PROMISSORY NOTE
January 26, 2005
Jersey City, New Jersey $1,500,000
FOR VALUE RECEIVED, the undersigned, GLOBAL CONCEPTS LTD., a Colorado
corporation (the "Company"), promises to pay CORNELL CAPITAL PARTNERS,
LP (the "Lender") at 101 Hudson Street, Suite 3700, Jersey City, New
Jersey 07302 or other address as the Lender shall specify in writing,
the principal sum of One Million Five Hundred Thousand Dollars
($1,500,000) and interest at the annual rate of twelve percent (12%) on
the unpaid balance pursuant to the following terms:
1. Principal and Interest. For value received, the Company hereby
promises to pay to the order of the Lender on the date eighteen months
from the date hereof in lawful money of the United States of America
and in immediately available funds the principal sum of One Million
Five Hundred Thousand Dollars ($1,500,000), together with interest on
the unpaid principal of this Debenture at the rate of twelve
percent (12%) per year (computed on the basis of a 365-day year and the
actual days elapsed) from the date of this Promissory Note (the "Note")
until paid.
2. Monthly Payments of the Note. The Company shall make monthly
payments of interest only on the outstanding principal balance of the
Note, the first of which shall be due and payable on the date one month
from the date hereof, and with payments being due and payable each
succeeding month thereafter for a total of 6 months. Beginning on the
date seven (7) months from the date hereof, the Company shall make
monthly prepayments of the outstanding principal of the Note in six
(6) equal principal payments of Two Hundred Fifty Thousand ($250,000),
plus interest accrued on the outstanding principal amount on the date of
each payment, with the first such payment being due and payable on
the date seven (7) months from the date hereof and with payments being
due and payable on the first trading day of each succeeding month
thereafter until all principal and interest has been paid. All payment
amounts shall be first applied to interest and the balance to
principal.
3. Right of Prepayment. Notwithstanding the payments pursuant to
Section 2, the Company at its option shall have the right to prepay,
with three (3) business days advance written notice, a portion or all
outstanding principal of the Note.
4. Waiver and Consent. To the fullest extent permitted by law and
except as otherwise provided herein, the Company waives demand,
presentment, protest, notice of dishonor, suit against or joinder of
any other person, and all other requirements necessary to charge or
hold the Company liable with respect to this Note.
5. Costs, Indemnities and Expenses. In the event of default as
described herein, the Company agrees to pay all reasonable fees and
costs incurred by the Lender in collecting or securing or attempting to
collect or secure this Note, including reasonable attorneys' fees and
expenses, whether or not involving litigation, collecting upon any
judgments and/or appellate or bankruptcy proceedings. The Company
agrees to pay any documentary stamp taxes, intangible taxes or other
taxes which may now or hereafter apply to this Note or any payment made
in respect of this Note, and the Company agrees to indemnify and hold
the Lender harmless from and against any liability, costs, attorneys'
fees, penalties, interest or expenses relating to any such taxes, as
and when the same may be incurred.
6. Event of Default. An "Event of Default" shall be deemed to have
occurred upon the occurrence of any of the following: (i) the Company
should fail for any reason or for no reason to make any payment of the
interest, outstanding principal balance plus accrued interest, or any
prepayment premium pursuant to this Note within fifteen (15) days of
the date due as prescribed herein; (ii) failure by the Company for
twenty (20) days after notice to it to satisfy any of its other
obligations or requirements or comply with any of its other agreements
under this Note; (iii) any proceedings under any bankruptcy laws of the
United States of America or under any insolvency, not disclosed to the
Lender, reorganization, receivership, readjustment of debt,
dissolution, liquidation or any similar law or statute of any
jurisdiction now or hereinafter in effect (whether in law or at equity)
is filed by or against the Company or for all or any part of its
property; or (iv) a breach by the Company of its obligations under the
Promissory Note Purchase Agreement, Security Agreement, Pledge
Agreement, Escrow Agreement, Irrevocable Transfer Agent Instructions or
any other related agreements hereunder between the Company and the
Lender of even date herewith which is not cured by the Company within
ten (10) days after receipt of written notice thereof. Upon an Event
of Default (as defined above), the entire principal balance and accrued
interest outstanding under this Note, and all other obligations of the
Company under this Note, shall be immediately due and payable without
any action on the part of the Lender, and the Lender shall be entitled
to seek and institute any and all remedies available to it. Upon an
Event of Default, the Lender shall, in addition to any other remedy,
have the right to convert the entire principal balance and accrued
interest outstanding under this Note, and all other obligations of the
Company under this Note into restricted shares of the Company's common
stock, no par value , (the "Common Stock") to be issued as outlined in
the Irrevocable Transfer Agent Instructions dated the date hereof, at
the lower of (a) one hundred twenty percent (120%) of the closing bid
price of the Common Stock as of the date hereof, or (b) eighty percent
(80%) of the average of the three (3) lowest closing bid prices of the
Common Stock for the thirty (30) days prior to the date of conversion.
(the "Conversion Shares")
7. Reservation of Shares As outlined Section 6. herein and more
fully in the Irrevocable Transfer Agent Instructions the Company shall
have reserved with its transfer agent such number of shares necessary
in order to effectuate conversions of this Note in an Even of Default.
The Company shall take all action reasonably necessary to at all times
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have authorized, and reserved for the purpose of issuance, such number
of shares of Common Stock as shall be necessary to effect the issuance
of the Conversion Shares. If at any time the Company does not have
available such shares of Common Stock as shall from time to time be
sufficient to effect the conversion of all of the Conversion Shares of
the Company shall call and hold a special meeting of the shareholders
within sixty (60) days of such occurrence, for the sole purpose of
increasing the number of shares authorized. The Company's management
shall recommend to the shareholders to vote in favor of increasing the
number of shares of Common Stock authorized. Management shall also
vote all of its shares in favor of increasing the number of authorized
shares of Common Stock.
8.
9. Maximum Interest Rate. In no event shall any agreed to or actual
interest charged, reserved or taken by the Lender as consideration for
this Note exceed the limits imposed by New Jersey law. In the event
that the interest provisions of this Note shall result at any time or
for any reason in an effective rate of interest that exceeds the
maximum interest rate permitted by applicable law, then without further
agreement or notice the obligation to be fulfilled shall be
automatically reduced to such limit and all sums received by the Lender
in excess of those lawfully collectible as interest shall be applied
against the principal of this Note immediately upon the Lender's
receipt thereof, with the same force and effect as though the Company
had specifically designated such extra sums to be so applied to
principal and the Lender had agreed to accept such extra payment(s) as
a premium-free prepayment or prepayments.
10. Secured Nature of the Note. This Note is secured by the Pledged
Property as defined in the Security Agreement between the Company and
the Lender of even date herewith, and the Pledged Shares as defined in
the Pledge Agreement among the Company, the Lender, and David Gonzalez,
Esq. of even date herewith.
11. Issuance of Capital Stock. With the exception of any shares of
common stock issued pursuant to the Standby Equity Distribution
Agreement between the Lender and the Company, So long as any portion of
this Note is outstanding, the Company shall not, without the prior
written consent of the Lender, (i) issue or sell shares of common stock
or preferred stock without consideration or for a consideration per
share less than the bid price of the common stock determined
immediately prior to its issuance, (ii) issue any warrant, option,
right, contract, call, or other security instrument granting the holder
thereof, the right to acquire common stock without consideration or for
a consideration less than such common stock's bid price value
determined immediately prior to it's issuance, (iii) enter into any
security instrument granting the holder a security interest in any and
all assets of the Company, or (iv) file any registration statement on
Form S-8.
12. Cancellation of Note. Upon the repayment by the Company of all of
its obligations hereunder to the Lender, including, without limitation,
the principal amount of this Note, plus accrued but unpaid interest,
the indebtedness evidenced hereby shall be deemed canceled and paid in
full. Except as otherwise required by law or by the provisions of this
Note, payments received by the Lender hereunder shall be applied first
against expenses and indemnities, next against interest accrued on this
Note, and next in reduction of the outstanding principal balance of
this Note.
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13. Severability. If any provision of this Note is, for any reason,
invalid or unenforceable, the remaining provisions of this Note will
nevertheless be valid and enforceable and will remain in full force and
effect. Any provision of this Note that is held invalid or
unenforceable by a court of competent jurisdiction will be deemed
modified to the extent necessary to make it valid and enforceable and
as so modified will remain in full force and effect.
14. Amendment and Waiver. This Note may be amended, or any provision
of this Note may be waived, provided that any such amendment or waiver
will be binding on a party hereto only if such amendment or waiver is
set forth in a writing executed by the parties hereto. The waiver by
any such party hereto of a breach of any provision of this Note shall
not operate or be construed as a waiver of any other breach.
15. Successors. Except as otherwise provided herein, this Note shall
bind and inure to the benefit of and be enforceable by the parties
hereto and their permitted successors and assigns.
16. Assignment. This Note shall not be directly or indirectly
assignable or delegable by the Company. The Lender may assign this
Note as long as such assignment complies with the Securities Act of
1933, as amended.
17. No Strict Construction. The language used in this Note will be
deemed to be the language chosen by the parties hereto to express their
mutual intent, and no rule of strict construction will be applied
against any party.
18. Further Assurances. Each party hereto will execute all documents
and take such other actions as the other party may reasonably request
in order to consummate the transactions provided for herein and to
accomplish the purposes of this Note.
19. Notices, Consents, etc. Any notices, consents, waivers or other
communications required or permitted to be given under the terms hereof
must be in writing and will be deemed to have been delivered: (i) upon
receipt, when delivered personally; (ii) upon receipt, when sent by
facsimile (provided confirmation of transmission is mechanically or
electronically generated and kept on file by the sending party); or (iii)
one (1) trading day after deposit with a nationally recognized overnight
delivery service, in each case properly addressed to the party to receive
the same. The addresses and facsimile numbers for such communications
shall be:
If to Company:
Global Concepts, Ltd.
14 Garrison Inn Lane
Garrison, NY 10524
Attention: Michael Margolies
Telephone: (845) 434-4100
Facsimile: (845) 424-4003
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With a copy to:
Robert Brantl, Esq,
322 4th Street
Brooklyn, NY 11215
Telephone: (718) 768-6045
Facsimile: (718) 965-4042
If to the Lender:
Cornell Capital Partners, L.P.
101 Hudson Street, Suite 3700
Jersey City, NJ 07302
Attention: Mark A. Angelo
Telephone: (201) 985-8300
Facsimile: (201) 985-8266
With a copy to:
David Gonzalez, Esq.
101 Hudson Street, Suite 3700
Jersey City, NJ 07302
Telephone: (201) 985-8300
Facsimile: (201) 985-8266
or at such other address and/or facsimile number and/or to the
attention of such other person as the recipient party has specified by
written notice given to each other party three (3) trading days prior
to the effectiveness of such change. Written confirmation of receipt
(A) given by the recipient of such notice, consent, waiver or other
communication, (B) mechanically or electronically generated by the
sender's facsimile machine containing the time, date, recipient
facsimile number and an image of the first page of such transmission or
(C) provided by a nationally recognized overnight delivery service,
shall be rebuttable evidence of personal service, receipt by facsimile
or receipt from a nationally recognized overnight delivery service in
accordance with clause (i), (ii) or (iii) above, respectively.
20. Remedies, Other Obligations, Breaches and Injunctive Relief. The
Lender's remedies provided in this Note shall be cumulative and in
addition to all other remedies available to the Lender under this Note,
at law or in equity (including a decree of specific performance and/or
other injunctive relief), no remedy of the Lender contained herein
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shall be deemed a waiver of compliance with the provisions giving rise
to such remedy and nothing herein shall limit the Lender's right to
pursue actual damages for any failure by the Company to comply with the
terms of this Note. No remedy conferred under this Note upon the
Lender is intended to be exclusive of any other remedy available to the
Lender, pursuant to the terms of this Note or otherwise. No single or
partial exercise by the Lender of any right, power or remedy hereunder
shall preclude any other or further exercise thereof. The failure of
the Lender to exercise any right or remedy under this Note or
otherwise, or delay in exercising such right or remedy, shall not
operate as a waiver thereof. Every right and remedy of the Lender
under any document executed in connection with this transaction may be
exercised from time to time and as often as may be deemed expedient by
the Lender. The Company acknowledges that a breach by it of its
obligations hereunder will cause irreparable harm to the Lender and
that the remedy at law for any such breach may be inadequate. The
Company therefore agrees that, in the event of any such breach or
threatened breach, the Lender shall be entitled, in addition to all
other available remedies, to an injunction restraining any breach, and
specific performance without the necessity of showing economic loss and
without any bond or other security being required.
21. Governing Law; Jurisdiction. All questions concerning the
construction, validity, enforcement and interpretation of this
Agreement shall be governed by the internal laws of the State of New
Jersey, without giving effect to any choice of law or conflict of law
provision or rule (whether of the State of New Jersey or any other
jurisdictions) that would cause the application of the laws of any
jurisdictions other than the State of New Jersey. Each party hereby
irrevocably submits to the exclusive jurisdiction of the Superior Court
of the State of New Jersey sitting in Hudson County, New Jersey and the
United States Federal District Court for the District of New Jersey
sitting in Newark, New Jersey, for the adjudication of any dispute
hereunder or in connection herewith or therewith, or with any
transaction contemplated hereby or discussed herein, and hereby
irrevocably waives, and agrees not to assert in any suit, action or
proceeding, any claim that it is not personally subject to the
jurisdiction of any such court, that such suit, action or proceeding is
brought in an inconvenient forum or that the venue of such suit, action
or proceeding is improper. Each party hereby irrevocably waives
personal service of process and consents to process being served in any
such suit, action or proceeding by mailing a copy thereof to such party
at the address for such notices to it under this Agreement and agrees
that such service shall constitute good and sufficient service of
process and notice thereof. Nothing contained herein shall be deemed
to limit in any way any right to serve process in any manner permitted
by law.
22. No Inconsistent Agreements. None of the parties hereto will
hereafter enter into any agreement, which is inconsistent with the rights
granted to the parties in this Note.
23. Third Parties. Nothing herein expressed or implied is intended or
shall be construed to confer upon or give to any person or entity, other
than the parties to this Note and their respective permitted successor
and assigns, any rights or remedies under or by reason of this Note.
24. Waiver of Jury Trial. AS A MATERIAL INDUCEMENT FOR THE LENDER TO
LOAN TO THE COMPANY THE MONIES HEREUNDER, THE COMPANY HEREBY WAIVES ANY
RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING RELATED IN ANY WAY TO
THIS AGREEMENT AND/OR ANY AND ALL OF THE OTHER DOCUMENTS ASSOCIATED
WITH THIS TRANSACTION.
25. Entire Agreement. This Note (including any recitals hereto) set
forth the entire understanding of the parties with respect to the subject
matter hereof, and shall not be modified or affected by any offer,
proposal, statement or representation, oral or written, made by or for
any party in connection with the negotiation of the terms hereof, and may
be modified only by instruments signed by all of the parties hereto.
IN WITNESS WHEREOF, this Promissory Note is executed by the undersigned
as of the date hereof.
CORNELL CAPITAL PARTNERS, LP
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By: Yorkville Advisors, LLC
Its: General Partner
By: /s/ Mark Angelo
------------------------------
Name: Mark Angelo
Its: Portfolio Manager
GLOBAL CONCEPTS, LTD.
By: /s/ Michael Margolies
Name: Michael Margolies
Title: Chairman & Chief
Executive Officer