% SECURED CONVERTIBLE PROMISSORY NOTEConvertible Promissory Note |
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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.
2%
SECURED CONVERTIBLE PROMISSORY NOTE
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$50,000
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Ridgefield,
Connecticut
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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 Holder 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.
