Exhibit 10.4
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (the "Agreement") entered into as of this
10th day of May, 2001, by and between Global Technovations, Inc. (the "Company")
and Wilmington Trust Co. and ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, Co-Trustees U/A Dated 11/25/70
with ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ for ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ (the "Purchaser").
WHEREAS, the Company desires to sell to the Purchaser $4,000,000 of 10%
Series D Convertible Preferred Stock (the "Preferred Stock") and warrants to
purchase shares of common stock on the terms and conditions contained in this
Agreement.
WHEREAS, the Purchaser has paid $2,000,000 pursuant to a letter agreement
dated January 11, 2001, has agreed to pay an additional $2,000,000 and purchase
the Preferred Stock on the above terms.
NOW, THEREFORE, in consideration of the mutual promises made herein, and in
consideration of the representations, warranties, and covenants contained
herein, the parties agree as follows:
1. Sale of Preferred Stock.
(a) Purchase and Sale of Preferred Stock. On and subject to
the terms and conditions of this Agreement, the Company shall sell to the
Purchaser and the Purchaser shall purchase from the Company 4,000 shares of
Preferred Stock, of which 2,000 shares were paid for pursuant to a letter
agreement dated January 11, 2001. The terms and conditions of the Preferred
Stock are contained on the Certificate of Designation annexed as Schedule 1(a)
to this Agreement which Certificate of Designation shall be promptly filed with
the Delaware Secretary of State as provided herein.
(b) Issuance of the Warrants. As additional consideration and
in addition to the warrants previously issued in January 2001, the Company shall
issue to the Purchaser 250,000 warrants exercisable at a price of $0.80 per
share (the "Warrants"). The Warrants shall be exercisable from the earlier of
(i) one year from the date of issuance, or (ii) the effective date of a
registration statement registering the underlying common stock and expiring 6:00
p.m., Palm Beach Gardens, Florida time 10 years after the date of issuance.
(c) The Closing. The closing of the transactions contemplated
by this Agreement (the "Closing") shall take place at the offices of the Company
at ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ at 10:00 a.m. on
the 15th day of May, 2001, subject to the satisfaction or waiver of all
conditions to the obligation of the parties to consummate the transactions
contemplated hereby (other than conditions with respect to actions, the
respective parties will take at the Closing itself), or such other date as the
parties may mutually determine (the "Closing Date"). At the Closing, (i) the
Company shall deliver to the Purchaser the various certificates, instruments and
documents referred to in this Agreement including certificates for the Preferred
Stock and the Warrants, and (ii) the Company shall execute the Certificate of
Designation and transmit it for filing to the Delaware Secretary of State.
2. Representations and Warranties of the Company. The Company
represents and warrants to the Purchaser that the statements contained in this
Section 2 are, to its knowledge, correct and complete as of the date of this
Agreement and shall, to its knowledge, be correct and complete as of the Closing
Date.
(a) Organization of the Company. The Company is a corporation
duly organized, validly existing, and in good standing under the laws of the
State of Delaware. The Company is duly authorized to conduct business and is in
good standing under the laws of each jurisdiction in which the Company owns,
leases or operates property or in which such qualification is required for the
conduct of its business except where the failure to be so qualified will not
have a material adverse effect on the results of operations or future prospects
of the Company taken as a whole. The Company has full corporate power and
authority to carry on the businesses in which it is engaged and to own and use
the properties owned and used by it. The Company has delivered to the Purchaser
correct and complete copies of its certificate of incorporation and bylaws, as
amended. The Company is not in default under or in violation of any provision of
its certificate of incorporation or bylaws.
(b) Authorization of Transaction. The Company has the full
power and authority to execute and deliver this Agreement and to perform its
obligations hereunder. Subject to execution, delivery and authorization of the
Purchaser, this Agreement constitutes the binding obligation of the Company
enforceable in accordance with its terms and conditions. The Company need not
give any notice to, make any filing with, or obtain any authorization, consent,
or approval of any government or governmental agency in order to consummate the
transactions contemplated by this Agreement.
(c) Non-Contravention. Neither the execution and the delivery
of this Agreement, nor the consummation of the transactions contemplated hereby,
will (i) violate any constitution, statute, regulation, rule, injunction,
judgment, order, decree, ruling, charge, or other restriction of any government,
governmental agency, or court to which the Company is subject or, (ii) conflict
with, result in a breach of, constitute a default under, result in the
acceleration of, create in any party the right to accelerate, terminate, modify,
or cancel, or require any notice under, any agreement, contract, lease, license,
instrument, or other arrangement to which the Company is a party or by which it
is bound or to which any of its assets are subject.
(d) Brokers' Fees. The Company has no liability or
obligation to pay any fees or commissions to any broker, --------------
finder, or agent with respect to the transactions contemplated by this
Agreement for which the Purchaser could become liable or obligated.
(e) Title to Assets. The Company has good and marketable title
to, or a valid leasehold interest in, the properties and assets used by it,
located on its premises, shown on its Form 10-Q for the quarter ended December
31, 2000 (the "Form 10-Q"), or acquired after the date thereof and the
properties and assets are free and clear of all security interests, except for
properties and assets disposed of in the ordinary course of business since
December 31, 2000, or as shown on Schedule 2(e).
(f) Capitalization.
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(i) The authorized capital stock of the Company consists of 50,000,000
shares of common stock, of which 29,809,281 shares of common stock are
outstanding and 5,000,000 shares of preferred stock, of which 310,000 shares of
Series A Junior Preferred Stock, 3,500 shares of Series B Preferred Stock, and
2,000 shares of Series C Preferred Stock are outstanding as of the date of this
Agreement. All of the issued and outstanding shares of common stock and
preferred stock are validly issued and are fully paid, non-assessable and free
of preemptive rights.
(ii) Except as disclosed in the Form 10-Q, or as set forth on Schedule
2(f)(ii), there are (A) no outstanding subscriptions, options, calls, contracts,
commitments, understandings, restrictions, arrangements, rights or warrants,
including any right of conversion or exchange under any outstanding security,
instrument or other agreement and also including any rights plan or other
anti-takeover agreement, obligating the Company to issue, deliver or sell, or
cause to be issued, delivered or sold, additional shares of the capital stock of
the Company or obligating the Company to grant, extend or enter into any
agreement or commitment to do so, and (B) no voting trusts, proxies or other
agreements or understandings to which the Company is a party or is bound with
respect to the voting of any shares of the capital stock of the Company. Subject
to authorization of the Company's stockholders, the shares of common stock to be
issued to the Purchaser upon conversion of the Preferred Stock and exercise of
the Warrants will be duly authorized, validly issued, fully paid and
non-assessable and free of preemptive rights.
(g) Reports and Financial Statements. The Company has filed
with the Securities and Exchange Commission (the "SEC") all forms, statements,
reports and documents (including all exhibits, amendments and supplements
thereto) required to be filed by it under each of the Securities Act of 1933
(the "Securities Act"), the Securities Exchange Act of 1934 (the "Exchange Act")
and the respective rules and regulations thereunder, all of which, as amended if
applicable, complied in all material respects with all applicable requirements
of the appropriate act and the rules and regulations thereunder. The Company has
previously delivered to the Purchaser copies of its Form 10-Q, as well as the
Form 10-K for the year ended September 30, 2000. As of their respective dates,
the Form 10-Q and the Form 10-K did not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading. The financial statements of the Company
included in such reports (collectively the "Company's Financial Statements")
have been prepared in accordance with generally accepted accounting principles
applied on a consistent basis (except as may be indicated therein or in the
notes thereto) and fairly present the financial position of the Company as of
the dates thereof and the results of operations and changes in financial
position for the periods then ended, subject, in the case of the unaudited
interim financial statements, to normal year-end and audit adjustments and any
other adjustments described therein.
(h) Absence of Undisclosed Liabilities. Except as disclosed in
the Form 10-Q, the Company did not have at December 31, 2000, and has not
incurred since that date, except as disclosed on Schedule 2(h), any liabilities
or obligations (whether absolute, accrued, contingent or otherwise) of any
nature, except: (A) liabilities, obligations or contingencies (1) which are
accrued or reserved against in the Company's Financial Statements or reflected
in the notes thereto, or (2) which were incurred after December 31, 2000 and
were incurred in the ordinary course of business and consistent with past
practices; (B) liabilities, obligations or contingencies which (1) would not, in
the aggregate, have a material adverse effect on the Company, or (2) have been
discharged or paid in full prior to the date hereof; and (C) liabilities and
obligations which are of a nature not required to be reflected in the financial
statements of the Company prepared in accordance with generally accepted
accounting principles consistently applied and which were incurred in the
ordinary course of business.
(i) Absence of Certain Changes or Events. Since the date of
the Form 10-Q, except as disclosed at meetings of the board of directors of the
Company, there has not been any material adverse change in the business,
operations, properties, assets, liabilities, condition (financial or other),
results of operations or prospects of the Company, taken as a whole, including
as a result of any change in capital structure, employee compensation
arrangement (including severance rights and benefit plans), accounting method or
applicable law.
(j) Material Agreements. Since February 20, 2001, the Company
has not entered into any material agreements which were not filed as exhibits to
or disclosed in the Form 10-Q, except in the ordinary course of business and as
disclosed on Schedule 2(j).
(k) Disclosure. The representations and warranties contained
in this Section 2(k) do not contain any untrue statement of a material fact or
omit to state any material fact necessary in order to make the statements and
information contained in this Section 2 not misleading.
(l) No Other Representations. The Company shall not be
deemed to have made to the Purchaser any representation ----------------------
or warranty other than as is expressly made in Sections 2(a) through (l).
3. Representations and Warranties of the Purchaser.
(a) Authorization of Transaction. The Purchaser has the full
power and authority to execute and deliver this Agreement and to perform its
obligations hereunder. Subject to execution, delivery and authorization of the
Company, this Agreement constitutes the obligation of the Purchaser enforceable
in accordance with its terms and conditions. The Purchaser need not give any
notice to, make any filing with, or obtain any authorization, consent, or
approval of any government or governmental agency in order to consummate the
transactions contemplated by this Agreement.
(b) Investment Intent. The Purchaser is acquiring the
Preferred Stock and the Warrants for investment for its own account and not with
a view to, or for resale in connection with any distribution thereof. The
Purchaser understands that neither the Preferred Stock nor the Warrants have
been registered under the Securities Act or the securities laws of any state by
reason of specific exemptions from the registration provisions of the Securities
Act and applicable state securities laws, which exemptions are dependent upon,
among other things, the bona fide nature of the investment of the Purchaser as
expressed herein.
(c) Investor Accreditation. The Purchaser in an
"accredited investor" as that term is defined by Rule 501(a) ----------------
promulgated under the Securities Act.
(d) Rule 144. The Purchaser understands that common stock
issuable upon conversion of the Preferred Stock and exercise of the Warrants
must be held indefinitely by it unless subsequently registered under the
Securities Act and applicable securities laws or an exemption from such
registration is available. The Purchaser is aware of the provisions of Rule 144
promulgated under the Securities Act which permit limited resale of securities
purchased in a private placement subject to the satisfaction of certain
conditions.
(e) No Public Market. The Purchaser understands that no public
market now exists for any of the Preferred Stock or Warrants to be issued to it
and that a public market is not expected to ever exist for the Preferred Stock
or the Warrants. The Purchaser is relying upon the registration rights provided
by Section 4(c) of this Agreement.
(f) Endorsement or Approval. The Purchaser understands and
acknowledges that no federal or state agency has passed upon or made any
recommendations or endorsement of the Preferred Stock or the Warrants.
(g) Direct Communication. The offer and sale of the Preferred
Stock and the Warrants to the Purchaser was made only through direct personal
communication between officers of the Company and officers or representatives of
the Purchaser and not through any general solicitation or advertising.
4. Post-Closing Covenants. The Company agrees as follows with
respect to the period following the Closing:
(a) General. In case at any time after the Closing any further
action is necessary to carry out the purposes of this Agreement, the Company
will take such further action (including the execution and delivery of such
further instruments and documents) as the Purchaser reasonably may request, all
at the sole cost and expense of the Company.
(b) Inspection. At all times upon reasonable notice, the
Purchaser or its authorized representatives shall have the power to inspect the
books and records including the books and records of account of the Company for
any proper purpose. As part of such inspection, the Purchaser and its authorized
representatives may make such copies and extra sets of the Company's books and
records as it or they may reasonably request. All of the foregoing rights are
subject to the inspecting persons executing any confidentiality agreement.
(c) Registration Rights. The Company shall file a registration
statement with the SEC registering for public sale the common stock issuable
upon conversion of the Preferred Stock and exercise of the Warrants unless such
Preferred Stock has been fully redeemed and exercise of the Warrants (as well as
common stock issuable upon exercise of all other warrants held by the Purchaser
and an affiliated trust) and use its best efforts to have it declared effective
within six months from the date hereof. Once registered, such shares of common
stock will be subject to volume sales limitations under which only 1/6 of the
total shares converted can be sold in any calendar month. Any shares of common
stock not sold in a month may be sold in any succeeding month. The Company shall
have no liability to the Purchaser for delays in the Purchaser being able to
sell the common stock (i) as long as the Company uses its best efforts to file
pre-effective or post-effective amendments or supplements, (ii) where the
required financial statements are unavailable, or (iii) the Company would be
required to disclose information that it has no duty to disclose under the
Securities Act, the Exchange Act or the rules of regulations of the Commission.
(i) The Company shall comply with the requirements of Section 4(c) at its
own expense including legal, accounting, filing, blue sky qualification, and
printing fees and costs, but excluding underwriting commissions or discounts and
attorneys' fees and costs for the Purchaser. The Company shall pay for all blue
sky costs in any states reasonably requested.
(ii) The Company's obligation under Sections 4(c) shall be conditioned upon
a timely receipt by the Company in writing of:
(A) Information as to the terms of such public offering furnished by
or on behalf of the Purchaser intending to make a public distribution of
its common stock; and
(B) Such other information as the Company may reasonably require from
the Purchaser for inclusion in such registration statement or
post-effective amendment including a statement as to compliance with
Regulation M promulgated under the Exchange Act.
5. Remedies For Breaches of This Agreement.
(a) Survival of Representations and Warranties. All of the
representations and warranties of the parties contained in this Agreement shall
survive the Closing hereunder and continue in full force and effect for a period
of three years (subject to any applicable statutes of limitations).
(b) Indemnification Provisions for Benefit of the Purchaser.
In the event the Company breaches any of its representations, warranties, and
covenants contained herein and provided that the Purchaser makes a written claim
for indemnification against the Company, then the Company agrees to indemnify
the Purchaser from and against the entirety of any losses, damages, amounts paid
in settlement of any claim or action, expenses, or fees including court costs
and reasonable attorneys' fees and expenses.
6. Miscellaneous.
(a) Expenses. Each of the parties to this transaction shall
bear its own costs and expenses (including legal fees and expenses) incurred in
connection with this Agreement and the transactions contemplated hereby except
that the Company shall reimburse the Purchaser up to $10,000 for legal fees and
expenses incurred in connection with the negotiation and execution of this
Agreement.
(b) Severability. In the event any parts of this Agreement are
found to be void, the remaining provisions of this Agreement shall nevertheless
be binding with the same effect as though the void parts were deleted.
(c) Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument. The execution of this
Agreement may be by actual or facsimile signature.
(d) Benefit. This Agreement shall be binding upon
and inure to the benefit of the parties hereto and their representatives,
successors and assigns.
(e) Notices and Addresses. All notices, offers, acceptance and
any other acts under this Agreement (except payment) shall be in writing, and
shall be sufficiently given if delivered to the addressees in person, by Federal
Express or similar receipted delivery, by facsimile delivery or, if mailed,
postage prepaid, by certified mail, return receipt requested, as follows:
The Company:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇., President Global Technovations,
Inc. ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, P.A. ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇. ▇▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇ Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
the Purchaser:
▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ TMF Investments, Inc. ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇
▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Wilmington Trust Company ▇▇▇▇▇▇ Square North ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇ Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, Esquire
or to such other address as any of them, by notice to the other may designate
from time to time. The transmission confirmation receipt from the sender's
facsimile machine shall be evidence of successful facsimile delivery. Time shall
be counted to, or from, as the case may be, the delivery in person or by
mailing.
(f) Attorney's Fees. In the event that there is any
controversy or claim arising out of or relating to this Agreement, or to the
interpretation, breach or enforcement thereof, and any action or proceeding
including an arbitration proceeding is commenced to enforce the provisions of
this Agreement, the prevailing parties shall be entitled to an award by the
court or arbitrator, as appropriate, of reasonable attorney's fees, costs and
expenses.
(g) Oral Evidence. This Agreement constitutes the entire
Agreement between the parties and supersedes all prior oral and written
agreements between the parties hereto with respect to the subject matter hereof.
Neither this Agreement nor any provision hereof may be changed, waived,
discharged or terminated orally, except by a statement in writing signed by the
party or parties against which enforcement or the change, waiver discharge or
termination is sought.
(h) Governing Law. This Agreement and any dispute,
disagreement, or issue of construction or interpretation arising hereunder
whether relating to its execution, its validity, the obligations provided herein
or performance shall be governed or interpreted according to the internal laws
of the State of Delaware without regard to choice of law considerations.
(i) Arbitration. Any controversy, dispute or claim arising out
of or relating to this Agreement, or its interpretation, application,
implementation, breach or enforcement which the parties are unable to resolve by
mutual agreement, shall be settled by submission by either party of the
controversy, claim or dispute to binding arbitration in Palm Beach County,
Florida (unless the parties agree in writing to a different location), before
three arbitrators in accordance with the rules of the American Arbitration
Association then in effect. In any such arbitration proceeding the Parties agree
to provide all discovery deemed necessary by the arbitrators. The decision and
award made by the arbitrators shall be final, binding and conclusive on all
parties hereto for all purposes, and judgment may be entered thereon in any
court having jurisdiction thereof.
(j) Section or Paragraph Headings. Section headings herein
have been inserted for reference only and shall not be deemed to limit or
otherwise affect, in any matter, or be deemed to interpret in whole or in part
any of the terms or provisions of this Agreement.
IN WITNESS WHEREOF the parties hereto have set their hands and seals as
of the date first above written.
GLOBAL TECHNOVATIONS, INC.
/s/▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
By:_____________________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇., President
WILMINGTON TRUST CO. & ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, CO-TRUSTEES U/A DATED 11/25/70
WITH ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ FOR ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
By: /s/▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
-------------------------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, Vice President
/s/▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
By: ____________________________________
▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, Co-Trustee
SCHEDULE 1(a)
TO THE STOCK PURCHASE AGREEMENT
BY AND BETWEEN
GLOBAL TECHNOVATIONS, INC.
AND
WILMINGTON TRUST CO. AND ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, CO-TRUSTEES
U/A DATED 11/25/70 WITH ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
FOR ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
Dated May 10, 2001
CERTIFICATE OF DESIGNATION
(see attached)
FIFTH CERTIFICATE OF DESIGNATION
OF
GLOBAL TECHNOVATIONS, INC.
I, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇., President, of Global Technovations, Inc.
a corporation organized and existing under the laws of the State of Delaware
(hereinafter, the "Corporation"), DO HEREBY CERTIFY:
That pursuant to Section 151 of the Delaware General Corporation Law, the Board
of Directors of the Corporation on May 10, 2001, adopted the following
resolution.
RESOLVED: That the designations, powers, preferences and rights of
the Series D Convertible, Preferred Stock be, and they hereby are, as set
forth below:
Section 1. Designation, Number of Shares and Stated Value of Series D
Convertible Preferred Stock. There is hereby authorized and established a series
of Preferred Stock that shall be designated as Series D Convertible Preferred
Stock ("Series D Preferred"), and the number of shares constituting such Series
shall be 4,000. Such number of shares may be increased or decreased, but not to
a number less than the number of shares of Series D Preferred then issued and
outstanding, by resolution adopted by the Board of Directors. The Stated Value
per share of the Series D Preferred shall be $1,000.
Section 2. Definitions. In addition to the definitions set
forth elsewhere herein, the following terms shall have the meanings indicated:
"Business Day" shall mean any day other than a Saturday, Sunday or a
day on which banking institutions in Miami, Florida are authorized or obligated
by law or executive order to close.
"Common Stock" shall mean the common stock, par value $0.001 per share,
of the Corporation.
"Corporation" shall mean Global Technovations, Inc.
"Junior Securities" means the Common Stock and any other series of
stock issued by the Corporation ranking junior as to the Series D Preferred upon
liquidation, dissolution or winding up of the Corporation.
Section 3. Dividends and Distributions.
(a) The Series D Preferred shall rank prior to the Common Stock and to
the Series B Convertible, Preferred Stock, but pari passu as a class with the
Series C Convertible Preferred Stock, with respect to dividends. The record
holders of shares of the Series D Preferred shall be entitled to receive cash
dividends at an annual rate of 10% of the par value (the "Dividend Rate"). Such
dividends shall be payable quarterly, when, as and if declared by the Board of
Directors out of funds legally available therefor, on April 10, July 10, October
10, and January 10 in each year (each a "Dividend Payment Date") to record
holders as of March 31, June 30, September 30 and December 31 in each year (the
"Record Date"). Dividends shall be paid in cash unless the Corporation is unable
to do so as a result of a restriction contained in a loan agreement or other
financing agreement entered into prior to or after the date of this Certificate
of Designation or if the agreement to pay cash or the payment of cash results in
a breach of any such agreement. In such case, the Corporation shall issue shares
of its Common Stock in lieu of a cash dividend.
(b) Dividends shall be calculated on the basis of the time elapsed from
and including the date of issuance of such shares to and including the Record
Date or on any final distribution date relating to redemption or to a
dissolution, liquidation or winding up of the Corporation. Dividends payable on
the shares of Series D Preferred for any period less than a full calendar year
shall be prorated for the partial year on the basis of a 360 day year.
(c) Dividends payable on each Dividend Payment Date shall be paid to
record holders of the shares of Series D Preferred as they appear on the books
of the Corporation at the close of business on the applicable Record Date
immediately preceding the respective Dividend Payment Date or on such other
record date as may be fixed by the Board of Directors of the Corporation in
advance of a Dividend Payment Date, provided that no such Record Date shall be
less than 10 nor more than 60 calendar days preceding such Dividend Payment
Date.
(d) So long as any shares of Series D Preferred are outstanding, no dividend or
other distribution, whether in liquidation or otherwise, shall be declared or
paid, or set apart for payment on or in respect of, any Junior Securities, nor
shall any Junior Securities, be redeemed, purchased or otherwise acquired for
any consideration (or any money be paid to a sinking fund or otherwise set apart
for the purchase or redemption of any such Junior Securities), unless (i) all
dividends on all outstanding shares of the Series D Preferred shall have been
paid or set apart for payment for all past dividend periods, and (ii) sufficient
funds shall have been set apart for the payment of the dividend for the then
current dividend period with respect to the Series D Preferred.
Section 4. Optional Conversion. The record holders of shares
of Series D Preferred shall have the following conversion rights:
(a) Right to Convert: Conversion Price, Subject to the terms,
conditions, and restrictions of this Section 4, the record holder of any share
or shares of Series D Preferred shall have the right to convert each such share
of Series D Preferred into a number of shares of Common Stock equal to the
Stated Value of the Series D Preferred plus all accrued but unpaid dividends of
such share or shares of Series D Preferred divided by the "Conversion Price".
The Conversion Price is (i) $0.6875 per share for $2,000,000 and (ii) for the
balance, 70% of the closing price of the Common Stock (on the date prior to
payment of the last $2,000,000 (the "Conversion Date").
(b) Conversion Dates. The record holder of any share or shares of
Series D Preferred may not convert such shares until the later of (i) January
15, 2002, or (ii) either one year from the date of issuance or an effective
registration statement for the public sale of the Common Stock.
(c) Conversion Notice. The right of conversion shall be exercised by
the record holder thereof by telecopying or faxing an executed and completed
written notice (the "Conversion Notice") to the Corporation that the record
holder elects to convert a specified number of shares of Series D Preferred into
Common Stock and by delivering the original Conversion Notice and a certificate
or certificates of Series D Preferred being converted to the Corporation at its
principal office (or such other office or agency of the Corporation as the
Corporation may designate by notice in writing to the record holder of the
Series D Preferred), together with a statement of the name or names (with
address) in which the certificate or certificates for shares of Common Stock
shall be issued. The business date indicated on a Conversion Notice which is
telecopied to and received by the Corporation in accordance with the provisions
hereof shall be deemed a Conversion Date. The Conversion Notice shall include
therein (a) the number of shares of Series D Preferred to be converted, (b) the
Conversion Price selected for the shares to be converted, and (c) the number of
shares of Common Stock to be issued in connection with such conversion. The
Corporation shall have the right to review the calculations included in the
Conversion Notice, and shall provide notice of any discrepancy or dispute
therewith within one business day of the receipt thereof.
(d) Issuance of Certificates - Time Conversion Effected. Promptly, but
in no event more than three business days after the receipt of the Conversion
Notice referred to in Section 4 (c) and surrender of the certificate or
certificates for the share or shares of Series D Preferred to be converted, the
Corporation shall issue and deliver, or cause to be issued and delivered, to the
record holder, shares of Common Stock, registered in such name or names as such
record holder may direct, a certificate or certificates for the number of whole
shares of Common Stock into which such shares of Series D Preferred are
converted. Such conversion shall be deemed to have been effected as of the close
of business on the date on which such Conversion Notice shall have been received
by the Corporation, and the rights of the record holder of such share or shares
of Series D Preferred shall cease, at such time, and the person or persons in
whose name or names any certificate or certificates for shares of Common Stock
shall be issuable upon such conversion shall be deemed to have become the record
holder of the shares represented thereby. Issuance of shares of Common Stock
issuable upon conversion which are requested to be registered in a name other
than that of the registered record holder shall be subject to compliance with
all applicable federal and state securities laws.
(e) Fractional Shares. No fractional shares shall be issued upon
conversion of any Series D Preferred into Common Stock. All fractional shares
shall be rounded down to the nearest whole share. In case the number of shares
of Series D Preferred represented by the certificate or certificates surrendered
pursuant to Section 4(a) exceeds the number of shares converted, the Corporation
shall, upon such conversion, execute and deliver to the record holder, at the
expense of the Corporation, a new certificate or certificates for the number of
shares of Series D Preferred represented by the certificate or certificates
surrendered which are not to be converted.
(f) Reorganization or Reclassification. If any capital reorganization
or reclassification of the capital stock of the Corporation shall be effected in
such a way that the record holder of Common Stock shall be entitled to receive
stock, securities or assets with respect to or in exchange for Common Stock,
then, as a condition of such reorganization or reclassification, lawful and
adequate provisions shall be made whereby each record holder of a share or
shares of Series D Preferred shall thereupon have the right to receive, upon the
basis and upon the terms and conditions specified herein and in lieu of the
shares of Common Stock immediately theretofore receivable upon the conversion of
such share or shares of Series D Preferred, such shares of stock, securities or
assets as may be issued or payable with respect to or in exchange for a number
of outstanding shares of such Common Stock equal to the number of shares of such
Common Stock immediately theretofore receivable upon such conversion had such
reorganization or reclassification not taken place, and in any such case
appropriate provisions shall be made with respect to the rights and interests of
such record holder to the end that the provisions hereof (including without
limitation provisions for adjustments of the conversion rights) shall thereafter
be applicable, as nearly as may be, in relation to any shares of stock,
securities or assets thereafter deliverable upon the exercise of such conversion
rights.
(g) Adjustments for Splits, Combinations, etc. The Conversion Price and
the number of shares of Common Stock into which the Series D Preferred shall be
convertible, shall be proportionately adjusted for stock splits, combinations,
or other similar events. Additionally, an adjustment shall be made in the case
of an exchange of Common Stock, consolidation or merger of the Corporation with
or into another corporation or sale of all or substantially all of the assets of
the Corporation in order to enable the record holder of Series D Preferred to
acquire the kind and the number of shares of stock or other securities or
property receivable in such event by a record holder of the Series D Preferred
of the number of shares that might otherwise have been issued upon the
conversion of the Series D Preferred. No adjustment to the Conversion Price will
be made for dividends (other than stock dividends), if any, paid on the Common
Stock or for securities issued for less than fair market value.
Section 5. Shares to be Reserved.
(a) The Corporation shall as promptly as possible hold its 2001 annual
meeting of stockholders at which time it shall make its best efforts to amend
its Certificate of Incorporation to increase its authorized Common Stock to
insure a sufficient number of shares of Common Stock available to reserve for
issuance upon the conversion of all outstanding shares of Series D Preferred,
pursuant to the terms and conditions set forth in Section 4 subject to other
provisions of this Section 5.
(b) Thereafter, the Corporation shall at all times reserve and keep
available out of its authorized Common Stock, solely for the purpose of issuance
upon the conversion of Series D Preferred as herein provided, such number of
shares of Common Stock as shall then be issuable upon the conversion of all
outstanding shares of Series D Preferred. The Corporation covenants that all
shares of Common Stock which shall be so issued shall be duly and validly
issued, fully paid and non assessable.
Section 6. Closing of Books. The Corporation shall at no time close its
transfer books against the transfer of any Series D Preferred or of any shares
of Common Stock issued or issuable upon the conversion of any shares of Series D
Preferred in any manner which interferes with the timely conversion of such
Series D Preferred, except as may otherwise be required to comply with
applicable securities laws.
Section 7. Redemption.
(a) The Corporation may redeem the Series D Preferred at any time, in
whole or in part, prior to the submission of a Conversion Notice, at 115% of the
Stated Value of the Series D Preferred plus all accrued and unpaid dividends
through 6:00 p.m., Palm Beach Gardens, Florida time on December 31, 2001, after
which time redemption may be made at 120% of Stated Value of the Series D
Preferred plus all accrued and unpaid dividends. To redeem Series D Preferred,
the Corporation shall deliver notice to the record holder, provided, however,
that the Corporation may not redeem Series D Preferred after a Conversion Notice
has been delivered by the record holder.
(b) As promptly as practicable after receiving notice of the
Corporation's election to redeem the Series D Preferred (but in no case later
than three business days thereafter), the record holder, at its expense, shall
surrender the Series D Preferred to the Corporation, duly endorsed with
medallion guarantees, at the principal offices of the Corporation. The
Corporation shall make the redemption payment within five business days after
the Corporation delivers to the record holder notice of redemption ("Redemption
Payment Date"). Dividends shall continue to accrue on the Series D Preferred
until the Redemption Payment Date. If the Series D Preferred is to be redeemed
in part, then upon surrender of the Series D Preferred, the Corporation shall
deliver to the record holder a new certificate of Series D Preferred in the
aggregate principal amount equal to the unredeemed portion thereof. If the
Corporation falls to make payment, by check drawn on an United States commercial
bank, to the record holder, in full by the Redemption Payment Date, the
Corporation shall forfeit its rights of redemption pursuant to Section 7 in
relation to the redemption made and all future redemptions.
Section 8. Reacquired Shares. Any shares of Series D Preferred
repurchased, redeemed, or otherwise acquired by the Corporation shall be retired
and canceled promptly after the acquisition thereof. All such shares shall, upon
their cancellation, become authorized but unissued shares of Series D Preferred,
without designation as to series or class.
Section 9. Voting Rights. Except as otherwise provided by law, the
record holders of the shares of Series D Preferred shall not have the right to
vote on any matters that come before the stockholders of the Corporation prior
to conversion as provided herein.
Section 10. Record Holders. The Corporation may deem and treat
the record holder of any shares Series D Preferred as the true and lawful owner
thereof for all purposes, and the Corporation shall not be affected by any
notice to the contrary.
Section 11. Notice. Except as may otherwise be provided by law or
provided for herein, all notices referred to herein shall be in writing, and all
notices hereunder shall be deemed to have been given upon receipt, in the case
of a notice of conversion given to the Corporation, or, in all other cases, upon
the earlier of receipt of such notice or two Business Days after the delivery by
overnight courier addressed if to the Corporation, to its principal executive
offices or to any agent of the Corporation designated as permitted hereby, or if
to a record holder of the Series D Preferred, to such record holder at the
address of such record holder of the Series D Preferred as listed in the stock
record books of the Corporation, or to such other address as the Corporation or
holder, as the case may be, shall have designated by notice similarly given.
Section 12. Successors and Transferees. The provisions applicable to
shares of Series D Preferred shall bind and inure to the benefit of and be
enforceable by the Corporation, the respective successors to the Corporation,
and by any record holder of shares of Series D Preferred.
Section 13. Guarantees. Whenever this Certificate of Designation refers
to the delivery of Series D Preferred, conversion of Series D Preferred or the
redemption of Series D Preferred, such delivery, conversion or redemption shall
not be completed until the record holder delivers an executed stock power
containing a medallion guarantee. The failure to mention the stock power herein
shall not create an implication to the contrary.
IN WITNESS WHEREOF, the undersigned has signed and executed the
foregoing Fifth Certificate of Designation as of the 15th day of May, 2001.
GLOBAL TECHNOVATIONS, INC.
By:_______________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇., President
SCHEDULE 2(e)
TO THE STOCK PURCHASE AGREEMENT
BY AND BETWEEN
GLOBAL TECHNOVATIONS, INC.
AND
WILMINGTON TRUST CO. AND ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, CO-TRUSTEES
U/A DATED 11/25/70 WITH ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
FOR ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
Dated May 10, 2001
TITLE TO ASSETS
NONE