EXHIBIT 10.1
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SECURITIES PURCHASE AGREEMENT
THIS SECURITIES PURCHASE AGREEMENT (the "Agreement") is made this 12th day
of May, 2005, by and between Global Matrechs, Inc. (the "Company"), a Delaware
corporation, and Southridge Partners LP (the "Purchaser").
WHEREAS, the Purchaser purchased from the Company, a nonnegotiable 2%
secured convertible promissory note in the amount of $250,000 (the "First Note")
and a warrant (the "Warrant") on or about October 19th, 2004, with an option to
purchase an additional promissory note and warrant of the Company on the same
terms and conditions; Purchaser purchased from the Company, a second
nonnegotiable 2% secured convertible promissory note in the amount of $250,000
(the "Second Note") and a warrant (the "Warrant") on or about January 31st, 2005
on the same terms and conditions; Purchaser purchased from the Company, a third
nonnegotiable 2% secured convertible promissory note in the amount of $175,000
(the "Third Note") and a warrant (the "Warrant") on or about March 1, 2005 on
the same terms and conditions, a forth nonnegotiable 2% secured convertible
promissory note in the amount of $125,000 (the "Fourth Note") and a warrant (the
"Warrant") on or about April 12, 2005 on the same terms and conditions
WHEREAS, the Purchaser wishes to exercise its option to purchase from the
Company, and the Company wishes to sell to the Purchaser, a Fifth Note in the
principal amount of $125,000 substantially in the form of Exhibit A attached
hereto, and a warrant (the "Warrant") to purchase shares of common stock, par
value $0.0001 per share (the "Common Stock"), of the Company, substantially in
the form of Exhibit B attached hereto (the "Warrant Shares"), and to amend the
option to purchase a Additional Principal Amount and warrant from the Company as
follows.
NOW, THEREFORE, in consideration of the mutual covenants contained in this
Agreement, the parties agree as follows:
SECTION 1 Sale of Securities.
1.1. Authorization of Sale of the Securities. Subject to the terms and
conditions of this Agreement, the Company has authorized the sale and issuance
to the Purchaser of the Notes and Warrant (the "Securities").
1.2. Agreement to Sell and Purchase the Securities. At the Closing, the
Company will issue and sell to the Purchaser and the Purchaser will buy from the
Company the Securities upon the terms and conditions hereinafter set forth.
Subject to and in reliance upon all of the representations, warranties,
covenants, terms and conditions of this Agreement, any such closing hereunder
shall take place at the offices of Foley Hoag LLP, 155 Seaport Boulevard,
Boston, Massachusetts, 02210 at 10:00 a.m., local time, on the dates set forth
below, or at such other location, date and time as many be agreed upon between
the Purchaser and the Company.
1.3. Closing. At the closing of the sale and purchase of the Fifth Note
(the "Fifth Closing"), the Company shall issue and sell, and the Purchaser shall
purchase, the Fifth Note, which shall be in principal amount of $125,000 (the
"Fifth Principal Amount") and the Warrant
to purchase 5,000,000 shares of Common Stock, against payment by the Purchaser
of the Fifth Principal Amount.
1.4. Optional Closing. If, at any time prior to July 1, 2005, the
Purchaser shall deliver notice to the Company of its election to purchase an
Additional Note, then there shall be an additional closing (the "Optional
Closing"), at which Optional Closing the Company shall issue and sell, and the
Purchaser shall purchase, an Additional Note, which shall be in principal amount
of not more than $1,500,000 (the "Additional Principal Amount") and
substantially in the form of Exhibit A attached hereto, against payment by the
Purchaser of the Additional Principal Amount.
SECTION 2. Grant of Security Interest. The Company hereby grants to the
Purchaser, to secure the payment of the Notes, a security interest in and so
pledges and assigns to the Purchaser a security interest in all of its right,
title and interest to the following:
2.1. presently existing and hereafter arising accounts, contract
rights, and all other forms of obligations owing to the Company arising out of
the sale or lease of goods or the rendition of services by the Company, whether
or not earned by performance, and any and all credit insurance, guaranties, and
other security therefor, as well as all merchandise returned to or reclaimed by
the Company and the Company's Books relating to any of the foregoing
(collectively, "Accounts");
2.2. present and future general intangibles and other personal property
(including choses or things in action, goodwill, patents, trade names,
trademarks, servicemarks, copyrights, blueprints, drawings, purchase orders,
customer lists, monies due or recoverable from pension funds, route lists,
monies due under any royalty or licensing agreements, infringement claims,
computer programs, computer discs, computer tapes, literature, reports, catalogs
deposit accounts, insurance premium rebates, tax refunds, and tax refund claims)
other than goods and Accounts, and the Company's Books relating to any of the
foregoing (collectively, "General Intangibles");
2.3. present and future letters of credit, notes, drafts, instruments,
certificated and uncertificated securities, documents, leases, and chattel
paper, and the Company's Books relating to any of the foregoing (collectively,
"Negotiable Collateral");
2.4. present and future inventory in which the Company has any
interest, including goods held for sale or lease or to be furnished under a
contract of service and all of the Company's present and future raw materials,
work in process, finished goods, and packing and shipping materials, wherever
located, and any documents of title representing any of the above, and the
Company's Books relating to any of the foregoing (collectively, "Inventory");
2.5. books and records including: ledgers; records indicating,
summarizing, or evidencing the Company's assets or liabilities, or the
collateral; all information relating to the Company's business operations or
financial condition; and all computer programs, disc or tape files, printouts,
funds or other computer prepared information, and the equipment containing such
information (collectively, "Company's Books");
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2.6. substitutions, replacements, additions, accessions, proceeds,
products to or of any of the foregoing, including, but not limited to, proceeds
of insurance covering any of the foregoing, or any portion thereof, and any and
all Accounts, General Intangibles, Negotiables, Collateral, Inventory, money,
deposits, accounts, or other tangible or intangible property resulting from the
sale or other disposition of the accounts, General Intangibles, Negotiable
Collateral, Inventory or any portion thereof or interest therein and the
proceeds thereof.
SECTION 3. Registration Rights.
3.1. Request for Registration. If the Company proposes to register any
of its securities under the Securities Act of 1933, as amended ("Act") (except
for registrations on Forms S-8 or S-4 or their equivalent), it will give written
notice by registered mail, at least twenty (20) days prior to the filing of each
such registration statement, to the Purchaser of its intention to do so. If the
Purchaser notifies the Company within ten (10) days after receipt of any such
notice of its desire to include any of the Warrant Shares or Conversion Shares
(together, the "Underlying Shares"), the Company shall afford the Purchaser the
opportunity to have any such Underlying Shares registered under such
registration statement at the Company's sole cost and expense; provided,
however, that the Purchaser shall not have any registration rights with respect
to that certain registration on Form SB-2 to be filed with the Securities and
Exchange Commission with respect to the Private Equity Credit Agreement entered
into by the Company on January 31, 2005, or any amendments thereto.
3.2. Limitations on Registration.
(a) Termination of Registration Rights. These rights may be
exercised at any time on an unlimited number of occasions after the date hereof
until such time when all Underlying Shares may be sold without volume
restrictions pursuant to Rule 144(k) as determined by the counsel to the Company
pursuant to a written opinion letter to such effect, addressed and acceptable to
the Company's transfer agent and the Purchaser.
(b) Underwritten Offerings. In connection with any offering
involving an underwriting of shares being issued by the Company, the Company
shall not be required to include any Underlying Shares in such underwriting
unless such Purchaser accepts the terms of the underwriting as agreed upon
between the Company and the underwriters selected by it, and then only in such
quantity as will not, in the reasonable opinion of the underwriters, jeopardize
the success of the offering by the Company. If the underwriters reasonably
believe the total amount of Underlying Shares which the Purchaser requests to be
included in an underwritten offering pursuant to this Section 3, together with
any other shares of Common Stock for which registration has been requested by
holders with similar rights, exceeds the amount of securities that the
underwriters reasonably believe compatible with the success of the offering, the
Company shall only be required to include in the offering so many of the
Underlying Shares and such other shares of Common Stock as the underwriters
reasonably believe will not jeopardize the success of the offering, such shares
so included to be apportioned pro rata among the Purchaser and other holders
based on the number of shares for which registration was initially requested.
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SECTION 4. Expenses. Each party hereto will pay its own expenses in
connection with the transactions contemplated hereby, whether or not such
transactions shall be consummated.
SECTION 5. Notices. All notices, requests, consents, and other
communications under this Agreement shall be in writing and shall be delivered
by hand, sent via overnight courier, sent by facsimile, or mailed by first class
certified or registered mail, return receipt requested, postage prepaid:
if to the Company, to:
Global Matrechs, Inc.
90 Grove Street, Suite 201
Ridgefield, Connecticut 06877
Attn: Michael Sheppard
Facsimile: (203)431-6665
with a copy to:
Foley Hoag LLP
155 Seaport Boulevard
Boston, MA 022110
Attn: David A. Broadwin, Esq.
Facsimile: (617) 832-7000
if to the Purchaser, to:
Southridge Partners LP
c/o Krieger & Prager LLP
39 Broadway, Suite 1440
New York, NY 10006
Attention: Samuel Krieger
Facsimile: 212-363-2999
SECTION 6. Severability. In case any provision contained in this Agreement
should be invalid, illegal or unenforceable in any respect, the validity,
legality and enforceability of the remaining provisions contained herein shall
not in any way be affected or impaired thereby.
SECTION 7. Governing Law. This Agreement shall be governed by and
interpreted in accordance with the laws of the State of New York for contracts
to be wholly performed in such state and without giving effect to the principles
thereof regarding the conflict of laws. Each of the parties consents to the
exclusive jurisdiction of the federal courts whose districts encompass any part
of the County of New York or the state courts of the State of New York sitting
in the County of New York in connection with any dispute arising under this
Agreement or any of the other Transaction Agreements and hereby waives, to the
maximum extent permitted by law, any objection, including any objection based on
FORUM NON CONVENIENS, to the bringing of any such proceeding in such
jurisdictions. Each of the parties hereto expressly waives its right to a trial
by jury with respect to any adjudication arising between the parties pursuant to
this Agreement.
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SECTION 8. Entire Agreement. This Agreement contains the entire agreement
of the parties with respect to the subject matter hereof and supersedes and is
in full substitution for any and all prior oral or written agreements and
understandings between them related to such subject matter, and neither party
hereto shall be liable or bound to the other party hereto in any manner with
respect to such subject matter by any representations, indemnities, covenants or
agreements except as specifically set forth herein.
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IN WITNESS WHEREOF, the parties hereto have caused this Securities
Purchase Agreement to be executed as of the date first above written by their
duly authorized representatives shown below:
GLOBAL MATRECHS, INC.
By: /s/ Michael Sheppard
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Name: Michael Sheppard
Title: President
SOUTHRIDGE PARTNERS LP
By: Southridge Capital Management LLC
Its: General Partner
By: /s/ Stephen M. Hicks
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Title: General Partner and President
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