FORM 8-K
Securities and Exchange Commission
Washington, D.C. 20549
CURRENT REPORT
Pursuant to Section 13 or 15 (d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) 6/10/98
GLOBALINK, INC.
(Exact Name of Registrant as specified in its Charter)
Delaware 33-60296 54-1473222
(State or other (Commission File (IRS Employer
Jurisdiction of Number) Identification
Incorporation) Number)
9302 Lee Highway, 12th Floor, Fairfax, Virginia 22031
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(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including area code: 703-273-5600
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Item 2. Acquisition or Disposition of Assets
Pursuant to the Unit Purchase Agreement dated June 10, 1998, the Company sold 22
Units at $100,000 per Unit for aggregate consideration of $2,200,000 to 26
individual accredited investors.
Each Unit consists of a $100,000 principal amount 10% Convertible Debenture (the
"Debenture") and 23,000 common stock purchase warrants (the "Warrants") to
purchase 23,000 shares of common stock of the Company (the "Common Stock") at an
exercise price of $2.50 per share of Common Stock for a period of five years
from the date of closing.
The holders of the Debentures shall have the right, at any time, to convert all
or part of the principal amount of each Debenture, but not interest accrued
thereon, into shares of Common Stock at a price, subject to adjustment, equal to
$2.00 per share. The Debentures may be redeemed in full, but not in part, by the
Company after 25 months if the closing bid price of Common Stock is at least
$4.00 per share for 20 consecutive trading days. On June 10, 2003, any
outstanding Convertible Debentures shall automatically convert into shares of
Common Stock. Interest on each Debenture shall accrue at a rate of 10% per annum
and is payable in cash annually.
Each Warrant will entitle the holder to purchase on share of Common Stock
("Warrant Shares") during the five-year period commencing on the date of closing
at a price, subject to adjustment, equal to $2.50 per share. The terms of the
Warrants also allow the holders to make a cashless exercise. The Company may
redeem the Warrants at any time after the 25-month anniversary from the closing
for a redemption price of $.01 per Warrant, if the closing bid price per share
of Common Stock has been at or above 200% of the exercise price for 20
consecutive trading days.
The Company agreed to pay to M.H. Meyerson & Co., Inc., the placement agent for
the transaction, a fee equal to 10% of the aggregate Unit Purchase Price, or
$220,000. In addition, the Company issued five year warrants to purchase 220,000
shares of Common Stock at an exercise price of $2.20, subject to adjustment.
The transaction is exempt from registration under the Securities Act of 1933, as
amended, and Rule 506 promulgated thereunder.
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Item 7. Financial Statements and Exhibits
Exhibits
4.1(f) Form of 10% Convertible Debenture dated June
10, 1998
4.1(g) Form of Warrant for the Purchase of Shares
of Common Stock of Globalink, Inc., dated
June 10, 1998
4.1(h) Form of Placement Agent Warrant for the
Purchase of Shares of Common Stock of
Globalink, Inc., dated June 10, 1998
10.01 Agency Agreement between M.H. Meyerson &
Co., Inc., and the Company dated May 28,
1998
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.
Date: June 25, 1998 GLOBALINK, INC.
By:/S/Mark A. Paiewonsky
---------------------
Mark A. Paiewonsky
Chief Financial &
Accounting Officer
NEITHER THIS DEBENTURE NOR THE SHARES OF COMMON STOCK ISSUABLE UPON CONVERSION
HAS BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR
UNDER ANY STATE SECURITIES LAW. THE COMPANY WILL NOT TRANSFER THIS DEBENTURE OR
ANY SHARES OF COMMON STOCK ISSUABLE UPON CONVERSION UNLESS (i) THERE IS AN
EFFECTIVE REGISTRATION COVERING THIS DEBENTURE OR SHARES UNDER THE ACT AND
APPLICABLE STATE SECURITIES LAWS, (ii) IT FIRST RECEIVES AN OPINION FROM AN
ATTORNEY, REASONABLY ACCEPTABLE TO THE COMPANY, STATING THAT THE PROPOSED
TRANSFER IS EXEMPT FROM REGISTRATION UNDER THE ACT AND UNDER ALL APPLICABLE
STATE SECURITIES LAWS, OR (iii) THE TRANSFER IS MADE PURSUANT TO RULE 144
PROMULGATED UNDER THE ACT.
GLOBALINK, INC.
10% CONVERTIBLE DEBENTURE
Debenture No.: ________________ June 11, 1998
Principal Amount: ______________
FOR VALUE RECEIVED, GLOBALINK, INC., a Delaware corporation
("Company"), with its principal office presently located at 9302 Lee Highway,
Fairfax, Virginia 20031, promises to pay to the order of _____________, with an
address of _______________ ("Holder"), on June 10, 2003, ("Maturity Date"), the
principal amount indicated above, in such coin or currency of the United States
of America as at the time of payment shall be legal tender for the payment of
public or private debts. Interest on the unpaid balance of the principal amount
outstanding shall accrue at the rate of ten (10%) percent per annum commencing
as of the date hereof and shall be due and payable on each anniversary of the
date hereof; provided, however, that if any principal amount is converted
pursuant to the provisions of section 4, all accrued but unpaid interest on such
principal amount shall be paid within ten (10) business days after such
conversion; and provided further that if this Debenture is not paid in full on
or before the Maturity Date, interest shall accrue on the principal amount
outstanding from the Maturity Date up to and including the date of payment at a
rate equal to the lesser of eighteen percent (18%) per annum or the maximum
interest rate allowed under applicable law. This Debenture is one of a series of
debentures of like tenor in the aggregate principal amount of $2,200,000 being
issued simultaneously herewith, and this Debenture shall be paid and redeemed
(if elected by the Company) pro rata with the other debentures of this series.
Payments of principal and interest are to be made at the address of the Holder
designated above or at such other place as the Holder shall have given notice to
the Company as provided in section 7.4 at least five business days before such
payment is due. The obligation of the Company under this Debenture to pay both
principal and interest hereon is unconditional and absolute and all payments
shall be made without set-off or deduction.
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This Debenture is issued pursuant to an Agency Agreement
between the Company and M.H. Meyerson & Co., Inc. ("Placement Agent"), dated as
of May 28, 1998, ("Agency Agreement"), a copy of which is available for
inspection at the Company's principal executive office. Reference herein to the
Agency Agreement shall in no way impair the absolute and unconditional
obligation of the Company to pay both principal and interest hereon.
1. Events of Default.Upon the occurrence of any of the following
events (herein called "Events of Default"):
(i) The Company shall fail to pay the principal of or
interest on this Debenture on the dates such amounts shall become due
and payable;
(i) (A) The Company shall commence any proceeding or
other action relating to it in bankruptcy or seek reorganization,
arrangement, readjustment of its debts, receivership, dissolution,
liquidation, winding-up, composition or any other relief under any
bankruptcy law, or under any other insolvency, reorganization,
liquidation, dissolution, arrangement, composition, readjustment of
debt or any other similar act or law, of any jurisdiction, domestic or
foreign, now or hereafter existing; or (B) the Company shall admit the
material allegations of any petition or pleading in connection with any
such proceeding; or (C) the Company shall apply for, or consent or
acquiesce to, the appointment of a receiver, conservator, trustee or
similar officer for it or for all or a substantial part of its
property; or (D) the Company shall make a general assignment for the
benefit of creditors;
(i) (A) The commencement of any proceedings or the
taking of any other action against the Company in bankruptcy or seeking
reorganization, arrangement, readjustment of its debts, liquidation,
dissolution, arrangement, composition, or any other relief under any
bankruptcy law or any other similar act or law of any jurisdiction,
domestic or foreign, now or hereafter existing and the continuance of
any of such events for sixty (60) days undismissed, unbonded or
undischarged; or (B) the appointment of a receiver, conservator,
trustee or similar officer for the Company for any of its property and
the continuance of any of such events for sixty (60) days undismissed,
unbonded or undischarged; or (C) the issuance of a warrant of
attachment, execution or similar process against any of the property of
the Company and the continuance of such event for sixty (60) days
undismissed, unbonded and undischarged;
(i) Any breach of any of the Company's
representations or warranties or covenants contained in the Agency
Agreement; provided, however, that with respect to a failure to comply
with any such covenant, if such failure is capable of being remedied,
such failure is not remedied within thirty (30) days after the Company
has been given notice of same;
(i) The Company shall fail to comply with any of its
obligations under this Debenture; provided, however, that with respect
to a failure to comply with any of the provisions of Sections 2.1(a)
and (c), if such failure is capable of being remedied, such failure is
not remedied within thirty (30) days after the Company has been given
notice of same;
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(i) The Company shall default with respect to any
indebtedness for borrowed money (other than under this Debenture) if
either (a) the effect of such default is to accelerate the maturity of
such indebtedness (giving effect to any applicable grace periods) or
(b) the holder of such indebtedness declares the Company to be in
default (giving effect to any applicable grace periods); or
(i) Any judgment or judgments against the Company or
any attachment, levy or execution against any of its properties for any
amount in excess of $100,000 in the aggregate shall remain unpaid, or
shall not be released, discharged, dismissed, stayed or fully bonded
for a period of thirty (30) days or more after its entry, issue or
levy, as the case may be; or
(i) The Company's stockholders' equity, as reported
on any balance sheet of the Company included within a report filed by
the Company pursuant to the Securities Exchange Act of 1934, as
amended, shall be below $5,000,000;
then, and in any such event, the Holder at its option and upon notice to the
Company, may accelerate the Maturity Date and declare the entire principal
amount of this Debenture then outstanding, together with accrued but unpaid
interest thereon, immediately due and payable, and the same shall forthwith
become immediately due and payable without presentment, demand, protest, or
other notice of any kind, all of which are expressly waived.
1. Covenants.
2.1. Affirmative Covenants. The Company covenants and
agrees that, while this Debenture is outstanding, it shall:
(a) Pay and discharge all taxes, assessments and governmental
charges or levies imposed upon it or upon its income and profits, or upon any
properties belonging to it before the same shall be in default; provided,
however, that the Company shall not be required to pay any such tax, assessment,
charge or levy which is being contested in good faith by proper proceedings and
adequate reserves for the accrual of same are maintained if required by
generally accepted accounting principles;
(c) Preserve its corporate existence and continue to
engage in business of the same general type as conducted as of the date hereof;
(e) Comply in all respects with all statutes, laws,
ordinances, orders, judgments, decrees, injunctions, rules, regulations,
permits, licenses, authorizations and requirements ("Requirement(s)") of all
governmental bodies, departments, commissions, boards, companies or associates
insuring the premises, courts, authorities, officials, or officers, which are
applicable to the Company; except wherein the failure to comply would not have a
material adverse effect on the Company; provided that nothing contained herein
shall prevent the Company from contesting the validity or the application of any
Requirements.
2.3. Negative Covenants. The Company covenants and
agrees that while this Debenture is outstanding it will not directly or
indirectly:
(a) Guaranty or otherwise in any way become or be responsible
<PAGE>
for indebtedness for borrowed money received by anyone other than the company or
a wholly-owned subsidiary or for obligations of any of its officers or directors
or any of their affiliates, contingently or otherwise, other than such
guaranties existing as of the date hereof;
(c) Declare or pay cash dividends other than with
respect to the Company's Series A-2 Convertible Preferred Stock;
(e) Sell, transfer or dispose of, all or substantially
all of its assets other than in the ordinary course of its business and for fair
value; or
(g) Purchase, redeem or otherwise acquire for value any
of its Common Stock now or hereafter outstanding.
3. Subordination. The indebtedness evidenced by this Debenture
is hereby expressly subordinated, to the extent and in the manner hereinafter
set forth, in right of payment to the prior payment in full of all the Company's
Senior Indebtedness, as hereinafter defined.
4.1. Senior Indebtedness. As used in this Debenture, the term
"Senior Indebtedness" shall mean the Company's existing debt obligations to
First Union National Bank and all future indebtedness of the Company to banks,
insurance companies or other financial institutions regularly engaged in the
business of lending money, which (i) is for money borrowed by the Company; (ii)
is secured by, in general, a perfected first priority security interest in all
or substantially all of the Company's assets; (iii) is not convertible in whole
or in part into capital stock of the Company; and (iv) was not issued in tandem
or concurrent with any capital stock of the Company or any other security of the
Company exercisable or convertible into any capital stock of the company.
4.3. Default on Senior Indebtedness. If there shall occur any
receivership, insolvency, assignment for the benefit of creditors, bankruptcy,
reorganization or arrangements with creditors (whether or not pursuant to
bankruptcy or other insolvency laws), sale of all or substantially all of the
assets, dissolution, liquidation or any other marshaling of the assets and
liabilities of the Company, or if this Debenture shall be declared due and
payable upon the occurrence of a default with respect to any Senior
Indebtedness, then (i) no amount shall be paid by the Company in respect of the
principal of or interest on this Debenture at the time outstanding, unless and
until the principal of and interest on the Senior Indebtedness then outstanding
shall be paid in full, and (ii) no claim or proof of claim shall be filed with
the Company by or on behalf of the Holder that shall assert any right to receive
any payments in respect of the principal of and interest on this Debenture
except subject to the payment in full of the principal of and interest on all of
the Senior Indebtedness then outstanding. If there occurs an event of default
that has been declared in writing with respect to any Senior Indebtedness as
defined in the instrument governing such Senior Indebtedness or in the
instrument under which any Senior Indebtedness if outstanding, permitting the
holder of such Senior Indebtedness to accelerate the maturity thereof, then,
unless and until such default shall have been cured or waived or shall have
ceased to exist, or all Senior Indebtedness shall have been paid in full, no
payment shall be made in respect of the principal of or interest on this
Debenture.
4.5. Effect of Subordination. Subject to the rights, if any,
of the holders of Senior Indebtedness under this section 3 to receive cash,
<PAGE>
securities or other properties otherwise payable or deliverable to the Holder,
nothing contained in this section 3 shall impair, as between the Company and the
Holder, the obligation of the Company, subject to the terms and conditions
hereof, to pay to the Holder the principal hereof and interest hereon as and
when the same become due and payable, or shall prevent the Holder, upon default
hereunder, from exercising all rights, powers and remedies otherwise provided
herein or by applicable law.
4.7. Undertaking. By its acceptance of this Debenture,
the Holder agrees to execute and deliver such documents as may be reasonably
requested from time to time by the Company or the holder of any Senior
Indebtedness in order to implement the foregoing provisions of this section 3.
5. Conversion.
6.1. Voluntary Conversion. The Holder shall have the right, at
the Holder's option, at any time and from time to time prior to redemption by
the Company pursuant to section 5, to convert the unpaid principal into shares
of Common Stock, par value $.01 per share, of the Company ("Common Stock") at a
price, subject to adjustment as provided herein ("Conversion Price"), equal to
$2.00 per share.
6.3. Automatic Conversion. Provided that (i) no Event of
Default then exists, and (ii) the Common Stock is then listed on the New York
Stock Exchange or American Stock Exchange or quoted on the Nasdaq National
Market or Nasdaq SmallCap Market, then immediately prior to the close of
business on June 10, 2003, the entire unpaid principal amount of this Debenture
shall be automatically converted into shares of Common Stock at the Conversion
Price, whereupon the Company shall deliver the certificate representing the
shares of Common Stock into which the unpaid principal amount has been
converted, together with all interest accrued but unpaid through June 10, 2003,
to the Holder within ten (10) business days after the Holder shall have
surrendered to the Company this Debenture, and the Holder shall be treated for
all purposes as the record holder of such shares issuable upon conversion as of
the close of business on June 10, 2003.
6.5. Mechanics and Effect of Voluntary Conversion. In order to
convert any unpaid principal into shares of Common Stock, the Holder shall
surrender this Debenture and give notice, in the form of Conversion Notice
annexed to this Debenture, to the Company at its principal executive office, of
its election to convert all or a portion of the unpaid principal and shall state
therein the principal amount to be converted and the address to which the
certificate representing the shares of Common Stock to be issued are to be
delivered. The Company shall, as soon as practicable, but not later than five
(5) business days after the date of receipt of the Conversion Notice and
Debenture, issue and deliver to a location in the United States designated by
the Holder (i) a certificate for the number of shares of Common Stock to which
the holder shall be entitled as aforesaid; (ii) a check payable to the order of
the Holder in the amount of interest accrued on the principal amount so
converted; and (iii) if the entire unpaid principal amount has not been
converted, a replacement Debenture reflecting the balance of unpaid principal
amount not so converted. Such conversion shall be deemed to have been made
immediately prior to the close of business on the date which the Written Notice
is received by the Corporation in accordance herewith ("Conversion Date"), and
the Holder shall be treated for all purposes as the record holder of such shares
of Common Stock as of such Conversion Date.
<PAGE>
6.7. Fractional Shares. The Company shall not be required to
issue fractions of shares of Common Stock upon conversion. If any fractions of a
share would, but for this Section 4.3, be issuable upon any conversion, in lieu
of such fractional share the Company shall round up or down to the nearest whole
number of shares.
6.9. Reservation of Shares. The Company shall reserve and
shall at all times have reserved out of its authorized but unissued shares of
Common Stock sufficient shares of Common Stock to permit the conversion of the
unpaid principal amount pursuant to this Section 4. All shares of Common Stock
which may be issued upon conversion shall be validly issued, fully paid and
nonassessable. So long as this Debenture remains outstanding, the Company shall
maintain the listing of the shares of Common Stock to be issued upon conversion
on each national securities exchange on which Common Stock is listed or on the
Nasdaq Stock Market if the Common Stock is then quoted on the Nasdaq Stock
Market.
6.11. Adjustments.
(a) Split, Subdivision or Combination of Shares. If the
outstanding shares of the Company's Common Stock at any time while this
Debenture remains outstanding shall be subdivided or split into a greater number
of shares, or a dividend in Common Stock shall be paid in respect of Common
Stock, the Conversion Price in effect immediately prior to such subdivision or
split or at the record date of such dividend shall, simultaneously with the
effectiveness of such subdivision or split or immediately after the record date
of such dividend (as the case may be) shall be proportionately decreased. If the
outstanding shares of Common Stock shall be combined or reverse-split into a
smaller number of shares, the Conversion Price in effect immediately prior to
such combination or reverse split shall, simultaneously with the effectiveness
of such combination or reverse split, be proportionately increased.
(c) Reclassification, Reorganization, Consolidation or Merger.
In the case of any reclassification of the Common Stock (other than a change in
par value or a subdivision or combination as provided for in section 4.6(a)), or
any reorganization, consolidation or merger of the Company with or into another
corporation (other than a merger or reorganization with respect to which the
Company is the continuing corporation and which does not result in any
reclassification of the Common Stock ), or a transfer of all or substantially
all of the assets of the Company, or the payment of a liquidating distribution
then, as part of any such reorganization, reclassification, consolidation,
merger, sale or liquidating distribution, lawful provision shall be made so that
the Holder shall have the right thereafter to receive upon the conversion
hereof, the kind and amount of shares of stock or other securities or property
which the Holder would have been entitled to receive if, immediately prior to
any such reorganization, reclassification, consolidation, merger, sale or
liquidating distribution, as the case may be, the Holder had held the number of
shares of Common Stock which were then purchasable upon the conversion of this
Debenture. In any such case, appropriate adjustment (as reasonably determined by
the Board of Directors of the Company) shall be made in the application of the
provisions set forth herein with respect to the rights and interests thereafter
of the Holder such that the provisions set forth in this Section 4 (including
provisions with respect to the Conversion Price) shall thereafter be applicable,
as nearly as is reasonably practicable in relation to any shares of stock or
other securities or property thereafter deliverable upon the conversion of this
Debenture.
(e) De Minimis Adjustments. No adjustment in the Conversion
<PAGE>
Price shall be required unless such adjustment would require an increase or
decrease in the Conversion Price of at least $0.01; provided, however, that any
adjustments which by reason of section 4.6 are not required to be made shall be
carried forward and taken into account in any subsequent adjustment. All
calculations under section 4.6 shall be made to the nearest cent or to the
nearest 1/100th of a share, as the case may be.
(g) Notice of Adjustment. Whenever the Conversion Price or
kind of securities purchasable upon conversion of this Debenture shall be
adjusted as required by the provisions of section 4.6, the Company shall
forthwith file with its Secretary or Assistant Secretary at its principal office
an officer's certificate showing the adjusted Conversion Price or kind of
securities purchasable upon conversion of this Debenture determined as herein
provided and setting forth in reasonable detail such facts as shall be necessary
to show the reason for and the manner of computing such adjustments. Each such
officer's certificate shall be made available at all reasonable times for
inspection by the Holder and the Company shall, forthwith after each such
adjustment, forward a copy of such certificate to the Holder in the manner
provided for notices under section 7.4.
6.13. No Impairment. The Company will not, by amendment of 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 to be observed or performed hereunder by the Company, but will at all
times in good faith assist in the carrying out of all the provisions of this
Section 4 and in the taking of all such action as may be necessary or
appropriate in order to protect the conversion rights of the Holder against
impairment.
7. Redemption.
8.1. Redemption Right. The Company may redeem for cash all
(but not less than all) of this Debenture at a redemption price equal to the
unpaid (and not yet converted) principal amount hereof, plus accrued interest
thereon, at any time after July 10, 2000, if notice of redemption as provided in
section 5.2 is given and the Closing Bid Price of the Common Stock has been at
least $4.00 per share on each of the twenty (20) consecutive trading days ending
on the third (3rd) trading day prior to the date on which notice of redemption
is given. The "Closing Bid Price" shall mean the closing bid price for the
Company's Common Stock as reported by the national securities exchange on which
the Common Stock is listed or admitted to trading, or, if the Common Stock is
not listed or admitted to trading on any national securities exchange or if any
such exchange on which the Common Stock is listed or admitted to trading is not
its principal trading market, the closing bid price as reported by the Nasdaq
Stock Market if the Common Stock is quoted on the Nasdaq National Market or
Nasdaq SmallCap Market. If the Common Stock is not listed on a national
securities exchange or quoted on the Nasdaq National Market or Nasdaq SmallCap
Market, but is traded in the residual over-the-counter market, the closing bid
price shall mean the closing bid price for the Common Stock, as reported by the
NASD OTC Bulletin Board or the National Quotation Bureau, Incorporated, or
similar publisher of such quotations. If the Closing Bid Price cannot be
determined pursuant to the above, the Closing Bid Price shall be such price as
the Board of Directors of the Company shall determine in good faith.
8.3. Date Fixed for Redemption; Notice of Redemption. In the
event the Company shall elect to redeem this Debenture, the Company shall fix a
<PAGE>
date for the redemption and shall give notice to the Holder in the manner
provided in section 7.4 not less than twenty (20) days prior to the date fixed
for redemption.
8.5. Conversion After Notice of Redemption. This Debenture may
be converted in accordance with section 4 at any time after notice of redemption
shall have been given by the Company pursuant to section 5.2 hereof and prior to
the date fixed for redemption. On and after the redemption date, the Holder
shall have no further rights to convert the unpaid principal amount of this
Debenture.
1. Replacement and Transfer.
2.1. Replacement of Debenture. Upon receipt by the Company of
evidence satisfactory to it of the loss, theft, destruction or mutilation of
this Debenture and (in the case of loss, theft or destruction) of indemnity
satisfactory to it, and upon reimbursement to the Company of all reasonable
expenses incidental thereto, and upon surrender and cancellation of such
Debenture, if mutilated, the Company will make and deliver in lieu of such
Debenture a new Debenture of like tenor and unpaid principal amount and dated as
of the original date of the Debenture.
2.3. Transfers. Subject to the restrictions on transfer
required by applicable securities laws described below, this Debenture may be
transferred by surrendering this Debenture, together with the assignment form
annexed hereto duly executed and completed, to the Company. The Company shall
immediately transfer this Debenture on its books and records and shall execute
and deliver a new Debenture of like tenor to the transferee as contemplated by
such assignment. This Debenture shall not be transferred unless (i) there is an
effective registration covering this Debenture under the Act and applicable
state securities laws, (ii) the company shall have first received an opinion
from an attorney, reasonably acceptable to the Company (the Company hereby
agreeing that the opinion of Graubard Mollen & Miller shall be acceptable),
stating that the proposed transfer is exempt from registration under the Act and
all applicable state securities law, or (iii) the transfer is made pursuant to
Rule 144 promulgated under the Act.
3. Miscellaneous.
4.1. Non-Waiver and Other Remedies. No course of dealing or
delay on the part of the Holder of this Debenture in exercising any right
hereunder shall operate as a waiver or otherwise prejudice the right of the
Holder of this Debenture. No remedy conferred hereby shall be exclusive of any
other remedy referred to herein or now or hereafter available at law, in equity,
by statute or otherwise.
4.3. Collection Costs; Attorney's Fees. In the event this
Debenture is turned over to an attorney for collection, the Company agrees to
pay all reasonable costs of collection, including reasonable attorney's fees and
expenses and all out of pocket expenses incurred in connection with such
collection efforts, which amounts may, at the Holder's option, be added to the
principal hereof.
4.5. Benefit. Subject to the restrictions on transfer
set forth in the legend on the facing page of this Debenture, the rights and
obligations of the Company and the Holder shall be binding upon and inure to
<PAGE>
the benefit of the parties hereto and their heirs, executors, administrators,
successors and assigns.
4.7. Notices. All notices and other communications under this
Debenture (except payment) shall be in writing, and shall be sufficiently given
if sent to the Holder or the Company, as the case may be, by hand delivery,
private overnight courier, with acknowledgment of receipt, or by registered or
certified mail, return receipt requested, as follows:
4.9. To Holder: To Holder's address on page 1 of this Debenture
4.10. Attention: [Name of Holder]
4.12. To The Company: To the Company's Principal Executive Offices
4.13. Attention: President
In either case with copies to: M.H. Meyerson & Co., Inc.
525 Washington Boulevard
Jersey City, New Jersey 07310
Attn: Ronald I. Heller
or to such other address as any of them, by notice to the others may designate
from time to time. Time shall be counted to, or from, as the case may be, the
delivery in person or by overnight courier or five (5) business days after
mailing.
1.1. Governing Law. This Debenture shall be governed by
and construed in accordance with the internal law of the State of New York
without regard to principles of conflicts of laws.
1.3. Jurisdiction and Venue. The Company (i) agrees that any
legal suit, action or proceeding arising out of or relating to this Debenture
shall be instituted exclusively in New York State Supreme Court, County of New
York or in the United States District Court for the Southern District of New
York, (ii) waives any objection to the venue of any such suit, action or
proceeding and the right to assert that such forum is not a convenient forum,
and (iii) irrevocably consents to the jurisdiction of the New York State Supreme
Court, County of New York, and the United States District Court for the Southern
District of New York in any such suit, action or proceeding, and the Company
further agrees to accept and acknowledge service of any and all process which
may be served in any such suit, action or proceeding in New York State Supreme
Court, County of New York, or in the United States District Court for the
Southern District of New York and agrees that service of process upon it mailed
by certified mail to its address shall be deemed in every respect effective
service of process upon it in any such suit, action or proceeding.
1.5. Usury Laws. Should the Usury laws of any state be
deemed applicable with respect to the Debentures, the Company will not assert
Such laws as a defense.
1.7. No rights as Stockholder. Until conversion of this
Debenture, the Holder shall not have or exercise any rights by virtue hereof as
a stockholder of the Company.
<PAGE>
1.9. Amendment or Waiver. Any term of this Debenture may
be amended, modified or waived only by an instrument in writing signed by the
party against which enforcement of the amendment, modification or waiver is
sought.
1.11. Section Headings. Section headings herein have been
inserted for reference only and shall not be deemed to limit or otherwise
affect, in any matter, or be deemed to interpret in whole or in part any of the
terms or provisions of this Debenture.
1.12. IN WITNESS WHEREOF, this Debenture has been executed
and delivered on the date specified above by the duly authorized representative
of the Company.
GLOBALINK, INC.
By: _____________________________________
Harry E. Hagerty, Jr.
Chief Executive Officer
<PAGE>
NOTICE OF CONVERSION
(To Be Completed and Signed Only Upon Conversion of Debenture)
TO GLOBALINK, INC.
The undersigned, the holder of the foregoing Debenture, hereby
surrenders such Debenture for conversion at the Conversion Price in effect upon
your receipt of the foregoing Debenture into shares of the Common Stock of
GLOBALINK, INC. to the extent of $________ of the unpaid principal amount
thereof, and requests that a certificate for such shares be issued to the
undersigned holder at the address indicated below, and if the principal amount
being hereby converted is less than the full unpaid amount of the foregoing, a
replacement Debenture representing the balance of unpaid principal in the amount
of $_______ be similarly issued.
Dated: _______________________
-------------------------------------
(Signature must conform in all respects to name
of holder as specified on the face of the Debenture)
-------------------------------------
(Address)
-------------------------------------
-------------------------------------
-------------------------------------
<PAGE>
ASSIGNMENT
(To be executed by the Holder to Effect a Transfer of the Attached Debenture)
FOR VALUE RECEIVED, the undersigned does hereby sell, assign
and transfer unto ___________________________________________________________,
with an address of
__________________________________________________________________________, all
right, title and interest of the undersigned in the attached Debenture of
Globalink, Inc. ("Company) and does hereby authorize the Company to transfer
such right on the books of the Company.
Dated: _______________________
-------------------------------------
(Signature must conform in all respects to name
of holder as specified on the face of the Debenture)
NEITHER THIS WARRANT NOR THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE HAVE
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR
UNDER ANY STATE SECURITIES LAW. THE COMPANY WILL NOT TRANSFER THIS WARRANT, OR
ANY SHARES OF COMMON SHARES ISSUABLE UPON EXERCISE, UNLESS (i) THERE IS AN
EFFECTIVE REGISTRATION COVERING THIS WARRANT OR SHARES UNDER THE ACT AND
APPLICABLE STATE SECURITIES LAWS, (ii) IT FIRST RECEIVES AN OPINION FROM AN
ATTORNEY, REASONABLY ACCEPTABLE TO THE COMPANY, STATING THAT THE PROPOSED
TRANSFER IS EXEMPT FROM REGISTRATION UNDER THE ACT AND UNDER ALL APPLICABLE
STATE SECURITIES LAWS, OR (iii) THE TRANSFER IS MADE PURSUANT TO RULE 144
PROMULGATED UNDER THE ACT.
For the Purchase of
________ shares of
No. _____________ Common Stock
WARRANT FOR THE PURCHASE OF
SHARES OF COMMON STOCK
OF
GLOBALINK, INC.
(A Delaware corporation)
FOR VALUED RECEIVED, Globalink, Inc. ("Company"), hereby certifies that
____________________________________, or his, her or its registered assigns
("Registered Holder"), is entitled, subject to the terms set forth below, to
purchase from the Company, at any time or from time to time during the five-year
period commencing on June 11, 1998 and expiring on June 10, 2003, __________
shares of Common Stock, $.01 par value, of the Company ("Common Stock"), at a
purchase price equal $2.50. The number of shares of Common Stock purchasable
upon exercise of this Warrant, and the purchase price per share, each as
adjusted from time to time pursuant to the provisions of this Warrant, are
hereinafter referred to as the "Warrant Shares" and the "Exercise Price,"
respectively.
1. Exercise
1.1 Procedure for Cash Exercise. This Warrant may be exercised by the
Registered Holder, in whole or in part, by the surrender of this Warrant (with
the Notice of Exercise Form attached hereto as Exhibit I duly executed by such
Registered Holder) at the principal office of the Company, or at such other
office or agency as the Company may designate, accompanied by payment in full,
in lawful money of the United States, of an amount equal to the then applicable
Exercise Price multiplied by the number of Warrant Shares then being purchased
upon such exercise.
<PAGE>
1.2 Procedure for Cashless Exercise. In lieu of the payment of the
Exercise Price in the manner set forth in Section 1.1, the Registered Holder
shall have the right (but not the obligation) to convert this Warrant, in whole
or part, into Common Stock ("Conversion Right") as follows: Upon exercise of the
Conversion Right, the Company shall deliver to the Registered Holder (without
payment by the Registered Holder of any of the Exercise Price) that number of
shares of Common Stock equal to the quotient obtained by dividing (x) the
"Value" (as defined below) of the portion of the Warrant being converted on the
second trading day immediately preceding the date the Warrant is delivered to
the Company pursuant to Section 1.3 if the Conversion Right is exercised
("Valuation Date") by (y) the "Market Price" (as defined below) on the Valuation
Date.
The "Value" of the portion of the Warrant being converted shall equal
the remainder derived from subtracting (a) the Exercise Price multiplied by the
number of shares of Common Stock underlying the portion of the Warrant being
converted from (b) the Market Price of the Common Stock multiplied by the number
of shares of Common Stock underlying the portion of the Warrant being converted.
As used herein, the term "Market Price" at any date shall be deemed to be the
last reported sale price of the Common Stock on such date, or, in case no such
reported sale takes place on such day, the average of the last reported sale
prices for the immediately preceding three trading days, in either case, as
reported by the national securities exchange on which the Common Stock is listed
or admitted to trading, or, if the Common Stock is not listed or admitted to
trading on any national securities exchange or if any such exchange on which the
Common Stock is listed or admitted to trading is not its principal trading
market, the last sale price as reported by the Nasdaq Stock Market if the Common
Stock is quoted on the Nasdaq National Market or Nasdaq SmallCap Market. If the
Common Stock is not listed on a national securities exchange or quoted on the
Nasdaq National Market or Nasdaq SmallCap Market, but is traded in the residual
over-the-counter market, the Market Price shall mean the last sale price for the
Common Stock, as reported by the NASD OTC Bulletin Board if quoted on the NASD
OTC Bulletin Board and, if not, the average of the bid and asked prices as
published by the National Quotation Bureau, Incorporated, or similar publisher
of such quotations. If the Market Price cannot be determined pursuant to the
above, the Market Price shall be such price as the Board of Directors of the
Company shall determine in good faith.
1.3 Exercise of Conversion Right. The Conversion Right may be exercised
by the Holder on any business day by delivering the Warrant with a duly executed
exercise form attached hereto with the conversion section completed to the
Company exercising the Conversion Right and specifying the total number of
shares of Common Stock the Registered Holder will purchase pursuant to such
conversion.
1.4 Date of Exercise. Each exercise of this Warrant shall be deemed to
have been effected immediately prior to the close of business on the day on
which this Warrant shall have been surrendered to the Company. At such time, the
person or persons in whose name or names any certificates for Warrant Shares
shall be issuable upon such exercise shall be deemed to have become the holder
or holders of record of the Warrant Shares represented by such certificates.
1.5 Issuance of Certificate. As soon as practicable after the exercise
of the purchase right represented by this Warrant, the Company at its expense
will use its best efforts to cause to be issued in the name of, and delivered
<PAGE>
to, the Registered Holder, or, subject to the terms and conditions hereof, to
such other individual or entity as such Holder (upon payment by such Holder of
any applicable transfer taxes) may direct:
(i) a certificate or certificates for the number of full shares of
Warrant Shares to which such Registered Holder shall be entitled upon such
exercise plus, in lieu of any fractional share to which such Registered Holder
would otherwise be entitled, cash in an amount determined pursuant to Section 4
hereof, and
(ii) in case such exercise is in part only, a new warrant or warrants
(dated the date hereof) of like tenor, stating on the face or faces thereof the
number of shares currently stated on the face of this Warrant minus the number
of such shares purchased by the Registered Holder upon such exercise as provided
in subsections 1.1 and 1.2 above.
2. Adjustments.
2.1 Split, Subdivision or Combination of Shares. If the outstanding
shares of the Company's Common Stock at any time while this Warrant remains
outstanding and unexpired shall be subdivided or split into a greater number of
shares, or a dividend in Common Stock shall be paid in respect of Common Stock,
the Exercise Price in effect immediately prior to such subdivision or at the
record date of such dividend shall, simultaneously with the effectiveness of
such subdivision or split or immediately after the record date of such dividend
(as the case may be), shall be proportionately decreased. If the outstanding
shares of Common Stock shall be combined or reverse-split into a smaller number
of shares, the Exercise Price in effect immediately prior to such combination or
reverse split shall, simultaneously with the effectiveness of such combination
or reverse split, be proportionately increased. When any adjustment is required
to be made in the Exercise Price, the number of shares of Warrant Shares
purchasable upon the exercise of this Warrant shall be changed to the number
determined by dividing (i) an amount equal to the number of shares issuable upon
the exercise of this Warrant immediately prior to such adjustment, multiplied by
the Exercise Price in effect immediately prior to such adjustment, by (ii) the
Exercise Price in effect immediately after such adjustment.
2.2 Reclassification Reorganization, Consolidation or Merger. In the
case of any reclassification of the Common Stock (other than a change in par
value or a subdivision or combination as provided for in subsection 2.1 above),
or any reorganization, consolidation or merger of the Company with or into
another corporation (other than a merger or reorganization with respect to which
the Company is the continuing corporation and which does not result in any
reclassification of the Common Stock), or a transfer of all or substantially all
of the assets of the Company, or the payment of a liquidating distribution then,
as part of any such reorganization, reclassification, consolidation, merger,
sale or liquidating distribution, lawful provision shall be made so that the
Registered Holder of this Warrant shall have the right thereafter to receive
upon the exercise hereof, the kind and amount of shares of stock or other
securities or property which such Registered Holder would have been entitled to
receive if, immediately prior to any such reorganization, reclassification,
consolidation, merger, sale or liquidating distribution, as the case may be,
such Registered Holder had held the number of shares of Common Stock which were
then purchasable upon the exercise of this Warrant. In any such case,
appropriate adjustment (as reasonably determined by the Board of Directors of
the Company) shall be made in the application of the provisions set forth herein
with respect to the rights and interests thereafter of the Registered Holder of
this Warrant such that the provisions set forth in this Section 2 (including
<PAGE>
provisions with respect to the Exercise Price) shall thereafter be applicable,
as nearly as is reasonably practicable, in relation to any shares of stock or
other securities or property thereafter deliverable upon the exercise of this
Warrant.
2.3 Price Adjustment. No adjustment in the per share Exercise Price
shall be required unless such adjustment would require an increase or decrease
in the Exercise Price of at least $0.01; provided, however, that any adjustments
which by reason of this paragraph are not required to be made shall be carried
forward and taken into account in any subsequent adjustment. All calculations
under this Section 2 shall be made to the nearest cent or to the nearest 1/100th
of a share, as the case may be.
2.4 Price Reduction. Notwithstanding any other provision set forth in
this Warrant, at any time and from time to time during the period that this
Warrant is exercisable, the Company in it sole discretion may reduce the
Exercise Price or extend the period during which this Warrant is exercisable.
2.5 No Impairment. The Company will not, by amendment of its Articles
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 to be observed or performed hereunder by the Company but will at all
times in good faith assist in the carrying out of all the provisions of this
Section 2 and in the taking of all such actions as may be necessary or
appropriate in order to protect against impairment of the rights of the
Registered Holder of this Warrant to adjustments in the Exercise Price.
2.6 Notice of Adjustment. Upon any adjustment of the Exercise Price or
extension of the Warrant exercise period, the Company shall forthwith give
written notice thereto to the Registered Holder of this Warrant describing the
event requiring the adjustment, stating the adjusted Exercise Price and the
adjusted number of shares purchasable upon the exercise hereof resulting from
such event, and setting forth in reasonable detail the method of calculation and
the facts upon which such calculation is based.
3. Fractional Shares. The Company shall not be required to issue fractions of
shares of Common Stock upon exercise. If any fractions of a share would, but for
this Section 3, be issuable upon any exercise, in lieu of such fractional share
the Company shall round up or down to the nearest whole number.
4. Limitation on Sales. Each holder of this Warrant acknowledges that this
Warrant and the Warrant Shares, as of the date of original issuance of this
Warrant, have not been registered under the Securities Act of 1933, as amended
("Act"), and agrees not to sell, pledge, distribute, offer for sale, transfer or
otherwise dispose of this Warrant or any Warrant Shares issued upon its exercise
in the absence of (a) an effective registration statement under the Act as to
this Warrant or such Warrant Shares or (b) an opinion of counsel, reasonably
acceptable to the Company (the Company hereby agreeing that the opinion from
Graubard Mollen and Miller shall be acceptable), that such registration and
qualification are not required. The Warrant Shares issued upon exercise thereof
shall be imprinted with a legend in substantially the following form:
<PAGE>
"THE ISSUANCE OF THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS, AND MAY NOT BE SOLD,
PLEDGED OR OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION THEREOF UNDER
SUCH ACT OR PURSUANT TO AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF SAID
ACT OR APPLICABLE STATE SECURITIES LAWS, SUPPORTED BY AN OPINION OF COUNSEL,
REASONABLY SATISFACTORY TO THE COMPANY AND ITS COUNSEL, THAT SUCH REGISTRATION
IS NOT REQUIRED."
5. Certain Dividends. If the Company pays a dividend or makes a distribution on
the Common Stock ("Dividend"), other than a stock dividend payable in shares of
Common Stock, then the Company will pay or distribute to the Registered Holder
of this Warrant, upon the exercise hereof, in addition to the Warrant Shares
purchased upon such exercise, the Dividend which would have been paid to such
Registered Holder if it had been the owner of record of such Warrant Shares
immediately prior to the date on which a record is taken for such Dividend or,
if no record is taken, the date as of which the records holders of Common Stock
entitled to such Dividend are determined.
6. Redemption.
6.1 Redemption Rights. The Company may redeem all, but not less than
all, of the Warrants at any time, after July 10, 2000, at a redemption price of
$.01 per Warrant, if notice of redemption as provided in Section 6.2 herein is
given and the closing bid price of a share of Common Stock has been at least
200% of the Exercise Price (initially $5.00) on each of the 20 consecutive
trading days ending on the third trading day prior to the day on which notice of
redemption is given.
6.2 Date Fixed for Redemption; Notice of Redemption. In the event the
Company shall elect to redeem all of the Warrants, the Company shall fix a date
for the redemption and mail a notice of redemption by first class mail, postage
prepaid, not less than 30 days from the date fixed for redemption to the holders
of the Warrants at their last address as they shall appear on the registration
books. Any notice mailed in the manner herein provided shall be conclusively
presumed to have been duly given whether or not the Registered Holder received
such notice.
6.3 Exercise After Notice of Redemption. The Warrants may be exercised
in accordance with Section 1 of this Agreement at any time after notice of
redemption shall have been given by the Company pursuant to Section 6.2 hereof
and prior to the time and date fixed for redemption. On and after the redemption
date, the holder of the Warrants shall have no further rights except to receive,
upon surrender of the Warrants, the redemption price.
7. Notices of Record Date. In case: (i) the Company shall take a record of the
holders of its Common Stock (or other stock or securities at the time
deliverable upon the exercise of this Warrant) for the purpose of entitling or
enabling them to receive any dividend or other distribution, or to receive any
right to subscribe for or purchase any shares of any class or any other
securities, or to receive any other right, or (ii) of any capital reorganization
of the Company, any reclassification of the capital stock of the Company, any
consolidation or merger of the Company with or into another corporation (other
than a consolidation or merger in which the Company is the surviving entity), or
<PAGE>
any transfer of all or substantially all of the assets of the Company, or (iii)
of the voluntary or involuntary dissolution, liquidation or winding-up of the
Company, then, and in each such case, the Company will mail or cause to be
mailed to the Registered Holder of this Warrant a notice specifying, as the case
may be, (i) the date on which a record is to be taken for the purpose of such
dividend, distribution or right, and stating the amount and character of such
dividend, distribution or right, or (ii) the effective date on which such
reorganization, reclassification, consolidation, merger, transfer, dissolution,
liquidation or winding-up is to take place, and the time, if any is to be fixed,
as of which the holders of record of Common Stock (or such other stock or
securities at the time deliverable upon the exercise of this Warrant) shall be
entitled to exchange their shares of Common Stock (or such other stock or
securities) for securities or other property deliverable upon such
reorganization, reclassification, consolidation, merger, transfer, dissolution,
liquidation or winding-up. Such notice shall be mailed at least ten (10) days
prior to the record date or effective date for the event specified in such
notice, provided that the failure to mail such notice shall not affect the
legality or validity of any such action.
8. Reservation of Stock. The Company will at all times reserve and keep
available, solely for issuance and delivery upon the exercise of this Warrant,
such shares of Common Stock and other stock, securities and property, as from
time to time shall be issuable upon the exercise of this Warrant. So long as
this Warrant remains outstanding, the Company shall maintain the listing of the
shares of Common Stock to be issued upon exercise on each national securities
exchange on which Common Stock is listed or on the Nasdaq Stock Market if the
Common Stock is then quoted on the Nasdaq Stock Market.
9. Replacement of Warrants. Upon receipt of evidence reasonably satisfactory to
the Company of the loss, theft, destruction or mutilation of this Warrant and
(in the case of loss, theft or destruction) upon delivery of an indemnity
agreement (with surety if reasonably required) in an amount reasonably
satisfactory to the Company, or (in the case of mutilation) upon surrender and
cancellation of this Warrant, the Company will issue, in lieu thereof, a new
Warrant of like tenor.
10. Transfers, etc.
10.1 Warrant Register. The Company will maintain a register containing
the names and addresses of the Registered Holders of this Warrant. Any
Registered Holder may change its, his or her address as shown on the warrant
register by written notice to the Company requesting such change.
10.2 Registered Holder. Until any transfer of this Warrant is made in
the warrant register, the Company may treat the Registered Holder of this
Warrant as the absolute owner hereof for all purposes; provided, however, that
if and when this Warrant is properly assigned in blank, the Company may (but
shall not be obligated to) treat the bearer hereof as the absolute owner hereof
for all purposes, notwithstanding any notice to the contrary.
11. No Rights as Stockholder. Until the exercise of this Warrant, the Registered
Holder of this Warrant shall not have or exercise any rights by virtue hereof as
a stockholder of the Company.
12. Successors. The rights and obligations of the parties to this Warrant will
inure to the benefit of and be binding upon the parties hereto and their
respective heirs, successors, assigns, pledgees, transferees and purchasers.
Without limiting the foregoing, the registration rights set forth in this
<PAGE>
Warrant shall inure to the benefit of the Registered Holder and all the
Registered Holder's successors, heirs, pledgees, assignees, transferees and
purchasers of this Warrant and the Warrant Shares.
13. Change or Waiver. Any term of this Warrant may be changed or waived only by
an instrument in writing signed by the party against which enforcement of the
change or waiver is sought.
14. Headings. The headings in this Warrant are for purposes of reference only
and shall not limit or otherwise affect the meaning of any provision of this
Warrant.
15. Governing Law. This Warrant shall be governed by and construed in accordance
with the laws of the State of New York as such laws are applied to contracts
made and to be fully performed entirely within that state between residents of
that state.
16. Jurisdiction and Venue. The Company (i) agrees that any legal suit, action
or proceeding arising out of or relating to this Warrant shall be instituted
exclusively in New York State Supreme Court, County of New York or in the United
States District Court for the Southern District of New York, (ii) waives any
objection to the venue of any such suit, action or proceeding and the right to
assert that such forum is not a convenient forum for such suit, action or
proceeding, and (iii) irrevocably consents to the jurisdiction of the New York
State Supreme Court, County of New York, and the United States District Court
for the Southern District of New York in any such suit, action or proceeding,
and the Company further agrees to accept and acknowledge service or any and all
process which may be served in any such suit, action or proceeding in New York
State Supreme Court, County of New York or in the United States District Court
for the Southern District of New York and agrees that service of process upon it
mailed by certified mail to its address shall be deemed in every respect
effective service of process upon it in any suit, action or proceeding.
17. Mailing of Notices, etc. All notices and other communications under this
Warrant (except payment) shall be in writing and shall be sufficiently given if
sent to the Registered Holder or the Company, as the case may be, by hand
delivery, private overnight courier, with acknowledgment of receipt, or by
registered or certified mail, return receipt requested, as follows:
Registered Holder: To Registered Holder's address on page 1 of
this Warrant
Attention: [Name of Holder]
The Company: To the Company's Principal Executive Offices
Attention: President
In either case, M.H. Meyerson & Co., Inc.
with a copy to: 525 Washington Boulevard
Jersey City, New Jersey 07310
Attn: Ronald Heller
or to such other address as any of them, by notice to the others may designate
from time to time. Time shall be counted to, or from, as the case may be, the
delivery in person or by overnight courier or five (5) business days after
mailing.
<PAGE>
GLOBALINK, INC.
By:
Name: Harry E. Hagerty, Jr.
Title: Chief Executive Officer
<PAGE>
EXHIBIT I
NOTICE OF EXERCISE
TO: Globalink, Inc .
9302 Lee Highway
Fairfax, Virginia 22031
1. The undersigned hereby elects to purchase ________ shares of the
Common Stock of Globalink, Inc., pursuant to terms of the attached Warrant, and
tenders herewith payment of the Exercise Price of such shares in full, together
with all applicable transfer taxes, if any.
2. or
The undersigned hereby elects to purchase _____ shares of Common Stock
of Globalink, Inc. by surrender of the unexercised portion of the attached
Warrant (with a "Value" of $_____ based on a "Market Price" of
$-------).
1. Please issue a certificate or certificates representing said shares
of the Common Stock in the name of the undersigned or in such other name as is
specified below:
3. The undersigned represents that it will sell the shares of Common
Stock pursuant to an effective Registration Statement under the Securities Act
of 1933, as amended, or an exemption from registration thereunder.
5. I acknowledge that this exercise of the Warrant represented by this
Notice of Exercise was solicited by M.H. Meyerson & Co., Inc.
7. The exercise of this Warrant represented by this Notice of Exercise
was not solicited by M.H. Meyerson & Co., Inc.
8. (Name)
(Address)
(Taxpayer Identification Number)
[print name of Registered Holder]
By:
Title:
Date:
THE SECURITIES EVIDENCED BY THIS INSTRUMENT, AS OF THE DATE OF ORIGINAL ISSUANCE
HEREOF, HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
("SECURITIES ACT"), OR UNDER THE SECURITIES LAWS OF ANY STATE OR OTHER
JURISDICTION. THE SECURITIES MAY NOT BE SOLD OR OFFERED FOR SALE IN THE ABSENCE
OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES
ACT AND APPLICABLE SECURITIES LAWS OF ANY STATE OR JURISDICTION, OR AN OPINION
OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.
VOID AFTER 5:00 P.M. EASTERN TIME, JUNE 10, 2003.
PURCHASE OPTION
For ______ Shares of Common Stock
of
Globalink, Inc.
(A Delaware Corporation)
Purchase Option.
THIS CERTIFIES THAT, in consideration of $______ duly paid by
or on behalf of _______________ ("Holder"), as registered owner of this Purchase
Option, to Globalink, Inc. ("Company"), Holder is entitled, at any time or from
time to time at or after June 11, 1998 ("Commencement Date"), and at or before
5:00 p.m., Eastern Time, June 10, 2003 ("Expiration Date"), but not thereafter,
to subscribe for, purchase and receive, in whole or in part, up to
_______________ (______) shares of Common Stock of the Company, $.01 par value
("Common Stock"). If the Expiration Date is a day on which banking institutions
are authorized by law to close, then this Purchase Option may be exercised on
the next succeeding day which is not such a day in accordance with the terms
herein. This Purchase Option is initially exercisable at $2.20 per share;
provided, however, that upon the occurrence of any of the events specified in
Section 5 hereof, the rights granted by this Purchase Option, including the
exercise price for and the number of shares of Common Stock to be received upon
such exercise, shall be adjusted as therein specified. The term "Exercise Price"
shall mean the initial exercise price or the adjusted exercise price, depending
on the context. This Purchase Option is one of a number of such options issued
by the Company to M.H. Meyerson Co., Inc. ("MHM") and its designees ("Purchase
Options") in connection with a private placement of the Company's 10%
Convertible Debentures ("Debentures") and Common Stock Purchase Warrants.
<PAGE>
1. Exercise.
a. Exercise Form. In order to exercise this Purchase Option, the
exercise form attached hereto must be duly executed and
completed and delivered to the Company, together with this
Purchase Option and payment of the Exercise Price for the
shares of Common Stock being purchased by wire transfer,
certified check or official bank check. If the subscription
rights represented hereby are not exercised at or before 5:00
p.m., Eastern time, on the Expiration Date this Purchase
Option shall become and be void without further force or
effect, and all rights represented hereby shall cease and
expire.
a. Legend. Each certificate for the shares of Common Stock
purchased under this Purchase Option shall bear a legend as
follows unless they have been registered under the Securities
Act of 1933, as amended ("Securities Act"):
"The issuance of this security has not been registered under
the Securities Act of 1933, as amended, or applicable state
securities laws, and may not be sold, pledged or otherwise
transferred without an effective registration thereof under
said act or pursuant to an exemption from the registration
requirements of said act and applicable state securities laws,
supported by an opinion of counsel, reasonably satisfactory to
the Company and its counsel, that such registration is not
required."
a. Cashless Exercise.
i. Determination of Amount. In lieu of the payment of
the Exercise Price in the manner set forth in
Section 1.1, the Holder shall have the right (but
not the obligation) to convert this Purchase Option,
in whole or part, into Common Stock ("Conversion
Right") as follows: Upon exercise of the Conversion
Right, the Company shall deliver to the Registered
Holder (without payment by the Holder of any of the
Exercise Price) that number of shares of Common
Stock equal to the quotient obtained by dividing (x)
the "Value" (as defined below) of the portion of the
Purchase Option being converted on the second
trading day immediately preceding the date the
Purchase Option is delivered to the Company pursuant
to Section 1.3.2 if this Conversion Right is
exercised ("Valuation Date") by (y) the "Market
Price" (as defined below") on the Valuation Date.
The "Value" of the portion of the Purchase Option
being converted shall equal the remainder derived by subtracting (a) the
Exercise Price multiplied by the number of shares of Common Stock underlying the
portion of this Purchase Option being converted from (b) the "Market Price" of
the Common Stock multiplied by the number of shares of Common Stock underlying
<PAGE>
the portion of this Purchase Option being converted. As used herein, the term
"Market Price" at any date shall be deemed to be the last reported sale price of
a share of Common Stock on such date, or, in case no such reported sale takes
place on such date, the average of the last reported sale prices for the
immediately preceding three trading days, in either case as officially reported
by the national exchange on which the Common Stock is listed or admitted to
trading, or, if the Common Stock is not listed or admitted to trading on any
national securities exchange or if any such exchange on which the Common Stock
is listed is not its principal trading market, the last sale price as reported
by the Nasdaq Stock Market if the Common Stock is quoted on Nasdaq National
Market or SmallCap Market. If the Common Stock is not listed on a national
securities exchange or quoted on the Nasdaq National Market or Nasdaq SmallCap
Market, but is traded in the residual over-the-market, the Market Price shall
mean the last sale price for the Common Stock, as reported by the NASD OTC
Bulletin Board if quoted on the NASD OTC Bulletin Board and, if not, the average
of the bid and asked prices as published by the National Quotation Bureau,
Incorporated, or similar publisher of such quotations. If the Market Price
cannot be determined pursuant to the above, the Market Price shall be such price
as the Board of Directors of the Company shall determine in good faith.
i. Exercise of Conversion Right. The Conversion Right
may be exercised by the Holder on any business day on
or after the Commencement Date and not later than the
Expiration Date by delivering to the Company the
Purchase Option with a duly executed exercise form
attached hereto with the conversion section
completed.
1. Transfer.
a. General Restrictions. The Holder of this Purchase Option, by
its acceptance hereof, agrees that it will not sell, transfer
or assign or hypothecate this Purchase Option, other than in
compliance with or exemptions from applicable securities laws
as set forth in Section 2.2. In order to make any permitted
assignment, the Holder must deliver to the Company the
assignment form attached hereto duly executed and completed,
together with this Purchase Option and payment of all transfer
taxes, if any, payable in connection therewith. The Company
shall immediately transfer this Purchase Option on the books
of the Company and shall execute and deliver a new Purchase
Option or Purchase Options of like tenor to the appropriate
assignee(s) expressly evidencing the right to purchase the
aggregate number of shares of Common Stock purchasable
hereunder or such portion of such number as shall be
contemplated by any such assignment.
a. Restrictions Imposed by the Act. This Purchase Option and the
shares of Common Stock underlying this Purchase Option shall
not be transferred in the absence of (a) an effective
registration statement under the Act as to this Purchase
Option or shares of Common Stock purchasable hereunder or (b)
an opinion of counsel, reasonably acceptable to the Company
(the Company hereby agreeing that the opinion of Graubard
Mollen & Miller shall be acceptable), that such registration
and qualification are not required.
<PAGE>
1. New Purchase Options to be Issued.
a. Partial Exercise or Transfer. Subject to the restrictions in
Section 2 hereof, this Purchase Option may be exercised or
assigned in whole or in part. In the event of the exercise or
assignment hereof in part only, the Company shall cause to be
delivered to the Holder without charge a new Purchase Option
of like tenor in the name of the Holder evidencing the right
to purchase the aggregate number of shares of Common Stock as
to which this Purchase Option has not been exercised or
assigned.
a. Lost Certificate. Upon receipt by the Company of evidence
satisfactory to it of the loss, theft, destruction or
mutilation of this Purchase Option and of reasonably
satisfactory indemnification, the Company shall execute and
deliver a new Purchase Option of like tenor and date. Any such
new Purchase Option executed and delivered as a result of such
loss, theft, mutilation or destruction shall constitute a
substitute contractual obligation on the part of the Company.
1. Registration Rights.
a. Obligation to Register. Upon the written demand of the holders
of at least 51% or more of the Purchase Options and/or the
underlying shares of Common Stock ("Majority Holders"), the
Company shall file a registration statement ("Registration
Statement") under the Securities Act with the Commission,
registering for resale this Purchase Option and the Common
Stock issuable upon exercise of this Purchase Option
("Registerable Securities"). The Company shall use its best
efforts to file the Registration Statement and have it
declared effective within 60 days after the demand by the
Majority Holders.
a. Terms. The Company shall bear all fees and expenses it incurs
in connection with the preparation, filing, modifying and
amending the Registration Statement, providing reasonable
numbers of the prospectus contained therein to the Holders and
effecting the issuance and transfer of the Registrable
Securities, but the Holders shall pay any and all underwriting
commissions and the expenses of any legal counsel selected by
the Holders to represent them in connection with the sale of
the Registrable Securities. The Company agrees to qualify or
register the Registrable Securities in such states as are
reasonably requested by the Holder(s); provided, however, that
in no event shall the Company be required to register the
Registrable Securities in a state in which such registration
would cause (i) the Company to be obligated to register or
license to do business in such state, or (ii) the principal
stockholders of the Company to be obligated to escrow their
shares of capital stock of the Company. The Company shall
cause any Registration Statement filed pursuant to this
Section 5 to remain effective and current until the
Registrable Securities may be sold without any limitation
under the Securities Act by the Holders thereof.
<PAGE>
a. General Terms.
i. Indemnification. The Company shall indemnify the
Holder(s) of the Registrable Securities to be sold
pursuant to any registration statement hereunder and
each person, if any, who controls such Holders within
the meaning of Section 15 of the Securities Act and/
or Section 20(a) of the Securities Exchange Act of
1934, as amended ("Exchange Act"), against all loss,
claim, damage, expense or liability (including all
reasonable attorneys' fees and other expenses
reasonably incurred in investigating, preparing or
defending against any claim whatsoever incurred by
the indemnified party in any action or proceeding
between the indemnitor and indemnified party or
between the indemnified party and any third party or
otherwise) to which any of them may become subject
under the Securities Act, the Exchange Act or any
other statute or at common law or otherwise under the
laws of foreign countries, arising from such
registration statement or based upon any untrue
statement or alleged untrue statement of a material
fact contained in (i) any preliminary prospectus, the
registration statement or prospectus (as from time to
time each may be amended and supplemented); (ii) in
any post-effective amendment or amendments or any new
registration statement and prospectus in which is
included the Registrable Securities; or (iii) any
application or other document or written
communication (collectively called "application")
executed by the Company or based upon written
information furnished by the Company in any
jurisdiction in order to qualify the Registrable
Securities under the securities laws thereof or filed
with the Commission, any state securities commission
or agency, Nasdaq or any securities exchange; or the
omission or alleged omission therefrom of a material
fact required to be stated therein or necessary to
make the statements therein, in light of the
circumstances under which they were made, not
misleading, unless such statement or omission is made
in reliance upon, and in conformity with, written
information furnished to the Company with respect to
the Holders expressly for use in a preliminary
prospectus, registration statement or prospectus, or
amendment or supplement thereof, or in any
application, as the case may be. The Company agrees
promptly to notify the Holder of the commencement of
any litigation or proceedings against the Company or
any of its officers, directors or controlling persons
in connection with the issue and sale or resale of
the Registrable Securities or in connection with the
registration statement or prospectus.
i. Exercise of Warrants. Nothing contained in this
Purchase Option shall be construed as requiring the
Holder(s) to exercise their Purchase Options prior to
or after the initial filing of any registration
statement or the effectiveness thereof.
<PAGE>
1. Adjustments.
a. Adjustments to Exercise Price and Number of Shares. The
Exercise Price and the number of shares of Common Stock
issuable upon exercise of this Purchase Option shall be
subject to adjustment from time to time as hereinafter set
forth:
i.Stock Dividends - Split-Ups. If after the date hereof, and
subject to the provisions of Section 5.2 below, the number
of outstanding shares of Common Stock is increased by a
stock dividend payable in shares of Common Stock or by a
split-up of shares of Common Stock or other similar event,
then, on the effective date of such stock dividend or
split-up, the number of shares of Common Stock issuable on
exercise of this Purchase Option shall be increased in
proportion to such increase in outstanding shares.
i. Aggregation of Shares. If after the date hereof, and
subject to the provisions of Section 5.2, the number
of outstanding shares of Common Stock is decreased by
a consolidation, combination or reclassification of
shares of Common Stock or other similar event, then,
upon the effective date of such consolidation,
combination or reclassification, the number of shares
of Common Stock issuable on exercise of this Purchase
Option shall be decreased in proportion to such
decrease in outstanding shares.
i. [omitted]
i. Adjustments in Exercise Price. Whenever the number of
shares of Common Stock purchasable upon the exercise
of this Purchase Option is adjusted, as provided in
this Section 5.1, the Exercise Price shall be
adjusted (to the nearest cent) by multiplying such
Exercise Price immediately prior to such adjustment
by a fraction (x) the numerator of which shall be the
number of shares of Common Stock purchasable upon the
exercise of this Purchase Option immediately prior to
such adjustment, and (y) the denominator of which
shall be the number of shares of Common Stock so
purchasable immediately thereafter.
i. Replacement of Securities Upon Reorganization, etc.
If after the date hereof any capital reorganization
or reclassification of the Common Stock of the
Company, or consolidation or merger of the Company
with another corporation, or the sale of all or
substantially all of its assets to another
corporation or other similar event shall be effected,
then, as a condition of such reorganization,
reclassification, consolidation, merger or sale,
lawful and fair provision shall be made whereby the
Holder shall thereafter have the right to purchase
and receive, upon the basis and upon the terms and
<PAGE>
conditions specified in this Purchase Option and in
lieu of the shares of Common Stock immediately
theretofore purchasable and receivable upon the
exercise of this Purchase Option, such shares of
stock, securities, or assets as may be issued or
payable with respect to or in exchange for the number
of shares of Common Stock immediately theretofore
purchasable and receivable upon the exercise of this
Purchase Option, had such reorganization,
reclassification, consolidation, merger or sale not
taken place. In such event, appropriate provision
shall be made with respect to the rights and
interests of the Holder so that the provisions hereof
(including, without limitation, provisions for
adjustments of the Exercise Price and of the number
of securities purchasable upon the exercise of this
Purchase Option) shall thereafter be applicable, as
nearly as may be in relation to any share of stock,
securities, or assets thereafter deliverable upon the
exercise hereof. The Company shall not effect any
such reorganization, reclassification, consolidation,
merger or sale unless, prior to the consummation
thereof, the successor corporation (if other than the
Company) resulting from such transaction shall assume
by written instrument executed and delivered to the
Holders the obligation to deliver such shares of
stock, securities or assets.
a. Elimination of Fractional Interests. The Company shall not be
required to issue certificates representing fractions of
Common Stock upon the exercise or transfer of the Purchase
Option, nor shall it be required to issue scrip or pay cash in
lieu of any fractional interests, it being the intent of the
parties that all fractional interests shall be eliminated by
rounding any fraction up to the nearest whole number of shares
of Common Stock or other securities, properties or rights at
no additional cost to the Holder.
1. Reservation and Listing. The Company shall at all times reserve and
keep available out of its authorized shares of Common Stock, solely for
the purpose of issuance upon exercise of the Purchase Options, such
number of shares of Common Stock or other securities, properties or
rights as shall be issuable upon the exercise thereof. The Company
covenants and agrees that, upon exercise of the Purchase Options and
payment of the Exercise Price therefor, all shares of Common Stock and
other securities issuable upon such exercise shall be duly and validly
issued, fully paid and non-assessable and not subject to preemptive
rights of any stockholder. As long as the Purchase Options shall be
outstanding, the Company shall use its best efforts to cause the Common
Stock issuable upon exercise of the Purchase Options to be listed
(subject to official notice of issuance) on all securities exchanges
(or, if applicable on Nasdaq) on which the Common Stock is then listed
and/or quoted for a period of seven years from the date hereof.
<PAGE>
1. Certain Notice Requirements.
a. Holder's Right to Receive Notice. Nothing herein shall be
construed as conferring upon the Holder the right to vote or
consent or to receive notice as a stockholder for the election
of directors or any other matter, or as having any rights
whatsoever as a stockholder of the Company. If, however, at
any time prior to the expiration of the Purchase Options and
their exercise, any of the events described in Section 7.2
shall occur, then, in one or more of said events, the Company
shall give written notice of such event at least fifteen days
prior to the date fixed as a record date or the date of
closing the transfer books for the determination of the
stockholders entitled to such dividend, distribution,
conversion or exchange of securities or subscription rights,
or entitled to vote on such proposed dissolution, liquidation,
winding up, consolidation, merger, reorganization or sale.
Such notice shall specify such record date or the date of the
closing of the transfer books, as the case may be.
a. Events Requiring Notice. The Company shall be required to give
the notice described in this Section 7 upon one or more of the
following events: (i) if the Company shall take a record of
the holders of its shares of Common Stock for the purpose of
entitling them to receive a dividend or distribution, or (ii)
the Company shall offer to all the holders of its Common
Stock any additional shares of capital stock of the Company or
securities convertible into or exchangeable for shares of
capital stock of the Company, or any option, right or warrant
to subscribe therefor, or (iii) a dissolution, liquidation,
winding up, consolidation, merger or reorganization of the
Company or a sale of all or substantially all of its property,
assets and business shall be proposed.
a. Notice of Change in Exercise Price. The Company shall,
promptly after an event requiring a change in the Exercise
Price pursuant to Section 5.1 hereof, send notice to the
Holder of such event and change ("Price Notice"). The Price
Notice shall describe the event causing the change and the
method of calculating same and shall be certified as being
true and accurate by the Company's President and Chief
Financial Officer.
a. Transmittal of Notices. All notices and other communications
under this Purchase Option (except payment) shall be in
writing and shall be sufficiently given if sent to the Holder
or the Company, as the case may be, by hand delivery, private
overnight courier, with acknowledgment of receipt, or by
registered or certified mail, return receipt requested, as
follows: (i) if to the Holder of the Purchase Option, to the
address of such Holder as shown on the books of the Company,
or (ii) if to the Company, to its principal executive office.
<PAGE>
1. Miscellaneous.
a. Amendments. The Company and MHM may from time to time
supplement or amend this Purchase Option without the approval
of any of the Holders in order to cure any ambiguity, to
correct or supplement any provision contained herein which may
be defective or inconsistent with any other provisions herein,
or to make any other provisions in regard to matters or
questions arising hereunder which the Company and MHM may deem
necessary or desirable. All other modifications or amendments
shall require the written consent of the party against whom
enforcement of the modification or amendment is sought.
Headings.The headings contained herein are for the sole
purpose of convenience of reference, and shall not in
any way limit or affect the meaning or interpretation
of any of the terms or provisions of this Purchase
Option.
Entire Agreement . This Purchase Option constitutes the
entire agreement of the parties hereto with respect
to the subject matter hereof, and supersedes all
prior agreements and understandings of the parties,
oral and written, with respect to the subject matter
hereof.
Binding Effect.This Purchase Option shall inure solely to the
benefit of and shall be binding upon, the Holder and
the Company and their respective successors, legal
representatives and assigns, and no other person
shall have or be construed to have any legal or
equitable right, remedy or claim under or in respect
of or by virtue of this Purchase Option or any
provisions herein contained. Without limiting the
foregoing, the registration rights set forth in this
Purchase Option shall inure to the benefit of the
Holder and all the Holder's successors, heirs,
pledgees, assignees, transferees and purchasers of
this Purchase Option or the Registrable Securities.
Governing Law; Submission to Jurisdiction . This Purchase
Option shall be governed by and construed and
enforced in accordance with the laws of the State of
New York, without giving effect to conflict of laws.
The Company hereby agrees that any action, proceeding
or claim against it arising out of, or relating in
any way to this Purchase Option shall be brought and
enforced in the courts of the State of New York or of
the United States of America for the Southern
District of New York, and irrevocably submits to such
jurisdiction, which jurisdiction shall be exclusive.
The Company hereby waives any objection to such
exclusive jurisdiction and that such courts represent
an inconvenient forum. Any process or summons to be
served upon the Company may be served by transmitting
<PAGE>
a copy thereof by registered or certified mail,
return receipt requested, postage prepaid, addressed
to it at the address set forth in Section 7.4 hereof.
Such mailing shall be deemed personal service and
shall be legal and binding upon the Company in any
action, proceeding or claim. The Company agrees that
the prevailing party(ies) in any such action shall be
entitled to recover from the other party(ies) all of
its reasonable attorneys' fees and expenses relating
to such action or proceeding and/or incurred in
connection with the preparation therefor.
a. Waiver, Etc. The failure of the Company or the Holder to at
any time enforce any of the provisions of this Purchase
Option shall not be deemed or construed to be a waiver of any
such provision, nor to in any way affect the validity of this
Purchase Option or any provision hereof or the right of the
Company or any Holder to thereafter enforce each and every
provision of this Purchase Option. No waiver of any breach,
non-compliance or non-fulfillment of any of the provisions of
this Purchase Option shall be effective unless set forth in a
written instrument executed by the party or parties against
whom or which enforcement of such waiver is sought; and no
waiver of any such breach, non-compliance or non-fulfillment
shall be construed or deemed to be a waiver of any other or
subsequent breach, non-compliance or non-fulfillment.
a. Execution in Counterparts. This Purchase Option may be
executed in one or more counterparts, and by the different
parties hereto in separate counterparts, each of which shall
be deemed to be an original, but all of which taken together
shall constitute one and the same agreement, and shall become
effective when one or more counterparts has been signed by
each of the parties hereto and delivered to each of the other
parties hereto.
a. Exchange Agreement. As a condition of the Holder's receipt and
acceptance of this Purchase Option, Holder agrees that, at any
time prior to the complete exercise of this Purchase Option by
Holder, if the Company and MHM enter into an agreement
("Exchange Agreement") pursuant to which they agree that all
outstanding Purchase Options issued in connection with the
Private Placement will be exchanged for securities or cash or
a combination of both, then Holder shall agree to such
exchange and become a party to the Exchange Agreement.
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Purchase
Option to be signed by its duly authorized officer as of June 11, 1998.
GLOBALINK, INC.
By:
Harry E. Hagerty, Jr.
Chief Executive Officer
<PAGE>
Form to be used to exercise Purchase Option:
Globalink, Inc.
9302 Lee Highway
Fairfax, Virginia 22031
Attn.: Harry E. Hagerty, Jr.
Date:_________________, 19__
The undersigned hereby elects irrevocably to exercise the
within Purchase Option and to purchase ____ shares of Common Stock of Globalink,
Inc. and hereby makes payment of $____________ in payment of the Exercise Price
pursuant thereto. Please issue the Common Stock in accordance with the
instructions given below.
or
The undersigned hereby elects irrevocably to convert the
within Purchase Option and to purchase _________ shares of Common Stock of
Globalink, Inc. by surrender of the unexercised portion of the within Purchase
Option (with a "Value" of $__________ based on a "Market Price" of
$___________). Please issue the Common Stock in accordance with the instructions
given below.
Signature
NOTICE: The signature to this form must correspond with the
name as written upon the face of the within Purchase Option in every particular
without alteration or enlargement or any change whatsoever.
Please issue securities as follows:Name:
Address:
I.D.#:
<PAGE>
Form to be used to assign Purchase Option:
ASSIGNMENT
(To be executed by the registered Holder to effect a transfer of the
within Purchase Option):
FOR VALUE RECEIVED, ____________________________________ does hereby
sell, assign and transfer unto ______________________________ the right to
purchase ___________________________ shares of Common Stock of Globalink, Inc.
("Company") evidenced by the within Purchase Option and does hereby authorize
the Company to transfer such right on the books of the Company.
Dated: _______________, 19___
Signature
NOTICE: The signature to this form must correspond with the name as
written upon the face of the within Purchase Option in every particular without
alteration or enlargement or any change whatsoever.
GLOBALINK, INC.
AGENCY AGREEMENT
As of May 28, 1998
M.H. Meyerson & Co., Inc.
525 Washington Blvd.
Jersey City, N.J. 07303-0260
Gentlemen:
Globalink, Inc., a Delaware corporation ("Company"), proposes
to offer for sale in a private placement ("Offering"), units ("Units")
aggregating $2,200,000 of gross proceeds to the Company. Each Unit consists of a
$100,000 principal amount 10% Convertible Debenture ("Debenture") and 23,000
Common Stock Purchase Warrants (each a "Warrant"). The per-Unit offering price
("Offering Price") will be $100,000. The Debenture will be issued in the form of
Exhibit A ("Debenture Certificate") to the Offering Documents (as hereinafter
defined).The Warrant will be issued in the form of Exhibit B ("Warrant
Certificate") to the Offering Documents. The Units will be offered on a "best
efforts, all or none basis," in accordance with Section 4(2) and/or 3(b) of the
Securities Act of 1933, as amended ("Securities Act"), and Rules 501-506 of
Regulation D ("Reg D") promulgated thereunder, only to "accredited investors,"
as defined in Reg D. The minimum subscription amount will be $100,000, but
subscriptions for amounts less than $100,000 may be accepted at the discretion
of the Placement Agent (as defined hereinafter).
The Units, Debentures and Warrants have the terms and
conditions reflected in the Company's Confidential Private Placement Memorandum
dated May 28, 1998 to be delivered to each subscriber of Units ("PPM"). The PPM,
together with all exhibits thereto, including, but not limited to, the Debenture
Certificate and the Warrant Certificate, form of Subscription Agreement to be
executed by each purchaser and the Company, the Company's Annual Report on Form
10-KSB for the year ended December 31, 1998, the Company's Quarterly Report on
Form 10-QSB for the quarter ended March 31, 1998 and the Company's 1998 Proxy
Statement will be referred to herein as the "Offering Documents. "M.H. Meyerson
& Co., Inc. is sometimes referred to herein as "MHM" or the "Placement Agent."
1. Appointment of Placement Agent; The Offering Period.
2.
1.1 Appointment of Placement Agent. You are hereby appointed exclusive
Placement Agent of the Company during the offering period herein specified
("Offering Period") for the purpose of assisting the Company in placing the
Units with purchasers who are qualified accredited investors ("Subscribers").
You hereby accept such agency and agree to assist the Company in placing Units
with the Subscribers. Your agency hereunder is not terminable by the Company
except upon termination of the Offering or breach by you of your material
obligations hereunder. You may remit, in your discretion, a portion of your
commissions, non-accountable expense allowance and/or Placement Agent Options
(as defined below) to other members of the NASD who assist you in placing Units.
<PAGE>
1.2 Offering Period. The Offering Period shall commence on the day the
Offering Documents are first made available to you by the Company and shall
continue until June 29, 1998; provided, however, that the Offering Period may be
extended for an additional period through July 13, 1998 by the mutual decision
of the Company and the Placement Agent, without notice to any Subscriber. If, at
any time during the Offering Period, subscriptions for not less than $2,200,000
have been received and accepted by the Company (and funds in payment therefor
have cleared the banking system), including up to 12 Units that may be
subscribed for by affiliates and employees of the Placement Agent, then, upon
the mutual consent of the Company and the Placement Agent, a Closing shall take
place with respect to such accepted subscriptions. If subscriptions for at least
$2,200,000 are not received and accepted prior to the end of the Offering Period
(including any extension thereof), the Offering will be terminated and all funds
received from Subscribers will be returned, without interest and without any
deduction. The day that the Offering Period terminates is hereinafter referred
to as the "Termination Date."
1.3 Offering Documents. The Company will provide the Placement Agent
with a sufficient number of copies of the Offering Documents for delivery to
potential Subscribers and such other information, documents and instruments
which the Placement Agent may reasonably request in order to comply with the
rules, regulations and judicial and administrative interpretations respecting
compliance with applicable state and federal statutes related to the Offering.
1.4 Segregation of Funds. Each subscriber for Units shall tender to the
Placement Agent a check payable to "M.H. Meyerson & Co., Inc. -- Globalink
Special Account" in the amount of the investment subscribed for, which funds
shall be held by the Placement Agent in a segregated non-interest bearing bank
account in accordance with Rules 10b-9 and 15c2-4 promulgated under the
Securities Exchange Act of 1934 ("Exchange Act"), as set forth in the Offering
Documents.
1.5 No Firm Commitment. The Company understands and
acknowledges that the undertaking by the Placement Agent pursuant to this
Agreement is not a "firm commitment" offering, and the Placement Agent is not
obligated in any way to purchase or sell the Units offered hereby.
2. Representations and Warranties of the Company. The Company hereby
represents and warrants as follows:
2.1 Due Incorporation and Qualification. The Company has been duly
incorporated, is validly existing and is in good standing under the laws of its
state of incorporation and is duly qualified as a foreign corporation for the
transaction of business and is in good standing in each jurisdiction in which
the ownership or leasing of its properties or the conduct of its business
requires such qualification, except where the failure to so qualify would not
have a material adverse effect on the business of the Company and its
subsidiaries ("Subsidiaries") taken as a whole. The Company has all requisite
corporate power and authority necessary to own or hold its properties and
conduct its business as described in the Offering Documents.
2.2 Authorized Capital. The Company is authorized to issue (i)
20,000,000 shares of Common Stock, of which 9,173,749 shares are currently
issued and outstanding and (ii) 250,000 shares of preferred stock, of which
28,874 shares of Series A-2 8% convertible redeemable preferred are currently
issued and outstanding ("Preferred Stock"). All of the outstanding securities of
the Company have been duly and validly authorized and issued and are fully paid
and non-assessable. None of the holders of such securities is subject to
personal liability solely by reason of being such a holder. The offers and sales
of such outstanding securities were at all relevant times either registered
<PAGE>
under the Securities Act and the applicable state securities or Blue Sky laws or
exempt from such registration. The Company has reserved for issuance a
sufficient number of shares of Common Stock to be issued upon conversion of the
Debentures as set forth in the Debenture Certificate ("Debenture Shares") and
upon the exercise of the Warrants as set forth in the Warrant Certificate
("Warrant Shares") and to be issued pursuant to the Placement Agent Options.
2.3 No Preemptive Rights; Options; Registration Rights. Except as set
forth on Schedule 2.3, there are no preemptive or other rights to subscribe for
or purchase, or any restriction upon the voting or transfer of, any shares of
Common Stock or other securities of the Company, under the Certificate of
Incorporation or By-Laws of the Company or under any agreement or other
outstanding instrument to which the Company is a party or by which it is bound.
Except as set forth on Schedule 2.3, the Company does not have outstanding any
option, warrant, convertible security, or other right permitting or requiring it
to issue, or otherwise to purchase or convert any obligation into, shares of
Common Stock or other securities of the Company and the Company has not agreed
to issue or sell any shares of Common Stock or other securities of the Company.
Except as set forth on Schedule 2.3, no holder of any of the Company's
securities has any rights, "demand," piggyback" or otherwise, to have such
securities registered or to demand the filing of a registration statement.
2.4 Financial Statements. The financial statements of the Company
included in the Offering Documents ("Financials") fairly present the financial
position and results of operations of the Company at the dates thereof and for
the periods covered thereby, subject, in the case of interim periods, to
year-end adjustments and normal recurring accruals. The Company has no material
liabilities or obligations, contingent, direct, indirect or otherwise except (i)
as set forth in the latest balance sheet included in the Financials (the date of
such Financials being referred to as the "Balance Sheet Date"), (ii) those
incurred in the ordinary course of business since the Balance Sheet Date. Except
as described in the PPM, there are no outstanding amounts due to or from any
officers, directors or shareholders of the Company, or to any of their
respective affiliates, including, but not limited to, accrued salaries, loans,
etc.
2.5 No Material Adverse Changes. Except as otherwise stated in the
Offering Documents, since the Balance Sheet Date, there has not been any change
in the condition, financial or otherwise, of the Company which could materially
adversely affect its ability to conduct its operations as described in the
Offering Documents.
2.6 Subsidiaries. Except for the Subsidiaries set forth in Schedule
2.6, the Company has no subsidiaries and has no interest in, shares of capital
stock of or right to acquire an interest in or shares of capital stock of any
other corporation, limited liability company, partnership or other entity. The
Company owns the outstanding capital stock of the subsidiaries as set forth in
Schedule 2.6 free and clear of all liens, charges and encumbrances of any kind
whatsoever, and there are no outstanding rights to acquire, or directly or
indirectly control the vote or transfer of, any of the capital stock of the
Subsidiaries.
2.7 Taxes. The Company has filed all federal tax returns and all state
and municipal and local tax returns (whether relating to income, sales,
franchise, withholding, real or personal property or other types of taxes)
required to be filed under the laws of the United States and applicable states,
and has paid in full all taxes which have become due pursuant to such returns or
claimed to be due by any taxing authority or otherwise due and owing; provided,
however, that the Company has not paid any tax, assessment, charge, levy or
license fee that it is contesting in good faith and by proper proceedings and
adequate reserves for the accrual of same are maintained if required by
generally accepted accounting principles. Each of the tax returns heretofore
filed by the Company correctly and accurately reflects the amount of its tax
liability thereunder. The Company has withheld, collected and paid all levies,
assessments, license fees and taxes to the extent required. As used herein,
"tax" or "taxes" include all taxes, charges, fees, levies or other assessments
imposed by any Federal, state, local, or foreign taxing authority, including,
without limitation, income, premium, recapture, credit, excise, property, sales,
<PAGE>
use, occupation, service, service use, leasing, leasing use, value added,
transfer, payroll, employment, license, stamp, franchise or similar taxes
(including any interest earned thereon or penalties or additions attributable
thereto).
2.8 Finder's Fees; Other Underwriters. The Company is not obligated to
pay a finder's fee to anyone in connection with the introduction of the Company
to the Placement Agent or the consummation of the Offering contemplated
hereunder. The Company does not owe any monies or other obligations to any NASD
member, associate or affiliate.
2.9 No Pending Actions. Except as set forth in the Offering Documents,
there are no actions, suits, proceedings, claims or hearings of any kind or
nature existing or pending (or, to the best knowledge of the Company,
threatened) or, to the best knowledge of the Company, any investigations or
inquiries, before or by any court, or other governmental authority, tribunal or
instrumentality (or, to the Company's best knowledge, any state of facts which
would give rise thereto), pending or threatened against the Company, or
involving the properties of the Company, which might result in any material
adverse change in the business, properties, financial position or results of
operations of the Company, or which might adversely affect the transactions or
other acts contemplated by this Agreement or the validity or enforceability of
this Agreement.
2.10 Private Offering Exemption; Offering Documents. The Offering
Documents conform in all material respects with the requirements of Section 4(2)
and/or 3(b) of the Securities Act and Rules 501-506 of Reg D and with the
requirements of all other applicable rules and regulations of the Securities and
Exchange Commission ("Commission") currently in effect relating to "private
offerings." The Offering Documents contain all material statements which are
required to be stated therein in accordance with such requirements and do not
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading. The
Debentures, Warrants and Placement Agent Options conform to the descriptions
thereof contained in the Offering Documents. When any exhibit to the PPM that
was required to be filed with the Commission, was filed with the Commission
pursuant to the Exchange Act or the Regulations promulgated thereunder or other
applicable law, such exhibit complied in all material respects with the
applicable provisions of the Exchange Act and the Regulations promulgated
thereunder or other applicable law and did not contain an untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. Assuming that (i) a
proper Form D is filed in accordance with Rule 503 of Reg D, (ii) the offer and
the sale of the Units by the Placement Agent was made in compliance with Rule
502(c) of Reg D and/or Section 4(2) of the Securities Act, and (iii) the
representations of the Subscribers in the Subscription Agreements signed by them
are true and correct (which facts will not be independently verified by the
Company) the sale of Units in the Offering is exempt from registration under the
Securities Act and is in compliance with Reg D.
2.11 Due Authorization; Consents. The Company has full right, power and
authority to enter into this Agreement and the Subscription Agreements to be
entered into between the Company and the Subscribers and to issue the
Debentures, Warrants and Placement Agent Options (collectively the "Offering
Agreements") and to perform all of its obligations hereunder and thereunder. The
execution and delivery of this Agreement and the Offering Agreements has been
duly authorized by all necessary corporate action and no further corporate
action or approval is or will be required for their respective execution,
delivery and performance. This Agreement constitutes, and the Offering
<PAGE>
Agreements upon execution and delivery will constitute, valid and binding
obligations of the Company, enforceable in accordance with their respective
terms (except (i) as the enforceability thereof may be limited by bankruptcy or
other laws now or hereafter in effect relating to or affecting creditors' rights
generally, (ii) that the remedy of specific performance and injunctive and other
forms of equitable relief may be subject to equitable defenses and to the
discretion of the court before which any proceedings therefor may be brought,
and (iii) that the enforceability of the indemnification and contribution
provisions of the respective agreements may be limited by the federal and state
securities laws and public policy), and no consent, approval, authorization,
order of, or filing with, any court or governmental authority or any other third
party is required to consummate the transactions contemplated by this Agreement
or the Offering Documents, except that the offer and sale of the Units in
certain jurisdictions may be subject to the provisions of the securities or Blue
Sky laws of such jurisdictions and final action may have to be taken (but all
such final action shall have been taken on or prior to the Closing) with respect
to the listing of the Debenture Shares, the Warrant Shares and the Common Stock
underlying the Placement Agent Options. On or prior to the Closing, the
Debenture Shares, the Warrant Shares, and the shares of Common Stock issuable
upon exercise of the Placement Agent Options will have been approved for listing
on the American Stock Exchange, subject to the notification of issuance.
2.12 Non-Contravention. The Company's execution and delivery of this
Agreement and the Offering Agreements and the incurrence of the obligations
herein and therein set forth, and the consummation of the transactions
contemplated herein and therein will not (i) conflict with, or constitute a
breach of, or a default under, the Certificate of Incorporation or By-Laws of
the Company, or any contract, lease or other agreement or instrument to which
the Company is a party or in which the Company has a beneficial interest or by
which the Company is bound; (ii) violate any existing applicable law, rule or
regulation, or any judgment, order or decree of any governmental agency or
court, domestic or foreign, having jurisdiction over the Company or any of its
properties or business (collectively, "Laws"), except where such violation(s)
would not have a material adverse effect, singly or in the aggregate, on the
Company; or (iii) have any material adverse effect on any permit, certification,
registration, approval, consent, license or franchise (collectively, "Permits")
necessary for the Company to own or lease and operate any of its properties or
to conduct its business.
2.13 Shares and Warrants. The Debenture Shares, the Warrant Shares and
the shares of Common Stock underlying the Placement Agent Options have been duly
and validly authorized and, when issued and delivered in accordance with the
terms of the Debentures, the Warrants and Placement Agent Options, as the case
may be, will be duly and validly issued, fully paid and non-assessable. The
holders of the Debenture Shares, the Warrant Shares and the shares of Common
Stock underlying the Placement Agent Options will not be subject to personal
liability by reason of being such holders and will not be subject to the
preemptive rights of any holders of any security of the Company or similar
contractual rights granted by the Company. All corporate action required to be
taken for the authorization, issuance and sale of the Debenture Shares, the
Warrant Shares and the shares of Common Stock underlying the Placement Agent
Options have been duly and validly taken.
2.14 No Right to Purchase. The issuance of the Units in the Offering,
the Placement Agent Options and the shares of Common Stock upon conversion of
the Debentures and exercise of the Warrants and Placement Agent Options will not
give any holder of any of the Company's outstanding shares of Common Stock,
options, warrants or other convertible securities or rights to purchase
securities of the Company (i) the right to purchase any additional shares of
Common Stock or any other securities of the Company, or (ii) the right to
purchase any securities at a reduced price, except that if all of the Debentures
were converted and all of the Warrants exercised, the number of shares issuable
<PAGE>
upon conversion of each share of the Company's Series A-2 Preferred Stock would
be increased to 13.228 from 12.9053 and the number of shares issuable upon
exercise of each of the Company's outstanding warrants issued in connection with
the issuance of the Series A-2 Preferred Stock would be increased to 1.35 from
1.29.
2.15 No Regulatory Problems. The Company (i) has not filed a
registration statement which is the subject of any pending proceeding or
examination under Section 8 of the Securities Act, and is not and has not been
the subject of any refusal order or stop order thereunder; (ii) is not subject
to any pending proceeding under Rule 258 of the Securities Act or any similar
rule adopted under Section 3(b) of the Securities Act, or to an order entered
thereunder; (iii) has not been convicted of any felony or misdemeanor in
connection with the purchase or sale of any security or involving the making of
any false filing with the Commission; (iv) is not subject to any order,
judgment, or decree of any court of competent jurisdiction temporarily or
preliminarily restraining or enjoining, or subject to any order, judgment, or
decree of any court of competent jurisdiction permanently restraining or
enjoining, the Company from engaging in or continuing any conduct or practice in
connection with the purchase or sale of any security or involving the making of
any false filing with the Commission; and (v) is not subject to a United States
Postal Service false representation order entered under Section 3005 of Title
39, United States Code or a temporary restraining order or preliminary
injunction entered under Section 3007 of Title 39, United States Code, with
respect to conduct alleged to have violated Section 3005 of Title 39, United
States Code. None of the Company's directors, officers, or beneficial owners of
10 percent or more of any class of its equity securities (i) has been convicted
of any felony or misdemeanor in connection with the purchase or sale of any
security, involving the making of a false filing with the Commission, or arising
out of the conduct of the business of an underwriter, broker, dealer, municipal
securities dealer, or investment advisor; (ii) is subject to any order, judgment
or decree of any court of competent jurisdiction temporarily or preliminarily
enjoining or restraining, or is subject to any order, judgment or decree of any
court of competent jurisdiction permanently enjoining or restraining, such
person from engaging in or continuing any conduct or practice in connection with
the purchase or sale of any security, or involving the making of a false filing
with the Commission, or arising out of the conduct of the business of an
underwriter, broker, dealer, municipal securities dealer, or investment adviser;
(iii) is subject to an order of the Commission entered pursuant to Section
15(b), 15B(a) or 15B(c) of the Exchange Act, or is subject to an order of the
Commission entered pursuant to Section 203(e) or (f) of the Investment Advisers
Act of 1940; (iv) is suspended or expelled from membership in, or suspended or
barred from association with a member of, an exchange registered as a national
securities exchange pursuant to Section 6 of the Exchange Act, an association
registered as a national securities association under Section 15A of the
Exchange Act, or a Canadian securities exchange or association for any act or
omission to act constituting conduct inconsistent with just and equitable
principles of trade; or (v) is subject to a United States Postal Service false
representation order entered under Section 3005 of Title 39, United States Code,
or is subject to a restraining order or preliminary injunction entered under
Section 3007 of Title 39, United States Code, with respect to conduct alleged to
have violated Section 3005 of Title 39, United States Code.
2.16 No Defaults. The Company is not in default in the performance and
observance of any term, covenant or condition of any license, contract,
indenture, mortgage, deed of trust, note, loan or credit agreement, or any other
agreement or instrument evidencing an obligation for borrowed money, or any
other agreement or instrument to which the Company is a party or by which the
Company may be bound or to which any of the properties or assets of the Company
is subject (collectively "Contracts"), except defaults which (singly or in the
aggregate) would not have a material adverse effect on the Company. Schedule
2.21 attached hereto lists all material Contracts that the Company is subject
to. The Company is not in violation of any term or provision of its Certificate
of Incorporation or By-Laws.
<PAGE>
2.17 Conduct of Business; Compliance with Law. The Company has all
requisite corporate power and authority, and has all necessary Permits, to own
or lease its properties and conduct its business as described in the Offering
Documents. The Company has been operating its business in compliance with all
such Permits. The disclosures in the Offering Documents concerning the effects
of federal, state and local regulation on the Company's business as currently
contemplated are correct in all material respects and do not omit to state a
material fact. The Company is in compliance with all Laws except where
noncompliance, singly or in the aggregate, would not have a material adverse
effect on the Company.
2.18 Title to Property; Insurance. The Company has good and marketable
title to, or valid and enforceable leasehold estates in, all items of real and
personal property (tangible and intangible) owned or leased by it, free and
clear of all liens, encumbrances, claims, security interests, defects and
restrictions of any material nature whatsoever. The Company has adequately
insured its properties against loss or damage by fire or other casualty and
maintains, in adequate amounts.
2.19 Intangibles. The Company owns or possesses the requisite licenses
or rights to use all trademarks, service marks, service names, trade names,
patents and patent applications, copyrights and other rights (collectively,
"Intangibles") used by the Company in its business or relating to products or
services sold by the Company, and all such Intangibles are listed on Schedule
2.19. The Company's Intangibles which have been registered in the United States
Patent and Trademark Office have been fully maintained and are in full force and
effect. There is no material claim or action by any person pertaining to, or
proceeding pending or, to the Company's knowledge, threatened and the Company
has not received any notice of conflict with, the asserted rights of others
which challenges the exclusive right of the Company with respect to any
Intangibles used in the conduct of the Company's business except as described in
the Offering Documents. The Intangibles and the Company's current products,
services and processes do not infringe on any intangibles held by any third
party. To the best of the Company's knowledge, no others have infringed upon the
Intangibles of the Company.
2.20 [Intentionally Omitted]
2.21 [Intentionally Omitted]
2.22 Exchange Act Reports. The Company has filed all forms, reports,
statements and other documents required to be filed with the Securities and
Exchange Commission and has heretofore made available to the Placement Agent, in
the same form filed with the Commission, copies of its (i) Annual Report on Form
10-KSB for fiscal 1997 and its Quarterly Report on Form 10-QSB for the fiscal
quarter ended March 31, 1998, (ii) all proxy statements relating to meetings of
stockholders (whether annual or special) since January 1, 1998, (iii) all
reports on Form 8-K since January 1, 1998, and (iv) all other reports or
registration statements filed by the Company since January 1, 1998
(collectively, the "Company Reports"). As of their respective filing dates, the
Company Reports (i) complied as to form in all material respects with the
requirements of the 1934 Act and the Securities Act and (ii) did not contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading.
2.23 Subsidiaries. The representations and warranties made by the
Company in this Agreement shall also apply and be true with respect to each
wholly and partially owned subsidiary, individually and taken as a whole with
the Company and all subsidiaries, as if each representation and warranty
contained herein made specific referenced to the subsidiary each time the term
"Company" was used.
<PAGE>
3. Representations and Warranties of the Placement Agent. The Placement
Agent represents and warrants as follows:
3.1 Due Incorporation. The Placement Agent is duly incorporated and
validly existing and in good standing under the laws of its state of
incorporation and is duly qualified as a foreign corporation for the transaction
of business and is in good standing in each jurisdiction where the failure to be
so qualified would not have a materially adverse effect on the business of the
Placement Agent.
3.2 Broker/Dealer Registration. The Placement Agent is
registered as a broker-dealer under Section 15 of the Exchange Act.
3.3 Good Standing. The Placement Agent is a member in good
standing of the NASD.
3.4 Sale In Certain Jurisdictions. Sales of Units by the Placement
Agent will be made only in such jurisdictions in which (i) the Placement Agent
is a registered broker-dealer or where an applicable exemption from such
registration exists and (ii) the Offering and sale of Units is registered under,
or is exempt from, applicable registration requirements.
3.5 Compliance with Laws. Offers and sales of Units by the Placement
Agent will be made in compliance with the provisions of Rule 502(c) of Reg D
and/or Section 4(2) of the Securities Act, and the Placement Agent will furnish
to each subscriber a copy of the Offering Documents prior to accepting any
payments for Units.
4. Closing.
4.1 Closing. If at any time prior to the Termination Date subscriptions
for not less than $2,200,000 of the Units have been accepted by the Company,
after subscription proceeds for such accepted subscriptions have cleared the
banking system and upon the mutual consent of the Company and the Placement
Agent that there should be a Closing, a Closing shall take place at the offices
of Graubard Mollen & Miller ("GM&M"), 600 Third Avenue, New York, New York. At
the Closing, payment for the Units issued and sold by the Company (by certified
check payable to the order of, or by wire transfer to, the Company), less the
amount deductible by the Placement Agent pursuant to Section 4.4 hereof, shall
be made against delivery of the Debenture Certificates and Warrant Certificates
representing the Units.
4.2 Deliveries at Closing. At the Closing, and as a condition
to such Closing, the Company shall deliver or cause to be delivered to the
Placement Agent:
4.2.1 Opinions of Counsel. The opinion of The Stoppelman
Law Firm, dated as of the date of the Closing, to the effect that:
(1) The Company and each of the Subsidiaries
has been duly organized and is validly existing as a corporation or other entity
and is in good standing under the laws of its state of organization and is duly
qualified and in good standing in each jurisdiction in which it owns or leases
any real property or the character of its operations requires such
qualification, except where the failure to so qualify would not have a material
adverse effect on the business of the Company and the Subsidiaries taken as a
whole.
(2) Based on a review of the Certificate of
Incorporation of the Company, and its corporate minute book and stock records,
<PAGE>
the Company is authorized to issue (i) 20,000,000 shares of Common Stock, of
which 9,173,749 shares are currently issued and outstanding, and (ii) 250,000
shares of Preferred Stock, of which 28,874 shares of Series A-2 8% convertible
redeemable preferred are currently issued and outstanding. All issued and
outstanding securities of the Company have been duly authorized and validly
issued and are fully paid and non-assessable; the holders thereof have no rights
of rescission with respect thereto, and are not subject to personal liability by
reason of being such holders; and none of such securities was issued in
violation of the statutory preemptive rights of any holders of any security of
the Company or, to the knowledge of such counsel, similar contractual rights
granted by the Company. The options and warrants to purchase shares of Common
Stock outstanding immediately before the Closing constitute the valid and
binding obligations of the Company, enforceable in accordance with their terms.
The offers and sales of Common Stock and options and warrants to purchase shares
of Common Stock outstanding immediately before the Closing were at all relevant
times either registered under the Securities Act and the applicable state
securities laws or Blue Sky Laws or are exempt from the registration
requirements thereof.
(3) The Company and each of the Subsidiaries
has all requisite corporate power or other authority, and has all necessary
Permits of and from all governmental or regulatory officials and bodies to own
or lease its properties and conduct its business as described in the PPM, and,
to the knowledge of such counsel, is and has been doing business in compliance
with all Permits, except where the failure to obtain or comply with any Permit,
singly or in the aggregate would not have a material adverse effect on the
Company or any Subsidiary.
(4) Except as set forth on Schedule 2.3 to this
Agreement, there are no statutory preemptive or other rights to subscribe for or
purchase, or any restriction upon the voting or transfer of, any shares of
Common Stock of the Company, or to such counsel's knowledge any other rights to
subscribe or purchase from the Company any shares of Common Stock, or any such
right or restriction under the Certificate of Incorporation or By-Laws of the
Company or, to the best of such counsel's knowledge, under any agreement or
other outstanding instrument to which the Company is a party or by which it is
bound. To the best of such counsel's knowledge, except as set forth in Schedule
2.3, (A) no holders of any securities of the Company or of any options, warrants
or securities of the Company exercisable for or convertible or exchangeable into
securities of the Company have the right to require the Company to register any
such securities of the Company under the Securities Act or to include any such
securities in a registration statement to be filed by the Company; and (B) the
issuance of the Units in the Offering and the issuance of Debenture Shares upon
conversion of the Debentures and the Warrant Shares upon the exercise of the
Warrants, the issuance of the Placement Agent Options or the issuance of the
Common Stock upon exercise of the Placement Agent Options will not give any
holder of any of the Company's outstanding options, warrants or other
convertible securities or rights to purchase shares of the Company's Common
Stock, the right to purchase or be issued any additional shares of Common Stock
and/or the right to purchase shares at a reduced price.
(5) In the course of the preparation of the
Offering Documents, such counsel has participated in discussions with officers
of the Company. Nothing has come to such counsel's attention which has caused
such counsel to believe that the Offering Documents contain any untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading (except that such
counsel need not express any opinion as to the Financial Statements and other
financial or statistical data contained in the Offering Documents). The
statements in the Offering Documents have been reviewed by such counsel, and
<PAGE>
insofar as they refer to statements of law, descriptions of statutes, licenses,
rules or regulations or legal conclusions, are correct in all material respects.
No statute or regulation or legal or governmental proceeding required to be
described in the Offering Documents is not described as required, nor are any
contracts or documents of a character required to be described in the Offering
Documents not so described or filed as required. Assuming that (a) a proper Form
D is filed in accordance with Rule 503 of Reg D, (b) the offer and the sale of
the Units by the Placement Agent was made in compliance with Rule 502(c) of Reg
D and (c) the representations of the Subscribers in the Subscription Agreements
signed by them are true and correct (which facts have not been independently
verified by counsel), the sale of the Units is exempt from registration under
the Securities Act and is in compliance with Reg D.
(6) The certificates representing the
Debentures, the Warrants and the Placement Agent Options are in proper legal
form. The Debentures, Warrants and Placement Agent Options conform in all
respects to the descriptions thereof contained in the PPM.
(7) To such counsel's knowledge, the Company
has good and marketable title to, or valid and enforceable leasehold estates in,
all items of real and personal property (tangible and intangible) stated in the
Offering Documents to be owned or leased by it, free and clear of all liens,
encumbrances, claims, security interests, defects and restrictions of any
material nature whatsoever, other than those referred to in the Offering
Documents and liens for taxes not yet due and payable.
(8) The Company has all corporate power and
authority to engage in and consummate the Offering and to execute and deliver
the Offering Agreements and to carry out the provisions and conditions thereof,
and all consents, authorizations, approvals and orders required in connection
therewith have been obtained. No consents, approvals, authorizations or orders
of, and no filing with, any court or governmental agency or body (other than
such as may be required under applicable Blue Sky laws) is required for the
valid authorization, issuance, sale and delivery of the Debentures and Warrants
and the Placement Agent Options or the Common Stock issuable upon conversion of
the Debentures and upon exercise of the Warrants and the Placement Agent
Options, and the consummation of the transactions and agreements contemplated by
the Offering Documents and the Offering Agreements. The Debenture Shares and the
Warrant Shares and the Common Stock issuable upon exercise of the Placement
Agent Options have been approved for listing on the American Stock Exchange,
subject to notification of issuance.
(9) The Debentures and Warrants included in
the Units have been duly authorized and validly issued and the Debenture Shares
and Warrant Shares when issued and paid for will be, validly issued, fully paid
and non-assessable, and the holders thereof are not and will not be subject to
personal liability by reason of being such holders. The Placement Agent Options
have been duly authorized and validly issued, and the Common Stock issuable upon
exercise of the Placement Agent Options, when issued and paid for, will be
validly issued, fully paid and non-assessable, and the holders thereof will not
be subject to personal liability by reason of being such holders. All corporate
action required to be taken for the authorization, issuance and sale of the
Units, Debentures, Warrants, Debenture Shares, Warrant Shares, Placement Agent
Options and Common Stock underlying the Placement Agent Options has been duly
and validly taken. The Company has reserved for issuance a sufficient number of
shares of Common Stock to be issued upon conversion of the Debentures and upon
exercise of the Warrants and Placement Agent Options. This Agreement, the
Subscription Agreements and the other Offering Documents and Offering Agreements
have been duly and validly authorized, executed and delivered by the Company,
will constitute valid and binding obligations of the Company, enforceable
against the Company in accordance with their respective terms.
<PAGE>
(10) To the best of counsel's knowledge, the
execution, delivery and performance by the Company of the Offering Documents and
the Offering Agreements, the issuance and sale of the Debentures, Warrants,
Debenture Shares, Warrant Shares, Placement Agent Options and Common Stock
issuable upon exercise of the Placement Agent Options, the consummation of the
transactions contemplated hereby and thereby and the compliance by the Company
with the terms and provisions hereof and thereof, do not and will not, with or
without the giving of notice or the lapse of time, or both, (A) conflict with,
or result in a breach of any of the terms or provisions of, or constitute a
default under, or result in the creation or modification of any lien, security
interest, charge or encumbrance upon any of the properties or assets of the
Company pursuant to the terms of, any material mortgage, deed of trust, note,
indenture, loan, contract, commitment or other material agreement or instrument
to which the Company is a party or by which the Company or any of its properties
or assets may be bound, (B) result in any violation of the provisions of the
Certificate of Incorporation or the By-Laws of the Company, (C) violate any Law,
except where such violation would not have a material adverse effect upon the
Company, or (D) have a material effect on any Permit.
(11) To the best of such counsel's knowledge,
no default exists in the due performance and observance of any term, covenant or
condition of any material license, contract, indenture, mortgage, deed of trust,
note, loan or credit agreement, or any other material agreement or instrument
evidencing an obligation for borrowed money, or any other material agreement or
instrument to which the Company or a Subsidiary is a party or by which the
Company or a Subsidiary may be bound or to which any of its properties or assets
is subject, except such defaults which, singly or in the aggregate, would not
have a material adverse effect on the Company or any Subsidiary. Neither the
Company nor any Subsidiary is in violation of any term or provisions of its
Certificate of Incorporation or By-Laws. To the best of such counsel's
knowledge, neither the Company nor any Subsidiary is in violation of any Law,
except where such violation would not have a material adverse effect on the
Company or any Subsidiary.
(12) To the best of such counsel's knowledge,
the Company and each Subsidiary owns or possesses, free and clear of all liens
or encumbrances and rights thereto or therein by third parties, the requisite
licenses or other rights to use all intangibles and other rights necessary to
conduct its business (including, without limitation, any such licenses or rights
described in the Offering Documents as being licensed to or owned or possessed
by the Company or a Subsidiary) and, to the best of such counsel's knowledge,
there is no material claim or action by any person pertaining to, or proceeding,
pending or threatened which challenges the exclusive rights of the Company or a
Subsidiary with respect to any intangibles used in the conduct of its business
(including without limitation any such licenses or rights described in the
Offering Documents as being owned or possessed by the Company or a Subsidiary).
To the best of such counsel's knowledge, the Company's current products,
services and processes do not infringe on any Intangible held by third persons.
(13) To the best of such counsel's knowledge,
except as described in the Offering Documents, there are no claims, actions,
suits, hearings, investigations, inquiries or proceedings of any kind or nature,
before or by any court, governmental authority, tribunal or instrumentality,
domestic or foreign, pending or threatened against or affecting the Company or a
Subsidiary or involving the properties of the Company or a Subsidiary which may
result in any material adverse change in the business, properties or financial
condition of the Company or a Subsidiary, or which may adversely affect the
transactions or other acts contemplated by this Agreement or the validity or
enforceability of this Agreement.
<PAGE>
4.2.2 Officers' Certificate. A certificate of the Company,
signed by two executive officers thereof, stating (i) that the representations
and warranties contained in Section 2 hereof are true and accurate at the
Closing as applied to the Company with the same effect as though expressly made
at the Closing, and (ii) that the Company has complied with all covenants and
agreements required to be complied with as of the Closing.
4.2.3 Investor Documents. Subscription Agreements signed
by the Company and each of the Subscribers.
4.2.4 Certificates. The certificates representing the
Debentures and the Warrants included in the Units.
4.2.5 Consents. Consents of any parties required to
consummate this Offering and the transactions contemplated thereby.
4.2.6 Placement Agent Options. At the Closing, the Company
shall issue to the Placement Agent and its designees, five-year options
("Placement Agent Options") to purchase, in the aggregate, 220,000 shares of
Common Stock, exercisable at a purchase price equal to 110% of the Conversion
Price of the Debentures (and subject to reduction after one year if the initial
Conversion Price is $2.25 per share), at any time until the fifth anniversary of
the Closing. The Placement Agent Option will be in the form of Exhibit A annexed
hereto.
4.2.7 [omitted]
4.2.8 [omitted]
4.2.9 [omitted]
4.2.10 American Stock Exchange. Evidence satisfactory to the
Placement Agent that the Debenture Shares, Warrant Shares and Common Stock
issuable upon exercise of the Placement Agent options have been approved for
listing, subject to notification of issuance, on the American Stock Exchange
("AMEX").
4.2.11 Other Documents. Such other closing documents as
shall be reasonably requested by the Placement Agent or GM&M.
4.3 Conditions. The obligations of the Placement Agent under
this Agreement shall be subject to the following conditions:
(1) All representations and warranties of the
Company set forth in this Agreement are true and accurate as of the date of the
Closing; and
(2) The Company has complied with all
covenants and agreements required to be complied with as of the date of the
Closing.
<PAGE>
4.4 Placement Agent's Fees and Expenses. At the Closing, the Company
shall pay to the Placement Agent a commission equal to 10% of the aggregate
purchase price of the Units sold in the Offering. In order to reimburse the
Placement Agent for its expenses incurred in connection with the Offering, at
the Closing, the Company also shall pay to the Placement Agent a non-accountable
expense allowance equal to $35,000 (less $10,000 paid on account). On or before
the Closing, the Company shall also pay the fees and disbursements of GM&M
referred to in Section 5.2 below in connection with the qualification of the
Units under the securities or Blue Sky laws of the states which the Placement
Agent shall designate and the other expenses of the offering that are referred
to in Section 5.2 below. All the foregoing amounts are payable directly to the
parties who are owed same by deduction from the aggregate purchase price of the
Units sold.
5. Covenants. The Company covenants and agrees that:
5.1 Amendments to Offering Documents. Until the Offering has been
completed or terminated, if there shall occur any event relating to or
affecting, among other things, the Company or any affiliate, or the proposed
operations of the Company as described in the Offering Documents, as a result of
which it is necessary, in the reasonable opinion of GM&M or counsel for the
Company, to amend or supplement the Offering Documents in order that the
Offering Documents will not contain an untrue statement of a material fact or
omit to state a material fact necessary in order to make the statements therein,
in the light of the circumstances under which they were made, not misleading,
the Company shall immediately prepare and furnish to the Placement Agent a
reasonable number of copies of an appropriate amendment of or supplement to the
Offering Documents, in form and substance satisfactory to GM&M.
5.2 Expenses of Offering. The Company shall be responsible for, and
shall pay, all fees, disbursements and expenses incurred in connection with the
Offering, including, but not limited to, the Company's legal and accounting fees
and disbursements, the costs of preparing, printing, mailing, delivering and,
where necessary, filing the Offering Documents, including all amendments and
supplements thereto, this Agreement, the Subscription Agreement, Debentures,
Warrants and Placement Agent Options and related documents, all in quantities as
the Placement Agent may reasonably require; preparation of four transaction
"bibles" for the Offering as well as the offering completed pursuant to the 1997
Agency Agreement (as defined in Section 5.6); the reasonable costs of up to
$10,000 of any "due diligence meetings" or investigations conducted by the
Company including the fees of a consultant to render a due diligence report to
the Placement Agent on the Company; preparation and printing of stock
certificates; and the fees and disbursements of GM&M in connection with blue sky
matters (which fees (excluding disbursements) shall be $10,000), plus "blue sky"
filing fees to be paid in the various states (as such fees become due) and
transfer taxes and transfer and warrant agent fees.
5.3 Further Assurances. The Company will take such actions as may be
reasonably required or desirable to carry out the provisions of this Agreement
and the transactions contemplated hereby. The Company further agrees to take
promptly, or cause to be taken, all actions and to do promptly, or cause to be
done, all other things necessary, proper or advisable to prepare the
registration statement necessary to file with the Commission in connection with
the proposed initial public offering and have such registration statement
declared effective by the Commission.
5.4 Capitalization. The Company will not change its current
capitalization or issue any shares of capital stock or any options, warrants or
other securities convertible into or exchangeable for shares of Common Stock,
other than as contemplated in the Letter of Intent, without the consent of the
Placement Agent prior to the earlier of the abandonment or consummation of the
Offering.
<PAGE>
5.5 [omitted]
5.6 Right of First Refusal. The thirty-day right of first refusal to
underwrite or place any public or private sale of debt or equity securities
("Future Offering") of the Company or any subsidiary or successor of the Company
granted to the Placement Agent by the Company pursuant to the Agency Agreement,
dated October 15, 1997 ("1997 Agency Agreement"), between the Company and the
Placement Agent is hereby extended until October 20, 2001.
5.7 Designee to the Board of Directors. The right granted to the
Placement Agent by the Company pursuant to the 1997 Agency Agreement to
designate a person to serve on the Company's Board of Directors or,
alternatively, to designate and send a representative to observe each meeting of
the Board of Directors is extended until October 20, 2001 and expended such that
the Placement Agent shall have the right to designate two, not merely one,
persons to serve on the Company's Board of Directors. If the Placement Agent
designates a second person prior to the Closing of this Offering and the
Company's 1998 Annual Meeting of Stockholders to be held on June 19, 1998
("Annual Meeting"), the Company will permit such designee to observe each
meeting of the Company's Board of Directors, as provided in the 1997 Agency
Agreement, held prior to the Annual Meeting, and, at a regular or special
meeting of the Board of Directors that will be held by the Company on June 19,
1998 immediately following the Annual Meeting, the Company will expand the Board
of Directors by one person and elect such designee to immediately become a
director of the Company, and, if the Closing of the Offering has not been held
prior to the Annual Meeting, the designee's election shall be a condition to the
Closing of the Offering.
5.8 Accuracy of Representations and Warranties. The Company hereby
agrees that prior to the Termination Date it will not enter into any transaction
or take any action, and will use its best efforts to prevent the occurrence of
any event, which could result in any of its representations, warranties or
covenants contained in this Agreement or any of the Offering Documents not to be
true and correct, or not to be performed as contemplated, at and as of the time
immediately after the occurrence of such transaction or event.
5.9 Warrant Solicitation and Warrant Solicitation Fee.
5.9.1 Engagement. The Company hereby engages the Placement
Agent, on a non-exclusive basis, as its agent for the solicitation of the
exercise of the Warrants. The Company, at its cost, will (i) assist the
Placement Agent with respect to such solicitation, if requested by the Placement
Agent and (ii) provide the Placement Agent, and direct the Company's transfer
and warrant agents to deliver to the Placement Agent, lists of the record, and
to the extent known, beneficial owners of the Warrants. The Company shall
instruct the transfer and warrant agents to cooperate with the Placement Agent
in every respect in connection with the Placement Agent's solicitation
activities, including, but not limited to, providing to the Placement Agent, at
the Company's cost, a list of record and beneficial holders of the Warrant and
providing disclosure documents, where necessary, to holders of the Warrants at
the time of exercise of the Warrants.
5.9.2 Procedure. In each instance in which a Warrant is
exercised, the Company shall promptly give written notice of such exercise to
the Placement Agent. If, upon the exercise of any Warrant, (i) the market price
of the Company's Common Stock is greater than the Warrant exercise price, (ii)
disclosure of compensation arrangements was made at the time of offering and of
exercise (as required by applicable law, rule or regulation), (iii) the exercise
of the Warrant was solicited by the Placement Agent, (iv) the Warrant was not
held in a discretionary account, and (v) the solicitation of the exercise of the
<PAGE>
Warrant was not in violation of Regulation M (as such rule or any successor rule
may be in effect as of such time of exercise) promulgated under the Exchange
Act, then the Company shall, upon exercise of the Warrant, pay from the proceeds
received upon exercise of the Warrant a fee of 5% of the Warrant exercise price
to the Placement Agent, provided that the Placement Agent delivers to the
Company a certificate that the conditions set forth in the preceding clauses
(iii), (iv) and (v) have been satisfied. The Placement Agent may, at any time
during business hours, examine the records of the Company, including its ledger
of original Warrant certificates returned to the Company upon exercise of
Warrants.
5.10 Listing of Securities. The Company shall apply for listing, and
obtain such listing, for the shares of Common Stock issuable upon conversion of
the Debentures and upon exercise of the Warrants and the Placement Agent Options
on the AMEX, at or prior to the Closing and maintain such listing until the
seventh anniversary of the date of Closing.
5.11 [omitted]
5.12 Future Offerings. The Company shall not, without the Placement
Agent's consent (which shall not be unreasonably withheld), (i) allow any
registration statement of the Company under the Securities Act to be declared
effective, or (ii) consummate any offering of its equity securities (including
debt securities convertible into equity securities) pursuant to Regulation D or
Regulation S promulgated under the Securities Act, or any successor regulations,
during the eighteen (18) month period following the Closing.
<PAGE>
5.13 Outstanding Insider Loan. The Company shall cause its
Chairman and Chief Executive Officer, Harry E. Hagerty, Jr., to repay in full
his debt obligation to the Company (amounting to $327,750, including accrued
interest, at March 31, 1998) within thirty (30) days of the Closing.
6. [omitted]
7. Indemnification and Contribution.
7.1 Indemnification by the Company. The Company agrees to indemnify and
hold harmless the Placement Agent and each person, if any, who controls the
Placement Agent within the meaning of the Securities Act and/or the Exchange Act
against any losses, claims, damages or liabilities, joint or several, to which
the Placement Agent or such controlling person may become subject, under the
Securities Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon (i)
any untrue statement or alleged untrue statement of a material fact contained
(A) in the Offering Documents, or (B) in any blue sky application or other
document executed by the Company specifically for blue sky purposes or based
upon any other written information furnished by the Company or on its behalf to
any state or other jurisdiction in order to qualify any or all of the Units
under the securities laws thereof (any such application, document or information
being hereinafter called a "Blue Sky Application"), (ii) any breach by the
Company of any of its representations, warranties or covenants contained herein
or in any of the Offering Agreements, or (iii) the omission or alleged omission
by the Company to state in the Offering Documents or in any Blue Sky Application
a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading; and will reimburse the Placement Agent and each such controlling
person for any legal or other expenses reasonably incurred by the Placement
Agent or such controlling person in connection with investigating or defending
any such loss, claim, damage, liability or action, whether arising out of an
action between the Placement Agent and the Company or the Placement Agent and a
third party; provided, however, that the Company will not be liable in any such
case to the extent that any such loss, claim, damage or liability arises out of
or is based upon (i) an untrue statement or alleged untrue statement or omission
or alleged omission made in reliance upon and in conformity with written
information regarding the Placement Agent which is furnished to the Company by
the Placement Agent specifically for inclusion in the Offering Documents or any
such Blue Sky Application or (ii) any breach by the Placement Agent of the
representations, warranties or covenants contained herein (collectively, (i) and
(ii) above are referred to as the "Non-Indemnity Events").
7.2 Indemnification by the Placement Agent. The Placement Agent agrees
to indemnify and hold harmless the Company and each person, if any, who controls
the Company within the meaning of the Securities Act and/or the Exchange Act
against any losses, claims, damages or liabilities, joint or several, to which
the Company or such controlling person may become subject, under the Securities
Act or otherwise insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon any Non-Indemnity
Event; and will reimburse the Company and each such controlling person for any
legal or other expenses reasonably incurred by the Company or such controlling
person in connection with investigating or defending any such loss, claim,
damage, liability or action provided that such loss, claim, damage or liability
is found ultimately to arise out of or be based upon any Non-Indemnity Event.
7.3 Procedure. Promptly after receipt by an indemnified party under
this Section 6 of notice of the commencement of any action, such indemnified
party will, if a claim in respect thereof is to be made against any indemnifying
party under this Section 7, notify in writing the indemnifying party of the
<PAGE>
commencement thereof; and the omission so to notify the indemnifying party will
relieve the indemnifying party from any liability under this Section 7 as to the
particular item for which indemnification is then being sought, but not from any
other liability which it may have to any indemnified party. In case any such
action is brought against any indemnified party, and it notifies an indemnifying
party of the commencement thereof, the indemnifying party will be entitled to
participate therein, and to the extent that it may wish, jointly with any other
indemnifying party, similarly notified, to assume the defense thereof, with
counsel who shall be to the reasonable satisfaction of such indemnified party,
and after notice from the indemnifying party to such indemnified party of its
election so to assume the defense thereof, the indemnifying party will not be
liable to such indemnified party under this Section 7 for any legal or other
expenses subsequently incurred by such indemnified party in connection with the
defense thereof other than reasonable costs of investigation. Any such
indemnifying party shall not be liable to any such indemnified party on account
of any settlement of any claim or action effected without the consent of such
indemnifying party.
7.4 Contribution. If the indemnification provided for in this Section 7
is unavailable to any indemnified party in respect to any losses, claims,
damages, liabilities or expenses referred to therein, then the indemnifying
party, in lieu of indemnifying such indemnified party, will contribute to the
amount paid or payable by such indemnified party, as a result of such losses,
claims, damages, liabilities or expenses (i) in such proportion as is
appropriate to reflect the relative benefits received by the Company on the one
hand, and the Placement Agent, on the other hand, from the Offering, or (ii) if
the allocation provided by clause (i) above is not permitted by applicable law,
in such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above, but also the relative fault of the Company, on
the one hand, and of the Placement Agent, on the other hand, in connection with
the statements or omissions which resulted in such losses, claims, damages,
liabilities or expenses as well as any other relevant equitable considerations.
The relative benefits received by the Company, on the one hand, and the
Placement Agent, on the other hand, shall be deemed to be in the same proportion
as the total proceeds from the Offering (net of sales commissions and the
non-accountable expense allowance, but before deducting other expenses) received
by the Company bear to the commissions and non-accountable expense allowance
received by the Placement Agent. The relative fault of the Company, on the one
hand, and the Placement Agent, on the other hand, will be determined with
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission to state a material fact relates to
information supplied by the Company, and its relative intent, knowledge, access
to information and opportunity to correct or prevent such statement or omission.
7.5 Equitable Considerations. The Company and the Placement Agent agree
that it would not be just and equitable if contribution pursuant to this Section
7 were determined by pro rata allocation or by any other method of allocation
which does not take into account the equitable considerations referred to in the
immediately preceding paragraph.
7.6 Attorneys' Fees. The amount payable by a party under this Section 7
as a result of the losses, claims, damages, liabilities or expenses referred to
above will be deemed to include any legal or other fees or expenses reasonably
incurred by such party in connection with investigating or defending any action
or claim.
8. Termination by Placement Agent. The Placement Agent shall have the right to
terminate this Agreement at any time prior to the Closing if (i) the Placement
Agent determines that market conditions would preclude a successful offering;
(ii) a material adverse change not yet reported by the Company in its public
filings has occurred in the financial condition, business or prospects of the
Company; or (iii) the Company has breached any of its material representations,
warranties or obligations hereunder, or failed to expeditiously proceed with the
<PAGE>
Offering. If the Placement Agent elects not to proceed with the Offering as a
result of the condition enumerated in clause (i) above, or if the Company elects
not to proceed with the offering as a result of a Repricing Event (as defined
below), the Placement Agent shall be entitled to retain the deposit of $10,000
previously paid to it ("Deposit"), but the Company shall not be liable to the
Placement Agent for any other expenses. If the Placement Agent elects not to
proceed with the Offering as a result of any of the conditions enumerated in any
of clauses (ii) or (iii) above, or if the Company elects not to proceed with the
Offering for any reason (other than because the closing bid price of the Common
Stock has been above $3.50 for any five consecutive trading days after the date
hereof and before the closing ("Repricing Event")), then (a) the Company shall
reimburse the Placement Agent in full for its reasonable out-of-pocket expenses
(including, without limitation its reasonable legal fees and disbursements) up
to an aggregate of $25,000, against which the Deposit shall be applied as a
credit and (b) if the Company subsequently engages in any public offering,
private placement or other capital raising transaction involving the sale of its
securities, or in any sale or exchange of all or substantially all of its assets
or outstanding shares of capital stock (including by way of merger), or in any
similar transaction within 12 months following the termination of the Offering,
then the Company shall pay the Placement Agent a fee of $150,000. The provisions
of Sections 7 and 8 of this Agreement shall survive the termination of this
Agreement for any reason.
9. Notices. Any notice hereunder shall be in writing and shall be
effective when delivered in person or by facsimile transmission, or mailed by
certified mail, postage prepaid, return receipt requested, to the appropriate
party or parties, at the following addresses: if to the Placement Agent, to M.H.
Meyerson & Co., Inc., 525 Washington Blvd, Jersey City, New Jersey 07303-0260,
Attention: Ronald I. Heller (Fax No. 201-459-9510); with a copy to Graubard
Mollen & Miller, 600 Third Avenue, New York, New York 10016, Attention: David
Alan Miller, Esq. (Fax No. 212/818-8881); if to the Company, to Globalink, Inc.,
9302 Lee Highway, 12th Floor, Fairfax, Virginia 22031, Attention: Mr. Harry E.
Hagerty, Jr., President (Fax No. 703/273-3866); with a copy to The Stoppelman
Law Firm, 1749 Meadow Road, Suite 610, McLean, Virginia 22102-4310, Attention:
John S. Stoppelman, Esq. (Fax No. 703 827-7455); or, in each case, to such other
address as the parties may hereinafter designated by like notice.
10. Parties. This Agreement will inure to the benefit of and be binding upon the
parties hereto and their respective successors and assigns. Neither party may
assign this Agreement or its obligations hereunder without the prior written
consent of the other party. This Agreement is intended to be, and is, for the
sole and exclusive benefit of the parties hereto and the persons described in
Section 7.1 and 7.2 hereof and their respective successors and assigns, and for
the benefit of no other person, and no other person will have any legal or
equitable right, remedy or claim under, or in respect of this Agreement.
11. Amendment and/or Modification. Neither this Agreement, nor any
term or provision hereof, may be changed, waived, discharged, amended, modified
or terminated orally, or in any manner other than by an instrument in writing
signed by each of the parties hereto.
12. Further Assurances. Each party to this Agreement will perform any
and all acts and execute any and all documents as may be necessary and proper
under the circumstances in order to accomplish the intents and purposes of this
Agreement and to carry out its provisions.
13. Validity. In case any term of this Agreement will be held invalid,
illegal or unenforceable, in whole or in part, the validity of any of the other
terms of this Agreement will not in any way be affected thereby.
14. Waiver of Breach. The failure of any party hereto to insist upon strict
performance of any of the covenants and agreements herein contained, or to
<PAGE>
exercise any option or right herein conferred in any one or more instances, will
not be construed to be a waiver or relinquishment of any such option or right,
or of any other covenants or agreements, and the same will be and remain in full
force and effect.
15. Entire Agreement. This Agreement contains the entire agreement and
understanding of the parties with respect to the subject matter hereof and
thereof, respectively, and there are no representations, inducements, promises
or agreements, oral or otherwise, not embodied in this Agreement. Any and all
prior discussions, negotiations, commitments and understanding relating to the
subject matter of these agreements are superseded by them.
16. Counterparts. This Agreement may be executed in counterparts and each
of such counterparts will for all purposes be deemed to be an original, and such
counterparts will together constitute one and the same instrument.
17. Law. This Agreement will be deemed to have been made and delivered in New
York City and will be governed as to validity, interpretation, construction,
effect and in all other respects by the internal law of the State of New York.
The Company (i) agrees that any legal suit, action or proceeding arising out of
or relating to this Agreement shall be instituted exclusively in New York State
Supreme Court, County of New York, or in the United States District Court for
the Southern District of New York, (ii) waives any objection to the venue of any
such suit, action or proceeding, and the right to assert that such forum is an
inconvenient forum, and (iii) irrevocably consents to the jurisdiction of the
New York State Supreme Court, County of New York, and the United States District
Court for the Southern District of New York in any such suit, action or
proceeding. The Company further agrees to accept and acknowledge service of any
and all process which may be served in any such suit, action or proceeding in
the New York State Supreme Court, County of New York, or in the United States
District Court for the Southern District of New York and agrees that service of
process upon it mailed by certified mail to its address shall be deemed in every
respect effective service of process upon it in any such suit, action or
proceeding.
18. Representations, Warranties and Covenants to Survive Delivery. The
respective representations, indemnities, agreements, covenants, warranties and
other statements of the Company and the Placement Agent shall survive execution
of this Agreement and delivery of the Units and/or the termination of this
Agreement prior thereto.
19. If you find the foregoing is in accordance with our
understanding, kindly sign and return to us a counterpart hereof, whereupon this
instrument along with all counterparts will become a binding agreement between
us.
Very truly yours,
GLOBALINK, INC.
By:
Harry E. Hagerty, Jr.
Chief Executive Officer
AGREED:
M.H. MEYERSON & CO., INC.
By:
Michael Silvestri
President
