EXHIBIT 10.17
THIS WARRANT AND THE UNDERLYING SECURITIES HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY OTHER
SECURITIES LAWS, HAVE BEEN TAKEN FOR INVESTMENT, AND MAY NOT BE SOLD OR
TRANSFERRED OR OFFERED FOR SALE OR TRANSFER UNLESS A REGISTRATION STATEMENT
UNDER THE SECURITIES ACT AND OTHER APPLICABLE SECURITIES LAWS WITH RESPECT TO
SUCH SECURITIES IS THEN IN EFFECT, OR IN THE OPINION OF COUNSEL TO THE ISSUER OF
THESE SECURITIES, SUCH REGISTRATION UNDER THE SECURITIES ACT AND OTHER
APPLICABLE SECURITIES LAWS IS NOT REQUIRED.
Date: January 11, 2001
GLOBAL TECHNOVATIONS, INC.
WARRANT FOR THE PURCHASE OF 429,000 SHARES OF
COMMON STOCK
THIS IS TO CERTIFY that, for value received, G. Xxxx Xxxxxx Trustee U/A dated
10/23/85 FBO descendants of Xxxxxx X. Xxxxxx, and its successors and assigns
(collectively, the "Holder"), is entitled to purchase, subject to the terms and
conditions hereinafter set forth, up to 2,450,000 shares of the common stock
("Common Stock"), of Global Technovations, Inc., a Delaware corporation (the
"Company"), under the terms summarized below, and to receive certificates for
the Common Stock so purchased.
Issuance Date No. of Underlying Shares Warrant Price Expiration Date
January 12, 1998 50,000 $2.00 January 12, 2008
November 1, 1998 150,000 $1.94 October 31, 2008
May 1, 1999 21,500 $1.75 April 30, 2009
August 13, 1999 100,000 $.875 August 12, 2009
October 21, 1999 107,500 $2.375 October 20, 2009
(a) Exercise Period. The exercise period is the period beginning on the earlier
of (i) the effective date of a registration statement covering the shares of
Common Stock or (ii) one year from the date of the Issuance Date and ending for
each block of Warrants at 6:00 p.m. New York time on the Expiration Date as set
forth above (the "Exercise Period"). This Warrant will terminate automatically
and immediately upon the expiration of each applicable Exercise Period.
(b) Exercise of Warrant. This Warrant may be exercised, in whole or in part, at
any time and from time to time during the applicable Exercise Periods. Such
exercise shall be accomplished by tender to the Company of the purchase price
set forth above as the Warrant Price multiplied by the number of underlying
shares to be acquired in cash, by wire transfer or by certified check or bank
cashier's check, payable to the order of the Company, together with presentation
and surrender to the Company of this Warrant with an executed subscription in
substantially the form attached hereto as Exhibit A (the "Subscription"). Upon
receipt of the foregoing, the Company will deliver to the Holder, as promptly as
possible, a certificate or certificates representing the shares of Common Stock
so purchased, registered in the name of the Holder or its transferee (as
permitted under Section 3 below). With respect to any exercise of this Warrant,
the Holder will for all purposes be deemed to have become the holder of record
of the number of shares of Common Stock purchased hereunder on the date this
Warrant, a properly executed Subscription and payment of the Warrant Price is
received by the Company (the "Exercise Date"), irrespective of the date of
delivery of the certificate evidencing such shares, except that, if the date of
such receipt is a date on which the stock transfer books of the Company are
closed, such person will be deemed to have become the holder of such shares at
the close of business on the next succeeding date on which the stock transfer
books are open. Fractional shares of Common Stock will not be issued upon the
exercise of this Warrant. In lieu of any fractional shares that would have been
issued but for the immediately preceding sentence, the Holder will be entitled
to receive cash equal to the current market price of such fraction of a share of
Common Stock on the trading day immediately preceding the Exercise Date. In the
event this Warrant is exercised in part, the Company shall issue a new Warrant
to the Holder covering the aggregate number of shares of Common Stock as to
which this Warrant remains exercisable for.
(c) Transferability and Exchange.
(d) This Warrant, and the Common Stock issuable upon the exercise hereof, may
not be sold, transferred, pledged or hypothecated unless the Company shall
have been provided with an opinion of the Company's counsel that such
transfer is not in violation of the Securities Act, and any applicable
state securities laws. Subject to the satisfaction of the aforesaid
condition, this Warrant and the underlying shares of Common Stock shall be
transferable from time to time by the Holder upon written notice to the
Company. If this Warrant is transferred, in whole or in part, the Company
shall, upon surrender of this Warrant to the Company, deliver to each
transferee a Warrant evidencing the rights of such transferee to purchase
the number of shares of Common Stock that such transferee is entitled to
purchase pursuant to such transfer. The Company may place a legend similar
to the legend at the top of this Warrant on any replacement Warrant and on
each certificate representing shares issuable upon exercise of this Warrant
or any replacement Warrants. Only a registered Holder may enforce the
provisions of this Warrant against the Company. A transferee of the
original registered Holder becomes a registered Holder only upon delivery
to the Company of the original Warrant and an original Assignment,
substantially in the form set forth in Exhibit B attached hereto.
(e) This Warrant is exchangeable upon its surrender by the Holder to the
Company for new Warrants of like tenor and date representing in the
aggregate the right to purchase the number of shares purchasable hereunder,
each of such new Warrants to represent the right to purchase such number of
shares as may be designated by the Holder at the time of such surrender.
(f) 4. Adjustments to Warrant Price and Number of Shares Subject to Warrant.
The Warrant Prices and the number of shares of Common Stock purchasable
upon the exercise of this Warrant are subject to adjustment from time to
time upon the occurrence of any of the events specified in this Section 4.
For the purpose of this Section 4, "Common Stock" means shares now or
hereafter authorized of any class of common stock of the Company and any
other stock of the Company, however designated, that has the right to
participate in any distribution of the assets or earnings of the Company
without limit as to per share amount (excluding, and subject to any prior
rights of, any class or series of preferred stock).
(a) In case the Company shall (i) pay a dividend or make a
distribution in shares of Common Stock or other securities to holders of Common
Stock, (ii) subdivide its outstanding shares of Common Stock into a greater
number of shares, (iii) combine its outstanding shares of Common Stock into a
smaller number of shares, or (iv) issue by reclassification of its shares of
Common Stock other securities of the Company, then the Warrant Prices in effect
at the time of the record date for such dividend or on the effective date of
such subdivision, combination or reclassification, and/or the number and kind of
securities issuable on such date, shall be proportionately adjusted so that the
Holder of any Warrant thereafter exercised shall be entitled to receive the
aggregate number and kind of shares of Common Stock (or such other securities
other than Common Stock) of the Company, at the same aggregate Warrant Price,
that, if such Warrant had been exercised immediately prior to such date, the
Holder would have owned upon such exercise and been entitled to receive by
virtue of such dividend, distribution, subdivision, combination or
reclassification. Such adjustment shall be made successively whenever any event
listed above shall occur.
(b) In case the Company shall fix a record date for the making
of a distribution to all holders of Common Stock (including any such
distribution made in connection with a consolidation or merger in which the
Company is the surviving corporation) of cash, evidences of indebtedness or
assets, or subscription rights or warrants, the Warrant Price to be in effect
after such record date shall be determined by multiplying the Warrant Price in
effect immediately prior to such record date by a fraction, the numerator of
which shall be the current market price per share of Common Stock on such record
date, less the amount of cash so to be distributed or the fair market value (as
determined in good faith by, and reflected in a formal resolution of, the Board
of Directors of the Company) of the portion of the assets or evidences of
indebtedness so to be distributed, or of such subscription rights or warrants,
applicable to one share of Common Stock, and the denominator of which shall be
the Current Market Price, as defined, per share of Common Stock. Such adjustment
shall be made successively whenever such a record date is fixed; and in the
event that such distribution is not so made, the Warrant Price shall again be
adjusted to be the Warrant Price which would then be in effect if such record
date had not been fixed.
(c) For purposes of this Warrant "Current Market Price" shall
mean the price of the Company's Common Stock determined as of the last business
day for which the prices or quotes below are available: (i) the closing price of
the Company 's Common Stock appearing on a national securities exchange if the
principal market for such Common Stock is such an exchange or if not listed or
if such exchange is not the principal market, appearing on the Nasdaq Stock
Market ("Nasdaq"); (ii) if the principal market for the Company's Common Stock
is not an exchange or Nasdaq, then the average bid and asked price for its
Common Stock as listed on the National Association of Securities Dealers, Inc.'s
Bulletin Board ("OTC-BB"); or (iii) if the principal market for Company's Common
Stock is not an exchange, Nasdaq or the OTC-BB, then the average bid and asked
price for the Company's Common Stock as reported in the National Quotation
Bureau's "pink sheets"; or (iv) if the Common Stock is not so listed as provided
in subsections (i), (ii) or (iii) above, and bid and asked prices are not so
reported, the "Current Market Price" shall be an amount determined in such
reasonable manner as may be prescribed by the Board of Directors of the Company.
(d) Notwithstanding any provision herein to the contrary, no adjustment in the
Warrant Price shall be required unless such adjustment would require an
increase or decrease of at least 1% in the Warrant Price; provided,
however, that any adjustments which by reason of this subsection (d) are
not required to be made shall be carried forward and taken into account in
any subsequent adjustment. All calculations under this Section 4 shall be
made to the nearest cent or the nearest one-hundredth of a share, as the
case may be.
(e) In the event that at any time, as a result of an adjustment made pursuant
to subsection (a) above, the Holder of any Warrant thereafter exercised
shall become entitled to receive any shares of capital stock of the Company
other than shares of Common Stock, thereafter the number of such other
shares so receivable upon exercise of any Warrant shall be subject to
adjustment from time to time in a manner and on terms as nearly equivalent
as practicable to the provisions with respect to the shares of Common Stock
contained in this Section 4, and the other provisions of this Warrant shall
apply on like terms to any such other shares.
(f) If the Company merges or consolidates into or with another corporation or
entity, or if another corporation or entity merges into or with the Company
(excluding such a merger in which the Company is the surviving or
continuing corporation and which does not result in any reclassification,
conversion, exchange, or cancellation of the outstanding shares of Common
Stock), or if all or substantially all of the assets or business of the
Company are sold or transferred to another corporation, entity, or person,
then, as a condition to such consolidation, merger, or sale (any
"Transaction"), lawful and adequate provision shall be made whereby the
Holder shall have the right from and after the Transaction to receive, upon
exercise of this Warrant and upon the terms and conditions specified herein
and in lieu of the shares of the Common Stock that would have been issuable
if this Warrant had been exercised immediately before the Transaction, such
shares of stock, securities, or assets as the Holder would have owned
immediately after the Transaction if the Holder had exercised this Warrant
immediately before the effective date of the Transaction.
(g) In case any event shall occur as to which the other provisions of this
Section 4 are not strictly applicable but the failure to make any
adjustment would not fairly protect the purchase rights represented by this
Warrant in accordance with the essential intent and principles hereof,
then, in each such case, the Company shall effect such adjustment, on a
basis consistent with the essential intent and principles established in
this Section 4, as may be necessary to preserve, without dilution, the
purchase rights represented by this Warrant.
5. Registration Rights. The Holder shall be entitled to the benefits as
provided in the Registration Rights Agreement, the form of which is
attached hereto as Exhibit C.
6. Reservation of Shares. The Company agrees at all times to reserve and hold
available out of its authorized but unissued shares of Common Stock the
number of shares of Common Stock issuable upon the full exercise of this
Warrant. The Company further covenants and agrees that all shares of Common
Stock that may be delivered upon the exercise of this Warrant will, upon
delivery, be fully paid and nonassessable and free from all taxes, liens
and charges with respect to the purchase thereof hereunder.
7. Notices to Holder. Upon any adjustment of the Warrant Price (or number of
shares of Common Stock purchasable upon the exercise of this Warrant)
pursuant to Section 4, the Company shall promptly thereafter cause to be
given to the Holder written notice of such adjustment. Such notice shall
include the Warrant Price (and/or the number of shares of Common Stock
purchasable upon the exercise of this Warrant) after such adjustment, and
shall set forth in reasonable detail the Company's method of calculation
and the facts upon which such calculations were based. Where appropriate,
such notice shall be given in advance and included as a part of any notice
required to be given under the other provisions of this Section 7.
In the event of (a) any fixing by the Company of a record date with
respect to the holders of any class of securities of the Company for the purpose
of determining which of such holders are entitled to dividends or other
distributions, or any rights to subscribe for, purchase or otherwise acquire any
shares of capital stock of any class or any other securities or property, or to
receive any other right, (b) any capital reorganization of the Company, or
reclassification or recapitalization of the capital stock of the Company or any
transfer of all or substantially all of the assets or business of the Company
to, or consolidation or merger of the Company with or into, any other entity or
person, or (c) any voluntary or involuntary dissolution or winding up of the
Company, then and in each such event the Company will give the Holder a written
notice specifying, as the case may be (i) the record date for the purpose of
such dividend, distribution, or right, and stating the amount and character of
such dividend, distribution, or right; or (ii) the date on which any such
reorganization, reclassification, recapitalization, transfer, consolidation,
merger, conveyance, dissolution, liquidation, or winding up is to take place and
the time, if any is to be fixed, as of which the holders of record of Common
Stock (or such capital stock or securities receivable upon the exercise of this
Warrant) shall be entitled to exchange their shares of Common Stock (or such
other stock securities) for securities or other property deliverable upon such
event. Any such notice shall be given at least 10 days prior to the earliest
date therein specified.
8. No Rights as a Stockholder. This Warrant does not entitle the Holder to any
voting rights or other rights as a stockholder of the Company, nor to any
other rights whatsoever except the rights herein set forth. The Holder may
not exercise this Warrant if the rules of a national securities exchange or
Nasdaq, as applicable, require stockholder approval as a consequence of
maintaining the listing until such approval has been obtained.
9. Additional Covenants of the Company. For so long as the Common Stock is
listed for trading on any national securities exchange or the Nasdaq, the
Company shall, upon issuance of any shares for which this Warrant is
exercisable, at its expense, promptly obtain and maintain the listing of
such shares. Additionally, the Company shall use its best efforts at the
2001 annual meeting of stockholders to obtain stockholder approval of the
issuance to the Holder (and its affiliates) of more than 20% of the Common
Stock of the Company.
The Company shall comply with the reporting requirements of Sections 13
and 15(d) of the Securities Exchange Act of 1934 (the "Exchange Act") for so
long as and to the extent that such requirements apply to the Company.
The Company shall not, by amendment of its Articles or Certificate of
Incorporation or through any reorganization, transfer of assets, consolidation,
merger, dissolution, issue or sale of securities, or any other voluntary action,
avoid or seek to avoid the observance or performance of any of the terms of this
Warrant. Without limiting the generality of the foregoing, the Company (a) will
at all times reserve and keep available, solely for issuance and delivery upon
exercise of this Warrant, shares of Common Stock issuable from time to time upon
exercise of this Warrant, (b) will not increase the par value of any shares of
capital stock receivable upon exercise of this Warrant above the amount payable
therefor upon such exercise, and (c) will take all such actions as may be
necessary or appropriate in order that the Company may validly and legally issue
fully paid and nonassessable stock.
10. Successors and Assigns. This Agreement shall be binding upon and inure to
the benefit of the Company, the Holder and their respective successors and
permitted assigns.
11. Notices. The Company agrees to maintain a ledger of the ownership of this
Warrant (the "Ledger"). Any notice hereunder shall be given by Federal
Express or other overnight delivery service, or registered or certified
mail if to the Company, at its principal executive office and, if to the
Holder, to its address shown in the Ledger of the Company; provided,
however, that either the Company or the Holder may at any time on three
days written notice to the other designate or substitute another address
where notice is to be given. Notice shall be deemed given and received
after a Federal Express or other overnight delivery service is delivered to
the carrier or a certified or registered letter, properly addressed with
postage prepaid, is deposited in the U.S. mail.
12. Severability. Every provision of this Warrant is intended to be severable.
If any term or provision hereof is illegal or invalid for any reason
whatsoever, such illegality or invalidity shall not affect the remainder of
this Warrant.
13. Governing Law. This Warrant shall be governed by and construed in
accordance with the laws of the State of Delaware without giving effect to
the principles of choice of laws thereof.
14. Attorneys' Fees. In any action or proceeding brought to enforce any
provision of this Warrant, the prevailing party shall be entitled to
recover reasonable attorneys' fees in addition to its costs and expenses
and any other available remedy.
15. Entire Agreement. This Warrant (including the Exhibits attached hereto)
constitutes the entire understanding between the Company and the Holder
with respect to the subject matter hereof, and supersedes all prior
negotiations, discussions, agreements and understandings relating to such
subject matter.
16. Replacement of Other Warrants. This Warrant replaces all other Warrants
issued by the Company to the Holder who agrees to return the other Warrants
to the Company for cancellation.
IN WITNESS WHEREOF, the Company has caused this Warrant to be executed
by its duly authorized officer as of the date first set forth above.
GLOBAL TECHNOVATIONS, INC.
By: _________________________________________________
Xxxxxxx X. Xxxxxx, Xx., President
A-2
Exhibit A
SUBSCRIPTION FORM
(To be Executed by the Holder to Exercise the Rights To Purchase Common Stock
Evidenced by the Within Warrant)
The undersigned hereby irrevocably subscribes for _______ shares of the
Common Stock (the "Stock") of ____________________ (the "Company") pursuant to
and in accordance with the terms and conditions of the attached Warrant (the
"Warrant"), and hereby makes payment of $_______ therefor by tendering cash,
wire transferring or delivering a certified check or bank cashier's check,
payable to the order of the Company.
Issuance Date No. of Shares Subscribed For Warrant Price
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The undersigned requests that a certificate for the Stock be issued in
the name of the undersigned and be delivered to the undersigned at the address
stated below. If the Stock is not all of the shares purchasable pursuant to the
Warrant, the undersigned requests that a new Warrant of like tenor for the
balance of the remaining shares purchasable thereunder be delivered to the
undersigned at the address stated below.
In connection with the issuance of the Stock, I hereby represent to the
Company that I am acquiring the Stock for my own account for investment and not
with a view to, or for resale in connection with, a distribution of the shares
within the meaning of the Securities Act of 1933, as amended (the "Securities
Act").
I understand that because the Stock has not been registered under the
Securities Act, I must hold such Stock indefinitely unless the Stock is
subsequently registered and qualified under the Securities Act or is exempt from
such registration and qualification. I shall make no transfer or disposition of
the Stock unless (a) such transfer or disposition can be made without
registration under the Securities Act by reason of a specific exemption from
such registration and such qualification, or (b) a registration statement has
been filed pursuant to the Securities Act and has been declared effective with
respect to such disposition. I agree that each certificate representing the
Stock delivered to me shall bear substantially the same legend as set forth on
the front page of the Warrant.
I further agree that the Company may place stop orders on the
certificates evidencing the Stock with the transfer agent, if any, to the same
effect as the above legend. The legend and stop transfer notice referred to
above shall be removed only upon my furnishing to the Company of an opinion of
counsel (reasonably satisfactory to the Company) to the effect that such legend
may be removed.
Date:____________________________________________
Signed:_________________________________________________
Address:________________________________________________
B-1
Exhibit B
ASSIGNMENT
(To be Executed by the Holder to Effect Transfer of the Attached Warrant)
For Value Received __________________________ hereby sells, assigns and
transfers to the Transferee, as provided below the Warrant attached hereto or
such portion thereof and the rights represented thereby to purchase the number
of shares of Common Stock as provided below in accordance with the terms and
conditions hereof, and does hereby irrevocably constitute and appoint
_________________________ as attorney to transfer such Warrant on the books of
the Company with full power of substitution.
Issuance Date Number of Underlying Warrant Price
Shares to be Transferred Transferee
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Dated:________________________ Signed: _____________________________
Please print or typewrite Please insert Social Security
name and address of or other Tax Identification
Transferee: Number of Transferee:
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Exhibit C
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (the "Agreement") entered into as of this
11th day of January, 2001, by and between Global Technovations, Inc. (the
"Company"), a Delaware corporation, and G. Xxxx Xxxxxx Trustee U/A dated
10/23/85 FBO descendants of Xxxxxx X. Xxxxxx, and its successors and assigns,
(the "Holder"), sets forth the registration rights of the Holder.
1._______Definitions
Affiliate: With reference to any designated Person, any Person that has
a relationship with such designated Person whereby either of such Persons
directly or indirectly controls or is controlled by or is under common control
with the other. For this purpose "control" means the power, direct or indirect,
of one Person to direct or cause direction of the management and policies of
another, whether by contract, through voting securities or otherwise.
Commission: The Securities and Exchange Commission or any other
governmental body at the time administering the Securities Act.
Common Stock: The Company's authorized common stock, as constituted on
the date of this Warrant, any stock into which such Common Stock may thereafter
be changed and any stock of the Company of any other class, which is not
preferred as to dividends or assets over any other class of stock of the Company
and which is not subject to redemption, issued to the holders of shares of such
Common Stock upon any re-classification thereof.
Company Securities: Any equity securities proposed to be sold
by the Company in the registration statement referred to.
Person: A corporation, an association, a partnership, a limited
liability company, a joint venture, a trust, an organization, a business, an
entity, an individual, a government or political subdivision thereof or a
governmental body.
Registrable Securities: Common Stock and any securities of the Company
issued with respect to the Common Stock by way of stock dividend or stock split
or in connection with a combination, recapitalization, share exchange,
consolidation or other reorganization of the Company. As to any Registrable
Securities, once issued, such securities shall cease to be Registrable
Securities when (i) a registration statement with respect to the sale of such
securities shall have become effective under the Securities Act and such
securities shall have been disposed of in accordance with such registration
statement, (ii) they shall have been distributed to the public pursuant to Rule
144 (or any successor provision) under the Securities Act, (iii) they shall have
been otherwise transferred, new certificates for them not bearing a legend
restricting further transfer shall have been delivered by the Company and
subsequent disposition of them shall not require registration or qualification
of them under the Securities Act or any similar state law then in force, or (iv)
they shall have ceased to be outstanding.
Selling Expenses: All underwriting discounts, selling commissions and
stock transfer taxes applicable to the securities registered by the Holder and,
all fees and disbursements of counsel for the Holder.
Capitalized terms used in this Agreement but not otherwise defined herein shall
have the meanings ascribed to such terms in the Warrant issued to the Holder by
the Company as of the same date.
2. Registration Rights.
(a) At any time after January 1, 2002, Holder may request in writing
(the "Request") that the Company register, under the Securities Act, all or any
portion of the shares of Common Stock held by the Holder. The Company shall be
obligated to file a registration statement with respect to such Common Stock
being registered pursuant to this Section 2 within 90 days of such Request.
Following receipt of any Request under this Section 2, the Company shall use its
best efforts to register, under the Securities Act, for public sale as provided
by the Holder the number of Shares specified in such Request. If the Holder
intends to distribute the Common Stock covered by their Request by means of an
underwriting, the underwriter shall be reasonably acceptable to the Company.
(b) If, at any time after January 1, 2002, the Company proposes to
register any of its equity securities under the Securities Act on any form other
than Form S-4 or Form S-8 (or any similar or successor form then in effect),
whether or not for sale for its own account, and if the registration form
proposed to be used may be used for the registration of Registrable Securities,
the Company will in each such case give prompt written notice (and in any event
at least 10 business days' prior written notice prior to the filing of such
registration statement) to the Holder of the Company's intention to do so, such
notice to specify the securities to be registered, the proposed numbers and
amounts thereof and the date not less than 20 days thereafter by which the
Company must receive the Holder's written indication of whether the Holder
wishes to include its Registrable Securities in such registration statement and
advising the Holder of its rights under this Section 2. Upon the written request
of the Holder made on or before the date specified in such notice (which request
shall specify the number of Registrable Securities intended to be disposed of by
such Holder), the Company will, to the extent permitted under Section 7, use its
best efforts to cause all such Registrable Securities, which the Holder has so
requested the registration thereof, to be registered under the Securities Act
(with the securities that the Company at the time proposes to register), to the
extent requisite to permit the sale or other disposition (in accordance with the
intended methods thereof as aforesaid) by the Holder of the Registrable
Securities to be so registered. (d) (c) Notwithstanding anything to the contrary
in this Section 2, the Company shall have the right to discontinue any
registration under Section 2(b) at any time prior to the effective date of such
registration if the registration of other securities giving rise to such
registration under this Section 2(b) is discontinued.
3. Registration Procedures
3.1 Obligations of the Company. If and whenever the Company is required
by the provisions hereof to effect or cause the registration of any Registrable
Securities under the Securities Act as provided herein, the Company will, as
expeditiously as possible:
(a) prepare and file with the Commission (in the case of a registration pursuant
to Section 2, such filing to be made as soon thereafter as possible but in any
event within 60 days after the request by the Holder to register Registrable
Securities) a registration statement with respect to such Registrable Securities
and use all commercially reasonable efforts to cause such registration statement
to become and remain effective (provided that, before filing a registration
statement or prospectus or any amendments or supplements thereto, the Company
will furnish to one counsel selected by the Holder copies of all such documents
proposed to be filed);
(b) prepare and file with the Commission such amendments and supplements to such
registration statement and the prospectus used in connection therewith as may be
necessary to keep such registration statement effective and to comply with the
provisions of the Securities Act with respect to the sale or other disposition
of all securities covered by such registration statement during such period in
accordance with the intended methods of disposition by the seller or sellers
thereof set forth in such registration statement;
(c) furnish to counsel for the Holder and each underwriter of the securities
being sold by the Holder such number of copies of such registration statement
and of each such amendment and supplement thereto (in each case including all
exhibits), such number of copies of the prospectus included in such registration
statement (including each preliminary prospectus), in conformity with the
requirements of the Securities Act, and such other documents, as such counsel
may reasonably request, in substantially the form in which they are proposed to
be filed with the Commission, in order to facilitate the public sale or other
disposition of the Registrable Securities owned by the Holder;
(d) use all commercially reasonable efforts to register or qualify such
Registrable Securities covered by such registration statement under such other
securities or blue sky laws of New York, and do any and all other acts and
things which may be necessary or advisable to enable the Holders and any
underwriter to consummate the disposition in such jurisdictions of such
Registrable Securities owned by the Holders;
(e) use all commercially reasonable efforts to cause such Registrable Securities
covered by such registration statement to be registered with or approved by such
other governmental agencies or authorities as may be reasonably necessary to
enable the Holder to consummate the disposition of its Registrable Securities;
(f) notify the Holder at any time when a prospectus relating to its Registrable
Securities is required to be delivered under the Securities Act, of the
Company's becoming aware that the prospectus included in the related
registration statement, as then in effect, includes an untrue statement of a
material fact or omits to state any material fact required to be stated therein
or necessary to make the statements therein not misleading in light of the
circumstances then existing, and promptly prepare and furnish to the Holder and
each underwriter a reasonable number of copies of a prospectus supplemented or
amended so that, as thereafter delivered to the purchasers of such Registrable
Securities, such prospectus shall not include an 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 not misleading in the light of the circumstances
then existing;
(g) otherwise use all commercially reasonable efforts to comply with all
applicable rules and regulations of the Commission;
(h) use all commercially reasonable efforts (i) to cause all such Registrable
Securities covered by such registration statement to be listed on a national
securities exchange (if such Registrable Securities are not already so listed)
and on each additional national securities exchange on which similar securities
issued by the Company are then listed, if the listing of such Registrable
Securities is then permitted under the rules of such exchange, or (ii) to secure
designation of all such Registrable Securities covered by such registration
statement as a Nasdaq "national market system security" or "small cap system
security" within the meaning of Rule 11Aa2-1 of the Commission or, failing that,
to secure Nasdaq authorization for such Registrable Securities;
(i) enter into such agreements (including an underwriting agreement in customary
form) and take such other actions as the Holder shall reasonably request in
order to expedite or facilitate the disposition of its Registrable Securities;
(j) make available for inspection by Holder and by any underwriter participating
in any disposition to be effected pursuant to such registration statement and by
any attorney, accountant or other agent retained by the Holder or any such
underwriter, all pertinent financial and other records, pertinent corporate
documents and properties of the Company, and cause all of the Company's
officers, directors, employees and the independent public accountants who have
audited its financial statements to supply all information reasonably requested
by the Holder, underwriter, attorney, accountant or agent in connection with
such registration statement;
(k) in the case of an underwritten offering, enable the Registrable Securities
to be in such denominations and registered in such names as the underwriters may
request at least two business days prior to the sale of the Registrable
Securities; and
(l) notify the Holder of any stop order threatened or issued by the Commission
and take all actions reasonably necessary to prevent the entry of such stop
order or to remove it if entered.
Section 3.2 Other Procedures.
(a) The Company shall be required to maintain the effectiveness of a
registration statement a total of 180 days. In the event that the registration
statement is required to be amended or supplemented and the Company gives the
Holder notice of such requirement, the Holder shall cease all sales. The Company
shall have no liability to the Holder for delays in the Holder being able to
sell the Registrable Securities (i) as long as the Company uses its best efforts
to file post-effective amendments or supplements, including making a good faith
and reasonable effort to respond to comments issued by the staff of the
Commission, or (ii) the Company does not use its best efforts under
circumstances where (x) the required financial statements (including the
financial statements of another entity) are unavailable, or (y) 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 and regulations of the
Commission.
(b) The Holder shall be deemed to have agreed by acquisition of such
Registrable Securities that, upon receipt of any notice from the Company of the
happening of any event of the kind described in Section 3.1(f) above, the Holder
will forthwith discontinue their disposition of Registrable Securities pursuant
to the registration statement covering such Registrable Securities until the
Holder's receipt of the copies of the supplemented or amended prospectus
contemplated by Section 3.1(f) and, if so directed by the Company, will deliver
to the Company (at the Company's expense) all copies, other than permanent file
copies, then in the Holders' possession of the prospectus covering such
Registrable Securities current at the time of receipt of such notice. In the
event the Company shall give any such notice, the period mentioned in Section
3.2(a) above shall be extended by the number of days during the period from and
including the date of the giving of such notice to and including the date when
the Holder shall have received the copies of the supplemented or amended
prospectus contemplated by Section 3.1(f) above.
(c) The Holder shall furnish to the Company in writing such information
and documents regarding it and the distribution of its securities as may
reasonably be required to be disclosed in the registration statement in question
by the rules and regulations under the Securities Act or under any other
applicable securities or blue sky laws of the jurisdictions referred to in
Section 3.1(d) above. The Holder shall also promptly execute any representation
letter concerning compliance with Regulation M under the Exchange Act (or any
successor rule or regulation).
(d) If any such registration or comparable statement refers to any
participating Holder by name or otherwise as the holder of any securities of the
Company, but such reference to such participating Holder by name or otherwise is
not required by the Securities Act or any similar federal statute then in force,
then such participating Holder shall have the right to require the deletion of
the reference to such participating Holder.
4. Registration Expenses
In connection with any registration of Registrable Securities pursuant
to Section 2, the Company will, whether or not any such registration shall
become effective, from time to time, pay all expenses (other than Selling
Expenses) incident to its performance of or compliance herewith (the "Company
Registration Expenses"), including, without limitation, all registration, filing
fees, fees and expenses of compliance with securities or blue sky laws, word
processing, duplicating expenses, messenger and delivery expenses, fees and
disbursements of counsel for the Company and all independent public accountants
and other Persons retained by the Company.
5. Indemnification
The Company will indemnify, to the extent permitted by law,
the Holder and each Person, if any, who controls the Holder within the meaning
of Section 15 of the Securities Act (collectively, "Holder Indemnified
Parties"), from and against all losses, claims, damages, liabilities and
expenses, joint or several, to which any such Holder Indemnified Party may
become subject under the Securities Act, the Exchange Act and all rules and
regulations under each such Act, at common law or otherwise, insofar as such
losses, claims, damages, liabilities or expenses (or actions or proceedings,
whether commenced or threatened, in respect thereof) arise out of or are based
upon (i) any untrue statement or alleged untrue statement of a material fact
contained in any registration statement as contemplated hereby or any omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, (ii) any
untrue statement or alleged untrue statement of a material fact contained in any
preliminary, final or summary prospectus, together with the documents
incorporated by reference therein (as amended or supplemented if the Company
shall have filed with the Commission any amendment thereof or supplement
thereto), or any omission or alleged omission to state therein a material fact
required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, or (iii) any violation by the Company of any federal, state or
common law rule or regulation applicable to the Company and relating to action
of or inaction by the Company in connection with any such registration;
provided, however, that the Company shall not be liable to any such Holder
Indemnified Party insofar as the Company is entitled to indemnification under
Section 7(c) for such losses, claims, damages, liabilities, expenses, actions or
proceedings.
(b) If the offering pursuant to any registration statement provided for
hereunder is made through underwriters, no action or failure to act on the part
of such underwriters (whether or not any such underwriter is an Affiliate of any
Holder Indemnified Party) shall affect the Company's obligations to indemnify
the Holder Indemnified Parties pursuant to Section 5(a). If the offering
pursuant to any registration statement provided for hereunder is made through
underwriters, the Company agrees to enter into an underwriting agreement in
customary form with such underwriters and to indemnify such underwriters, their
officers and directors, if any, and each Person, if any, who controls such
underwriters within the meaning of Section 15 of the Securities Act to the same
extent as hereinbefore provided with respect to the indemnification of the
Holder Indemnified Parties; provided, however, that the Company shall not be
required to indemnify any such underwriter, or any officer or director of such
underwriter or any Person who controls such underwriter within the meaning of
Section 15 of the Securities Act, to the extent that the loss, claim, damage,
liability, expense, action or proceeding for which indemnification is claimed
results from such underwriter's failure to send or give a copy of the amended or
supplemented final prospectus, at or prior to the written confirmation of the
sale of Registrable Securities, or to a Person asserting the existence of an
untrue statement or alleged untrue statement or omission or alleged omission if
such statement or omission was corrected in such amended or supplemented final
prospectus prior to such written confirmation and the underwriter was given
notice of the availability of such amended or supplemented final prospectus.
(c) In connection with any registration statement in which the Holder
is participating, the Holder will furnish to the Company in writing such
information as shall be reasonably requested by the Company for use in any such
registration statement or prospectus and will indemnify, to the extent permitted
by law, the Company, its officers and directors and each Person, if any, who
controls the Company within the meaning of Section 15 of the Securities Act,
against any losses, claims, damages, liabilities, expenses, actions or
proceedings resulting from (i) any untrue statement or alleged untrue statement
of a material fact or any omission or alleged omission of a material fact
required to be stated in the registration statement or prospectus or preliminary
prospectus or any amendment thereof or supplement thereto, or necessary to make
the statements therein not misleading, but only to the extent that such untrue
statement or omission is made in reliance on or in conformity with any
information so furnished in writing by the Holder expressly for use therein; or
(ii) any failure by the Holder to register or qualify the Registerable
Securities under the securities laws of any state or other jurisdiction.
(d) A party that seeks indemnification under this Section 5 must
promptly give the other party notice of any legal action. However, a delay in
notice does not relieve an indemnifying party of any liability to an indemnified
party, except to the extent the indemnifying party shows that the delay
prejudiced the defense of the action.
(e) The indemnifying party may participate in the defense at any time
or it may assume the defense by giving notice to the other party. After assuming
the defense, the indemnifying party:
(i) must select an attorney that is reasonably satisfactory to the other party;
(ii) is not liable to the other party for any later attorney's fees or for any
other later expenses that the other party incurs;
(iii)must not compromise or settle the action without the other party's consent
(but the other party must not unreasonably withhold its consent); and
(iv) is not liable for any compromise or settlement made without its consent.
(f) If the indemnifying party fails to assume the defense within 10 days after
receiving notice of the action, the indemnifying party is bound by any
determination made in the action or by any compromise or settlement made by
the other party.
(g) If for any reason the foregoing indemnity is unavailable, then the
indemnifying party shall contribute to the amount paid or payable by the
indemnified party as a result of such losses, claims, damages, liabilities or
expenses (i) in such proportion as is appropriate to reflect the relative
benefits received by the indemnifying party on the one hand and the indemnified
party on the other, or (ii) if the allocation provided by Section 5(g) (i) above
is not permitted by applicable law or provides a lesser sum to the indemnified
party than the amount hereinafter calculated, in such proportion as is
appropriate to reflect not only the relative benefits received by the
indemnifying party on the one hand and the indemnified party on the other but
also the relative fault of the indemnifying party and the indemnified party as
well as any other relevant equitable considerations. Notwithstanding the
foregoing, the Holder shall not be required to contribute any amount in excess
of the amount the Holder would have been required to pay to an indemnified party
if the indemnity under Section 5(a) was available. No Person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any Person who was not
guilty of such fraudulent misrepresentation. The obligation of any underwriters
to contribute pursuant to this Section 5 shall be several in proportion to their
respective underwriting commitments and not joint.
(h) An indemnifying party shall make payments of all amounts required
to be made pursuant to the foregoing provisions of this Section 5 to or for the
account of the indemnified party from time to time promptly upon receipt of
bills or invoices relating thereto or when otherwise due and payable.
6. Certain Limitations on Registration Rights
In the case of a registration under Section 2, if the Company
determines to enter into an underwriting agreement in connection therewith, all
Registrable Securities to be included in such registration shall be subject to
such underwriting agreement and no Person may participate in such registration
unless such Person agrees to sell such Person's securities on the basis provided
in such underwriting agreement and completes and/or executes all questionnaires,
indemnities, and other reasonable documents which must be executed under the
terms of such underwriting agreement.
7. Allocation of Securities Included in Registration Statement
In the case of a registration pursuant to Section 2, if the Company's
managing underwriter shall advise the Company and the Holder and other holders
of registrable securities in writing that the inclusion in any registration
pursuant hereto of some or all of (a) the Registrable Securities sought to be
registered by the Holder and other holders, and (b) the Company Securities
sought to be registered creates a substantial risk that the proceeds or price
per unit that will be derived from such registration will be reduced or that the
number of securities to be registered is too large a number to be reasonably
sold, (i) first, the number of Company Securities sought to be registered shall
be included in such registration, and (ii) next, the number of Registrable
Securities and other securities of holders exercising "piggyback rights" shall
be included in such registration to the extent permitted by the Company's
managing underwriter with the number of Registrable Securities and such other
securities being registered being on a pro-rata basis based on the number of
securities the Holder and each such other holder desire to have registered;
provided, however, that, if the Holder would be required pursuant to the
provisions of this Section 7 to reduce the number of Registrable Securities that
it may include in such registration, the Holder may withdraw all or any portion
of its Registrable Securities from such registration.
8. Limitations on Sale or Distribution of Securities
If a registration hereunder shall be in connection with an underwritten
public offering, the Holder shall be deemed to have agreed by acquisition of its
Registrable Securities not to effect any public sale or distribution, including
any sale pursuant to Rule 144 under the Securities Act, of any Registrable
Securities and to use its best efforts not to effect any such public sale or
distribution of any other equity security of the Company (including any short
sale) or of any security convertible into or exchangeable or exercisable for any
equity security of the Company (other than as part of such underwritten public
offering) within 10 days before or 90 days after the effective date of such
registration statement. In such event, the Holder agrees, if requested, to sign
a customary market stand-off letter with the Company's managing underwriter, and
to comply with applicable rules and regulations of the Commission.
9. Rule 144
The Company covenants that it will file the reports required to be
filed under the Securities Act and the Exchange Act and the rules and
regulations adopted by the Commission thereunder (or, in the event that the
Company is not required to file such reports, it will make publicly available
information as set forth in Rule 144(c)(2) promulgated under the Securities
Act), and it will take such further action as the Holder may reasonably request,
or to the extent required from time to time to enable the Holder to sell its
Registrable Securities without registration under the Securities Act within the
limitation of the exemption provided by (a) Rule 144 under the Securities Act,
as such Rule may be amended from time to time, or (b) any similar rule or
regulation hereafter adopted by the Commission (collectively, "Rule 144"). Upon
request of any Holder, the Company will deliver to the Holder a written
statement as to whether it has complied with such requirements.
10. Transfer of Registration Rights
If and to the extent that the Holder sells or otherwise disposes of
Registrable Securities in any transaction that does not require registration
under the Securities Act (other than a transaction exempt under Rule 144), the
rights of the Holder hereunder with respect to such Registrable Securities will
be assignable to the transferee of such Registrable Securities; provided,
however, that such transferee agrees in writing to be bound by all the terms and
conditions of this Agreement.
IN WITNESS WHEREOF, the Company has caused this Registration Rights
Agreement to be signed by its duly authorized officer on the date first
mentioned above.
GLOBAL TECHNOVATIONS, INC.
By: __________________________
Xxxxxxx X. Xxxxxx, Xx., President
G. XXXX XXXXXX TRUSTEE U/A DATED 10/23/85 FBO
DESCENDANTS OF XXXXXX X. XXXXXX
By: ____________________________
G. Xxxx Xxxxxx
