Contract
Exhibit
10.2
NEITHER
THIS NOTE NOR THE SECURITIES ISSUABLE UPON CONVERSION HEREOF HAVE BEEN THE
SUBJECT OF REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
UNDER
THE SECURITIES LAWS OF ANY STATE, AND THE SAME HAVE BEEN (OR WILL BE, WITH
RESPECT TO THE SECURITIES ISSUABLE UPON CONVERSION HEREOF) ISSUED IN RELIANCE
ON
EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF SAID ACT AND SUCH LAWS.
NEITHER
THIS NOTE NOR THE SECURITIES ISSUABLE UPON CONVERSION HEREOF MAY BE SOLD,
TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF EXCEPT AS PERMITTED
UNDER SUCH SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION
THEREFROM.
|
$50,000
|
Ridgefield,
Connecticut
|
September
13, 2006
FOR
VALUE
RECEIVED, the undersigned, Global Matrechs, Inc., a Delaware corporation
(the
“Maker”),
hereby promises to pay to Southridge Partners LP (the “Payee”)
the
principal sum of fifty thousand dollars ($50,000) in one installment due
on
March 31, 2007 (the “Maturity
Date”)
together with interest from and after the date hereof at the rate of two
percent
(2%) per annum computed on the unpaid principal balance on the basis of a
360-day year. All payments made hereunder shall be made in immediately available
funds. By acceptance of this Note, the Payee represents, warrants, covenants
and
agrees that it will abide by and be bound by its terms.
1. Conversion.
The
Payee shall have the option at any time to convert all or a portion of the
outstanding principal and interest on this Note into a number of shares of
common stock, $0.001 par value per share (the “Common
Stock”)
equal
to a fraction, the numerator of which shall be the amount of principal and
interest being so converted and the denominator of which shall be equal to
the
Conversion Price (the “Conversion
Shares”).
“The
“Conversion
Price”
shall
be equal to eighty percent (80%) of the average of the five lowest closing
bid
prices for the ten (10) trading days immediately preceding the Conversion
Date.
The “Conversion Date” shall be defined as the date in which the Issuer receives
written notice by Xxxxxx of its election to convert all or a portion of the
Note
pursuant to this Section 1.
2. Restrictions
on Conversion.
Notwithstanding anything to the contrary contained herein, the number of
Conversion Shares that may be acquired by the Payee upon any conversion of
this
Note (or otherwise in respect hereof) shall be limited to the extent necessary
to insure that, following such conversion, the total number of shares of
Common
Stock then beneficially owned by such Payee and its affiliates and any other
persons whose beneficial ownership of Common Stock would be aggregated with
the
Payee’s for purposes of Section 13(d) of the Securities Exchange Act of 1934, as
amended (the “Exchange
Act”),
does
not exceed 4.999% of the total number of issued and outstanding shares of
Common
Stock (including for such purpose the shares of Common Stock issuable upon
such
conversion). For such purposes, beneficial ownership shall be determined
in
accordance with Section 13(d) of the Exchange Act and the rules and regulations
promulgated thereunder.
3. Prepayment The
Maker
shall have the right to redeem this Note at any time by providing written
notice
to the Payee by making a cash payment to the Payee of the outstanding principal
amount of the Note multiplied by 120%, plus all accrued interest: Written
notice
to the Payee shall be received at least 5 business days prior to the date
of
redemption payment (“Redemption Date”). If the redemption payment is not made on
or before the Redemption Date, the redemption notice shall be rendered null
and
void and the Payee thereafter shall have the right to convert any portion
of the
outstanding principal of the Note.
4. Adjustment
for Dividends, Distributions, Subdivisions, Combinations, Mergers,
Consolidations or Sale of Assets.
(a) Manner
of Adjustment.
(i) Stock
Dividends, Distributions or Subdivisions.
In the
event the Maker shall issue shares of Common Stock in a stock dividend, stock
distribution or subdivision, the Conversion Price in effect immediately before
such stock dividend, stock distribution or subdivision shall, concurrently
with
the effectiveness of such stock dividend, stock distribution or subdivision,
be
proportionately decreased and the number of shares of Common Stock issuable
upon
conversion of this Note shall be proportionately increased.
(ii) Combinations
or Consolidations.
In the
event the outstanding shares of Common Stock shall be combined or consolidated,
by reclassification or otherwise, into a lesser number of shares of Common
Stock, the Conversion Price in effect immediately prior to such combination
or
consolidation shall, concurrently with the effectiveness of such combination
or
consolidation, be proportionately increased and the number of shares of Common
Stock issuable upon conversion of this Note shall be proportionately
decreased.
(iii) Adjustment
for Reclassification, Exchange or Substitution.
In the
event that the class of securities issuable upon the conversion of this Note
shall be changed into the same or a different number of shares of any class
or
classes of stock, whether by capital reorganization, reclassification or
otherwise, then and in each such event the Payee shall have the right thereafter
to convert this Note for the kind and amount of shares of stock and other
securities and property receivable upon such reorganization, reclassification,
or other change, by Payees of the number of shares of the class of securities
into which such Note might have been convertible for immediately prior to
such
reorganization, reclassification, or change, all subject to further adjustment
as provided herein.
(iv) Adjustment
for Merger, Consolidation or Sale of Assets.
In the
event that the Maker shall merge or consolidate with or into another entity
or
sell all or substantially all of its assets, this Note shall thereafter be
convertible for the kind and amount of shares of stock or other securities
or
property to which a Payee of the number of shares of Common Stock of the
Maker
deliverable upon conversion of this Note would have been entitled upon such
consolidation, merger or sale; and, in such case, appropriate adjustment
(as
determined in good faith by the Maker’s Board of Directors) shall be made in the
application of the provisions set forth in this Section 4 with respect to
the rights and interest thereafter of the Payee of this Note, to the end
that
the provisions set forth in this Section 4 shall thereafter be applicable,
as nearly as reasonably may be, in relation to any shares of stock or other
property thereafter deliverable upon the conversion of this Note.
2
(b) Certificate
as to Adjustments.
Upon
the occurrence of each adjustment or readjustment of the Conversion Price
pursuant to this Section 4, the Maker at its expense shall promptly compute
such adjustment or readjustment in accordance with the terms hereof and furnish
to the Payee a certificate setting forth such adjustment or readjustment
and
showing in detail the facts upon which such adjustment or readjustment is
based.
(c) Closing
of Books.
The
Maker shall at no time close its transfer books against the transfer of any
shares of Common Stock issued or issuable upon the conversion of this Note
in
any manner which interferes with the timely and proper issuance of such
shares.
5. Miscellaneous.
(a) Restricted
Securities.
By
acceptance hereof, the Payee understands and agrees that this Note is a
“restricted security” under the federal securities laws inasmuch as it is being
acquired from the Maker in a transaction not involving a public offering
and has
not been the subject of registration under the Securities Act and that under
such laws and applicable regulations such securities may be resold in the
absence of registration under the Securities Act only in certain limited
circumstances. The Payee hereby represents that it is familiar with Rule
144, as
promulgated by the Securities and Exchange Commission under the Securities
Act,
as currently in effect, and understands the resale limitations imposed thereby
and by the Securities Act.
(b) Legends.
It is
understood that this Note shall bear the legend (in addition to any legends
which may be required, in the opinion of the Maker’s counsel, by the securities
laws of the state where the Payee is located) set forth on the first page
of
this Note.
6. The
following shall constitute an “Event of Default”:
|
a.
|
The
Maker shall default in the payment of principal or interest on
this Note
and same shall continue for a period of twenty (20) days;
or
|
|
b.
|
The
Maker shall (1) make an assignment for the benefit of creditors
or
commence proceedings for its dissolution; or (2) apply for or consent
to
the appointment of a trustee, liquidator or receiver for its or
for a
substantial part of its property or business;
or
|
|
c.
|
A
trustee, liquidator or receiver shall be appointed for the Maker
or for a
substantial part of its property or business without its consent
and shall
not be discharged within sixty (60) days after such appointment;
or
|
3
|
d.
|
Any
governmental agency or any court of competent jurisdiction at the
instance
of any governmental agency shall assume custody or control of the
whole or
any substantial portion of the properties or assets of the Maker
and shall
not be dismissed within sixty (60) days thereafter;
or
|
|
e.
|
Except
for any judgments, settlements or related litigations or actions
disclosed
in the Maker’s Annual Report on Form 10-K for the year ended December 31,
2003, any money judgment, writ or warrant of attachment, or similar
process in excess of One Hundred Fifty Thousand ($150,000) Dollars
in the
aggregate shall be entered or filed against the Maker or any of
its
properties or other assets and shall remain unpaid, unvacated,
unbonded or
unstayed for a period of sixty (60) days;
or
|
|
f.
|
Bankruptcy,
reorganization, insolvency or liquidation proceedings or other
proceedings
for relief under any bankruptcy law or any law for the relief of
debtors
shall be instituted by or against the Maker and, if instituted
against the
Maker, shall not be dismissed within sixty (60) days after such
institution or the Maker shall by any action or answer approve
of, consent
to, or acquiesce in any such proceedings or admit the material
allegations
of, or default in answering a petition filed in any such proceeding;
|
Upon
the
occurrence of an Event of Default, or at any time thereafter, and in each
and
every such case, unless such Event of Default shall have been waived in writing
by the Payee (which waiver shall not be deemed to be a waiver of any subsequent
default) at the option of the Payee and in the Payee's sole discretion, the
Payee may consider all obligations under this Note immediately due and payable,
without presentment, demand, protest or notice of any kind, all of which
are
hereby expressly waived by the Company, anything herein or in any note or
other
instruments contained to the contrary notwithstanding, and the Payee may
immediately enforce any and all of the Payee's rights and remedies provided
herein or any other rights or remedies afforded by law. Upon the occurrence
of
any Event of Default as set forth herein and during any period that the Company
shall have failed to make payment of any principal or Interest due hereunder,
at
the option of Payee and without notice to the Company, the Interest shall
be
added to the outstanding principal balance hereof, and the entire outstanding
principal balance, as so adjusted, shall bear interest thereafter until paid
at
an annual rate of eighteen percent (18%) (the “Default Rate”).
7. Presentment.
Except
as set forth herein, the Maker waives presentment, demand and presentation
for
payment, notice of nonpayment and dishonor, protest and notice of protest
and
expressly agrees that this Note or any payment hereunder may be extended
from
time to time by the Payee without in any way affecting the liability of the
Maker.
4
8
. All
provisions herein made are expressly limited so that in no event whatsoever,
whether by reason of advancement of proceeds hereof, acceleration of maturity
of
the unpaid balance hereof or otherwise, shall the amount paid or agreed to
be
paid to Payee for the use of the money advanced or to be advanced hereunder
exceed the maximum rate of interest allowed to be charged under applicable
law
(the “Maximum Rate”), regardless of whether or not there has been an
acceleration of the payment of principal as set forth herein. If, from any
circumstances whatsoever, the fulfillment of any provision of this Note or
any
other agreement or instrument now or hereafter evidencing, securing or in
any
way relating to the indebtedness evidenced hereby shall involve the payment
of
interest in excess of the Maximum Rate, then, ipso
facto,
the
obligation to pay interest hereunder shall be reduced to the Maximum Rate;
and
if from any circumstance whatsoever, Payee shall ever receive interest, the
amount of which would exceed the amount collectible at the Maximum Rate,
such
amount as would be excessive interest shall be applied to the reduction of
the
principal balance remaining unpaid hereunder and not to the payment of interest.
This provision shall control every other provision in any and all other
agreements and instruments existing or hereafter arising between the Maker
and
Payee with respect to the indebtedness evidenced hereby.
9. In
the
event this Note is placed in the hands of an attorney for collection, or
if
Payee incurs any costs incident to the collection of the indebtedness evidenced
hereby, the Maker agrees to pay to Payee an amount equal to all such costs,
including without limitation all reasonable attorneys' fees and all court
costs.
10. Notices.
(c) Notices
to the Payee.
Whenever any provision of this Note requires a notice to be given or a request
to be made to the Payee by the Maker, then and in each such case, any such
notice or request shall be in writing and shall be sent by registered or
certified mail, return receipt requested with postage thereon fully prepaid
to
the Payee at its address set forth on the first page of this Note or at such
other address as the Payee may from time to time designate in
writing.
(d) Notices
to the Maker.
Whenever any provision of this Note requires a notice to be given or a request
to be made to the Maker by the Payee, any such notice or request shall be
in
writing and shall be sent by registered or certified mail, return receipt
requested with postage thereon fully prepaid to the Maker at its address
set
forth on the signature page or at such other address as the Maker may from
time
to time designate in writing.
11. Construction;
Governing Law.
The
validity and construction of this Note and all matters pertaining hereto
are to
be determined in accordance with the laws of the state of New York without
regard to the conflicts of law principles thereof.
12. Amendments.
Neither
this Note nor any of its provisions may be changed, waived or modified without
the written consent of both the Maker and the Payee.
13. Successors.
This
Note shall be a binding obligation of any successor of the Maker.
5
IN
WITNESS WHEREOF, the Maker, by its appropriate officers thereunto duly
authorized, has executed this Note as of this 13th day of September,
2006.
By:
/s/
Xxxxxxx Xxxxxxxx
Name:
Xxxxxxx Xxxxxxxx
Title:
President
Address:
00 Xxxxx Xxxxxx, Xxxxx 000
Ridgefield,
CT 06877
6
