This Note may not be prepaid in whole or in part except
with the written consent of Lender.
 
 
 

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SECTION 5. CONVERSION AND REGISTRATION RIGHTS:
 

 
a.
The Lender, by written notice to Celestial given at any time prior to the
Maturity Date, shall have the right to convert this Note in one or more
transactions in equity ownership interests in Celestial. Upon exercising the
right to convert with respect to the entire principal balance of this Note, the
Lender shall receive an equity ownership interest in Celestial equal to 9.000%
of the aggregate of all equity interests in Celestial on a pro forma basis after
the completion of the conversion, and assuming that all other convertible notes
issued by Celestial that have not been previously exercised or converted are
simultaneously converted into equity interests in Celestial. If Lender exercise
the right to convert only a part of the principal balance of this Note, then
Lender shall be entitled to receive a pro rata share of the equity interests
that Lender would be entitled to receive upon the conversion of this entire
Note.
       
b.
If, prior to exercising the right to convert, Celestial engages in any business
combination in which Celestial is not the surviving entity, then Celestial shall
be obligated to create in Lender a legally enforceable right to covert this Note
into equity interests in the resulting entity or entities in such business
combination equal in amount to the equity interests in such resulting entity or
entities that Lender would have been entitled to receive if this Note had been
converted in full into equity interests in Celestial immediately prior to such
business combination. In the event of successive business combinations, Lender
shall be given the right to obtain the same equity interest in the ultimate
resulting entity or entities as if this Note had been converted into equity
interests in Celestial immediately prior to the first such business combination.
Celestial or any such resulting entity shall be required to include in any
merger agreement or other comparable agreement provisions protecting the rights
of the holder of this Note that are set forth in this Section 5.
       
c.
Celestial agrees, for itself and for resulting entity that is the surviving
entity in a business combination in which Celestial engages (Celestial or such
resulting entity being referred to herein as the “Filer”), upon written demand
by the holder hereof, to file with the Securities and Exchange Commission (the
“Commission”) a registration statement (the “Registration Statement”) on Form
S-1 under the Act with respect to the securities into which this Note may be
converted (the “Securities”), so as to permit a non-underwritten public offering
and resale of such Securities by Lender. The Filer will exercise its best
efforts to assure that the Registration Statement satisfies all applicable
requirements of the Act and the regulations of the Commission thereunder. The
Filer agrees to diligently pursue making the Registration Statement effective.
The Filer will notify Lender of the effectiveness of the Registration Statement
within one (1) business day of receiving notice from the Commission. Such
Registration Statement may be filed on a form other than Form S-1 only with the
prior written consent of the holder hereof.

 
 
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d.
The Filer will maintain the Registration Statement and any post-effective
amendment thereto filed under this Section 5 effective under the Act until the
earliest of (i) the date that none of the Securities covered by such
Registration Statement are issued and outstanding, (ii) the date that all of the
Securities have been sold pursuant to such Registration Statement, (iii) the
date Lender receives an opinion of counsel from the Filer, which counsel shall
be reasonably acceptable to Lender, that the Securities may be sold under the
provisions of Rule 144, (iv) the date that all Securities have been otherwise
transferred to persons who may trade such Securities without restriction under
the Act, and the Filer has delivered a new certificate or other evidence of
ownership for such securities not bearing a restrictive legend, or (v) the date
all Securities may be sold at any time, without volume or manner of sale
limitations, pursuant to Rule 144(k) or any similar provision then in effect
under the Act in the opinion of counsel to the Filer, which counsel shall be
reasonably acceptable to Lender.
       
e.
The Filer, at its expense, shall furnish to Lender with respect to the
Securities registered under the Registration Statement such reasonable number of
copies of the Registration Statement, prospectuses and preliminary prospectuses
in conformity with the requirements of the Act and such other documents as
Lender may reasonably request, in order to facilitate the public sale or other
disposition of all or any of the Securities by Lender, provided, however, that
the obligation of the Filer to deliver copies of prospectuses or preliminary
prospectuses to Lender shall be subject to the receipt by the Filer of
reasonable assurances from Lender that Lender will comply with the applicable
provisions of the Act and of such other securities or blue sky laws as may be
applicable in connection with any use of such prospectuses or preliminary
prospectuses.
       
f.
All fees, disbursements and out-of-pocket expenses and costs incurred by the
Filer in connection with the preparation and filing of the Registration
Statement and in complying with applicable securities and blue sky laws
(including, without limitation, all attorneys’ fees of the Filer) shall be borne
by the Filer. Lender shall bear the cost of fees and expenses of Lender’s
counsel.
       
g.
The Filer will advise Lender promptly after it shall receive notice or obtain
knowledge of the issuance of any stop order by the Commission delaying or
suspending the effectiveness of the Registration Statement or of the initiation
of any proceeding for that purpose, and the Filer will use commercially
reasonable efforts to prevent the issuance of any stop order or to obtain its
withdrawal at the earliest possible moment if such stop order should be issued.
       
h.
With a view to making available to Lender the benefits of Rule 144 (or its
successor rule) and any other rule or regulation of the Commission that may at
the time permit Lender to sell the Securities to the public without
registration, the Filer covenants and agrees, from and after the Registration
Statement is declared effective, to: (i) make and keep public information
available, as those terms are understood and defined in Rule 144, until the
earliest of (A) such date as all of the Securities may be resold pursuant to
Rule 144(k) or any other rule of similar effect or (B) such date as all of the
Securities shall have been resold; and (ii) file with the Commission in a timely
manner all reports and other documents required of the Filer under the Act and
under the Securities Exchange Act of 1934 (the “Exchange Act”), as amended.

 
 
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i.
Lender will cooperate with the Filer in all respects in connection with the
preparation of the Registration Statement, including timely supplying all
information reasonably requested by the Filer (which shall include all
information regarding Lender and the proposed manner of sale of the Securities
required to be disclosed in any Registration Statement) and executing and
returning all documents reasonably requested in connection with the registration
and sale of the Securities and entering into and performing their obligations
under any underwriting agreement, if the offering is an underwritten offering,
in usual and customary form, with the managing underwriter or underwriters of
such underwritten offering. Nothing in this Agreement shall obligate Lender to
consent to be named as an underwriter in any Registration Statement.
       
j.
The Filer shall prepare and file with the SEC such amendments and supplements to
the Registration Statement as may be necessary to comply with the provisions of
the Act with respect to the disposition of all Securities covered by the
Registration Statement; provided, however, that before filing a registration
statement or any amendments or supplements thereto, or comparable statements
under securities or blue sky laws of any jurisdiction, the Filer will furnish to
one counsel to be designated by Lender, copies of all such documents proposed to
be filed.
       
k.
The provisions of this Section 5 shall survive the conversion, payment or
maturity of this Note.

 
SECTION 6. DEFAULT: An Event of Default shall include:
 

 
a)
any failure to pay, when due, any amount due hereunder;
 
b)
the failure to perform any of the terms, covenants or conditions of this Note;
 
c)
the filing by or against Celestial of any petition under the Bankruptcy Code or
proceeding for receivership or under any insolvency, dissolution or conservation
statute;
 
d)
the suspension of business, commencement of liquidation, assignment for the
benefit of creditors, making of any offer of settlement, extension or
composition, appointment of a committee of creditors or a liquidating agent, by
or for Celestial; or
 
e)
the issuance of an attachment, injunction, execution, tax lien or filing of a
judgment or other lien against Celestial.

 
The entire amount due and owing under this Note shall be immediately due and
payable at the option of the Lender, without notice or demand except as
expressly set forth herein, if any one or more of such Events of Default occurs,
or if pursuant to any other provision of this Note, the Lender has the option to
so require that this Note be repaid immediately in full.
 
 
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SECTION 7. COLLECTION AND LITIGATION: Celestial agrees to pay any and all costs
and expenses incurred by the holder hereof in the collection of this Note or the
enforcement or interpretation of any of its provisions (including attorneys’
fees whether or not litigation is commenced). Celestial expressly waives any and
every right to impose any counterclaim, setoff or defense in any action or
proceeding brought hereunder, except for the defense of payment. This Note shall
be governed by and construed in accordance with the laws of the State of New
York. Celestial agrees to submit to the jurisdiction of the Supreme Court of the
State of New York and agrees that personal jurisdiction over Celestial shall
rest with such court for all purposes.
 
SECTION 8. TRANSFER OF NOTE: The Lender may transfer this Note and may deliver
the security or any part thereof to the transferee or transferees, who shall
thereupon become vested with all the powers and rights given to the Lender under
the terms of any agreement executed by Celestial in connection with this Note;
and the Lender shall thereafter be forever relieved and fully discharged from
any liability or responsibility in the matter.
 
SECTION 9. WAIVER AND LIABILITY: Celestial and all endorsers hereof waive
presentment and demand for payment, notice of dishonor, protest, and notice of
protest. This Note and its provisions shall apply to and bind Celestial jointly
and severally.
 
SECTION 10. NOTICES AND DEMANDS: (a) The making of any demand, oral or written,
or the giving of any notice, in any one or more instances shall not establish a
course of conduct nor constitute a waiver of the Lender’s rights. The Lender
shall not be required to give any notice under this Note except as expressly
provided in this Note.
 
(b) Any notices required or permitted to be given hereunder shall be: (i)
personally delivered or (ii) given by registered or certified mail, postage
prepaid, return receipt requested, or (iii) forwarded by nationally recognized
overnight delivery service such as Federal Express or UPS, in each instance
addressed to the addresses set forth at the beginning of this Note or such other
addresses as the parties may for themselves designate by notice. All notices
shall be in writing and shall be deemed given, in the case of notice by personal
delivery, upon actual delivery, and in the case of appropriate mail or courier
service, three days after deposit with the U.S. Postal Service or one day after
delivery to the overnight service for overnight delivery. Notices may be given
by the person or entity obligated to give such notice or by his, her or its
attorney, representative or agent.
 
SECTION 11. WAIVER OR DELAY BY THE LENDER: The Lender shall not by any act,
delay, omission or otherwise be deemed to have waived any rights or remedies
hereunder. No waiver by the Lender shall be valid unless signed by the Lender.
Any waiver by the Lender on any occasion shall not bar any right or remedy that
the Lender would otherwise have had on any future occasion. The failure by the
Lender to insist upon strict performance of each and all of the terms and
conditions hereof shall not be construed or deemed to be a waiver of any such
term or condition. No executory agreement unless signed by the Lender and no
course of dealing or oral agreement between Celestial and the Lender shall be
effective to waive, modify or discharge, in whole or in part, this Note or any
provision hereof. All rights and remedies of the Lender shall be cumulative and
may be exercised singly or concurrently.
 
 
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SECTION 12. DEFENITION OF LENDER. The term “Lender” as used herein shall include
any future holder of this Note.
 
SECTION 13. SEVERABILITY: If any provision of this Note is found to be
unenforceable by any court, then the remainder of this Note shall remain fully
enforceable against Celestial.
 
SECTION 14. WAIVER OF TRIAL BY JURY: Celestial and the Lender hereby expressly
waive any and every right to trial by jury in any action on or related to this
Note.
 

 
Celestial Jets, Inc.
       
By:
/s/ Gary Clyburn, Jr.,
   
Gary Clyburn, Jr., President

 
 
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