UNITED
STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT
REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
November 13, 2006
Date of Report (Date of earliest event reported)
GlobalSCAPE, Inc.
(Exact name of registrant as specified in its charter)
Delaware |
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000-30617 |
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74-2785449 |
(State or other
jurisdiction
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(Commission
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(IRS Employer
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6000 Northwest Parkway, Suite 100
San Antonio, Texas 78249
(210) 308-8267
(Address of principal executive offices and Registrants telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 1.01 Entry into a Material Definitive Agreement.
On November 13, 2006, GlobalSCAPE, Inc. (the Company ) entered into a Securities Purchase Agreement (the Agreement ) with certain accredited investors (the Purchasers ), pursuant to which the Company agreed to issue 1,352,000 shares of its common stock, par value $0.001 per share (the Common Stock ), and warrants ( Warrants ) to purchase 1,352,000 shares of Common Stock ( Warrant Shares ) to the Purchasers at a price of $2.50 per share, or an aggregate of $3,380,000 in cash before transaction expenses. The Warrants may not be exercised prior to May 15, 2007 and expire on May 15, 2012 and are exercisable at a price of $3.15 per share, subject to certain adjustments. The exercise price will not, in any event, be adjusted to a price of less than $2.81 per share except in the event of stock dividends, stock splits or similar events. In addition, Thomas W. Brown, the Chairman of the Board, and David L. Mann, a member of the Companys board of directors, sold a total of 2,028,000 shares, at a price of $2.50 per share in a private transaction with the Purchasers. The transactions closed on November 16, 2006 (the Closing Date ). The Common Stock sold by the Company, the Warrants and the Warrant Shares have not been registered under the Securities Act of 1933, as amended (the Securities Act ), or any applicable state securities laws in reliance on the exemption provided by Section 4(2) of the Securities Act and Rule 506 of the regulations promulgated thereunder. The Common Stock, Warrants and Warrant Shares sold by the Company and Messrs. Brown and Mann may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements. There was no general solicitation involved in the offer. The Company and Messrs. Brown and Mann paid a cash commission of $500,000 out of their proceeds to Americas Growth Capital, LLC which acted as the Companys placement agent.
The Company also agreed, pursuant to the terms of a Registration Rights Agreement, promptly following the closing but no later than December 16, 2006, to prepare and file with the Securities and Exchange Commission a registration statement on Form S-3 or such other successor form (except that if the Company is not then eligible to register for resale the Common Stock on Form S-3, then such registration shall be on Form S-1 or any successor form) (a Registration Statement ) to enable the resale of the Common Stock and the Warrant Shares (collectively, the Registrable Securities ) by the Purchasers or their transferees from time to time over any national stock exchange on which the Companys Common Stock is then traded, or in privately-negotiated transactions. The Company has agreed to use its commercially reasonable efforts to cause the Registration Statement to become effective by the earlier of (i) the 90 th calendar day following the Closing Date (the 120 th calendar day in the event of a full review by the SEC; provided that, if the Company has filed the Registration Statement by December 16, 2006 and the SEC has not completed its review and declared the Registration Statement effective on or prior to February 13, 2006, then the time period for being effective shall be extended to the 150 th calendar day after the Closing Date) and (ii) the 10th business day after the SEC advises the Company that the Registration Statement will not be reviewed or the SEC has no further comments on the Registration Statement (the Required Effective Date ) and to remain continuously effective for a period ending on the date that is the earlier of (i) the two-year anniversary of the date that the Registration Statement is declared effective by the SEC, (ii) the date on which the Purchasers may sell all Registrable Securities then held by the Purchasers without restriction under Rule 144(k), or (iii) otherwise transferred to persons who may trade such securities without restriction or limitation under the Securities Act.
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The foregoing statements are qualified in their entirety by the provisions of the Securities Purchase Agreement, the Registration Rights Agreement and the form of Warrant filed as exhibits to this report.
Item 3.02 Unregistered Sales of Equity Securities .
See Item 1.01 above.
Item 5.03 Amendments to Articles of Incorporation or Bylaws; Changes in Fiscal Year
Amendments to Certificate of Incorporation
On November 13, 2006, our board of directors and our controlling stockholders, acting by written consents in lieu of meetings, approved the following actions:
(ii) an amendment of the Companys Certificate of Incorporation to create a classified board of directors (the Classified Board Amendment ); and
(iii) an amendment of the Companys Certificate of Incorporation which requires that action by stockholders be taken only at an annual or special meeting, prohibits action by written content and eliminates the ability of stockholders to call special meetings (the Consent Amendment ).
The Amended and Restated Certificate of Incorporation will be effective immediately upon filing with the Secretary of State of the State of Delaware, which will occur on a date not less than 21 days after we mail an Information Statement to our stockholders of record on November 13, 2006. The form of Amended and Restated Certificate of Incorporation is attached as Exhibit 3.1 hereto.
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Amendments to our Bylaws
On November 13, 2006, our board of directors approved the restatement of our Bylaws with the following material amendments:
(i) An amendment to Article II, Section 1(a) to eliminate the ability to hold a stockholders meeting by means of remote communication;
(ii) an amendment to Article II, Section 3 to conform the provisions relating to the call of special meetings of stockholders to the provisions of the Amended and Restated Certificate of Incorporation;
(iii) an amendment to Article II, Section 5 adding subpart (e) relating to the eligibility of nominees to serve as directors and for stockholder proposals to be considered at meetings;
(iv) an amendment to Article II, Section 7 increasing the quorum requirement for stockholders meetings from 33-1/3% to the holders of a majority of the shares issued and outstanding and entitled to vote generally in the election of directors;
(v) an amendment to Article II, Section 8 to provide for inspectors of elections;
(vi) an amendment to Article II, Section 9 relating to the conduct of business of stockholders meetings;
(vii) an amendment to Article II, Section 11 eliminating the ability of stockholders to vote by written consent in lieu of a meeting;
(viii) an amendment to Article II, Section 12 relating to voting by proxy;
(ix) amendments to Article III, Sections 2 through 6 to conform our Bylaws as necessary with the Classified Board Amendment to our Certificate of Incorporation; and
(x) the addition of a new Article VII providing for indemnification of officers and directors of the Company.
The text of each of these amendments to our Bylaws is included in the form of Amended and Restated Bylaws attached to this Current Report on Form 8-K as Exhibit 3.2.
Item 7.01 Regulation FD Disclosure .
On November 17, 2006, GlobalSCAPE issued a press release announcing the closing of the transactions contemplated by the Securities Purchase Agreement.
A copy of this press release has been furnished as Exhibit 99.1 to this Current Report on Form 8-K. Pursuant to the rules and regulations of the Securities and Exchange Commission, these exhibits and the information set forth therein are deemed to have been furnished and shall not be deemed to be filed under the Securities Exchange Act of 1934, as amended.
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Item 9.01 Financial Statements and Exhibits .
(d) Exhibits
3.1 Form of Amended and Restated Certificate of Incorporation.
3.2 Form of Amended and Restated Bylaws.
4.1 Registration Rights Agreement dated November 16, 2006 by and between GlobalSCAPE, Inc. and the purchasers signatory thereto.
10.1 Securities Purchase Agreement dated November 13, 2006 by and among GlobalSCAPE, Inc., the Stockholders named in Schedule I thereto and the purchasers named therein.
10.2 Form of Common Stock Purchase Warrant.
99.1 Press Release dated November 17, 2006.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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GLOBALSCAPE, INC. |
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By: |
/s/ Charles R. Poole |
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Charles R. Poole, President and Chief
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Dated: November 17, 2006 |
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EXHIBIT 3.1
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF
GLOBALSCAPE, INC.
GlobalSCAPE, Inc., a corporation organized and existing under the laws of the State of Delaware (the Corporation), hereby certifies as follows:
(a) Authorization of Shares . The total number of shares of capital stock which the Corporation shall have the authority to issue is 50,000,000 shares, consisting of 40,000,000 shares of common stock, par value $0.001 per share (Common Stock), and 10,000,000 shares of preferred stock, par value $0.001 per share (Preferred Stock).
(b) Common Stock .
(i) Dividends . The holders of shares of Common Stock shall be entitled to receive such dividends as from time to time may be declared by the Board of Directors of the Corporation, subject to any preferential payments to which the holders of shares of any series of Preferred Stock shall be entitled as may be stated and expressed pursuant to the resolution establishing any such series of Preferred Stock.
(ii) Liquidation . In the event of any liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary, after payment shall have been made to any holders of shares of any series of Preferred Stock then outstanding of the full amounts of preferential payments to which they shall respectively be entitled as may be stated and expressed pursuant to the resolution establishing any such series of Preferred Stock, the holders of shares of Common Stock then outstanding shall be entitled to share ratably based upon the number of shares of Common Stock held by them in all remaining assets of the Corporation available for distribution to its shareholders.
(iii) Voting Rights . All shares of Common Stock shall be identical with each other in every respect. The shares of Common Stock shall entitle the holders thereof to one vote for each share upon all matters upon which shareholders have the right to vote.
(c) Preferred Stock . The Board of Directors is authorized to establish, from time to time, one or more series of any class of shares, to increase or decrease the number within each series, and to fix the designations, powers, preferences and relative, participating, optional or other rights of such series and any qualifications, limitations or restrictions thereof
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IN WITNESS WHEREOF, this Amended and Restated Certificate of Incorporation, which restates, integrates and amends the certificate of incorporation of the Corporation, and which has been duly adopted in accordance with Sections 228, 242 and 245 of the Delaware General Corporation Law, has been executed by its duly authorized officer this day of , 2006.
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GLOBALSCAPE, INC. |
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By: |
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Charles R. Poole, President |
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TABLE OF CONTENTS
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ARTICLE I |
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OFFICES |
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Section 1. |
Registered Office |
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Section 2. |
Other Offices |
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ARTICLE II |
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STOCKHOLDERS |
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Section 1. |
Place of Meetings |
1 |
Section 2. |
Annual Meetings |
1 |
Section 3. |
Special Meetings |
1 |
Section 4. |
Notice |
2 |
Section 5. |
Nominations and Stockholder Business |
2 |
Section 6. |
List of Stockholders |
3 |
Section 7. |
Quorum |
4 |
Section 8. |
Inspectors of Elections |
4 |
Section 9. |
Conduct of Business |
4 |
Section 10. |
Voting |
5 |
Section 11. |
Action Without Meeting |
5 |
Section 12. |
Proxies |
5 |
Section 13. |
Record Date |
6 |
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ARTICLE III |
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BOARD OF DIRECTORS |
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Section 1. |
Management |
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Section 2. |
Number, Election and Terms of Directors |
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Section 3. |
Place of Meetings |
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Section 4. |
Telephone and Similar Meetings |
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Section 5. |
Regular Meetings |
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Section 6. |
Special Meetings |
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Section 7. |
Quorum |
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Section 8. |
Interested Directors |
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Section 9. |
Committees |
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Section 10. |
Action by Consent |
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Section 11. |
Compensation of Directors |
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ARTICLE IV |
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NOTICE |
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Section 1. |
Form of Notice |
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Section 2. |
Waiver |
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ARTICLE V |
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OFFICERS AND AGENTS |
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Section 1. |
In General |
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Section 2. |
Other Officers and Agents |
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Section 3. |
Compensation |
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Section 4. |
Term of Office and Removal |
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Section 5. |
Employment and Other Contracts |
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Section 6. |
Chairman of the Board of Directors |
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Section 7. |
President |
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Section 8. |
Vice Presidents |
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Section 9. |
Secretary |
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Section 10. |
Assistant Secretaries |
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Section 11. |
Treasurer |
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Section 12. |
Assistant Treasurers |
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Section 13. |
Bonding |
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ARTICLE VI |
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STOCK CERTIFICATES; UNCERTIFICATED SHARES |
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Section 1. |
Shares |
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Section 2. |
Lost Certificates |
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Section 3. |
Transfer of Shares |
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Section 4. |
Registered Stockholders |
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ARTICLE VII |
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INDEMNIFICATION |
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Section 1. |
Right to Indemnification |
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Section 2. |
Right to Advancement of Expenses |
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Section 3. |
Right of Indemnitee to Bring Suit |
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Section 4. |
Non-Exclusivity of Rights |
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Section 5. |
Insurance |
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Section 6. |
Amendment of Rights |
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Section 7. |
Indemnification of Employees and Agents of the Corporation |
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ARTICLE VIII |
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GENERAL PROVISIONS |
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Section 1. |
Dividends |
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Section 2. |
Reserves |
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Section 3. |
Books and Records |
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Section 4. |
Fiscal Year |
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Section 5. |
Seal |
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Section 6. |
Advances of Expenses |
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Section 7. |
Resignation |
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Section 8. |
Amendment of Bylaws |
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Section 9. |
Invalid Provisions |
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Section 10. |
Relation to the Certificate of Incorporation |
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Section 11. |
The Term public announcement |
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Section 12. |
The Term electronic transmission |
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AMENDED
AND RESTATED
BYLAWS
OF
GLOBALSCAPE, INC.
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responsible for the giving of notice; provided, however, the inadvertent failure to treat such inability as a revocation shall not invalidate any meeting or other action. Any notice permitted to be given by electronic transmission will be deemed to be given: (A) if by facsimile telecommunication when directed to a number which the stockholder or director has consented to receive notice; (B) if by electronic mail, when directed to an electronic mail address at which the stockholder or director has consented to receive notice; (C) if by posting on an electronic network together with a separate notice to the stockholder of such specific posting, upon the later of (1) such posting and (2) the giving of such
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separate notice; (D) if by any other form of electronic transmission, when directed to the stockholder.
An affidavit of the Secretary of the Corporation that the notice has been given shall, in the absence of fraud, be prima facie evidence of the facts stated therein.
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EXHIBIT 4.1
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this Agreement ) is made and entered into as of November 16, 2006, by and among GlobalSCAPE, Inc., a Delaware corporation (the Company ), and the purchasers signatory hereto (each a Purchaser and collectively, the Purchasers ).
This Agreement is made pursuant to the Securities Purchase Agreement, dated as of the date hereof, by and among the Company and the Purchasers (the Purchase Agreement ).
The Company and the Purchasers hereby agree as follows:
Advice shall have the meaning set forth in Section 6(g).
Blackout Period shall have the meaning set forth in Section 6(f).
Common Stock means the common stock of the Company, par value $0.001 per share.
Commission means the Securities and Exchange Commission.
Company Shares means the shares of Common Stock issued by the Company to the Purchasers pursuant to the Purchase Agreement other than the Warrant Shares.
Effectiveness Period shall have the meaning set forth in Section 2(a).
Event shall have the meaning set forth in Section 2(b).
Event Date shall have the meaning set forth in Section 2(b).
Exchange Act means the Securities Exchange Act of 1934, as amended, or any successor statute, and the rules and regulations of the Commission thereunder.
Filing Date means, with respect to the Registration Statement required hereunder, the 30 th calendar day following the issuance of the Securities pursuant to the Purchase Agreement.
Free Writing Prospectus means a free writing prospectus as defined in Rule 405 under the Securities Act.
Holder or Holders means the holder or holders, as the case may be, from time to time of Registrable Securities.
Indemnified Party shall have the meaning set forth in Section 5(c).
Indemnifying Party shall have the meaning set forth in Section 5(c).
Issuer Free Writing Prospectus means an issuer free writing prospectus as defined in Rule 433 under the Securities Act.
Losses shall have the meaning set forth in Section 5(a).
Permitted Free Writing Prospectus shall have the meaning set forth in Section 6(d).
Plan of Distribution shall have the meaning set forth in Section 2(a).
Proceeding means an action, claim, suit, investigation or proceeding (including, without limitation, an investigation or partial proceeding, such as a deposition), whether commenced or threatened in writing.
Prospectus means the prospectus included in a Registration Statement as supplemented by any and all prospectus supplements and as amended by any and all amendments including post-effective amendments, and including all material incorporated by reference or deemed to be incorporated by reference in such Prospectus.
Registrable Securities means all of (i) the Shares, (ii) the Warrant Shares and (iii) any shares of Common Stock issued or issuable upon any stock split, dividend or other distribution, recapitalization or similar event with respect to the foregoing.
Registration Statement means any registration statement of the Company under the Securities Act that covers any of the Registrable Securities pursuant to the provisions of this Agreement, including the related Prospectus, all amendments and supplements to such registration statement or Prospectus, including post-effective amendments, all exhibits thereto, and all material incorporated by reference or deemed to be incorporated by reference in such registration statement.
Required Effective Date shall have the meaning set forth in Section 2(a).
Rule 415 means Rule 415 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same purpose and effect as such Rule.
Rule 424 means Rule 424 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same purpose and effect as such Rule.
Securities Act means the Securities Act of 1933, as amended, or any successor statute, and the rules and regulations of the Commission thereunder.
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Selling Shareholder Questionnaire shall have the meaning set forth in Section 3(a).
Selling Stockholder Shares means the shares of Common Stock set forth opposite the name of each Selling Stockholder on Schedule I to the Purchase Agreement.
Shares means the Company Shares and the Selling Stockholder Shares.
Trading Market means whichever of the New York Stock Exchange, the American Stock Exchange, the NASDAQ Global Market, the NASDAQ Capital Market or the OTC Bulletin Board on which the Common Stock is listed or quoted for trading on the date in question.
Warrant Shares means the shares of Common Stock issuable upon exercise of the Warrants.
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In connection with the Companys registration obligations hereunder, the Company shall:
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An Indemnified Party shall have the right to employ separate counsel in any such Proceeding and to participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense of such Indemnified Party or Parties unless: (1) the Indemnifying Party has agreed in writing to pay such fees and expenses; (2) the Indemnifying Party shall have failed promptly to assume the defense of such Proceeding and to employ counsel reasonably satisfactory to such Indemnified Party in any such Proceeding; or (3) the named parties to any such Proceeding (including any impleaded parties) include both such Indemnified Party and the Indemnifying Party, and such Indemnified Party shall have been advised by counsel that a conflict of interest is likely to exist if the same counsel were to represent such Indemnified Party and the Indemnifying Party (in which case, if such Indemnified Party notifies the Indemnifying Party in writing that it elects to employ separate counsel at the expense of the Indemnifying Party, the Indemnifying Party shall not have the right to assume the defense thereof and the reasonable fees and expenses of one separate counsel shall be at the expense of the Indemnifying Party). The Indemnifying Party shall not be liable for any settlement of any such Proceeding effected without its written consent, which consent shall not be unreasonably withheld, delayed or conditioned. No Indemnifying Party shall, without the prior written consent of the Indemnified Party, effect any settlement of any pending Proceeding in respect of which any Indemnified Party is a party, unless such settlement includes an unconditional release of such Indemnified Party from all liability on claims that are the subject matter of such Proceeding. The failure to deliver written notice to the Indemnifying Party within a reasonable time of the commencement of any such action shall not relieve such Indemnifying Party of any liability to the Indemnified Party under this Section 5, except to the extent that the Indemnifying Party is prejudiced in its ability to defend such action.
Subject to the terms of this Agreement, all reasonable fees and expenses of the Indemnified Party (including reasonable fees and expenses to the extent incurred in connection with investigating or preparing to defend such Proceeding in a manner not inconsistent with this Section) shall be paid promptly to the Indemnified Party, as incurred, but no later than ten (10) Trading Days of written notice thereof to the Indemnifying Party; provided, that the Indemnified Party shall promptly reimburse the Indemnifying Party for that portion of such fees and expenses applicable to such actions for which such Indemnified Party is not entitled to indemnification hereunder, determined based upon the relative faults of the parties.
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The indemnity agreements contained herein shall be in addition to (i) any cause of action or similar right of the Indemnified Party or Indemnified Person against the indemnifying party or others, and (ii) any liabilities the indemnifying party may be subject to pursuant to the law.
The parties hereto agree that it would not be just and equitable if contribution pursuant to this Section 5(d) were determined by pro rata allocation or by any other method of allocation that does not take into account the equitable considerations referred to in the immediately preceding paragraph. Notwithstanding the provisions of this Section 5(d), no Holder shall be required to contribute, in the aggregate, any amount in excess of the amount by which the proceeds actually received by such Holder from the sale of the Registrable Securities subject to the Proceeding exceeds the amount of any damages that such Holder has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission, except in the case of fraud by such Holder.
The indemnity and contribution agreements contained in this Section are in addition to any liability that the Indemnifying Parties may have to the Indemnified Parties. The parties to this Agreement hereby acknowledge that they are sophisticated business persons who were represented by counsel during the negotiations regarding the provisions hereof including, without limitation, the provisions of this Section 5, and are fully informed regarding said provisions. They further acknowledge that the provisions of this Section 5 fairly allocate the risks in light of the ability of the parties to investigate the Company and its business in order to assure that adequate disclosure is made in the Registration Statement as required by the Securities Act and the Exchange Act. The parties are advised that federal or state public policy as interpreted by the courts in certain jurisdictions may be contrary to certain of the provisions of this Section 5, and the parties hereto hereby expressly waive and relinquish any right or ability to assert such public
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policy as a defense to a claim under this Section 5 and further agree not to attempt to assert any such defense.
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(i) the issuance (or threat of issuance) by the Commission of any stop order suspending the effectiveness of any Registration Statement or the initiation of any proceedings for that purpose or that any Registration Statement has otherwise ceased to be effective;
(ii) the receipt by the Company of any notification with respect to the suspension of the qualification or exemption from qualification of any of the Registrable Securities including therein for sale in any jurisdiction or the initiation of any proceeding for such purpose;
(iii) the discovery or happening of any event that requires the making of any changes in any Registration Statement or any Prospectus so that, as of such date, the statements therein do not include an untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading (which advice shall be accompanied by an instruction to suspend the use of such Prospectus until the requisite changes have been made); and
(iv) the Companys reasonable determination that the post-effective amendment to any Registration Statement would be appropriate.
Immediately after the transmission of a Suspension Certificate by the Company, the Company may, in its sole discretion, require such Holders of Registrable Securities to refrain from selling or otherwise transferring or disposing of any Registrable Securities or other Company securities then held by such Holders for a specified period of time that is customary under the circumstances (not to exceed 30 days consecutively and 60 days in any 12-month period) (a Blackout Period ). Notwithstanding the foregoing sentence, the Company shall be permitted to cause Holders of Registrable Securities to so refrain from selling or otherwise transferring or disposing of any Registrable Securities or other securities of the Company on only three (3) occasions during each twelve (12) consecutive month period that the Registration Statement remains effective. The Company may impose stop transfer instructions to enforce any required agreement of the Holders under this Section 6(f).
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IN WITNESS WHEREOF, the parties have executed this Registration Rights Agreement as of the date first written above.
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GLOBALSCAPE, INC. |
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By: |
/s/ Thomas W. Brown |
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Name: Thomas W. Brown |
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Title: Chariman |
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[SIGNATURE PAGE OF HOLDERS FOLLOWS]
[SIGNATURE PAGE OF HOLDERS TO GLOBALSCAPE, INC.
REGISTRATION RIGHTS AGREEMENT]
Name of Holder: |
Iroquois Master Fund Ltd. |
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Signature of Authorized Signatory of Holder: |
/s/ Joshua Silverman |
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Name of Authorized Signatory: |
Joshua Silverman |
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Title of Authorized Signatory: |
Authorized Signatory |
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[SIGNATURE PAGES CONTINUE]
A- 1
[SIGNATURE PAGE OF HOLDERS TO GLOBALSCAPE, INC.
REGISTRATION RIGHTS AGREEMENT]
Name of Holder: |
Emancipation Capital Master Ltd. |
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Signature of Authorized Signatory of Holder: |
/s/ Charles Frumberg |
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Name of Authorized Signatory: |
Charles Frumberg |
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Title of Authorized Signatory: |
Managing Member |
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[SIGNATURE PAGES CONTINUE]
[SIGNATURE PAGE OF HOLDERS TO GLOBALSCAPE, INC.
REGISTRATION RIGHTS AGREEMENT]
Name of Holder: |
Zeke, L.P. |
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Signature of Authorized Signatory of Holder: |
/s/ Edward N. Antoian |
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Name of Authorized Signatory: |
Edward N. Antoian |
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Title of Authorized Signatory: |
Zeke, LP - General Partner |
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[SIGNATURE PAGES CONTINUE]
[SIGNATURE PAGE OF HOLDERS TO GLOBALSCAPE, INC.
REGISTRATION RIGHTS AGREEMENT]
Name of Holder: |
SF Capital Partners Ltd. |
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Signature of Authorized Signatory of Holder: |
/s/ Brian H. Davidson |
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Name of Authorized Signatory: |
Briand H. Davidson |
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Title of Authorized Signatory: |
Managing Director |
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[SIGNATURE PAGES CONTINUE]
[SIGNATURE PAGE OF HOLDERS TO GLOBALSCAPE, INC.
REGISTRATION RIGHTS AGREEMENT]
Name of Holder: |
Dolphin Offshore Partners, L.P. |
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Signature of Authorized Signatory of Holder: |
/s/ Peter E. Salas |
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Name of Authorized Signatory: |
Peter E. Salas |
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Title of Authorized Signatory: |
General Partner |
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[SIGNATURE PAGES CONTINUE]
[SIGNATURE PAGE OF HOLDERS TO GLOBALSCAPE, INC.
REGISTRATION RIGHTS AGREEMENT]
Name of Holder: |
Nite Capital LP |
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Signature of Authorized Signatory of Holder: |
/s/ Keith A. Goodman |
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Name of Authorized Signatory: |
Keith A. Goodman |
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Title of Authorized Signatory: |
Managing of the General Partner |
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[SIGNATURE PAGES CONTINUE]
[SIGNATURE PAGE OF HOLDERS TO GLOBALSCAPE, INC.
REGISTRATION RIGHTS AGREEMENT]
Name of Holder: |
Enable Opportunity Partners, L.P. |
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Signature of Authorized Signatory of Holder: |
/s/ Adam Epstein |
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Name of Authorized Signatory: |
Adam Epstein |
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Title of Authorized Signatory: |
Principal |
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[SIGNATURE PAGES CONTINUE]
[SIGNATURE PAGE OF HOLDERS TO GLOBALSCAPE, INC.
REGISTRATION RIGHTS AGREEMENT]
Name of Holder: |
Enable Growth Partners, L.P. |
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Signature of Authorized Signatory of Holder: |
/s/ Adam Epstein |
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Name of Authorized Signatory: |
Adam Epstein |
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Title of Authorized Signatory: |
Principal |
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[SIGNATURE PAGES CONTINUE]
[SIGNATURE PAGE OF HOLDERS TO GLOBALSCAPE, INC.
REGISTRATION RIGHTS AGREEMENT]
Name of Holder: |
Pierce Diversified Strategy Master Fund, LLC Ena |
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Signature of Authorized Signatory of Holder: |
/s/ Adam Epstein |
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Name of Authorized Signatory: |
Adam Epstein |
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Title of Authorized Signatory: |
Principal |
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[SIGNATURE PAGES CONTINUE]
ANNEX A
Plan of Distribution
The selling stockholders, which as used herein includes donees, pledgees, transferees or other successors-in-interest selling shares of common stock or interests in shares of common stock received after the date of this prospectus from a selling stockholder as a gift, pledge, partnership distribution or other transfer, may, from time to time, sell, transfer or otherwise dispose of any or all of their shares of common stock or interests in shares of common stock on any stock exchange, market or trading facility on which the shares are traded or in private transactions. These dispositions may be at fixed prices, at prevailing market prices at the time of sale, at prices related to the prevailing market price, at varying prices determined at the time of sale, or at negotiated prices.
The selling stockholders may use any one or more of the following methods when disposing of shares or interests therein:
· ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers;
· block trades in which the broker-dealer will attempt to sell the shares as agent, but may position and resell a portion of the block as principal to facilitate the transaction;
· purchases by a broker-dealer as principal and resale by the broker-dealer for its account;
· an exchange distribution in accordance with the rules of the applicable exchange;
· privately negotiated transactions;
· short sales effected after the date the registration statement of which this Prospectus is a part is declared effective by the SEC;
· through the writing or settlement of options or other hedging transactions, whether through an options exchange or otherwise;
· broker-dealers may agree with the selling stockholders to sell a specified number of such shares at a stipulated price per share; and
· a combination of any such methods of sale.
The selling stockholders may, from time to time, pledge or grant a security interest in some or all of the shares of common stock owned by them and, if they default in the performance of their secured obligations, the pledgees or secured parties may offer and sell the shares of common stock, from time to time, under this prospectus, or under an amendment to this prospectus under Rule 424(b)(3) or other applicable provision of the Securities Act amending the list of selling stockholders to include the pledgee, transferee or other successors in interest as
A- 1
selling stockholders under this prospectus. The selling stockholders also may transfer the shares of common stock in other circumstances, in which case the transferees, pledgees or other successors in interest will be the selling beneficial owners for purposes of this prospectus.
In connection with the sale of our common stock or interests therein, the selling stockholders may enter into hedging transactions with broker-dealers or other financial institutions, which may in turn engage in short sales of the common stock in the course of hedging the positions they assume. The selling stockholders may also sell shares of our common stock short and deliver these securities to close out their short positions, or loan or pledge the common stock to broker-dealers that in turn may sell these securities. The selling stockholders may also enter into option or other transactions with broker-dealers or other financial institutions or the creation of one or more derivative securities which require the delivery to such broker-dealer or other financial institution of shares offered by this prospectus, which shares such broker-dealer or other financial institution may resell pursuant to this prospectus (as supplemented or amended to reflect such transaction).
The aggregate proceeds to the selling stockholders from the sale of the common stock offered by them will be the purchase price of the common stock less discounts or commissions, if any. Each of the selling stockholders reserves the right to accept and, together with their agents from time to time, to reject, in whole or in part, any proposed purchase of common stock to be made directly or through agents. We will not receive any of the proceeds from this offering. Upon any exercise of any warrants by payment of cash, however, we will receive the exercise price of the warrants.
The selling stockholders also may resell all or a portion of the shares in open market transactions in reliance upon Rule 144 under the Securities Act of 1933, provided that they meet the criteria and conform to the requirements of that rule.
The selling stockholders and any underwriters, broker-dealers or agents that participate in the sale of the common stock or interests therein may be underwriters within the meaning of Section 2(11) of the Securities Act. Any discounts, commissions, concessions or profit they earn on any resale of the shares may be underwriting discounts and commissions under the Securities Act. Selling stockholders who are underwriters within the meaning of Section 2(11) of the Securities Act will be subject to the prospectus delivery requirements of the Securities Act.
To the extent required, the shares of our common stock to be sold, the names of the selling stockholders, the respective purchase prices and public offering prices, the names of any agents, dealer or underwriter, any applicable commissions or discounts with respect to a particular offer will be set forth in an accompanying prospectus supplement or, if appropriate, a post-effective amendment to the registration statement that includes this prospectus.
In order to comply with the securities laws of some states, if applicable, the common stock may be sold in these jurisdictions only through registered or licensed brokers or dealers. In addition, in some states the common stock may not be sold unless it has been registered or qualified for sale or an exemption from registration or qualification requirements is available and is complied with.
A- 2
We have advised the selling stockholders that the anti-manipulation rules of Regulation M under the Exchange Act may apply to sales of shares in the market and to the activities of the selling stockholders and their affiliates. In addition, we will make copies of this prospectus (as it may be supplemented or amended from time to time) available to the selling stockholders for the purpose of satisfying the prospectus delivery requirements of the Securities Act. The selling stockholders may indemnify any broker-dealer that participates in transactions involving the sale of the shares against certain liabilities, including liabilities arising under the Securities Act.
We have agreed to indemnify the selling stockholders against liabilities, including liabilities under the Securities Act and state securities laws, relating to the registration of the shares offered by this prospectus.
We have agreed with the selling stockholders to keep the registration statement of which this prospectus constitutes a part effective until the earlier of (1) such time as all of the shares covered by this prospectus have been disposed of pursuant to and in accordance with the registration statement or (2) the date on which the shares may be sold pursuant to Rule 144(k) of the Securities Act.
A- 3
ANNEX B
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Name of Selling Stockholder |
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QUESTIONNAIRE FOR SELLING STOCKHOLDERS
SENT ON: [ ], 2006
PLEASE RETURN BY: [ ], 2006
This Questionnaire is being furnished to all selling stockholders of GlobalSCAPE, Inc., a Delaware corporation (the Company ), and relates to certain information required to be disclosed in the registration statement (the Registration Statement ) being prepared on behalf of you and the Company for filing with the United States Securities and Exchange Commission (the SEC ).
Selling stockholders of the Company may be personally liable under the federal securities laws of the United States if the Registration Statement contains any statement which is false or misleading as to any material fact or omits to state any material fact necessary in order to make the statements therein not false or misleading.
Your careful completion of this Questionnaire will help ensure that the Registration Statement will be complete and accurate. Careful consideration of the instructions and definitions contained in the endnotes to various items is essential to an understanding of the questions.
PLEASE PROVIDE A RESPONSE TO EVERY QUESTION , indicating None or Not Applicable where appropriate. Please complete, sign, and fax one copy of this Questionnaire NO LATER THAN [ ], 2006 to:
[ ]
Unless stated otherwise, answers should be given as of the date you complete this Questionnaire. However, it is your responsibility to inform us of any changes that may occur to your situation between the date you complete the Questionnaire and the effective date of the Registration Statement . If there is any situation about which you have any doubt, please give relevant facts so that the information may be reviewed.
B- 1
QUESTIONNAIRE
STOCK OWNERSHIP
Item 1 . Beneficial Ownership .
a. Deemed Beneficial Ownership . Please state the amount of securities of the Company you own as of [ ], 2006, assuming the exercise of warrants for shares of Common Stock. (If none, please so state in each case.)
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Shares as to which you have shared voting power: |
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Shares as to which you have sole investment power: |
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Shares as to which you have shared investment power: |
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Please state the number of shares owned by family members, trusts and other organizations with which you have a relationship, and any other shares of which you may be deemed to be the beneficial owner(1): |
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Shares as to which you have shared voting power: |
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Shares as to which you have sole investment power: |
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Shares as to which you have shared investment power: |
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B- 2
Shares which you will have a right to acquire before [date 60 days from expected filing date] , through the exercise of options, warrants or otherwise: |
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Shares of Common Stock you intend to offer for sale pursuant to the Registration Statement: |
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Shares of Common Stock that you will hold after the offering for sale of Common Stock that is the subject of the Registration Statement: |
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Do you have any present plans to exercise options or otherwise acquire, dispose of or transfer shares of Common Stock (on an as-converted basis) of the Company between the date you complete this Questionnaire and [date 60 days from expected filing date] ? |
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If so, please describe. |
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b. Pledged Securities . If any of such securities have been pledged or otherwise deposited as collateral or are the subject matter of any voting trust or other similar agreement or of any contract providing for the sale or other disposition of such securities, please give the details thereof.
Answer:
c. Disclaimer of Beneficial Ownership . Do you wish to disclaim beneficial ownership(1) of any of the shares reported in response to Item 1(a)?
Answer:
If the answer is Yes, please furnish the following information with respect to the person or persons who should be shown as the beneficial owner(s)(1) of the shares in question.
Name and Address of
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B- 3
Item 2 . Major Shareholders . Please state below the names of persons or groups known by you to own beneficially(1) more than 5% of the Companys Common Stock.
Answer:
Item 3 . Change of Control . Do you know of any contractual arrangements, including any pledge of securities of the Company, the operation of which may at a subsequent date result in a change of control of the Company?
Answer:
Item 4 . Relationship with the Company . Please state the nature of any position, office or other material relationship you have, or have had within the past three years, with the Company or its affiliates.
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Item 5 . Correct Name . Please confirm that your name or your organizations name, as it appears on the signature page to this Questionnaire, is exactly as it should appear in the Principal and Selling Stockholder section of the Registration Statement:
o Yes, this name is correct.
o No, the correct name should be:
B- 4
SIGNATURE
If at any time any of the information set forth in my responses to this Questionnaire has changed due to passage of time, or any development occurs which requires a change in any of my answers, or has for any other reason become incorrect, I agree immediately to furnish to the individual to whom a copy of this Questionnaire is to be sent, as indicated and at the address shown on the first page hereof, any necessary or appropriate correcting information. Otherwise, the Company is to understand that the above information continues to be, to the best of my knowledge, information and belief, complete and correct.
I understand that the information that I am furnishing to you herein will be used by the Company in the preparation of its Registration Statement on Form S-1 and hereby consent to the inclusion of such information in the Registration Statement.
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Date: , 2006 |
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B- 5
ENDNOTE
1. Beneficial Ownership . You are the beneficial owner of a security, as defined in Rule 13d-3 under the Securities Exchange Act of 1934 (the Exchange Act ), if you, directly or indirectly, through any contract, arrangement, understanding, relationship or otherwise have or share: (1) voting power, which includes the power to vote, or to direct the voting of, such security, and/or (2) investment power, which includes the power to dispose, or to direct the disposition of, such security. You are also the beneficial owner of a security if you, directly or indirectly, create or use a trust, proxy, power of attorney, pooling arrangement or any other contract, arrangement, or device with the purpose or effect of divesting yourself of beneficial ownership of a security or preventing the vesting of such beneficial ownership.
You are deemed to be the beneficial owner of a security if you have the right to acquire beneficial ownership of such security at any time within sixty (60) days including , but not limited to, any right to acquire such security (a) through the exercise of any option, warrant or right, (b) through the conversion of a security, or (c) pursuant to the automatic termination of, or the power to revoke a trust, discretionary account, or similar arrangement.
Ordinarily, shares held in the name of your spouse or minor child should be considered as beneficially owned by you absent special circumstances to indicate that you do not have, as a practical matter, voting power or investment power over such shares. Similarly, absent countervailing facts, securities held in the name of relatives who share your home are to be reported as being beneficially owned by you. In addition, securities held for your benefit in the name of others, such as nominees, trustees and other fiduciaries, securities held by a partnership of which you are a partner, and securities held by a corporation controlled by you should be regarded as beneficially owned by you.
This definition of beneficial ownership is very broad; therefore, even through you may not actually have or share voting or investment power with respect to securities owned by persons in your family or living in your home, you should include such shares in your beneficial ownership disclosure and may then disclaim beneficial ownership of such securities. Please note, however, that shares in which you have an economic interest but over which you have no voting or investment control (for example, shares in a trust of which you are the beneficiary but not the trustee) are not deemed beneficially owned by you for the purposes of this questionnaire.
B- 6
Exhibit 10.1
SECURITIES PURCHASE AGREEMENT
This Securities Purchase Agreement (this Agreement ) is dated as of November 13, 2006, among GlobalSCAPE, Inc., a Delaware corporation (the Company ), each of the Persons named on Schedule I hereto (each a Selling Stockholder and collectively the Selling Stockholders ) and each purchaser identified on the signature pages hereto (each, including its successors and assigns, a Purchaser and collectively the Purchasers ).
WHEREAS, subject to the terms and conditions set forth in this Agreement, the Company desires to issue and sell to each Purchaser, each Selling Stockholder desires to sell to each Purchaser, and each Purchaser, severally and not jointly, desires to purchase from the Company and the Selling Stockholders, securities of the Company as more fully described in this Agreement.
NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in this Agreement, and for other good and valuable consideration the receipt and adequacy of which are hereby acknowledged, the Company and each Purchaser agree as follows:
Action shall have the meaning ascribed to such term in Section 3.1(j).
Affiliate means any Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common control with a Person as such terms are used in and construed under Rule 144 under the Securities Act of 1933, as amended (the Securities Act ). With respect to a Purchaser, any investment fund or managed account that is managed on a discretionary basis by the same investment manager as such Purchaser will be deemed to be an Affiliate of such Purchaser.
Business Day means any day except Saturday, Sunday, any day which shall be a federal legal holiday in the United States or any day on which banking institutions in the State of New York are authorized or required by law or other governmental action to close.
Closing means the closing of the purchase and sale of the Securities pursuant to Section 2.1.
Closing Date means the Trading Day when all of the Transaction Documents have been executed and delivered by the applicable parties thereto, and all conditions precedent to (i) the Purchasers obligations to pay the Subscription Amount and (ii) the Companys obligations to deliver the Securities have been satisfied or waived.
Closing Price means on any particular date (a) the last reported closing bid price per share of Common Stock on such date on the Trading Market (as reported by
Bloomberg L.P. at 4:15 PM (New York time)), or (b) if there is no such price on such date, then the closing bid price on the Trading Market on the date nearest preceding such date (as reported by Bloomberg L.P. at 4:15 PM (New York time)), or (c) if the Common Stock is not then listed or quoted on the Trading Market and if prices for the Common Stock are then reported in the pink sheets published by Pink Sheets LLC (or a similar organization or agency succeeding to its functions of reporting prices), the most recent bid price per share of the Common Stock so reported, or (d) if the shares of 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 Purchasers of a majority in interest of the Shares then outstanding.
Commission means the Securities and Exchange Commission.
Common Stock means the common stock of the Company, par value $0.001 per share, and any other class of securities into which such securities may hereafter be reclassified or changed into.
Company Shares means the shares of Common Stock issued by the Company to the Purchasers pursuant to this Agreement other than the Warrant Shares.
Common Stock Equivalents means any securities of the Company or the Subsidiaries which would entitle the holder thereof to acquire at any time Common Stock, including, without limitation, any debt, preferred stock, rights, options, warrants or other instrument that is at any time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive, Common Stock.
Company Counsel means Jackson Walker L.L.P.
Company Securities means the Company Shares, the Warrants and the Warrant Shares.
Company Subscription Amount means, as to each Purchaser, the aggregate amount to be paid to the Company for the Company Shares and Warrants purchased hereunder from the Company as specified opposite such Purchasers name on Schedule II hereto.
Disclosure Schedules means the Disclosure Schedules of the Company delivered concurrently herewith.
Effective Date means the date that the initial Registration Statement filed by the Company pursuant to the Registration Rights Agreement is first declared effective by the Commission.
Evaluation Date shall have the meaning ascribed to such term in Section 3.1(r).
Exchange Act means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.
2
GAAP shall have the meaning ascribed to such term in Section 3.1(h).
Indemnified Liabilities shall have the meaning ascribed to such term is Section 4.9.
Intellectual Property Rights shall have the meaning ascribed to such term in Section 3.1(o).
Knowledge means the actual knowledge of the President and Chief Financial Officer of the Company.
Legend Removal Date shall have the meaning ascribed to such term in Section 4.1(c).
Liens means a lien, charge, security interest, encumbrance, right of first refusal, preemptive right or other similar restriction.
Material Adverse Effect shall have the meaning assigned to such term in Section 3.1(b).
Material Permits shall have the meaning ascribed to such term in Section 3.1(m).
Non-Disclosure Agreement means as to each Purchaser, the confidentiality or similar agreement executed and delivered by the Company and such Purchaser relating to the transactions contemplated by this Agreement.
Per Share Purchase Price equals $2.50, subject to adjustment for reverse and forward stock splits, stock dividends, stock combinations and other similar transactions of the Common Stock that occur after the date of this Agreement and prior to the Closing Date.
Person means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind.
Proceeding means an action, claim, suit, investigation or proceeding (including, without limitation, an investigation or partial proceeding, such as a deposition), whether commenced or threatened in writing.
Purchaser Counsel shall have the meaning ascribed to such term in Section 4.4.
Purchaser Party shall have the meaning ascribed to such term in Section 4.9.
Registration Rights Agreement means the Registration Rights Agreement, dated the date hereof, among the Company and the Purchasers, in the form of Exhibit A attached hereto.
3
Registration Statement means a registration statement meeting the requirements set forth in the Registration Rights Agreement and covering the resale by the Purchasers of the Shares and the Warrant Shares.
Required Approvals shall have the meaning ascribed to such term in Section 3.1(e).
Rule 144 means Rule 144 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same effect as such Rule.
SEC Reports shall have the meaning ascribed to such term in Section 3.1(h).
Securities means the Company Securities and the Selling Stockholder Shares.
Securities Act means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.
Selling Stockholder Shares means the shares of Common Stock set forth opposite the name of each Selling Stockholder on Schedule I which are being sold to the Purchasers pursuant to this Agreement.
Selling Stockholder Subscription Amount means, as to each Purchaser, the aggregate amount to be paid to the Selling Stockholders for the Selling Stockholder Shares purchased hereunder from the Selling Stockholders as specified opposite such Purchasers name on Schedule II hereto.
Shares means the Company Shares and the Selling Stockholder Shares.
Short Sales shall include all short sales as defined in Rule 200 of Regulation SHO under the Exchange Act and all types of direct and indirect stock pledges, forward sale contracts, options, puts, calls, short sales, swaps and similar arrangements (including on a total return basis) and sales and other transactions having the effect of hedging securities or investments made pursuant to this Agreement.
Subscription Amount means, as to each Purchaser, the aggregate amount of such Purchasers Company Subscription Amount and Selling Stockholder Subscription Amount.
Subsidiary means any subsidiary of the Company as set forth on Schedule 3.1(a) .
Trading Day means a day on which the Common Stock is traded on a Trading Market.
4
Trading Market means the following markets or exchanges on which the Common Stock is listed or quoted for trading on the date in question: the American Stock Exchange, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, the New York Stock Exchange or the OTC Bulletin Board.
Transaction Documents means this Agreement, the Warrants and the Registration Rights Agreement and any other documents or agreements executed in connection with the transactions contemplated hereunder.
VWAP means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Stock is then listed or quoted on a Trading Market, the daily volume weighted average price of the Common Stock for such date (or the nearest preceding date) on the Trading Market on which the Common Stock is then listed or quoted for trading as reported by Bloomberg Financial L.P. (based on a Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time); (b) if the OTC Bulletin Board is not a Trading Market, the volume weighted average price of the Common Stock for such date (or the nearest preceding date) on the OTC Bulletin Board; (c) if the Common Stock is not then quoted for trading on the OTC Bulletin Board and if prices for the Common Stock are then reported in the Pink Sheets published by Pink Sheets, LLC (or a similar organization or agency succeeding to its functions of reporting prices), the most recent bid price per share of the Common Stock so reported; or (d) in all other cases, the fair market value of a share of Common Stock as determined by an independent appraiser selected in good faith by the Holder and reasonably acceptable to the Company.
Warrants means collectively the Common Stock purchase warrants, in the form of Exhibit C delivered to the Purchasers at the Closing in accordance with Section 2.2(a) hereof, which Warrants shall be initially exercisable on the date six (6) months after the date of issuance and have a term of exercise equal to five (5) years thereafter.
Warrant Shares means the shares of Common Stock issuable upon exercise of the Warrants.
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The Company hereby covenants and agrees with each of the Purchasers that:
THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE SECURITIES ACT), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY. THESE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT WITH A REGISTERED BROKER-DEALER OR OTHER LOAN WITH A FINANCIAL INSTITUTION THAT IS AN ACCREDITED INVESTOR AS DEFINED IN RULE 501(a) UNDER THE SECURITIES ACT OR OTHER LOAN SECURED BY SUCH SECURITIES.
The Company acknowledges and agrees that a Purchaser may from time to time pledge pursuant to a bona fide margin agreement with a registered broker-dealer or grant a security interest in some or all of the Securities to a financial institution that is an accredited investor as defined in Rule 501(a) under the Securities Act and who agrees to be bound by the provisions of this Agreement and the Registration Rights Agreement
23
and, if required under the terms of such arrangement, such Purchaser may transfer pledged or secured Securities to the pledgees or secured parties. Such a pledge or transfer would not be subject to approval of the Company and no legal opinion of legal counsel of the pledgee, secured party or pledgor shall be required in connection therewith, but such legal opinion shall be required in connection with a subsequent transfer or foreclosure following default by the Purchaser transferee of the pledge. Further, no notice shall be required of such pledge but Purchasers transferee shall promptly notify the Company of the pledge. At the appropriate Purchasers expense, the Company will execute and deliver such reasonable documentation as a pledgee or secured party of Securities may reasonably request in connection with a pledge or transfer of the Securities, including, if the Securities are subject to registration pursuant to the Registration Rights Agreement, the preparation and filing of any required prospectus supplement under Rule 424(b)(3) under the Securities Act or other applicable provision of the Securities Act to appropriately amend the list of Selling Stockholders thereunder. Each Purchaser acknowledges that the Company shall not be responsible for any pledges relating to, or the grant of any security interest in, any of the Securities or for any agreement, understanding or arrangement between any Purchaser and its pledgee or secured party. The Companys indemnification obligations pursuant to this Agreement shall not extend to any Proceeding or Losses arising out of or related to this Section 4.1(b).
24
25
26
27
28
29
30
31
32
(Signature Pages Follow)
33
IN WITNESS WHEREOF, the parties hereto have caused this Securities Purchase Agreement to be duly executed by their respective authorized signatories as of the date first indicated above.
THE COMPANY: |
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GLOBALSCAPE, INC. |
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Address for Notice: |
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GlobalSCAPE, Inc.
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By: |
/s/ Thomas W. Brown |
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Name: Thomas W. Brown |
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Title: Chariman |
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With a copy to (which shall not constitute notice): |
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Jackson Walker L.L.P. |
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Weston Centre
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SELLING STOCKHOLDERS: |
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Address for Notice:
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/s/ Thomas W. Brown |
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San Antonio, TX 78249 |
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Thomas W. Brown |
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Address for Notice:
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/s/ David L. Mann |
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San Antonio, TX 78249 |
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David L. Mann |
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[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE PAGES FOR PURCHASERS FOLLOW]
34
Schedule I
SELLING STOCKHOLDERS
Selling Stockholder |
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Selling Stockholder
|
|
Aggregate Sale Price ($) |
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|
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|
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Thomas W. Brown |
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1,178,000 |
|
$ |
2,945,000.00 |
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David L. Mann |
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850,000 |
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$ |
2,125,000.00 |
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Total: |
|
2,028,000 |
|
$ |
5,070,000.00 |
|
35
Schedule II
PURCHASERS
Purchaser* |
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Company
|
|
Warrants
|
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Company
|
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Selling
|
|
Selling
|
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Total
|
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|||
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|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Zeke, LP |
|
480,000 |
|
480,000 |
|
$ |
1,200,000.00 |
|
720,000 |
|
$ |
1,800,000.00 |
|
$ |
3,000,000.00 |
|
SF Capital Partners Ltd. |
|
480,000 |
|
480,000 |
|
$ |
1,200,000.00 |
|
720,000 |
|
$ |
1,800,000.00 |
|
$ |
3,000,000.00 |
|
Enable Growth Partners, L.P. |
|
102,000 |
|
102,000 |
|
$ |
255,000.00 |
|
153,000 |
|
$ |
382,500.00 |
|
$ |
637,500.00 |
|
Enable Opportunity Partners, L.P. |
|
12,000 |
|
12,000 |
|
$ |
30,000.00 |
|
18,000 |
|
$ |
45,000.00 |
|
$ |
75,000.00 |
|
Pierce Diversified Strategy Master Fund, LLC Ena |
|
6,000 |
|
6,000 |
|
$ |
15,000.00 |
|
9,000 |
|
$ |
22,500.00 |
|
$ |
37,500.00 |
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Dolphin Offshore Partners, L.P. |
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112,000 |
|
112,000 |
|
$ |
280,000.00 |
|
168,000 |
|
$ |
420,000.00 |
|
$ |
700,000.00 |
|
Emancipation Capital Master Ltd. |
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80,000 |
|
80,000 |
|
$ |
200,000.00 |
|
120,000 |
|
$ |
300,000.00 |
|
$ |
500,000.00 |
|
Iroquois Master Fund Ltd. |
|
40,000 |
|
40,000 |
|
$ |
100,000.00 |
|
60,000 |
|
$ |
150,000.00 |
|
$ |
250,000.00 |
|
Nite Capital LP |
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40,000 |
|
40,000 |
|
$ |
100,000.00 |
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60,000 |
|
$ |
150,000.00 |
|
$ |
250,000.00 |
|
Total: |
|
1,352,000 |
|
1,352,000 |
|
$ |
3,380,000.00 |
|
2,028,000 |
|
$ |
5,070,000.00 |
|
$ |
8,450,000.00 |
|
36
EXHIBIT 10.2
NEITHER THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS EXERCISABLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE SECURITIES ACT), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY. THIS SECURITY AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES.
Warrant No. 2006-
COMMON STOCK PURCHASE WARRANT
To Purchase Shares of Common Stock of
GLOBALSCAPE, INC.
THIS COMMON STOCK PURCHASE WARRANT (the Warrant ) certifies that, for value received, (the Holder ), is entitled, upon the terms and subject to the limitations on exercise and the conditions hereinafter set forth, at any time on or after May 15, 2007 (the Initial Exercise Date ) and on or prior to the close of business on May 15, 2012 (the Termination Date ) but not thereafter, to subscribe for and purchase from GLOBALSCAPE, INC., a Delaware corporation (the Company ), up to shares (the Warrant Shares ) of Common Stock, par value $0.001 per share, of the Company (the Common Stock ). The purchase price of one share of Common Stock under this Warrant shall be equal to the Exercise Price, as defined in Section 2(b).
Section 1 . Definitions . Capitalized terms used and not otherwise defined herein shall have the meanings set forth in that certain Securities Purchase Agreement (the Purchase Agreement ), dated November 13, 2006, among the Company and the purchasers signatory thereto.
Section 2 . Exercise .
a) Exercise of Warrant . Exercise of the purchase rights represented by this Warrant may be made, in whole or in part, at any time or times on or after the Initial Exercise Date and on or before the Termination Date by delivery to the Company of a duly executed facsimile copy of the Notice of Exercise Form annexed hereto (or such other office or agency of the Company as it may designate by notice in writing to the
registered Holder at the address of such Holder appearing on the books of the Company); and, within 3 Trading Days of the date said Notice of Exercise is delivered to the Company, the Company shall have received payment of the aggregate Exercise Price of the shares thereby purchased by wire transfer of immediately available funds or cashiers check drawn on a United States bank, unless this Warrant is being exercised pursuant to the cashless exercise provision set forth in Section 2(c) below. Notwithstanding anything herein to the contrary, the Holder shall not be required to physically surrender this Warrant to the Company until the Holder has purchased all of the Warrant Shares available hereunder and the Warrant has been exercised in full, in which case, the Holder shall surrender this Warrant to the Company for cancellation within 3 Trading Days of the date the final Notice of Exercise is delivered to the Company. Partial exercises of this Warrant resulting in purchases of a portion of the total number of Warrant Shares available hereunder shall have the effect of lowering the outstanding number of Warrant Shares purchasable hereunder in an amount equal to the applicable number of Warrant Shares purchased. The Holder and the Company shall maintain records showing the number of Warrant Shares purchased and the date of such purchases. The Company shall deliver any objection to any Notice of Exercise Form within 2 Business Days of receipt of such notice. In the event of any dispute or discrepancy, the records of the Company shall be controlling and determinative in the absence of manifest error. The Holder and any assignee, by acceptance of this Warrant, acknowledge and agree that, by reason of the provisions of this paragraph, following the purchase of a portion of the Warrant Shares hereunder, the number of Warrant Shares available for purchase hereunder at any given time may be less than the amount stated on the face hereof.
b) Exercise Price . The exercise price per share of the Common Stock under this Warrant shall be $3.15, subject to adjustment hereunder (the Exercise Price ).
c) Cashless Exercise . This Warrant may also be exercised at such time by means of a cashless exercise in which the Holder shall be entitled to receive a certificate for the number of Warrant Shares equal to the quotient obtained by dividing [(A-B) (X)] by (A), where:
(A) = the VWAP on the Trading Day immediately preceding the date of such election;
(B) = the Exercise Price of this Warrant, as adjusted; and
(X) = the number of Warrant Shares issuable upon exercise of this Warrant in accordance with the terms of this Warrant by means of a cash exercise rather than a cashless exercise.
d) Exercise Limitations . The Company shall not effect any exercise of this Warrant, and a Holder shall not have the right to exercise any portion of this Warrant, pursuant to Section 2(c) or otherwise, to the extent that after giving effect to such issuance after exercise as set forth on the applicable Notice of Exercise, such Holder (together with such Holders Affiliates, and any other person or entity acting as a group
2
together with such Holder or any of such Holders Affiliates), as set forth on the applicable Notice of Exercise, would beneficially own in excess of the Beneficial Ownership Limitation (as defined below). For purposes of the foregoing sentence, the number of shares of Common Stock beneficially owned by such Holder and its Affiliates shall include the number of shares of Common Stock issuable upon exercise of this Warrant with respect to which such determination is being made, but shall exclude the number of shares of Common Stock which would be issuable upon (A) exercise of the remaining, nonexercised portion of this Warrant beneficially owned by such Holder or any of its Affiliates and (B) exercise or conversion of the unexercised or nonconverted portion of any other securities of the Company (including, without limitation, any other Convertible Securities (as defined in section 3(b)) or warrants) subject to a limitation on conversion or exercise analogous to the limitation contained herein beneficially owned by such Holder or any of its affiliates. Except as set forth in the preceding sentence, for purposes of this Section 2(d), beneficial ownership shall be calculated in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder, it being acknowledged by a Holder that the Company is not representing to such Holder that such calculation is in compliance with Section 13(d) of the Exchange Act and such Holder is solely responsible for any schedules required to be filed in accordance therewith. To the extent that the limitation contained in this Section 2(d) applies, the determination of whether this Warrant is exercisable (in relation to other securities owned by such Holder together with any Affiliates) and of which a portion of this Warrant is exercisable shall be in the sole discretion of a Holder, and the submission of a Notice of Exercise shall be deemed to be each Holders determination of whether this Warrant is exercisable (in relation to other securities owned by such Holder together with any Affiliates) and of which portion of this Warrant is exercisable, in each case subject to such aggregate percentage limitation, and the Company shall have no obligation to verify or confirm the accuracy of such determination. In addition, a determination as to any group status as contemplated above shall be determined in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder. For purposes of this Section 2(d), in determining the number of outstanding shares of Common Stock, a Holder may rely on the number of outstanding shares of Common Stock as reflected in (x) the Companys most recent Form 10-Q or Form 10-K, as the case may be, (y) a more recent public announcement by the Company or (z) any other notice by the Company or the Companys transfer agent setting forth the number of shares of Common Stock outstanding. Upon the written or oral request of a Holder, the Company shall within 2 Trading Days confirm orally and in writing to such Holder the number of shares of Common Stock then outstanding. In any case, the number of outstanding shares of Common Stock shall be determined after giving effect to the conversion or exercise of securities of the Company, including this Warrant, by such Holder or its Affiliates since the date as of which such number of outstanding shares of Common Stock was reported. The Beneficial Ownership Limitation shall be 4.99% of the number of shares of the Common Stock
3
outstanding immediately after giving effect to the issuance of shares of Common Stock issuable upon exercise of this Warrant. The Beneficial Ownership Limitation provisions of this Section 2(d) may be waived by such Holder, at the election of such Holder, upon not less than 61 days prior notice to the Company to change the Beneficial Ownership Limitation to 9.99% of the number of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock upon exercise of this Warrant, and the provisions of this Section 2(d) shall continue to apply. Upon such a change by a Holder of the Beneficial Ownership Limitation from such 4.99% limitation to such 9.99% limitation, the Beneficial Ownership Limitation may not be further waived by such Holder. The provisions of this paragraph shall be construed and implemented in a manner otherwise than in strict conformity with the terms of this Section 2(d) to correct this paragraph (or any portion hereof) which may be defective or inconsistent with the intended Beneficial Ownership Limitation herein contained or to make changes or supplements necessary or desirable to properly give effect to such limitation. The limitations contained in this paragraph shall apply to a successor holder of this Warrant.
e) Mechanics of Exercise .
i. Authorization of Warrant Shares . The Company covenants that all Warrant Shares which may be issued upon the exercise of the purchase rights represented by this Warrant will, upon exercise of the purchase rights represented by this Warrant, be duly authorized, validly issued, fully paid and nonassessable and free from all taxes, liens and charges created by the Company in respect of the issue thereof (other than taxes in respect of any transfer occurring contemporaneously with such issue).
ii. Delivery of Certificates Upon Exercise . Certificates for shares purchased hereunder shall be transmitted by the transfer agent of the Company to the Holder by crediting the account of the Holders prime broker with the Depository Trust Company through its Deposit Withdrawal Agent Commission ( DWAC ) system if the Company is a participant in such system, and otherwise by physical delivery to the address specified by the Holder in the Notice of Exercise within 3 Trading Days from the delivery to the Company of the Notice of Exercise Form, surrender of this Warrant (if required) and payment of the aggregate Exercise Price as set forth above ( Warrant Share Delivery Date ). This Warrant shall be deemed to have been exercised on the date (a) the Exercise Price is received by the Company or (b) notification to the Company that this Warrant is being exercised pursuant to a cashless exercise provision set forth in Section 2(c) above. The Warrant Shares shall be deemed to have been issued, and Holder or any other person so designated to be named therein shall be deemed to have become a holder of record of such shares for all purposes, as of the date the Warrant has been exercised by payment to the Company of the Exercise Price (or by cashless exercise, if permitted) and all taxes required to be paid by the Holder, if any, pursuant to Section 2(e)(vi) prior to the issuance of such shares, have been paid.
4
iii. Delivery of New Warrants Upon Exercise . If this Warrant shall have been exercised in part, the Company shall, at the request of a Holder and upon surrender of this Warrant certificate, at the time of delivery of the certificate or certificates representing Warrant Shares, deliver to Holder a new Warrant evidencing the rights of Holder to purchase the unpurchased Warrant Shares called for by this Warrant, which new Warrant shall in all other respects be identical with this Warrant.
iv. Rescission Rights . If the Company fails to cause its transfer agent to transmit to the Holder a certificate or certificates representing the Warrant Shares pursuant to this Section 2(e) by the Warrant Share Delivery Date, then the Holder will have the right to rescind such exercise.
v. No Fractional Shares or Scrip . No fractional shares or scrip representing fractional shares shall be issued upon the exercise of this Warrant. As to any fraction of a share which Holder would otherwise be entitled to purchase upon such exercise, the Company shall at its election, either pay a cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied by the Exercise Price or round up to the next whole share.
vi. Charges, Taxes and Expenses . Issuance of certificates for Warrant Shares shall be made without charge to the Holder for any issue or transfer tax or other incidental expense in respect of the issuance of such certificate, all of which taxes and expenses shall be paid by the Company, and such certificates shall be issued in the name of the Holder or in such name or names as may be directed by the Holder; provided , however , that in the event certificates for Warrant Shares are to be issued in a name other than the name of the Holder, this Warrant when surrendered for exercise shall be accompanied by the Assignment Form attached hereto duly executed by the Holder; and the Company may require, as a condition thereto, the payment of a sum sufficient to reimburse it for any transfer tax incidental thereto.
vii. Closing of Books . The Company will not close its stockholder books or records in any manner which prevents the timely exercise of this Warrant, pursuant to the terms hereof.
Section 3 . Certain Adjustments .
a) Stock Dividends and Splits . If the Company, at any time while this Warrant is outstanding: (A) pays a stock dividend or otherwise make a distribution or distributions on shares of its Common Stock or any other equity or equity equivalent securities payable in shares of Common Stock (which, for avoidance of doubt, shall not include any shares of Common Stock issued by the Company upon exercise of this Warrant), (B) subdivides outstanding shares of Common Stock into a larger number of shares, (C) combines
5
(including by way of reverse stock split) outstanding shares of Common Stock into a smaller number of shares, or (D) issues by reclassification of shares of the Common Stock any shares of capital stock of the Company, then in each case the Exercise Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock (excluding treasury shares, if any) outstanding immediately before such event and of which the denominator shall be the number of shares of Common Stock outstanding immediately after such event and the number of shares issuable upon exercise of this Warrant shall be proportionately adjusted. Any adjustment made pursuant to this Section 3(a) 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.
b) Adjustment for Issuance of Shares of Common Stock Below Exercise Price . From the date hereof until 9 months after the Closing Date, if the Company shall issue, or be deemed to issue (as provided below), any additional shares of Common Stock other than Excluded Stock, as defined below ( Additional Shares of Common Stock ) for a consideration per share less than the Exercise Price in effect immediately prior to the issuance of such Additional Shares of Common Stock (excluding subdivisions, stock dividends, combinations and reclassifications which are covered in Sections 3(a) above), the Exercise Price shall be reduced concurrent with each such issuance to the price equal to the consideration per share received, or receivable, by the Company for such issuance or sale, or deemed issuance or sale, as the case may be; provided , however , that notwithstanding any provision herein to the contrary, including this Section 3(b), under no circumstances shall the Exercise Price be adjusted to a price that is less than $2.81.
As used herein:
Convertible Securities means any evidence of indebtedness, shares or securities, in each case convertible into or exchange for Additional Shares of Common Stock other than Excluded Stock.
Excluded Stock means the issuance of (a) shares of Common Stock or options to employees, officers or directors of the Company pursuant to any stock or option plan duly adopted by a majority of the non-employee members of the Board of Directors of the Company or a majority of the members of a committee of non-employee directors established for such purpose (for purposes of clarity, the issuance of shares of Common Stock upon exercise of options granted pursuant to a Company plan subsequent to the date hereof shall also be Excluded Stock), (b) securities upon the exercise or exchange of or conversion of (i) any Securities issued under the Purchase Agreement; (ii) securities to a registered broker-dealer in connection with the transactions contemplated by the Purchase Agreement; and/or (iii) other securities or rights exercisable or exchangeable for or convertible into shares of Common Stock which are issued and outstanding on the date of the Purchase Agreement, provided that such securities have not been amended since the date of the Purchase Agreement to increase the number of such securities or to decrease the exercise, exchange or conversion price of any such securities, (c) securities issued pursuant to acquisitions or strategic transactions approved by a majority of the
6
disinterested directors, provided any such issuance shall only be to a Person which is, itself or through its subsidiaries, an operating company in a business synergistic with the business of the Company and in which the Company receives benefits in addition to the investment of funds, but shall not include a transaction in which the Company is issuing securities primarily for the purpose of raising capital or to an entity whose primary business is investing in securities, (d) shares of Common Stock or other securities issued in connection with any stock split, stock dividend or recapitalization of the Company (subject to Section 3(a) hereof), (e) shares of Common Stock or other securities or rights exercisable or exchangeable for or convertible into shares of Common Stock to a bank, financial institution or other lender to the Company or (f) shares of Common Stock or other securities or rights exercisable or exchangeable for or convertible into shares of Common Stock issued in a public offering.
Options means rights, options or warrants to subscribe for, purchase or otherwise acquire shares of Common Stock or Convertible Securities other than Excluded Stock.
No adjustment in the Exercise Price need be made if such adjustment would result in a change in the Exercise Price of less than $0.01. Any such adjustment which is not made shall be carried forward and shall be made at the time of and together with any subsequent adjustment which, on a cumulative basis, amounts to an adjustment of $0.01 or more in the Exercise Price. No adjustment in the Exercise Price of this Warrant shall be made in respect of the issuance of Additional Shares of Common Stock unless the consideration per share for such Additional Shares of Common Stock issued or deemed to be issued (as provided below) by the Company is less than the Exercise Price then in effect on the date of, and immediately prior to, such issue, for this Warrant.
For purposes of making any adjustment required under this Section 3(b), the consideration received by the Company for any issue or sale of securities shall (a) to the extent that it consists of cash be computed as the amount of cash received by the Company without deduction of any underwriting or similar commissions, compensation or concessions paid or allowed by the Company in connection with such issue or sale, (b) to the extent that it consists of property other than cash, be computed at the fair market value of that property as determined in good faith by the Board of Directors, and (c) if Additional Shares of Common Stock, Convertible Securities or right or Options are issued or sold together with other securities or other assets of the Company for a consideration which covers both, be computed (as provided in clauses (a) and (b) above) as the portion of the consideration so received that may be reasonably determined in good faith by the Board of Directors to be allocable to such Additional Shares of Common Stock, Convertible Securities or rights or Options.
For purposes of the adjustment required under this Section 3(b), if at any time or from time to time after the issuance date of this Warrant, the Company issues or sells any Options or Convertible Securities, then in each case the Company shall be deemed to have issued at the time of the issuance of such Options or Convertible Securities the maximum number of Additional Shares of Common Stock (as set forth in the instruments relating thereto, giving effect to any provision contained therein for a subsequent upward
7
adjustment of such number other than any provision requiring antidilution adjustments (based on price, recapitalizations, mergers, reorganizations or otherwise), which such antidilution provisions shall only result in upward adjustments upon the triggering of such antidilution adjustment) issuable upon exercise or conversion thereof and to have received as consideration for the issuance of such shares of Common Stock an amount equal to the total amount of consideration, if any, received by the Company for the issuance of such Options or Convertible Securities plus, in the case of such Options, the minimum amounts of consideration, if any (as set forth in the instruments relating thereto, giving effect to any provision contained therein for a subsequent downward adjustment of such consideration), payable to the Company upon the exercise of such Options and, in the case of Convertible Securities, the minimum amounts of consideration, if any, payable to the Company upon the subsequent conversion of any such Convertible Security (other than by cancellation of liabilities or obligations evidenced by such Convertible Securities). No further adjustment of the Exercise Price, adjusted upon the issuance of such Options or Convertible Securities, shall be made as a result of the actual issuance of Additional Shares of Common Stock on the exercise of any such Options or the conversion of any such Convertible Securities. If any such Options or the conversion privilege represented by any such Convertible Securities shall expire without having been exercised, the Exercise Price adjusted upon the issuance of such Options or Convertible Securities or upon the triggering of any antidilution adjustments (based on price, recapitalization, mergers reorganizations or otherwise) thereunder shall be readjusted to the Exercise Price which would have been in effect had an adjustment been made on the basis that the only Additional Shares of Common Stock so issued were the Additional Shares of Common Stock, if any, actually issued or sold for the consideration received by the Company for the granting of all such Options, whether or not exercised, plus the consideration received for issuing or selling the Convertible Securities actually converted plus the consideration, if any, actually received by the Company (other than by cancellation of liabilities or obligations evidenced by such Convertible Securities) on the conversion of such Convertible Securities. Upon the happening of any of the following events, namely, if the purchase price provided for in any Option, the additional consideration, if any, payable upon the conversion or exchange of any Convertible Securities, or the rate at which Convertible Securities are convertible into or exchangeable for Common Stock shall change at any time (including, but not limited to, changes under or by reason of provisions designed to protect against dilution), the Exercise Price in effect at the time of such event shall forthwith be readjusted to the Exercise Price which would have been in effect at such time had such Options or Convertible Securities still outstanding provided for such changed purchase price, additional consideration or conversion rate, as the case may be, at the time initially granted, issued or sold, but only if as a result of such adjustment the Exercise Price then in effect hereunder is thereby reduced; and on the termination of any such Option or any such right to convert or exchange such Convertible Securities, the Exercise Price then in effect hereunder shall forthwith be increased to the Exercise Price which would have been in effect at the time of such termination had such Option or Convertible Securities, to the extent outstanding immediately prior to such termination, never been issued.
c) Calculations . 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. For purposes of this
8
Section 3, the number of shares of Common Stock deemed to be issued and outstanding as of a given date shall be the sum of the number of shares of Common Stock (excluding treasury shares, if any) issued and outstanding.
d) Voluntary Adjustment By Company . The Company may at any time during the term of this Warrant reduce the then current Exercise Price to any amount and for any period of time deemed appropriate by the Board of Directors of the Company.
e) Notice to Holders .
i. Adjustment to Exercise Price . Whenever the Exercise Price is adjusted pursuant to any provision of this Section 3, the Company shall promptly mail to each Holder a notice setting forth the Exercise Price after such adjustment and setting forth a brief statement of the facts requiring such adjustment.
ii. Notice to Allow Exercise by Holder . If (A) the Company shall declare a dividend (or any other distribution in whatever form) 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 the 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 exchange whereby the Common Stock is converted into other securities, cash or property; (E) the Company shall authorize the voluntary or involuntary dissolution, liquidation or winding up of the affairs of the Company; then, in each case, the Company shall cause to be mailed to the Holder at its last address as it shall appear upon the Warrant Register 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 the 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 the Common Stock of record shall be entitled to exchange their shares of the Common Stock for securities, cash or other property deliverable upon such reclassification, consolidation, merger, sale, transfer or share exchange; provided that the failure to mail such notice or any defect therein or in the mailing thereof shall not affect the validity of the corporate action required to be specified in such notice. The Holder is entitled to exercise this Warrant during the 20-day period
9
commencing on the date of such notice to the effective date of the event triggering such notice.
Section 4 . Transfer of Warrant .
a) Transferability . Subject to compliance with any applicable securities laws and the conditions set forth in Section 4(d) hereof and to the provisions of Section 4.1 of the Purchase Agreement, this Warrant and all rights hereunder (including, without limitation, any registration rights) are transferable, in whole or in part, upon surrender of this Warrant at the principal office of the Company or its designated agent, together with a written assignment of this Warrant substantially in the form attached hereto duly executed by the Holder or its agent or attorney and funds sufficient to pay any transfer taxes payable upon the making of such transfer. Upon such surrender and, if required, such payment, the Company shall execute and deliver a new Warrant or Warrants in the name of the assignee or assignees and in the denomination or denominations specified in such instrument of assignment, and shall issue to the assignor a new Warrant evidencing the portion of this Warrant not so assigned, and this Warrant shall promptly be cancelled. A Warrant, if properly assigned, may be exercised by a new holder for the purchase of Warrant Shares without having a new Warrant issued.
b) New Warrants . This Warrant may be divided or combined with other Warrants upon presentation hereof at the aforesaid office of the Company, together with a written notice specifying the names and denominations in which new Warrants are to be issued, signed by the Holder or its agent or attorney. Subject to compliance with Section 4(a), as to any transfer which may be involved in such division or combination, the Company shall execute and deliver a new Warrant or Warrants in exchange for the Warrant or Warrants to be divided or combined in accordance with such notice.
c) Warrant Register . The Company shall register this Warrant, upon records to be maintained by the Company for that purpose (the Warrant Register ), in the name of the record Holder hereof from time to time. The Company may deem and treat the registered Holder of this Warrant as the absolute owner hereof for the purpose of any exercise hereof or any distribution to the Holder, and for all other purposes, absent actual notice to the contrary.
d) Transfer Restrictions . If, at the time of the surrender of this Warrant in connection with any transfer of this Warrant, the transfer of this Warrant shall not be registered pursuant to an effective registration statement under the Securities Act and under applicable state securities or blue sky laws, the Company may require, as a condition of allowing such transfer (i) that the Holder or transferee of this Warrant, as the case may be, furnish to the Company a written opinion of counsel (which opinion shall be in form, substance and scope customary for opinions of counsel in comparable transactions) to the effect that such transfer may be made without registration under the Securities Act and under applicable state securities or blue sky laws, (ii) that the holder or transferee execute and deliver to the Company an investment letter in form and substance acceptable to the Company and (iii) that the transferee be an accredited investor as defined in Rule 501(a)(1), (a)(2), (a)(3), (a)(7), or (a)(8) promulgated under the Securities
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Act or a qualified institutional buyer as defined in Rule 144A(a) under the Securities Act.
Section 5 . Miscellaneous .
a) No Rights as Shareholder Until Exercise . This Warrant does not entitle the Holder to any voting rights or other rights as a shareholder of the Company prior to the exercise hereof as set forth in Section 2(e)(ii).
b) Loss, Theft, Destruction or Mutilation of Warrant . The Company covenants that upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant or any stock certificate relating to the Warrant Shares, and in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it (which, in the case of the Warrant, shall not include the posting of any bond), and upon surrender and cancellation of such Warrant or stock certificate, if mutilated, the Company will make and deliver a new Warrant or stock certificate of like tenor and dated as of such cancellation, in lieu of such Warrant or stock certificate.
c) Saturdays, Sundays, Holidays, etc . If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall not be a Business Day, then such action may be taken or such right may be exercised on the next succeeding Business Day.
d) Authorized Shares .
The Company covenants that during the period the Warrant is outstanding, it will reserve from its authorized and unissued Common Stock a sufficient number of shares to provide for the issuance of the Warrant Shares upon the exercise of any purchase rights under this Warrant. The Company further covenants that its issuance of this Warrant shall constitute full authority to its officers who are charged with the duty of executing stock certificates to execute and issue the necessary certificates for the Warrant Shares upon the exercise of the purchase rights under this Warrant. The Company will take all such reasonable action as may be necessary to assure that such Warrant Shares may be issued as provided herein without violation of any applicable law or regulation, or of any requirements of the Trading Market upon which the Common Stock may be listed.
Except and to the extent as waived or consented to by the Holder, the Company shall not by any action, including, without limitation, amending its 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, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such actions as may be necessary or appropriate to protect the rights of Holder as set forth in this Warrant against
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impairment. Without limiting the generality of the foregoing, the Company will (a) not increase the par value of any Warrant Shares above the amount payable therefor upon such exercise immediately prior to such increase in par value, (b) take all such action as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable Warrant Shares upon the exercise of this Warrant, and (c) use commercially reasonable efforts to obtain all such authorizations, exemptions or consents from any public regulatory body having jurisdiction thereof as may be necessary to enable the Company to perform its obligations under this Warrant.
Before taking any action which would result in an adjustment in the number of Warrant Shares for which this Warrant is exercisable or in the Exercise Price, the Company shall obtain all such authorizations or exemptions thereof, or consents thereto, as may be necessary from any public regulatory body or bodies having jurisdiction thereof.
e) Jurisdiction . All questions concerning the construction, validity, enforcement and interpretation of this Warrant shall be determined in accordance with the provisions of the Purchase Agreement.
f) Restrictions . The Holder acknowledges that the Warrant Shares acquired upon the exercise of this Warrant, if not registered, will have restrictions upon resale imposed by state and federal securities laws.
g) Nonwaiver and Expenses . No course of dealing or any delay or failure to exercise any right hereunder on the part of Holder shall operate as a waiver of such right or otherwise prejudice the Companys or the Holders rights, powers or remedies, notwithstanding the fact that all rights hereunder terminate on the Termination Date. If the Company or a Holder willfully and knowingly fails to comply with any provision of this Warrant, which results in any material damages to the Holder or Company (as the case may be), the breaching party shall pay to the other party such amounts as shall be sufficient to cover any costs and expenses including, but not limited to, reasonable attorneys fees, including those of appellate proceedings, incurred by the non-breaching party in collecting any amounts due pursuant hereto or in otherwise enforcing any of its rights, powers or remedies hereunder.
h) Notices . Any notice, request or other document required or permitted to be given or delivered to the Holder by the Company shall be delivered in accordance with the notice provisions of the Purchase Agreement.
i) Limitation of Liability . No provision hereof, in the absence of any affirmative action by Holder to exercise this Warrant to purchase Warrant Shares, and no enumeration herein of the rights or privileges of Holder, shall give rise to any liability of Holder for the purchase price of any Common Stock or as a stockholder of the Company, whether such liability is asserted by the Company or by creditors of the Company.
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j) Remedies . Holder, in addition to being entitled to exercise all rights granted by law, including recovery of damages, will be entitled to seek specific performance of its rights under this Warrant. The Company agrees that monetary damages would not be adequate compensation for any loss incurred by reason of a breach by it of the provisions of this Warrant and hereby agrees to waive and not to assert the defense in any action for specific performance that a remedy at law would be adequate.
k) Successors and Assigns . Subject to applicable securities laws, this Warrant and the rights and obligations evidenced hereby shall inure to the benefit of and be binding upon the successors of the Company and the successors and permitted assigns of Holder. The provisions of this Warrant are intended to be for the benefit of all Holders from time to time of this Warrant and shall be enforceable by any such Holder or holder of Warrant Shares.
l) Amendment . This Warrant may be modified or amended or the provisions hereof waived with the written consent of the Company and the Holder.
m) Severability . Wherever possible, each provision of this Warrant shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Warrant shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provisions or the remaining provisions of this Warrant.
n) Headings . The headings used in this Warrant are for the convenience of reference only and shall not, for any purpose, be deemed a part of this Warrant.
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IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its officer thereunto duly authorized.
Dated: November 16, 2006
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GLOBALSCAPE, INC. |
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NOTICE OF EXERCISE
TO:
(1) The undersigned hereby elects to purchase Warrant Shares of the Company pursuant to the terms of the attached Warrant (only if exercised in full), and tenders herewith payment of the exercise price in full, together with all applicable transfer taxes, if any.
(2) Payment shall take the form of (check applicable box):
[ ] in lawful money of the United States; or
[ ] the cancellation of such number of Warrant Shares as is necessary, in accordance with the formula set forth in subsection 2(c), to exercise this Warrant with respect to the maximum number of Warrant Shares purchasable pursuant to the cashless exercise procedure set forth in subsection 2(c).
(3) Please issue a certificate or certificates representing said Warrant Shares in the name of the undersigned or in such other name as is specified below:
The Warrant Shares shall be delivered to the following DWAC Account Number or by physical delivery of a certificate to:
(4) Accredited Investor . The undersigned is an accredited investor as defined in Regulation D promulgated under the Securities Act of 1933, as amended.
[SIGNATURE OF HOLDER] |
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ASSIGNMENT FORM
(To assign the foregoing warrant, execute
this form and supply required information.
Do not use this form to exercise the warrant.)
FOR VALUE RECEIVED, [ ] all of or [ ] shares of the foregoing Warrant and all rights evidenced thereby are hereby assigned to
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NOTE: The signature to this Assignment Form must correspond with the name as it appears on the face of the Warrant, without alteration or enlargement or any change whatsoever, and must be guaranteed by a bank or trust company. Officers of corporations and those acting in a fiduciary or other representative capacity should file proper evidence of authority to assign the foregoing Warrant.
Exhibit 99.1
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NEWS RELEASE |
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Contact: |
Earl Posey |
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(210) 293-7918 |
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www.globalscape.com |
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GlobalSCAPE Closes Private Placement
SAN ANTONIO, TEXAS, November 17, 2006 GlobalSCAPE (OTCBB:GSCP), a leading developer of secure server and Enhanced File Transfer (EFT) Management solutions and WAFS, today announced it closed a private placement through the issuance of 1,352,000 shares of common stock and warrants to purchase 1,352,000 shares of common stock to institutional investors at a price of $2.50 per share for gross proceeds of $3,380,000. The warrants will expire on May 17, 2011 and have an initial exercise price of $3.15 per share. In addition, Thomas W. Brown, the Chairman of the Board, and David L. Mann, a member of the Companys board of directors, sold a total of 2,028,000 shares of common stock, at a price of $2.50 per share in a private transaction with the same investors.
Americas Growth Capital of Boston, Massachusetts acted as exclusive placement agent for these transactions.
GlobalSCAPE intends to use the proceeds it received from the private placement for general corporate purposes, including repayment of amounts outstanding under its loan agreement with Silicon Valley Bank.
The securities offered have not been registered under the Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or an applicable exemption from applicable registration requirements.
As announced at our annual shareholders meeting in June, one of our key goals was to diversify the stock ownership of the Company, stated Randy Poole, President and CEO. As a result of this private placement, a total of 3,380,000 shares are now owned by several institutional investors from coast to coast. If all warrants are exercised at $3.15 that will add another 1,352,000 to that total.
About GlobalSCAPE
GlobalSCAPE is a leading provider of managed and secured file transfer(EFT), wide area file services(WAFS), and continuous data protection software(CDP). Virtually all of the Fortune 100 use GlobalSCAPE products to secure and accelerate their data exchange. GlobalSCAPEs innovative managed file transfer solution, Enhanced File Transfer(EFT), enables all types of organizations to speed and automate the secure storage and movement of their data across the corporate firewall to external entities, and help them comply with government mandates such as HIPAA, Sarbanes-Oxley, and GLBA. GlobalSCAPEs Wide Area File Services(WAFS) deliver transparent, secure file replication that allows companies with branch offices across large geographic distances to replicate files within the corporate firewall to provide local file access speeds to each office, while reducing network utilization and maintaining file coherence and lock semantics. Continuous Data Protection(CDP) is GlobalSCAPEs real-time, continuous data backup solution that assures that any information on the network, even on distributed and remote servers, can be restored from any point in time in event of data loss. GlobalSCAPE is headquartered in San Antonio, TX. For more information, please visit http://www.globalscape.com or call GlobalSCAPE toll-free at 800-290-5054 (US) or 210-308-8267 (international).