Exhibit 10.1


 


THIS SECURITY HAS BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO,
OR FOR SALE IN CONNECTION WITH, ANY DISTRIBUTION THEREOF WITHIN THE MEANING OF
THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”).


 


THE SECURITIES REPRESENTED BY THIS NOTE HAVE NOT BEEN REGISTERED UNDER
THE ACT OR REGISTERED OR QUALIFIED UNDER ANY OTHER APPLICABLE FEDERAL OR STATE
SECURITIES LAWS. THESE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD OR
OTHERWISE TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION UNDER SUCH
LAWS OR AN OPINION OF COUNSEL ACCEPTABLE TO THE OBLIGOR TO THE EFFECT THAT SUCH
REGISTRATION IS NOT REQUIRED.


 


RIPTIDE WORLDWIDE, INC.


CONVERTIBLE SUBORDINATED NOTE


 


	
  US $1,565,000.00

  	
   

  	
  November 21, 2008

  



 


Riptide
Worldwide, Inc., a Nevada corporation, with its registered office at 200
E. Palm Valley Drive, 2nd Floor, Oviedo, FL 32765 (the “Obligor”, which term, as used
herein, shall include any successor thereto), for value received, hereby
executes and delivers this Convertible Subordinated Note (this “Note”) in favor of Matrix Holdings,
LLC (the “Holder”), and hereby promises
to pay to Holder, its designees or successors and permitted assigns, the
principal sum of US $1,565,000.00 (the “Principal Amount”).
This Note is issued in connection with the fund raising efforts by the Holder
for the benefit of the Obligor. Capitalized terms used and not otherwise
defined herein shall have the respective meanings ascribed to such terms in Section 10.


 


1.                                     Maturity Date.


 


The then
Principal Balance, together with any accrued but unpaid interest thereon (“Accrued Interest”) (subject to any
reductions per Section 8), shall become due and payable on November 21,
2013 (the “Maturity Date”).


 


2.                                     Payment Schedule


 


(a)                                 Principal Payments. Principal payments in
the amount of $300,000.00 shall be made by the Obligor to the Holder on the
first anniversary and each anniversary date for the following four years of the
Issue Date, with the remaining principal payment in the amount of $365,000
being made by the Obligor to the Holder on the fifth anniversary of the Issue
Date. Each such principal payment shall, upon payment as provided in this
paragraph, be subtracted from the Principal Amount to arrive at the then
outstanding principal balance hereunder (the “Principal Balance”).


 

















 


(b)                                Interest Payments. Beginning on the Issue
Date, this Note shall accrue interest on the unpaid outstanding principal
balance hereof at a rate equal to the Prime Rate. Interest payments shall be
paid by the Obligor to the Holder in the form of Common Stock on each of the
first, second, third, fourth and fifth anniversary of the Issue Date. For the
purpose of calculating the number of shares of Common Stock due to the Holder
at each interest payment date, the Accrued Interest shall be divided by the
Note Conversion Price. Notwithstanding any provision of this Note to the
contrary, interest will accrue and be payable under and pursuant to this Note
until all indebtedness under this Note (including, but not limited to, all
unpaid principal and all accrued but unpaid interest) is paid in full, unless
Holder shall have otherwise converted this Note in accordance with the terms
set forth in Section 8 hereof. In the event that any indebtedness under
this Note (including, but not limited to, all unpaid principal and all accrued
but unpaid interest) remains unpaid after the Maturity Date or Default Date,
then Obligor shall be in default under this Note and such indebtedness shall
bear interest at the rate of the Prime Rate plus four percent (4%) per annum
(the “Default Rate”) until
such indebtedness is paid in full.


 


3.                                     Acceleration.


 


Notwithstanding
any provision hereof to the contrary, the obligations of Obligor hereunder
shall forthwith mature and immediately accelerate and shall be immediately due
and payable on the Default Date (as hereinafter defined) in the event that any
of the following occurs (each, a “Default Event”):
(i) the business of Obligor is discontinued, sold, liquidated or otherwise
disposed of, including by merger, consolidation, sale of all or substantially
all of the assets, liquidation or dissolution; 
(ii) Obligor’s (A) admission in writing of its inability to
pay its obligations as they become due, (B) assignment for the benefit of
its creditors, or (C) application for, consent to or acquiescence in, the
appointment of a trustee, receiver or other custodian for Obligor, the property
of Obligor or any part thereof or, in the absence of any application, consent
or acquiescence, the appointment of a trustee, receiver or other custodian for
Obligor or a substantial part of the property of Obligor, which appointment is
not discharged within sixty (60) days; 
(iii) commencement of any case under Title 11 of the United States
Code or any other bankruptcy, reorganization, receivership, custodianship or similar
proceeding under any state or federal law by or against Obligor and, with
respect to any such case or proceeding that is involuntary, such case or
proceeding is not dismissed within ninety (90) days of the filing thereof;  (iv) Obligor defaults in the full,
prompt and complete performance of all terms, conditions, covenants and
obligations contained in this Note (including Obligor’s failure to pay any
amounts under this Note when due), or instrument executed and delivered by
Obligor to Holder in connection with this Note; or  (v) commencement of any litigation or
proceeding before any court, government or governmental agency, body or
instrumentality (federal, state, local or foreign) against or affecting
Obligor, and such litigation or proceeding substantially impairs the ability of
Obligor to perform its obligations under this Note. The date on which any
Default Event occurs is referred to herein as the “Default
Date.”  No remedy herein
conferred upon or reserved to the Holders is intended to be exclusive of any
other remedy or remedies, and each and every such remedy shall be cumulative,
and shall be in addition to every other remedy given hereunder, or now or
hereafter existing at law or in equity.


 

















 


4.                                     Prepayments.


 


The Principal
Amount or Principal Balance, as applicable, of this Note may be prepaid by
Obligor at any time.


 


5.                                     Method of Payment.


 


Obligor shall
pay the Principal Amount and any other amounts payable in cash hereunder
(including, at Holder’s option, any amounts payable under the Default Rate) in
cash by wire transfer of immediately available funds to an account designated
by Holder or, if no account has been designated, by certified check delivered
to Holder at such place as Holder shall designate to Obligor in writing.


 


6.                                     Presentment Waived.


 


Obligor hereby
expressly waives presentment for payment, demand, notice of dishonor, protest,
notice of protest, notice of default, notice of demand, notice of nonpayment,
notice of intent to accelerate and any other notice required to be given under
the law to Obligor in connection with the delivery, acceptance, performance
default or enforcement of this Note. In any action on this Note, Holder need
not produce or file the original of this Note but only need produce or file a
photocopy of this Note certified by the Holder to be a true and correct copy of
this Note. Acceptance by Holder of any payment that is less than the full
amount then due and owing hereunder shall not constitute a waiver of Holder’s
right to receive payment in full at such time or at any prior or subsequent
time.


 


7.                                     Order of Priority.


 


Prior to the
Maturity Date, except for the obligations of Obligor upon any payment or
conversion of the Principal Amount or Principal Balance, as applicable, in
accordance with the terms of this Note, all indebtedness evidenced by this Note
shall be:


 


(a)                                 With
respect to all money and property of Obligor (the “Property”), subordinated to (i) all
other existing secured indebtedness of Obligor to financial institutions (and
specifically excluding trade debt, inter-company debt or debt owing to
affiliates), and (ii) to the extent consented to by the Holder in writing,
indebtedness incurred after the Issue Date but prior to the Maturity Date (the “Senior Indebtedness”);


 


(b)                                Not
subject to any right of set-off; and


 


(c)                                 Except
upon the Maturity Date or the Default Date, Holder shall not claim, request,
demand, sue for, take or receive (whether by way of set-off or in any other
manner and whether from Obligor or any other person) any Property which is
subject to any Senior Indebtedness.


 

















 


8.                                     Conversion Rights.


 


For the
purpose of this Section 8, the following definitions apply,


 


“Next Financing”
is the next transaction (or series of related transactions) after the date of
this Note in which the Obligor issues and sells shares of its capital stock in
exchange for aggregate gross proceeds of at least $1.0 million (including any
amounts received upon conversion or cancellation of this Note).


 


“Next Financing Note Conversion Price”
means the per share purchase price paid for the Next Financing Securities (as
defined below) by the investors in the Next Financing.


 


“Next Financing Securities”
are the equity securities issued by the Obligor in the Next Financing with such
rights, preferences, privileges and restrictions, contractual or otherwise, as
the securities issued by the Obligor in the Next Financing.


 


(a)           Automatic Conversion. If
the Obligor consummates the Next Financing before the Maturity Date, then upon
the closing of the Next Financing the entire remaining Principal Balance and
Accrued Interest of this Note shall be automatically converted into shares of
Next Financing Securities at the Next Financing Note Conversion Price.


 


(b)           Maturity Conversion.


 


(i)                                    If
a Next Financing is not consummated before the Maturity Date, then, on or after
the Maturity Date, at the option of Holder in its sole discretion, the Holder
may convert the entire remaining Principal Balance and Accrued Interest of this
Note (the “Maturity Conversion”)
into a number of shares of Common Stock (the “Maturity Conversion Shares”) equal to the amount of the
Principal Balance plus the Accrued Interest to be converted divided by the Note
Conversion Price.


 


(ii)                                 In
order to exercise the right of Maturity Conversion, Holder shall surrender this
Note at the principal office of Obligor and shall give written notice of such
exercise, substantially in the form of Appendix 1 attached hereto (the “Conversion Notice”), to Obligor at such
office. Such Maturity Conversion shall be deemed to have been effected at the
close of business on the date on which such Conversion Notice, duly completed
and executed, shall have been given as aforesaid, and, at such time, the entire
remaining Principal Balance and Accrued Interest as is subject to such Maturity
Conversion shall be applied by Obligor in full payment of the Maturity
Conversion Shares to be issued by Obligor to the Holder as a result of the
Maturity Conversion and such application shall discharge Obligor from all
liability in respect of the Principal Balance and Accrued Interest of this
Note, and Holder shall be deemed for all purposes to have become the holder of
the Maturity Conversion Shares.


 


(iii)                              As
promptly as practicable, but in no event later than five (5) business days
after a Maturity Conversion, (1) Obligor, at its expense, shall cause 


 

















 


the Conversion
Notice presented by Holder to Obligor, and any other documents necessary for
such Maturity Conversion, to be effected and (2) Obligor shall cause the
Maturity Conversion Shares to be issued to Holder and shall cause Holder’s name
to be entered in Obligor’s shareholders’ registry with respect to such Maturity
Conversion Shares. Notwithstanding any provision of this Note to the contrary,
no Maturity Conversion shall be deemed to have occurred unless and until
Obligor shall have complied with the obligations set forth in this paragraph,
whereupon such Maturity Conversion shall be deemed to have been effective as of
the date the Conversion Notice is given to Obligor; provided, however, that no
failure by Obligor to so comply with such obligations shall prohibit Holder
from exercising its rights as the holder of the Maturity Conversion Shares.


 


9.                                     Miscellaneous.


 


(a)                                 Actions by Obligor. Prior to the Maturity
Date, any right, option, discretion, obligation, notice, approval, consent,
authorization or other action required or permitted to be exercised, performed,
given or taken by Obligor or its Board under this Note in order to enforce
Obligor’s rights under this Note shall be exercised, performed, given or taken
only pursuant to a resolution duly adopted by the Board. Notwithstanding the
foregoing, time shall be of the essence with regard to each and every term,
condition and obligation of the Obligor under this Note.


 


(b)                                No Dividends. Obligor shall not pay any
dividend or make any distribution on
any shares of its capital stock at any time during which any indebtedness under
this Note (including, but not limited to, all unpaid principal and all accrued
but unpaid interest) remains unpaid.


 


(c)                                 Issuance of Common Stock;
Reservation of Shares. Obligor
represents and warrants to Holder that: (i) all shares of Common Stock
which may be issued to the Holder hereunder shall, upon issuance pursuant to
the terms hereof, be duly authorized, validly issued, fully paid, and non-assessable
shares of Common Stock free from all taxes, liens and charges with respect to
the issue thereof; and (ii) at all times during which any indebtedness
under this Note (including, but not limited to, all unpaid principal and all
accrued but unpaid interest) remains unpaid, Obligor shall have authorized, and
shall have reserved for issuance, a sufficient number of shares of Common Stock
to accommodate Holder’s rights under Sections 2(b) and 8 hereof.


 


(d)                                Specific Performance. Obligor and Holder
acknowledge and agree that in the event of any breach of this Note, the
non-breaching party would be irreparably harmed and could not be made whole
solely by monetary damages. Obligor and Holder hereby agree that in addition to
any other remedy to which any party may be entitled at law or in equity, to the
extent permitted by applicable law, Obligor 


 

















 


and Holder
shall be entitled to obtain an injunction or compel specific performance of
this Note in any action instituted in any Court.


 


(e)                                 Interpretation. The headings and captions
in this Note are for convenience of reference only and shall not control or
affect the meaning or construction of any provisions hereof. When used in this
Note, (i) the symbol “$” shall refer to the lawful currency of the United
States of America and (ii) the words “including” and “include” shall be
deemed followed by the words “without limitation.”


 


(f)                                   Notices. All notices and other
communications required or permitted to be given hereunder shall be in writing and
shall be (i) delivered by hand, (ii) delivered by a reputable
commercial overnight delivery service, or (iii) transmitted by facsimile,
in each case, sent to the address or telecopier number set forth below. Such
notices shall be effective: (i) in the case of hand deliveries, when
received; (ii) in the case of an overnight delivery service, when
received; and (iii) in the case of facsimile transmission, when electronic
confirmation of receipt is received by the sender. Any party may change its
address and telecopy number by written notice to another party in accordance
with this provision, provided that such notice shall be effective only upon
receipt.


 


If to Obligor, to:


 


Riptide Worldwide, Inc.


200 E. Palm Valley Drive


Second Floor


Oviedo, FL 32765


 


If to Holder, to:


 


Matrix Holdings, LLC


1359 Broadway, Suite 600


New York, NY 10018


 


(g)                                Governing Law; Forum; Service of Process. This
Note shall be governed by and construed in accordance with the laws of the
State of New York (without giving effect to conflicts of law principles) as to
all matters, including validity, construction, effect, performance and remedies
of and under this Note. Venue in any and all suits, actions and proceedings
between the parties hereto and relating to the subject matter of this Note
shall be in the courts located in the State of New York (the “Courts”), which shall have exclusive
jurisdiction for such purpose, and Holder and Obligor hereby irrevocably submit
to the exclusive jurisdiction of such Courts and irrevocably waive the defense
of an inconvenient forum to the maintenance of any such suit, action or
proceeding. Service of process may be made in any manner recognized by such
Courts. Holder and Obligor each hereby irrevocably waives its right to a jury
trial arising out of any dispute in connection with this Note or the
transactions contemplated hereby.


 

















 


(h)                                Severability. The invalidity, illegality
or unenforceability of one or more of the clauses or provisions of this Note in
any jurisdiction shall not affect the validity, legality or enforceability of
this Note in such jurisdiction or the validity, legality or enforceability of
this Note, including any such clause or provision, in any other jurisdiction,
it being intended that all rights and obligations of the parties hereunder
shall be enforceable to the fullest extent permitted by law.


 


(i)                                    Successors; Assigns; Third-Party Beneficiaries.
The provisions of this Note shall be binding upon the parties hereto and their
respective heirs, successors and permitted assigns. Neither this Note nor the
rights or obligations of Obligor may be assigned by Obligor without the prior
written consent of Holder. Holder may assign its rights or obligations
hereunder to any Affiliate, provided that any assignment to an Affiliate which
is not a wholly owned subsidiary of the Holder shall be subject to the prior
written consent of Obligor which consent shall not be unreasonably withheld or
delayed. Any attempted assignment in contravention of this Note shall be null
and void and of no effect. This Note is for the sole benefit of the parties
hereto and their respective heirs, successors and permitted assigns and no
provision hereof, whether express or implied, is intended, or shall be
construed, to give any other Person any rights or remedies, whether legal or
equitable, hereunder.


 


(j)                                    Amendments. This Note may not be amended,
modified or supplemented except in a writing signed by Obligor and Holder.


 


(k)                                 Waiver. Any waiver (whether express or
implied) of any default or breach of or by any party to this Note shall not be
effective unless evidenced by a writing signed by the party against which such
waiver is sought to be enforced. No such waiver for any purpose shall
constitute a waiver of any other or subsequent default or breach, or for any other
purpose.


 


(l)                                    Legality of Interest. Notwithstanding any
provision herein or in any document or instrument now or hereafter securing
this Note, the total liability for payments in the nature of interest shall not
exceed the limits now imposed by applicable law. Any sums collected by Holder
deemed to be interest in excess of the legal rate shall, at the option of
Holder, (a) be returned to Obligor or (b) to the extent permitted by
applicable law, be applied by Holder in payment of the outstanding Principal
Balance under this Note.


 


(m)                              Attorneys’ Fees. If any suit or action is
instituted or attorneys are employed to collect this Note or any part hereof,
Obligor promises and agrees to pay all costs and expenses of collection,
including reasonable attorneys’ fees and court costs.


 

















 


10.                              Definitions.


 


As used in
this Note, the following terms shall have the following meanings:


 


“Affiliate” has the meaning
specified in Rule 12b-2 promulgated under the United States Securities
Exchange Act of 1934, as amended, and the rules and regulations
promulgated thereunder.


 


“Board” means the board of directors
of Obligor.


 


“Business Day” means any day other
than a Saturday, Sunday or other day on which banks in the City of New York,
State of New York, United States of America are required or authorized to be
closed.


 


“Common Stock” means the common
stock, par value $0.001 per share, of Obligor or the shares of common stock of
any entity that succeeds to the business of Obligor, including without
limitation, by merger, acquisition or reorganization.


 


“Conversion Notice” has the meaning
specified in Section 8(b)(ii).


 


“Court” has the meaning specified in
Section 9(g).


 


“Holder” has the meaning specified
in the Preamble.


 


“Issue Date” means the date of first
issuance of this Note as first set forth above.


 


“Maturity Conversion” has the
meaning specified in Section 8(b)(i).


 


“Maturity Conversion Shares” has the
meaning specified in Section 8(b)(i).


 


“Maturity Date” has the meaning
specified in Section 1.


 


“Note” has the meaning specified in
the Preamble.


 


“Note Conversion Price” means $1.00.


 


“Obligor” has the meaning specified
in the Preamble.


 


“Person” means any individual, firm,
corporation, proprietary, public or private company, partnership, limited
liability company, public liability company, trust or other entity, and shall
include any successor (by merger or otherwise) of such entity.


 


“Prime Rate” means the rate per
annum reported from time to time in The Wall Street Journal or, if not
so reported, the prime rate charged by one or more banks in the United States
in connection with loans made to customers.


 


“Principal Amount” has the meaning
specified in the Preamble.


 

















 


“Principal Balance” has the meaning
specified in Section 2(a).


 


[SIGNATURE PAGE TO FOLLOW]


 
















 


IN WITNESS WHEREOF, Obligor has caused this Convertible Subordinated
Note to be duly executed and delivered as of the date first set forth above.


 


	
   

  	
   

  
	
   

  	
  RIPTIDE
  WORLDWIDE, INC.                                                                             

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
					


















 


APPENDIX 1


 


Form of


CONVERSION
NOTICE


 


To:   Riptide
Worldwide, Inc.


 


The undersigned registered Holder of the
attached Convertible Subordinated Note, dated as of November 21, 2008 (the
“Note”), originally executed by
Riptide Worldwide, Inc., a company organized under the laws of the State
of Nevada (the “Obligor”),
in favor of Matrix Holdings, LLC (the “Holder”),
hereby irrevocably exercises the option to convert $1,565,000 of the Principal
Amount or such lesser amount, or the Principal Balance, as applicable, under
the Note into the Maturity Conversion Shares in accordance with the terms of
the Note, and directs that the certificates representing such Maturity
Conversion Shares issuable and deliverable upon such conversion be issued and
delivered to the registered Holder hereof unless a different name has been
indicated below. Capitalized terms used in this Conversion Notice and not
otherwise defined herein shall have the respective meanings ascribed to such terms
in the Note.


 


	
  Dated:

  	
                                                                                  

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Signature(s)