EXHIBIT 99.2
------------
THE WARRANT EVIDENCED HEREBY, AND THE SECURITIES ISSUABLE HEREUNDER, HAVE BEEN
AND SHALL BE ISSUED WITHOUT REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR THE APPLICABLE STATE SECURITY LAWS. THE WARRANT AND SUCH SECURITIES
HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO DISTRIBUTION OR RESALE,
AND SHALL NOT BE SOLD, TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS THE PROPOSED
DISPOSITION IS THE SUBJECT OF A CURRENTLY EFFECTIVE REGISTRATION STATEMENT UNDER
SAID ACT AND UNDER APPLICABLE STATE SECURITIES LAWS OR UNLESS THE COMPANY HAS
RECEIVED AN OPINION OF COUNSEL, IN FORM AND SUBSTANCE REASONABLY SATISFACTORY TO
THE COMPANY, TO THE EFFECT THAT SUCH REGISTRATION IS NOT REQUIRED UNDER SAID ACT
AND SUCH STATE SECURITIES LAWS IN CONNECTION WITH SUCH DISPOSITION.
GLOBAL MATRECHS, INC.
COMMON STOCK PURCHASE WARRANT
Original Issue Date: October 19, 2004
Void After: October 19, 2009
This Warrant is Issued to
SOUTHRIDGE PARTNERS LP
(hereinafter called the "Holder," which term shall include the Holder's legal
representatives, heirs, successors and assigns) by Global Matrechs, Inc., a
Delaware corporation (hereinafter referred to as the "Company"). This Warrant
may be transferred by the Holder only in accordance with the provisions of
Section 12.
1. Exercise of Warrant. For value received and subject to the terms and
conditions hereinafter set forth, the Holder is entitled, upon surrender of this
Warrant at any time on or after October 19, 2004 and on or prior to October 19,
2009 (the "Exercise Date") (with the subscription form annexed hereto (the
"Subscription Form") duly executed) at the office of the Company at 90 Grove
Street, Suite 201, Ridgefield, Connecticut 06877, or such other office in the
United States of which the Company shall notify the Holder hereof in writing, to
purchase from the Company, at the purchase price hereinafter specified (as
adjusted from time to time, the "Exercise Price"), 10,000,000 shares (the
"Warrant Shares") (as adjusted from time to time) of the Common Stock, $0.0001
par value per share, of the Company (the "Common Stock"). The initial Exercise
Price shall be $0.025 per share.
2. Issuance of Stock Certificates. As promptly as practicable after
surrender of this Warrant and receipt of payment of the Exercise Price, the
Company shall issue and deliver to the Holder a certificate or certificates for
the shares purchased hereunder, in certificates of such denominations and in
such names as the Holder may specify.
3. Payment of Exercise Price. Payment of the Exercise Price shall be
made by check made payable to the order of the Company or wire transfer of funds
to a bank account designated by the Company.
4. Cashless Exercise. The Holder may notify the Company in a
Subscription Form of its election to utilize cashless exercise, in which event
the Company shall issue to the Holder the number of Warrant Shares determined as
follows:
X = Y [(A-B)/A]
where:
X = the number of Warrant Shares to be issued to the Holder.
Y = the number of Warrant Shares with respect to which this
Warrant is being exercised.
A = the average of the closing prices for the five trading
days immediately prior to (but not including) the
Exercise Date.
B = the Exercise Price.
For purposes of Rule 144 promulgated under the Securities Act, it is intended,
understood and acknowledged that the Warrant Shares issued in a cashless
exercise transaction shall be deemed to have been acquired by the Holder, and
the holding period for the Warrant Shares shall be deemed to have commenced, on
the date this Warrant was originally issued.
5. Limitation on Exercise. Notwithstanding anything to the contrary
contained herein, the number of Warrant Shares that may be acquired by the
Holder upon any exercise of this Warrant (or otherwise in respect hereof) shall
be limited to the extent necessary to insure that, following such exercise (or
other issuance), the total number of shares of Common Stock then beneficially
owned by such Holder and its affiliates and any other persons whose beneficial
ownership of Common Stock would be aggregated with the Holder's for purposes of
Section 13(d) of 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 exercise). 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.
6. Adjustment for Dividends, Distributions, Subdivisions, Combinations,
Mergers, Consolidations or Sale of Assets.
6.1 Manner of Adjustment.
(a) Stock Dividends, Distributions or Subdivisions. In the event the
Company shall issue shares of Common Stock in a stock dividend, stock
distribution or subdivision, the Exercise Price in effect immediately before
such stock dividend, stock distribution or subdivision shall, concurrently with
the effectiveness of such stock dividend,
2
stock distribution or subdivision, be proportionately decreased and the number
of shares of Common Stock purchasable by exercise of this Warrant shall be
proportionately increased.
(b) 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 Exercise 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 purchasable
by exercise of this Warrant shall be proportionately decreased.
(c) Adjustment for Reclassification, Exchange or Substitution. In the
event that the class of securities issuable upon the exercise of this Warrant
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 (other than any event addressed by Sections 6.1(a), 6.1(b) or 6.1(d)),
then and in each such event the Holder shall have the right thereafter to
exercise this Warrant for the kind and amount of shares of stock and other
securities and property receivable upon such reorganization, reclassification,
or other change, by holders of the number of shares of the class of securities
into which such Warrant might have been exercisable for immediately prior to
such reorganization, reclassification, or change, all subject to further
adjustment as provided herein.
(d) Adjustment for Merger, Consolidation or Sale of Assets. In the
event that the Company shall merge or consolidate with or into another entity or
sell all or substantially all of its assets, this Warrant shall thereafter be
exercisable for the kind and amount of shares of stock or other securities or
property to which a holder of the number of shares of Common Stock of the
Company deliverable upon exercise of this Warrant would have been entitled upon
such consolidation, merger or sale; and, in such case, appropriate adjustment
(as determined in good faith by the Company's Board of Directors) shall be made
in the application of the provisions set forth in this Section 6 with respect to
the rights and interest thereafter of the Holder of this Warrant, to the end
that the provisions set forth in this Section 6 shall thereafter be applicable,
as nearly as reasonably may be, in relation to any shares of stock or other
property thereafter deliverable upon the exercise of this Warrant.
6.2 Certificate as to Adjustments. Upon the occurrence of each
adjustment or readjustment of the Exercise Price pursuant to this Section 6, the
Company at its expense shall promptly compute such adjustment or readjustment in
accordance with the terms hereof and furnish to the Holder a certificate setting
forth such adjustment or readjustment and showing in detail the facts upon which
such adjustment or readjustment is based.
6.3 Closing of Books. The Company shall at no time close its transfer
books against the transfer of any shares of Common Stock issued or issuable upon
the exercise of this Warrant in any manner which interferes with the timely and
proper issuance of such shares.
7. Covenants of the Company. During the period within which the rights
represented by this Warrant may be exercised, the Company shall at all times
have authorized and reserved for the purpose of issue upon exercise of the
rights evidenced hereby, a sufficient number of shares of the class of
securities issuable upon exercise of this Warrant to provide for
3
the exercise of such rights. All securities which may be issued upon the
exercise of the rights represented by this Warrant shall, upon issuance, be duly
authorized, validly issued, fully paid and non-assessable and free from all
taxes, liens and charges with respect to the issue thereof. Upon surrender for
exercise, this Warrant shall be canceled and shall not be reissued; provided,
however, that upon the partial exercise hereof a substitute Warrant of like
tenor and date representing the rights to subscribe for and purchase any such
unexercised portion hereof shall be issued.
8. Voting Rights. This Warrant shall not entitle the Holder to any
voting rights or any other rights as a stockholder of the Company but upon
presentation of this Warrant with the Subscription Form duly executed and the
tender of payment of the Exercise Price at the office of the Company pursuant to
the provisions of this Warrant, the Holder shall forthwith be deemed a
stockholder of the Company in respect of the securities for which the Holder has
so subscribed and paid.
9. No Change Necessary. The form of this Warrant need not be changed
because of any adjustment in the Exercise Price or in the number of shares
issuable upon its exercise. A Warrant issued after any adjustment or any partial
exercise or upon replacement may continue to express the same Exercise Price and
the same number of shares (appropriately reduced in the case of partial
exercise) as are stated on this Warrant as initially issued, and that Exercise
Price and that number of shares shall be considered to have been so changed as
of the close of business on the date of adjustment.
10. Addresses for Notices. All notices, requests, consents and other
communications hereunder shall be in writing, either delivered in hand or mailed
by registered or certified mail, return receipt requested, or sent by facsimile,
and shall be deemed to have been duly made when delivered:
(a) If to the Holder, to the Holder's address as shown on the books of
the Company; or
(b) If to the Company, to the address set forth on the first page of
this Warrant.
11. Substitution. In the case this Warrant shall be mutilated, lost,
stolen or destroyed, the Company shall issue a new Warrant of like tenor and
denomination and deliver the same (a) in exchange and substitution for and upon
surrender and cancellation of any mutilated Warrant, or (b) in lieu of any
Warrant lost, stolen or destroyed, upon receipt of evidence satisfactory to the
Company of the loss, theft, or destruction of such Warrant (including, without
limitation, a reasonably detailed affidavit with respect to the circumstances of
any loss, theft or destruction), and of indemnity (or, in the case of the
initial Holder or any other institutional holder, an indemnity agreement)
satisfactory to the Company.
12. Transfer Restrictions. This Warrant shall not be transferable by
the Holder and shall be exercisable only by the Holder. Without the prior
written consent of the Company, the Warrant shall not be assigned, pledged or
hypothecated in any way (whether by operation of law or otherwise) and shall not
be subject to execution, attachment or similar process. Any
4
attempted transfer, assignment, pledge, hypothecation or other disposition of
the Warrant or of any rights granted hereunder contrary to the provisions of
this Section 12, or the levy of any attachment or similar process upon the
Warrant or such rights, shall be null and void.
13. Taxes. The Company makes no representation about tax treatment to
the Holder with respect to receipt or exercise of the Warrant or acquiring,
holding or disposing of the Common Stock, and the Holder represents that the
Holder has had the opportunity to discuss such treatment with the Holder's tax
advisers.
14. Remedies. Each party stipulates that the remedies at law in the
event of any default or threatened default by the other party in the performance
or compliance with any of the terms of this Warrant are and shall not be
adequate, and that such terms may be specifically enforced by a decree for that
specific performance of any agreement contained herein or by an injunction
against a violation of any of the terms hereof or otherwise.
15. Governing Law. This Warrant shall be construed and enforced in
accordance with, and governed by, the laws of the State of New York without
regard to its principles of conflicts of laws.
16. Miscellaneous. This Warrant and any term hereof may be changed,
waived, discharged or terminated only by an instrument in writing signed by the
Holder and the Company.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
5
COMMON STOCK PURCHASE WARRANT
IN WITNESS WHEREOF, the parties have caused this Warrant to be executed
this 19 day of October, 2004.
Global matrechs, inc.
By: /s/ Michael Sheppard
Name: Michael Sheppard
Title: President
SUBSCRIPTION FORM
(TO BE EXECUTED BY THE HOLDER
IN ORDER TO EXERCISE THE WARRANT)
Date: ________________
To: Global Matrechs, Inc.
90 Grove Street, Suite 201
Ridgefield, CT 06877
The undersigned, pursuant to the provisions set forth in the attached
Warrant hereby irrevocably elects to purchase _____ shares of the Common Stock
(the "Common Stock") covered by such Warrant and herewith makes payment of
$_________, representing the [full/partial] purchase price for such shares at
the price per share provided for in such Warrant.
The undersigned hereby agrees to take such other action and execute and
deliver such other documents as Global Matrechs, Inc. may require, in connection
with the issue of shares of Common Stock to the undersigned as aforesaid, in
order to comply with the provisions of such Warrant.
The undersigned is aware that the Common Stock has not been registered
under the Securities Act of 1933, as amended (the "Act") or any state securities
laws. The undersigned understands that the reliance by the Company on exemptions
under the Act is predicated in part upon the truth and accuracy of the
statements of the undersigned in this Subscription Form.
The undersigned represents and warrants that (1) it has been furnished
with all information which it deems necessary to evaluate the merits and risks
of the purchase of the Common Stock; (2) it has had the opportunity to ask
questions concerning the Common Stock and the Company and all questions posed
have been answered to its satisfaction; (3) it has been given the opportunity to
obtain any additional information it deems necessary to verify the accuracy of
any information obtained concerning the Common Stock and the Company; and (4) it
has such knowledge and experience in financial and business matters that it is
able to evaluate the merits and risks of purchasing the Common Stock and to make
an informed investment decision relating thereto.
The undersigned hereby represents and warrants that it is purchasing
the Common Stock for its own account and not with a view to the sale or
distribution of all or any part of the Common Stock.
The undersigned understands that because the Common Stock have not been
registered under the Act, it must continue to bear the economic risk of the
investment for an indefinite time and the Common Stock cannot be sold unless the
Common Stock are subsequently registered under applicable federal and state
securities laws or an exemption from such registration is available.
The undersigned agrees that it shall in no event sell or distribute or
otherwise dispose of all or any part of the Common Stock unless (1) there is an
effective registration statement under
the Act and applicable state securities laws covering any such transaction
involving the Common Stock or (2) the Company receives an opinion of legal
counsel to the undersigned (concurred in by legal counsel for the Company)
stating that such transaction is exempt from registration or the Company
otherwise satisfies itself that such transaction is exempt from registration.
The undersigned consents to the placing of a legend on its certificate
for the Common Stock stating that the Common Stock has not been registered and
setting forth the restriction on transfer contemplated hereby and to the placing
of a stop transfer order on the books of the Company and with any transfer
agents against the Common Stock until the Common Stock may be legally resold or
distributed without restriction.
The undersigned has considered the Federal and state income tax
implications of the exercise of the Warrant and the purchase and subsequent sale
of the Common Stock.
---------------------------------------
Signature
Print name:
---------------------------
Date:
---------------------------------