Exhibit 4.1
CERTIFICATE OF DESIGNATIONS
CERTIFICATE OF DESIGNATIONS, RIGHTS, PREFERENCES
AND LIMITATIONS
OF
SERIES D CONVERTIBLE PREFERRED STOCK
OF
GLOBAL TECHNOLOGIES, LTD.
----------
Pursuant to Section 151 of the General Corporation Law of the State of Delaware
----------
Global Technologies Ltd., a corporation organized and existing under the
General Corporation Law of the State of Delaware (the "Corporation"), hereby
certifies that the following resolutions were adopted by the Board of Directors
of the Corporation on April 26, 2001 pursuant to authority of the Board of
Directors as required by Section 151 of the General Corporation Law of the State
of Delaware:
RESOLVED, that pursuant to the authority granted to and vested in the Board
of Directors of this Corporation (the "Board of Directors" or the "Board") in
accordance with the provisions of its Amended and Restated Certificate of
Incorporation, the Board of Directors hereby designates a series of the
Corporation's previously authorized Preferred Stock, par value $0.01 per share
(the "Preferred Stock"), as its Series D Convertible Preferred Stock, and hereby
states the number of authorized shares, and the relative rights, preferences,
limitations, privileges, powers and restrictions thereof are and shall be as set
forth on the attached Annex A.
IN WITNESS WHEREOF, the Corporation has caused this Certificate of
Designations, Rights, Preferences and Limitations to be signed by its duly
authorized officers on this 26th day of April, 2001.
GLOBAL TECHNOLOGIES, LTD.
By: /s/ S. Lance Silver
-----------------------------------------
Name: S. Lance Silver
Title: Vice President and General Counsel
-1-
ANNEX A
Section 1. DESIGNATION, AMOUNT AND PAR VALUE. The series of preferred stock
of Global Technologies, Ltd., a Delaware corporation (the "COMPANY") shall be
designated as its Series D Convertible Preferred Stock (the "PREFERRED STOCK")
and the number of shares so designated shall be 800 (which shall not be subject
to increase without the consent of the holders of the Preferred Stock (each, a
"HOLDER" and collectively, the "HOLDERS"). Each share of Preferred Stock shall
have a par value of $.01 and a stated value equal to the sum of $10,000 (the
"STATED VALUE"). No dividends shall accrue on the Preferred Stock. The shares of
Preferred Stock are being issued in exchange for the outstanding shares of
Series C Preferred Stock in a transaction intended to comply with Section
3(a)(9) of the Securities Act. Notwithstanding the foregoing or anything to the
contrary contained herein, the Company shall have no obligation to pay (or issue
shares of any capital stock in lieu of payment) and no liability for any
dividends that may have accrued on the Series C Preferred Stock from the time of
issuance through the date of such exchange, except for dividends satisfied by
conversions of Series C Preferred Stock prior to the date of the Settlement
Agreement.
Section 2. VOTING RIGHTS. Except as otherwise provided herein and as
otherwise required by law, the Preferred Stock shall have no voting rights.
However, so long as any shares of Preferred Stock are outstanding, the Company
shall not, without the affirmative vote of the Holders of a majority of the
shares of the Preferred Stock then outstanding, (a) alter or change adversely
the powers, preferences or rights given to the Preferred Stock or alter or amend
this Certificate of Designation, (b) amend its certificate or articles of
incorporation or other charter documents so as to affect adversely any rights of
the Holders, or (c) enter into any agreement with respect to the foregoing.
Section 3. CONVERSION.
(a)
(i) CONVERSIONS AT OPTION OF HOLDER. Each share of Preferred
Stock shall be convertible into shares of Common Stock (subject to the
limitations set forth in Section 3(a)(ii)), at the Conversion Ratio
(as defined in Section 5), at the option of the Holder at any time and
from time to time from and after the Original Issue Date. Holders
shall effect conversions by surrendering the certificate or
certificates representing the shares of Preferred Stock to be
converted to the Company, together with the form of conversion notice
attached hereto as EXHIBIT A (a "CONVERSION NOTICE"). Each Conversion
Notice shall specify the number of shares of Preferred Stock to be
converted and the date on which such conversion is to be effected,
which date may not be prior to the date the Holder delivers such
Conversion Notice (including by facsimile) (the "CONVERSION DATE"). If
no Conversion Date is specified in a Conversion Notice, the Conversion
Date shall be the date that a Conversion Notice is deemed delivered
hereunder. If the Holder is converting less than all shares of
Preferred Stock represented by the certificate or certificates
tendered by the Holder with the Conversion Notice, or if a conversion
hereunder cannot be effected in full for any reason, the Company shall
promptly deliver to such Holder (in the manner and within the time set
forth in Section 3(b)) a certificate representing the number
of shares of Preferred Stock as have not been converted.
-2-
(ii) CERTAIN CONVERSION RESTRICTIONS.
(A) A Holder may not convert shares of Preferred Stock or
receive shares of Common Stock as payment of dividends hereunder to
the extent such conversion or receipt of such dividend payment would
result in the Holder, together with any affiliate thereof,
beneficially owning (as determined in accordance with Section 13(d) of
the Exchange Act (as defined in Section 5) and the rules promulgated
thereunder) in excess of 4.999% of the then issued and outstanding
shares of Common Stock, including shares issuable upon conversion of,
and payment of dividends on, the shares of Preferred Stock held by
such Holder after application of this Section. Since the Holder will
not be obligated to report to the Company the number of shares of
Common Stock it may hold at the time of a conversion hereunder, unless
the conversion at issue would result in the issuance of shares of
Common Stock in excess of 4.999% of the then outstanding shares of
Common Stock without regard to any other shares which may be
beneficially owned by the Holder or an affiliate thereof, the Holder
shall have the authority and obligation to determine whether the
restriction contained in this Section will limit any particular
conversion hereunder and to the extent that the Holder determines that
the limitation contained in this Section applies, the determination of
which portion of the shares of Preferred Stock are convertible shall
be the responsibility and obligation of the Holder. If the Holder has
delivered a Conversion Notice for shares of Preferred Stock that,
without regard to any other shares that the Holder or its affiliates
may beneficially own, would result in the issuance in excess of the
permitted amount hereunder, the Company shall notify the Holder of
this fact and shall honor the conversion for the maximum number of
shares of Preferred Stock permitted to be converted on such Conversion
Date in accordance with the periods described in Section 3(b) and, at
the option of the Holder, either retain shares of Preferred Stock
tendered for conversion in excess of the permitted amount hereunder
for future conversions or return such excess shares of Preferred Stock
permitted to the Holder. The provisions of this Section may be waived
by a Holder (but only as to itself and not to any other Holder) upon
not less than 61 days prior notice to the Company. Other Holders shall
be unaffected by any such waiver.
(B) A Holder may not convert shares of Preferred Stock or
receive shares of Common Stock as payment of dividends hereunder to
the extent such conversion or receipt of such dividend payment would
result in the Holder, together with any affiliate thereof,
beneficially owning (as determined in accordance with Section 13(d) of
the Exchange Act and the rules promulgated thereunder) in excess of
9.999% of the then issued and outstanding shares of Common Stock,
including shares issuable upon conversion of, and payment of dividends
on, the shares of Preferred Stock held by such Holder after
application of this Section. Since the Holder will not be obligated to
report to the Company the number of shares of Common Stock it may hold
at the time of a conversion hereunder, unless the
-3-
conversion at issue would result in the issuance of shares of Common
Stock in excess of 9.999% of the then outstanding shares of Common
Stock without regard to any other shares which may be beneficially
owned by the Holder or an affiliate thereof, the Holder shall have the
authority and obligation to determine whether the restriction
contained in this Section will limit any particular conversion
hereunder and to the extent that the Holder determines that the
limitation contained in this Section applies, the determination of
which portion of the shares of Preferred Stock are convertible shall
be the responsibility and obligation of the Holder. If the Holder has
delivered a Conversion Notice for shares of Preferred Stock that,
without regard to any other shares that the Holder or its affiliates
may beneficially own, would result in the issuance in excess of the
permitted amount hereunder, the Company shall notify the Holder of
this fact and shall honor the conversion for the maximum number of
shares of Preferred Stock permitted to be converted on such Conversion
Date in accordance with the periods described in Section 3(b) and, at
the option of the Holder, either retain shares of Preferred Stock
tendered for conversion in excess of the permitted amount hereunder
for future conversions or return such excess shares of Preferred Stock
permitted to the Holder. The provisions of this Section may be waived
by a Holder (but only as to itself and not to any other Holder) upon
not less than 61 days prior notice to the Company. Other Holders shall
be unaffected by any such waiver.
(C) If the Common Stock is then listed for trading on the
NASDAQ or the Nasdaq SmallCap Market and the Company has not obtained
the Shareholder Approval (as defined below), then the Company may not
issue in excess of an aggregate of 2,159,595 shares of Common Stock
upon (i) any and all conversions of Preferred Stock, (ii) any and all
conversions of Series C Preferred Stock and (iii) exercise of
Redemption Warrants (as defined in Section 5) at a price which is less
than the closing sales price of the Common Stock on the Trading Day
immediately preceding the Series C Original Issue Date (such number of
shares, the "ISSUABLE MAXIMUM"). The Issuable Maximum equals 19.999%
of the number of shares of Common Stock outstanding immediately prior
to the Series C Original Issue Date. The shares of Preferred Stock are
to be issued in exchange for the then outstanding shares of the Series
C Preferred Stock in accordance with the Securities Exchange Agreement
contemplated by the Settlement Agreement. Each Holder shall be
entitled to a portion of the Issuable Maximum equal to the quotient
obtained by dividing (x) the number of shares of Preferred Stock
issued to such Holder on the Original Issue Date by (y) the number of
shares of Preferred Stock issued by the Company on the Original Issue
Date. If any Holder shall no longer hold shares of Preferred Stock or
Redemption Warrants, if any, then such Holder's remaining portion of
the Issuable Maximum shall be allocated pro-rata among the remaining
Holders. If on any Conversion Date (a) the shares of Common Stock are
listed for trading on the NASDAQ or the Nasdaq SmallCap Market, (b)
the Conversion Price then in effect is such that the aggregate number
of shares of Common Stock that would then be issuable upon conversion
in full of all then outstanding shares of Preferred Stock, together
with any shares of Common Stock previously issued upon
-4-
conversion of shares of Preferred Stock and exercise of the Redemption
Warrants, if any, at a price which is less than the closing sales
price of the Common Stock on the Trading Day immediately preceding the
Series C Original Issue Date, would exceed the Issuable Maximum, and
(c) the Company shall not have previously obtained the vote of
shareholders (the "SHAREHOLDER APPROVAL"), if any, as may be required
by the applicable rules and regulations of the Nasdaq Stock Market (or
any successor entity) applicable to approve the issuance of shares of
Common Stock in excess of the Issuable Maximum pursuant to the terms
hereof, then the Company shall issue to the Holder requesting a
conversion a number of shares of Common Stock equal to such Holder's
pro-rata portion (which shall be calculated pursuant to the terms
hereof) of the Issuable Maximum and, with respect to the remainder of
the aggregate Stated Value of the shares of Preferred Stock then held
by such Holder for which a conversion in accordance with the
Conversion Price would result in an issuance of shares of Common Stock
in excess of such Holder's pro-rata portion (which shall be calculated
pursuant to the terms hereof) of the Issuable Maximum (the "EXCESS
STATED VALUE"), the converting Holder shall have the option to require
the Company to either (1) use its best efforts to obtain the
Shareholder Approval applicable to such issuance as soon as is
possible, but in any event not later than the 75th day after such
request, or (2) pay cash to the converting Holder in an amount equal
to the Mandatory Redemption Amount (as defined in Section 5) for the
Excess Stated Value. If the converting Holder shall have elected the
first option pursuant to the immediately preceding sentence and the
Company shall have failed to obtain the Shareholder Approval on or
prior to the 75th day after such request, then within three (3) days
of such 75th day, the Company shall pay cash to the converting Holder
an amount equal to the Mandatory Redemption Amount for the Excess
Stated Value. If the Company fails to pay the Mandatory Redemption
Amount in full pursuant to this Section within seven days after the
date payable, the Company will pay interest thereon at a rate of 18%
per annum or such lesser maximum amount that is permitted to be paid
by applicable law, to the converting Holder, accruing daily from the
end of such seven-day period until such amount, plus all such interest
thereon, is paid in full. The Company and the Holder understand and
agree that shares of Common Stock issued to and then held by the
Holder as a result of conversions of Preferred Stock shall not be
entitled to cast votes on any resolution to obtain Shareholder
Approval pursuant hereto.
(b)
(i) Not later than three Trading Days after each Conversion
Date, the Company will deliver to the Holder (A) a certificate or
certificates which shall be free of restrictive legends and trading
restrictions (other than those required by Section 3.1(b) of the
Purchase Agreement) representing the number of shares of Common Stock
being acquired upon the conversion of shares of Preferred Stock and
(B) one or more certificates representing the number of shares of
Preferred Stock not converted. Notwithstanding the foregoing or
anything to the contrary contained herein, the Company shall not be
obligated to issue certificates evidencing the shares of Common Stock
issuable upon conversion of any shares of Preferred Stock until one
Trading Day after certificates evidencing such shares of
-5-
Preferred Stock are delivered for conversion to the Company, or the
Holder of such Preferred Stock notifies the Company that such
certificates have been lost, stolen or destroyed and provides a bond
(or other adequate security) reasonably satisfactory to the Company to
indemnify the Company from any loss incurred by it in connection
therewith. The Company shall, upon request of the Holder, if
available, use its best efforts to deliver any certificate or
certificates required to be delivered by the Company under this
Section electronically through the Depository Trust Corporation or
another established clearing corporation performing similar functions.
If in the case of any Conversion Notice such certificate or
certificates are not delivered to or as directed by the applicable
Holder by the third Trading Day after the Conversion Date, the Holder
shall be entitled to elect by written notice to the Company at any
time on or before its receipt of such certificate or certificates
thereafter, to rescind such conversion, in which event the Company
shall immediately return the certificates representing the shares of
Preferred Stock tendered for conversion.
(ii) If the Company fails to deliver to the Holder such
certificate or certificates pursuant to Section 5(b)(i), by the third
Trading Day after the Conversion Date, the Company shall pay to such
Holder, in cash, as liquidated damages and not as a penalty, $5,000
for each Trading Day after such third Trading Day until such
certificates are delivered. Nothing herein shall limit a Holder's
right to pursue actual damages for the Company's failure to deliver
certificates representing shares of Common Stock upon conversion
within the period specified herein and such Holder shall have the
right to pursue all remedies available to it hereunder, at law or in
equity including, without limitation, a decree of specific performance
and/or injunctive relief.
(iii) In addition to any other rights available to the
Holder, if the Company fails to deliver to the Holder such certificate
or certificates pursuant to Section 5(b)(i), by the third Trading Day
after the Conversion Date, and if after such third Trading Day the
Holder purchases (in an open market transaction or otherwise) Common
Stock to deliver in satisfaction of a sale by such Holder of the
Underlying Shares which the Holder was entitled to receive upon such
conversion (a "BUY-IN"), then the Company shall (A) pay in cash to the
Holder the amount by which (x) the Holder's total purchase price
(including brokerage commissions, if any) for the Common Stock so
purchased exceeds (y) the product of (1) the aggregate number of
shares of Common Stock that such Holder was entitled to receive from
the conversion at issue multiplied by (2) the market price of the
Common Stock at the time of the sale giving rise to such purchase
obligation and (B) at the option of the Holder, either return the
shares of Preferred Stock for which such conversion was not honored or
deliver to such Holder the number of shares of Common Stock that would
have been issued had the Company timely complied with its conversion
and delivery obligations under Section 5(b)(i). For example, if the
Holder purchases Common Stock having a total purchase price of $11,000
to cover a Buy-In with respect to an attempted conversion of shares of
Preferred Stock with respect to which the market price of the
Underlying Shares on the date of conversion totaled $10,000, under
clause (A) of the immediately preceding sentence the Company shall be
required to pay the Holder $1,000. The Holder shall provide the
Company written notice indicating the amounts payable to the Holder in
respect of the Buy-In and provide reasonable evidence thereof (which
shall consist solely of the records evidencing the establishment of
-6-
the position at issue) which shall be reasonably satisfactory to the
Company. Nothing herein shall limit a Holder's right to pursue any
other remedies available to it hereunder, at law or in equity
including, without limitation, a decree of specific performance and/or
injunctive relief with respect to the Company's failure to timely
deliver certificates representing shares of Common Stock upon
conversion of the shares of Preferred Stock as required pursuant to
the terms hereof.
(c)
(i) The conversion price for each share of Preferred Stock
in effect on any Conversion Date shall be fixed at $5.0057 (the
"CONVERSION PRICE"), subject to the provisions of this Section.
(ii) If the Company, at any time while any shares of
Preferred Stock are outstanding, shall (a) pay a stock dividend or
otherwise make a distribution or distributions on shares of its Junior
Securities or pari passu securities payable in shares of Common Stock,
(b) subdivide outstanding shares of Common Stock into a larger number
of shares, (c) combine outstanding shares of Common Stock into a
smaller number of shares, or (d) issue by reclassification and
exchange of the Common Stock any shares of capital stock of the
Company, then the Conversion Price shall be multiplied by a fraction
of which the numerator shall be the number of shares of Common Stock
outstanding before such event and of which the denominator shall be
the number of shares of Common Stock outstanding after such event. Any
adjustment made pursuant to this Section 3(c)(ii) shall become
effective immediately after the record date for the determination of
stockholders entitled to receive such dividend or distribution and
shall become effective immediately after the effective date in the
case of a subdivision, combination or re-classification.
(iii) If the Company, at any time while shares of Preferred
Stork are outstanding, shall distribute to all holders of Common Stock
(and not to Holders) evidences of its indebtedness or assets or rights
or warrants to subscribe for or purchase any security (excluding those
referred to in Section 3(c)(ii) above), then in each such case the
Conversion Price at which each share of Preferred Stock shall
thereafter be convertible shall be determined by multiplying the
Conversion Price in effect immediately prior to the record date fixed
for determination of stockholders entitled to receive such
distribution by a fraction of which the denominator shall be the Per
Share Market Value determined as of the record date mentioned above,
and of which the numerator shall be such Per Share Market Value on
such record date less the then fair market value at such record date
of the portion of such assets or evidence of indebtedness so
distributed applicable to one outstanding share of Common Stock as
determined by the Board of Directors, in its sole discretion, in good
faith. In either case the adjustments shall be described in a
statement provided to the Holders of the portion of assets or
evidences of indebtedness so distributed or such subscription rights
applicable to one share of Common Stock. Such adjustment shall be made
whenever any such distribution is made and shall become effective
immediately after the record date mentioned above.
-7-
(iv) All calculations under this Section 3 shall be made to
the nearest cent or the nearest 1/100th of a share, as the case may
be. The number of shares of Common Stock outstanding at any given time
shall not include shares owned or held by or for the account of the
Company, and the disposition of any such shares shall be considered an
issue or sale of Common Stock.
(v) Whenever the Conversion Price is adjusted pursuant to
Section 3(c)(ii) or (iii) the Company shall promptly mail to each
Holder a notice setting forth the Conversion Price after such
adjustment and setting forth a brief statement of the facts requiring
such adjustment.
(vi) In case of any reclassification of the Common Stock, or
any compulsory share exchange pursuant to which the Common Stock is
converted into other securities, cash or property (other than
compulsory share exchanges which constitute Change of Control
Transactions), the Holders of the Preferred Stock then outstanding
shall have the right thereafter to convert such shares only into the
shares of stock and other securities, cash and property receivable
upon or deemed to be held by holders of Common Stock following such
reclassification or share exchange, and the Holders of the Preferred
Stock shall be entitled upon such event to receive such amount of
securities, cash or property as a holder of the number of shares of
Common Stock of the Company into which such shares of Preferred Stock
could have been converted immediately prior to such reclassification
or share exchange would have been entitled. This provision shall
similarly apply to successive reclassifications or share exchanges.
(vii) In case of any merger or consolidation of the Company
with or into another Person, or sale by the Company of more than
one-half of the assets of the Company (on an as valued basis) in one
or a series of related transactions, a Holder shall have the right
thereafter to convert its shares of Preferred Stock into the shares of
stock and other securities cash and property receivable upon or deemed
to be held by holders of Common Stock following such merger,
consolidation or sale, and such Holder shall be entitled upon such
event or series of related events to receive such amount of
securities, cash and property as the shares of Common Stock into which
such shares of Preferred Stock could have been converted immediately
prior to such merger, consolidation or sales would have been entitled.
(viii) If (a) the Company shall declare a dividend (or any
other distribution) on the Common Stock, (b) the Company shall declare
a special nonrecurring cash dividend on or a redemption of the Common
Stock, (c) the Company shall authorize the granting to all holders of
Common Stock rights or warrants to subscribe for or purchase any
shares of capital stock of any class or of any rights, (d) the
approval of any stockholders of the Company shall be required in
connection with any reclassification of the Common Stock, any
consolidation or merger to which the Company is a party, any sale or
transfer of all or substantially all of the assets of the Company, of
any compulsory share of exchange whereby the Common Stock is converted
into other securities, cash or property, or (e) the Company shall
authorize the voluntary or involuntary dissolution, liquidation or
winding up of the affairs of the Company; then the Company shall
notify the Holders at their last addresses as
-8-
they shall appear upon the stock books of the Company, at least 20
calendar days prior to the applicable record or effective date
hereinafter specified, a notice stating (x) the date on which a record
is to be taken for the purpose of such dividend, distribution,
redemption, rights or warrants, or if a record is not to be taken, the
date as of which the holders of Common Stock of record to be entitled
to such dividend, distributions, redemption, rights or warrants are to
be determined or (y) the date on which such reclassification,
consolidation, merger, sale, transfer or share exchange is expected to
become effective or close, and the date as of which it is expected
that holders of Common Stock of record shall be entitled to exchange
their Common Stock for securities, cash or other property deliverable
upon such reclassification, consolidation, merger, sale, transfer or
share exchange. Holders are entitled to convert shares of Preferred
Stock during the 20-day period commencing the date of such notice to
the effective date of the event triggering such notice.
(d) The Company covenants that it will at all times reserve and keep
available out of its authorized and unissued shares of Common Stock solely for
the purpose of issuance upon conversion of Preferred Stock, each as herein
provided, free from preemptive rights or any other actual contingent purchase
rights of persons other than the Holders, not less than such number of shares of
Common Stock as shall be issuable (taking into account the provisions of Section
3(a) and Section 3(c)) upon the conversion of all outstanding shares of
Preferred Stock. The Company covenants that all shares of Common Stock that
shall be so issuable shall, upon issue, be duly and validly authorized and
issued and fully paid and nonassessable.
(e) Upon a conversion hereunder the Company shall not be required to
issue stock certificates representing fractions of shares of Common Stock, but
may if otherwise permitted, make a cash payment in respect of any final fraction
of a share based on the Per Share Market Value at such time. If any fraction of
an Underlying Share would, except for the provisions of this Section, be
issuable upon a conversion hereunder, the Company shall pay an amount in cash
equal to the Conversion Ratio multiplied by such fraction.
(f) The issuance of certificates for Common Stock on conversion of
Preferred Stock shall be made without charge to the Holders thereof for any
documentary stamp or similar taxes that may be payable in respect of the issue
or delivery of such certificate, provided that the Company shall not be required
to pay any tax that may be payable in respect of any transfer involved in the
issuance and delivery of any such certificate upon conversion in a name other
than that of the Holder of such shares of Preferred Stock so converted.
(g) Shares of Preferred Stock converted into Common Stock or redeemed
in accordance with the terms hereof shall be canceled and may not be reissued.
(h) Any and all notices or other communications or deliveries to be
provided by the Holders of the Preferred Stock hereunder, including, without
limitation, any Conversion Notice, shall be in writing and delivered personally,
by facsimile or sent by a nationally recognized overnight courier service,
addressed to the attention of the Chief Financial Officer of the Company
addressed to 1811 Chestnut Street, Suite 120, Philadelphia, Pennsylvania 19103
or to facsimile number (215) 972-8183, or to such other address or facsimile
number as shall be specified in writing by the Company for such purpose. Any and
-9-
all notices or other communications or deliveries to be provided by the Company
hereunder shall be in writing and delivered personally, by facsimile or sent by
a nationally recognized overnight courier service, addressed to each Holder at
the facsimile telephone number or address of such Holder appearing on the books
of the Company, or if no such facsimile telephone number or address appears, at
the principal place of business of the Holder. Any notice or other communication
or deliveries hereunder shall be deemed given and effective on the earliest of
(i) the date of transmission, if such notice or communication is delivered via
facsimile and the party giving such notice has a confirmation of transmission
setting forth the date and time of transmission, which was produced by the
facsimile machine at the facsimile telephone number specified in this Section
prior to 8:00 p.m. (New York City time), (ii) the date after the date of
transmission, if such notice or communication is delivered via facsimile and the
party giving such notice has a confirmation of transmission setting forth the
date and time of transmission, which was produced by the facsimile machine at
the facsimile telephone number specified in this Section later than 8:00 p.m.
(New York City time) on any date and earlier than 11:59 p.m. (New York City
time) on such date, or (iii) upon receipt, if sent by a nationally recognized
overnight courier service, or (iv) upon actual receipt by the party to whom such
notice is required to be given.
Section 4. OPTIONAL REDEMPTION.
(i) Subject to the provisions of this Section 4, from and after the
Original Issue Date, the Company shall have the right, upon thirty Trading Days'
notice (an "OPTIONAL REDEMPTION NOTICE" and the date such Optional Redemption
Notice is received by a Holder, an "OPTIONAL REDEMPTION DATE") to the Holders,
to redeem all or any portion of the shares of Preferred Stock which have not
previously been redeemed or for which Conversion Notices shall not have been
delivered, for a price equal to the Optional Redemption Price (as defined
below). Notwithstanding anything herein to the contrary, together with the
delivery of the Optional Redemption Notice, the Company shall also deliver the
Redemption Warrants to the Holders of shares of Preferred Stock to be redeemed
and the Optional Redemption Notice shall only be valid if delivered together
with the Redemption Warrants. The Company may only deliver an Optional
Redemption Notice if: (i) the number of shares of Common Stock at the time
authorized, unissued and unreserved for all purposes is sufficient to satisfy
the Company's conversion obligations of all shares of Preferred Stock then
outstanding and the Company's exercise obligations pursuant to the Redemption
Warrants and other common stock purchase warrants issued to the Holders on the
Series C Original Issue Date, (ii) the Underlying Shares then outstanding are
registered for resale pursuant to an effective Underlying Shares Registration
Statement pursuant to which the Holders are permitted to utilize to sell
Underlying Shares or the Underlying Shares may be resold without volume
restrictions pursuant to Rule 144(k) promulgated under the Securities Act, and
(iii) the Common Stock is listed for trading on the NASDAQ or on a Subsequent
Market. Each of clauses (i) - (iii) of the immediately preceding sentence must
be true during the entire thirty Trading Days between the date of delivery of an
Optional Redemption Notice and Redemption Warrants and the date of payment of
the Optional Redemption Price. A Holder may, subject to Section 3(a)(i) hereof,
convert (and the Company shall honor such conversions in accordance with the
terms hereof) any or all of the shares of Preferred Stock subject to an Optional
Redemption Notice delivered for conversion on or prior to the 30th Trading Day
following an Optional Redemption Date.
-10-
(j) Failure by the Company to pay the entire Optional Redemption Price
by the 30th Trading Day following an Optional Redemption Date shall, at the
option of 7he Holders subject thereto, result in the invalidation AB INITIO of
the unpaid portion of such optional redemption, and, notwithstanding anything
herein to the contrary, the Company shall thereafter have no further rights to
optionally redeem any shares of Preferred Stock. In such event, the Company
shall, at the option of the Holder, either, (i) not later than three Trading
Days from receipt of Holder's request therefor, return to the Holder all of the
shares of Preferred Stock for which such Optional Redemption Price has not been
paid in full (the "UNPAID REDEMPTION SHARES") or (ii) convert of all or any
portion of the Unpaid Redemption Shares in which event the Per Share Market
Value for such shares shall be the lower of the Per Share Market Value
calculated on the date the Optional Redemption Price was originally due and the
Per Share Market Value as of the Holder's written demand for conversion. If the
Holder elects option (ii) above, the Company shall within three Trading Days of
its receipt of such election deliver to the Holder the shares of Common Stock
issuable upon conversion of the Unpaid Redemption Shares subject to such Holder
conversion demand and otherwise perform its obligations hereunder with respect
thereto.
(k)
(i) Except if the provisions of Section 4(c)(ii) apply, the
"OPTIONAL REDEMPTION PRICE" applicable for such Optional Redemption
Date shall equal the sum of (i) the greater of (A) the product of the
Optional Redemption Rate (as defined in Section 5) and the aggregate
of the Stated Value of the shares of Preferred Stock to be redeemed
and (B) the product of (x) the aggregate number of Shares to be
redeemed and (y) the product of (i) the average of the Per Share
Market Values for the five Trading Days preceding the Optional
Redemption Date, and (2) the Conversion Ratio calculated on the
Optional Redemption Date, and (ii) all other amounts, costs, expenses
and liquidated damages due in respect of such shares of Preferred
Stock.
(ii) If the Per Share Market Value for each of the twenty
Trading Days preceding an Optional Redemption Date is equal to or
greater than the Threshold Price (as defined in Section 5), then the
"OPTIONAL REDEMPTION PRICE " applicable for such Optional Redemption
Date shall equal the sum of (i) the product of (A) the product of (x)
the number of shares of Preferred Stock to be redeemed and (y) the
Conversion Ratio calculated on the Optional Redemption Date and (B)
the Threshold Price, and (ii) all other amounts, costs, expenses and
liquidated damages due in respect of such shares of Preferred Stock.
Section 5. DEFINITIONS. For the purposes hereof, the following terms shall
have the following meanings:
"CHANGE OF CONTROL TRANSACTION" means the occurrence of any of (i) an
acquisition after the date hereof by an individual or legal entity or "group"
(as described in Rule 13d-5(b)(1) promulgated under the Exchange Act) of
effective control (whether through legal or beneficial ownership of capital
stock of the Company, by contract or otherwise) of in excess of 50% of the
voting securities of the Company, (ii) a replacement at one time or over time of
more than one-half of the members of the Company's board of directors which is
not approved by a majority of those individuals who are members of the board of
-11-
directors on the date hereof (or by those individuals who are serving as members
of the board of directors on any date whose nomination to the board of directors
was approved by a majority of the members of the board of directors who are
members on the date hereof), (iii) the merger of the Company with or into
another entity that is not wholly-owned by the Company, consolidation or sale of
501c or more of the assets of the Company in one or a series of related
transactions, or (iv) the execution by the Company of an agreement to which the
Company is a party or by which it is bound, providing for any of the events set
forth above in (i), (ii) or (iii).
"COMMISSION" means the Securities and Exchange Commission.
"COMMON STOCK" means the Company's Class A common stock, par value $.01 per
share, and stock of any other class into which such shares may hereafter have
been reclassified or changed.
"CONVERSION RATIO" means, at any time, a fraction, the numerator of which
is Stated Value (or Excess Stated Value, as the case may be) and the denominator
of which is the Conversion Price at such time.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"JUNIOR SECURITIES" means the Common Stock and all other equity securities
of the Company other than those securities that are outstanding on the Series C
Original Issue Date and which are explicitly senior in rights or liquidation
preference to the Preferred Stock.
"MANDATORY REDEMPTION AMOUNT" for each share of Preferred Stock means the
sum of (i) the greater of (A) 120% of the Stated Value (or Excess Stated Value,
as the case may be) and (B) the product of (a) the lesser of (i) the Per Share
Market Value on the Trading Day immediately preceding (x) the date of the
Triggering Event or the Conversion Date, as the case may be, or (y) the date of
payment in full by the Company of the applicable redemption price, whichever is
greater, and (II) the Threshold Price and (b) the Conversion Ratio calculated on
the date of the Triggering Event, or the Conversion Date, as the case may be,
and (ii) all other amounts, costs, expenses and liquidated damages due in
respect of such share of Preferred Stock.
"OPTIONAL REDEMPTION RATE" means 120%.
"ORIGINAL ISSUE DATE " shall mean the date of the first issuance of any
shares of the Preferred Stock regardless of the number of transfers of any
particular shares of Preferred Stock and regardless of the number of
certificates which may be issued to evidence such Preferred Stock.
"PER SHARE MARKET VALUE" means on any particular date (a) the closing bid
price per share of Common Stock on such date on the NASDAQ or on the Subsequent
Market on which the Common Stock is then listed or quoted, or if there is no
such price on such date, then the closing bid price on the NASDAQ or on such
Subsequent Market on the date nearest preceding such date, or (b) if the Common
Stock is not then listed or quoted on the NASDAQ or on a Subsequent Market, the
closing bid price for a share of Common Stock in the over-the-counter market, as
-12-
reported by the National Quotation Bureau Incorporated or similar organization
or agency succeeding to its functions of reporting prices at the close of
business on such date, or (c) if the Common Stock is not then reported by the
National Quotation Bureau Incorporated (or similar organization or agency
succeeding to its functions of reporting prices), then the average of the "Pink
Sheet" quotes for the relevant conversion period, as determined in good faith by
the Holder, or (d) if the Common Stock are not then publicly traded the fair
market value of a share of Common Stock as determined by an Appraiser selected
in good faith by the Holders of a majority of the shares of the Preferred Stock.
"PERSON" means a corporation, an association, a partnership, organization,
a business, an individual, a government or political subdivision thereof or a
governmental agency.
"PURCHASE AGREEMENT" means the Convertible Preferred Stock Purchase
Agreement, dated as of the Series C Original Issue Date, to which the Company
and the original Holders are parties, as amended, modified or supplemented from
time to time in accordance with its terms.
"REDEMPTION WARRANTS" shall mean common stock purchase warrants issuable by
the Company together with an Optional Redemption Notice to the Holder of
Preferred Stock to be redeemed to purchase a number of shares of Common Stock
equal to 5% of the quotient obtained by dividing (x) the Stated Value of the
Preferred Stock to be redeemed pursuant to an Optional Redemption Notice by (y)
the average of the Per Share Market Values for the five Trading Days starting on
and including March 1, 2000. If the Per Share Market Value for each of the
twenty (20) Trading Days preceding an Optional Redemption Date is equal to or
greater than the Threshold Price, then the Redemption Warrants issuable in
connection with an Optional Redemption Notice shall entitle the Holder to
acquire an additional 100,000 shares of Common Stock in addition to the number
of shares of Common Stock set forth in the immediately preceding sentence. Such
warrants shall be substantially in the form attached as EXHIBIT D to the
Purchase Agreement and shall entitle the holders thereof to purchase shares of
Common Stock at any time during the five-year period following the Series C
Original Issue Date at an exercise price per share equal to the Conversion
Price.
"REGISTRATION RIGHTS AGREEMENT" means the Registration Rights Agreement,
dated as of the Series C Original Issue Date, to which the Company and the
original Holders are parties, as amended, modified or supplemented from time to
time in accordance with its terms.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SECURITIES EXCHANGE AGREEMENT" means the Securities Exchange Agreement
contemplated by the Settlement Agreement.
"SERIES C ORIGINAL ISSUE DATE" means February 16, 2000, the original date
of the issuance of the Series C Preferred Stock.
"SERIES C PREFERRED STOCK" means the Series C 5% Preferred Stock of the
Company.
"SETTLEMENT AGREEMENT" means the Agreement dated as of January 31, 2001, as
-13-
amended by the Amendment thereto dated as of April 26, 2001, to which the
Company and the original Holders are parties, as amended, modified or
supplemented from time to time in accordance with its terms.
"THRESHOLD PRICE" means 150% of the Conversion Price.
"TRADING DAY" means (a) a day on which the Common Stock is traded on the
NASDAQ or on the Subsequent Market on which the Common Stock is then listed or
quoted, as the case may be, or (b) if the Common Stock is not listed on the
NASDAQ or on a Subsequent Market, a day on which the Common Stock is traded in
the over-the-counter market, as reported by the OTC Bulletin Board, or (c) if
the Common Stock is not quoted on the OTC Bulletin Board, a day on which the
Common Stock is quoted in the over-the-counter market as reported by the
National Quotation Bureau Incorporated (or any similar organization or agency
succeeding its functions of reporting prices); PROVIDED, HOWEVER, that in the
event that the Common Stock is not listed or quoted as set forth in (a), (b) and
(c) hereof, then Trading Day shall mean any day except Saturday, Sunday and any
day which shall be a legal holiday or a day on which banking institutions in the
State of New York are authorized or required by law or other government action
to close.
"UNDERLYING SHARES" means, collectively, the shares of Common Stock into
which the shares of Preferred Stock are convertible in accordance with the terms
hereof.
"UNDERLYING SHARES REGISTRATION STATEMENT" means a registration statement
that meets the requirements of the Registration Rights Agreement and the
Settlement Agreement and registers the resale of all Underlying Shares by the
Holder, who shall be named as a "selling stockholder" thereunder.
-14-
EXHIBIT A
NOTICE OF CONVERSION
(To be Executed by the Registered Holder
in order to Convert shares of Preferred Stock)
The undersigned hereby elects to convert the number of shares of 5% Series A
Convertible Preferred Stock indicated below, into shares of Class A common
stock, par value $.01 per share (the "COMMON STOCK"), of Global Technologies,
Ltd., a Delaware corporation (the "COMPANY"), according to the conditions
hereof, as of the date written below. If shares are to be issued in the name of
a person other than undersigned, the undersigned will pay all transfer taxes
payable with respect thereto and is delivering herewith such certificates and
opinions as reasonably requested by the Company in accordance therewith. No fee
will be charged to the Holder for any conversion, except for such transfer
taxes, if any.
Conversion calculations:
Date to Effect Conversion
Number of shares of Preferred Stock to be Converted
Stated Value of shares of Preferred Stock to be Converted
Number of shares of Common Stock to be Issued
Applicable Conversion Price
Signature
Name
Address
Check box, if applicable:
[ ] The Holder intends to sell the shares of Common Stock issuable
hereunder pursuant to Rule 144 promulgated under the Securities
Act of 1933, as amended.
-15-