WARRANT PURCHASE AGREEMENT
WARRANT PURCHASE AGREEMENT, dated as of the date of acceptance set forth
below, by and between GLOBALINK, INC., a Delaware corporation, with headquarters
located at 0000 Xxx Xxxxxxx, 00xx Xxxxx, Xxxxxxx, Xxxxxxxx 00000 (the
"Company"), and the undersigned (the "Buyer").
W I T N E S S E T H:
WHEREAS, the Company and the Buyer are executing and delivering this
Agreement in reliance upon the exemption from securities registration provided
by Regulation D under the Securities Act of 1933, as amended (the "1933 Act");
and
WHEREAS, the Buyer wishes to purchase, upon the terms and subject to the
conditions of this Agreement, certain warrants of the Company to purchase shares
of Common Stock, $.01 par value (the "Common Stock"), of the Company and in
connection therewith to receive other warrants to purchase shares of Common
Stock, subject to acceptance of this Agreement by the Company;
NOW THEREFORE, in consideration of the premises and the mutual covenants
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. AGREEMENT TO PURCHASE; WARRANTS; PURCHASE PRICE.
(a) Purchase. The Company hereby agrees to issue to the Buyer three
Warrants of the Company in the form attached hereto as Annex I (the "Prepaid
Warrants"). The Buyer hereby agrees to prepay an amount equal to the Total
Purchase Price (as defined in the Prepaid Warrants) for the Prepaid Warrants in
the amount shown on the signature page of this Agreement at the closing in
connection with the issuance of the Warrants to the Buyer. The Buyer shall make
prepayment of the Total Purchase Price for the Prepaid Warrants in United States
Dollars in immediately available funds and the Company shall issue to the Buyer
three scrip certificates in the form attached hereto as Annex B to the Prepaid
Warrants (the "Scrip") to evidence such payment. In addition to issuance of the
Warrants, the Company shall issue to the Buyer on the Closing Date (as herein
defined) additional warrants to purchase shares of Common Stock, such warrants
to be in the form attached hereto as Annex II (the "Additional Warrants"). The
number of shares of Common Stock initially purchasable upon exercise of the
Additional Warrants to be issued to the Buyer on the Closing Date shall be
33,613. The Prepaid Warrants and the
-1-
Additional Warrants are referred to herein collectively as the "Warrants". The
shares of Common Stock issuable upon exercise of the Prepaid Warrants are
referred to herein as the "Warrant Shares." The shares of Common Stock issuable
upon exercise of the Additional Warrants are referred to herein as the
"Additional Warrant Shares." The Warrant Shares and the Additional Warrant
Shares are referred to herein collectively as the "Common Shares." The Common
Shares and the Warrants are referred to herein collectively as the "Securities."
(b) Form of Payment. The Buyer shall pay the Total Purchase Price for the
Prepaid Warrants by delivering good funds in United States Dollars to the escrow
agent (the "Escrow Agent") identified in the Joint Escrow Instructions attached
hereto as Annex III (the "Joint Escrow Instructions"). Such delivery of funds
shall be made against delivery by the Company of the Prepaid Warrants registered
in the name of the Buyer and the Scrip. Promptly following payment by the Buyer
to the Escrow Agent of the purchase price of the Warrants, but in no event later
than the Closing Date, the Company shall deliver certificates for the Warrants
and the Scrip, duly executed by the Company and registered in the name of the
Buyer, to the Escrow Agent. By signing this Agreement, the Buyer and the Company
each agrees to all of the terms and conditions of, and becomes a party to, the
Joint Escrow Instructions, all of the provisions of which are incorporated
herein by this reference as if set forth in full.
(c) Method of Payment. Payment of the purchase price for the Warrants shall
be made by wire transfer of funds to:
Citibank, N.A.
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
ABA#000000000
For Further Credit to A/C#37179446
for credit to the account of Xxxxx X. Xxxxx Attorney Escrow Account
Reference: Pangaea/Globalink
Not later than 4:00 p.m., New York City time, on the date which is three New
York Stock Exchange trading day after the Company shall have accepted this
Agreement and returned a signed counterpart of this Agreement to the Buyer, the
Buyer shall deposit with the Escrow Agent an amount equal to the Total Purchase
Price for the Prepaid Warrants.
2. BUYER REPRESENTATIONS, WARRANTIES, ETC.; ACCESS TO INFORMATION;
INDEPENDENT INVESTIGATION.
The Buyer represents and warrants to, and covenants and agrees with, the
Company as follows:
-2-
(a) The Buyer is acquiring the Warrants for its own account for investment
only and not with a view towards the public sale or distribution thereof;
(b) The Buyer is an "accredited investor" as that term is defined in Rule
501 of the General Rules and Regulations under the 1933 Act by reason of Rule
501(a)(3);
(c) All subsequent offers and sales of the Securities by the Buyer shall be
made pursuant to registration of the Securities being offered and sold under the
1933 Act or pursuant to an exemption from registration;
(d) The Buyer understands that the Warrants are being offered and sold, and
the Common Shares are being offered, to it in reliance on specific exemptions
from the registration requirements of United States federal and state securities
laws and that the Company is relying upon the truth and accuracy of, and the
Buyer's compliance with, the representations, warranties, agreements,
acknowledgments and understandings of the Buyer set forth herein and in the
Prospective Purchaser Questionnaire, a true and accurate copy of which has been
delivered by the Buyer to the Company (the "Questionnaire), in order to
determine the availability of such exemptions and the eligibility of the Buyer
to acquire the Warrants and to receive an offer of the Common Shares;
(e) The Buyer and its advisors, if any, have been furnished with all
materials relating to the business, finances and operations of the Company and
materials relating to the offer and sale of the Warrants and the offer of the
Common Shares which have been requested by the Buyer. The Buyer and its
advisors, if any, have been afforded the opportunity to ask questions of the
Company and have received complete and satisfactory answers to any such
inquiries. Without limiting the generality of the foregoing, the Buyer has had
the opportunity to obtain and to review the Company's (1) Annual Report on Form
10-KSB for the fiscal year ended December 31, 1995, (2) Quarterly Reports on
Form 10-QSB for the fiscal quarters ended March 31, 1996 and June 30, 1996, (3)
Current Report on Form 8-K, dated March 28, 1996, and (4) definitive Proxy
Statement for its 1996 Annual Meeting of Stockholders, in each case as filed
with the SEC. The Buyer understands that its investment in the Securities
involves a high degree of risk;
(f) The Buyer understands that no United States federal or state agency or
any other government or governmental agency has passed on or made any
recommendation or endorsement of the Securities; and
(g) This Agreement has been duly and validly authorized, executed and
delivered on behalf of the Buyer and is a valid and binding agreement of the
Buyer enforceable in accordance with its terms, subject as to enforceability to
general principles of equity and to bankruptcy, insolvency, moratorium and other
similar laws affecting the enforcement of creditors' rights generally.
-3-
3. COMPANY REPRESENTATIONS, WARRANTIES, ETC.
The Company represents and warrants to, and covenants and agrees with, the
Buyer that:
(a) Concerning the Securities. The Securities have been duly authorized and
the Warrants, when issued and paid for in accordance with this Agreement, and
the Common Shares, when issued upon exercise of the Warrants will be duly and
validly issued, fully paid and non-assessable and will not subject the holder
thereof to personal liability by reason of being such holder. There are no
preemptive rights of any stockholder of the Company, as such, to acquire any of
the Common Shares. The Common Stock is listed for trading on the American Stock
Exchange, Inc. (the "AMEX") and no suspension of trading in the Common Stock is
in effect.
(b) Warrant Purchase Agreement; Registration Rights Agreement; Warrants.
This Agreement, the Registration Rights Agreement, the form of which is attached
hereto as Annex IV (the "Registration Rights Agreement") and the Warrant, have
been duly and validly authorized by the Company, this Agreement has been duly
executed and delivered on behalf of the Company and this Agreement is and the
Registration Rights Agreement and the Warrants, when executed and delivered by
the Company, will be, valid and binding agreements of the Company enforceable in
accordance with their respective terms, subject as to enforceability to general
principles of equity and to bankruptcy, insolvency, moratorium and other similar
laws affecting the enforcement of creditors' rights generally.
(c) Non-contravention. The execution and delivery of this Agreement, the
Registration Rights Agreement and the Warrants by the Company and the
consummation by the Company of the issuance of the Warrants and the other
transactions contemplated by this Agreement, the Registration Rights Agreement
and the terms of the Warrants do not and will not conflict with or result in a
breach by the Company of any of the terms or provisions of, or constitute a
default under, the certificate of incorporation or by-laws of the Company, or
any indenture, mortgage, deed of trust or other material agreement or instrument
to which the Company is a party or by which it or any of its properties or
assets are bound, or any applicable law, rule or regulation or any applicable
decree, judgment or order of any court, United States federal or state
regulatory body, administrative agency or other governmental body having
jurisdiction over the Company or any of its properties or assets.
(d) Approvals. No authorization, approval or consent of or filing with any
court, governmental body, regulatory agency, self-regulatory organization, or
stock exchange or market or the stockholders of the Company is required to be
obtained by the Company for the issuance and sale of the Securities
-4-
as contemplated by this Agreement and the Warrants, other than (1) approval of
the listing of the Common Shares by the AMEX and (2) the requirements of any
applicable blue sky laws.
(e) SEC Reporting Status and Filings. The Company has filed with the SEC
all reports and other information required to be filed under Sections 13(a), 14
and 15(d) of the Securities Exchange Act of 1934, as amended (the "1934 Act").
Since June 30, 1995, the Company has not filed any reports or other information
with the SEC pursuant to Sections 13(a), 14 and 15(d) of the 1934 Act other than
the reports and other information identified in Section 2(e) hereof.
(f) Information Provided. The information provided by or on behalf of the
Company to the Buyer and referred to in Section 2(e) of this Agreement does not
contain any untrue statement of a material fact or omit to state any material
fact necessary in order to make the statements therein, in the light of the
circumstances under which they are made, not misleading.
(g) Absence of Certain Changes. Since December 31, 1995, there has been no
material adverse change and no material adverse development in the business,
properties, operations, condition (financial or other), results of operations or
prospects of the Company, except as disclosed in the documents referred to in
Section 2(e) hereof.
(h) Absence of Litigation. There is no action, suit, proceeding, inquiry or
investigation before or by any court, public board or body pending or, to the
knowledge of the Company or any of its subsidiaries, threatened against or
affecting the Company or any of its subsidiaries, wherein an unfavorable
decision, ruling or finding would have a material adverse effect on the
properties, business, condition (financial or other), results of operations or
prospects of the Company and its subsidiaries taken as a whole or the
transactions contemplated by this Agreement or any of the documents contemplated
hereby or which would adversely affect the validity or enforceability of, or the
authority or ability of the Company to perform its obligations under, this
Agreement or any of such other documents.
4. Certain Covenants and Acknowledgments.
(a) Transfer Restrictions. The Buyer acknowledges that (1) the Warrants
have not been and are not being registered under the provisions of the 1933 Act
and, except as provided in the Registration Rights Agreement, the Common Shares
have not been and are not being registered under the 1933 Act, and may not be
transferred unless (A) subsequently registered thereunder or (B) the Buyer shall
have delivered to the Company an opinion of counsel, reasonably satisfactory in
form, scope and substance to the Company, to the effect that the Securities to
be sold or transferred may be sold or transferred pursuant to an exemption from
such registration; (2) any sale of the Securities made in reliance on Rule 144
promulgated under the 1933 Act may be made only in
-5-
accordance with the terms of said Rule and further, if said Rule is not
applicable, any such resale of Securities under circumstances in which the
seller, or the person through whom the sale is made, may be deemed to be an
underwriter, as that term is used in the 1933 Act, may require compliance with
some other exemption under the 1933 Act or the rules and regulations of the SEC
thereunder; and (3) neither the Company nor any other person is under any
obligation to register the Common Shares (other than pursuant to the
Registration Rights Agreement) or the Warrants under the 1933 Act or to comply
with the terms and conditions of any exemption thereunder (other than pursuant
to Section 4(d) hereof and pursuant to the Registration Rights Agreement).
(b) Restrictive Legend. The Buyer acknowledges and agrees that the Warrants
and, until such time as the Common Shares have been registered under the 1933
Act as contemplated by the Registration Rights Agreement, the certificates for
the Common Shares, may bear a restrictive legend in substantially the following
form (and a stop-transfer order may be placed against transfer of the
certificates for the Common Shares and the Warrants):
The securities represented by this certificate have not been registered
under the Securities Act of 1933, as amended. The securities have been
acquired for investment and may not be sold, transferred or assigned in the
absence of an effective registration statement for the securities under the
Securities Act of 1933, as amended, or an opinion of counsel that
registration is not required under said Act.
(c) Registration Rights Agreement. The parties hereto agree to enter into
the Registration Rights Agreement on or before the Closing Date.
(d) Form D. The Company agrees to file a Form D with respect to the
Securities as required under Regulation D and to provide a copy thereof to the
Buyer promptly after such filing. The Buyer agrees to cooperate with the Company
in connection with such filing and, upon request of the Company, to provide all
information relating to the Buyer reasonably required for such filing.
(e) AMEX Listing; Reporting Status. The Company has filed a listing
application for the Common Shares with the AMEX and shall provide evidence of
such filing to the Buyer. The Company shall obtain the approval of the listing
of the Common Shares, subject to official notice of issuance, by the AMEX on or
prior to the Closing Date. So long as the Buyer beneficially owns any of the
Warrants or the Common Shares, the Company shall file all reports required to be
filed with the SEC pursuant to Section 13 or 15(d) of the 1934 Act and the
Company shall not terminate its status as an issuer required to file reports
under the 1934 Act even if the 1934 Act or the rules and regulations thereunder
would permit such termination.
-6-
(f) Use of Proceeds. The Company will use the proceeds from the sale of the
Warrants for the Company's internal working capital purposes and not for the
purpose of any investment in or loan to any other corporation, partnership,
enterprise or other person; provided, however, that the proceeds may be used for
loans to companies which are wholly-owned subsidiaries of the Company at all
times when such loans are outstanding.
(g) Blue Sky Laws. On or before the Closing Date, the Company shall take
such action as shall be necessary to qualify, or to obtain an exemption for, the
Warrants for sale to the Buyer pursuant to this Agreement and the Common Shares
for issuance to the Buyer on exercise of the Warrants under such of the
securities or "blue sky" laws of jurisdictions in the United States as shall be
applicable to the sale of the Warrants to the Buyer pursuant to this Agreement
and the issuance of the Common Shares to the Buyer on exercise of the Warrants.
The Company shall furnish copies of all filings, applications, orders and grants
or confirmations of exemptions relating to such securities or "blue sky" laws on
or prior to the Closing Date.
(h) Certain Expenses. Whether or not any closing occurs, the Company shall
pay or reimburse the Buyer for all reasonable legal fees and expenses of counsel
to the Buyer for the preparation and negotiation of, and closing under, this
Agreement up to an amount of $10,000. The obligations of the Company under the
provisions of this Section 4(h) shall be in addition to the obligation of the
Company for expenses under the Registration Rights Agreement.
(i) Certain Issuances of Securities. The Company will not issue any shares
of Common Stock or shares of any series of preferred stock or other securities
convertible into Common Stock of the Company for less than the greater of the
book or market value of such Common Stock, if such issuance would be integrated
as a transaction with the offer and sale of the Warrants to the Buyer and the
exercise thereof for purposes of the Stockholder Approval (as defined in the
Prepaid Warrants) requirement under of the rules of the AMEX and require
Stockholder Approval or a waiver thereof from the AMEX, unless the Company
obtains Stockholder Approval or such waiver thereof from the AMEX, as and to the
extent required under of the rules of the AMEX.
5. TRANSFER AGENT INSTRUCTIONS; CONVERSION PROCEDURE.
Transfer Agent Instructions. Promptly following the delivery by the Buyer
of the aggregate purchase price for the Warrants in accordance with Section 1(c)
hereof, and prior to the Closing Date, the Company will irrevocably instruct its
transfer agent to issue certificates for the Common Shares from time to time
upon exercise of the Warrants in such amounts as specified from time to time to
the transfer agent in the subscription forms attached to the Warrants, such
certificates to bear the restrictive legend specified in Section 4(b) of this
Agreement prior to registration of the
-7-
Common Shares under the 1933 Act, registered in the name of the Buyer or its
nominee and in such denominations to be specified by the Buyer in connection
with each exercise of the Warrants. The Company warrants that no instruction
other than such instructions referred to in this Section 5 and stop transfer
instructions to give effect to Section 4(a) hereof prior to registration of the
Common Shares under the 1933 Act will be given by the Company to the transfer
agent and that the Common Shares shall otherwise be freely transferable on the
books and records of the Company as and to the extent provided in this
Agreement. Nothing in this Section 5 shall affect in any way the Buyer's
obligations and agreement to comply with all applicable securities laws upon
resale of the Securities. If the Buyer provides the Company with an opinion of
counsel reasonably satisfactory in form, scope and substance to the Company that
registration of a resale by the Buyer of any of the Securities in accordance
with clause (1)(B) of Section 4(a) of this Agreement is not required under the
1933 Act, the Company shall permit the transfer of such Securities and, in the
case of the Common Shares, instruct the Company's transfer agent to issue upon
transfer and deliver to or upon the order of the Buyer promptly, but in no event
later than three business days after receipt of such opinion, one or more share
certificates in such name or names and in such denominations as specified by the
Buyer. The provisions of Section 3(n) of the Registration Rights Agreement shall
supersede this Section 5(a) once said Section 3(n) becomes applicable.
6. STOCK DELIVERY INSTRUCTIONS.
The Warrants shall be delivered by the Company to the Escrow Agent pursuant
to Section 1(b) hereof on a delivery against payment basis at the closing.
7. CLOSING DATE.
The date and time of the issuance of the Warrants (the "Closing Date")
shall be 12:00 noon, New York City time, on the date which is three New York
Stock Exchange trading days after the date on which the Buyer has deposited the
purchase price for the Warrants with the Escrow Agent in accordance with Section
1(c) hereof, or such other mutually agreed to time. The closing shall occur on
the Closing Date at the offices of the Escrow Agent.
8. CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL AND ISSUE.
The Buyer understands that the Company's obligation to issue the Warrants
to the Buyer pursuant to this Agreement is conditioned upon:
(a) The receipt and acceptance by the Company of this Agreement as
evidenced by execution of this Agreement by the
-8-
Company and delivery of an executed counterpart of this Agreement to the Buyer
or its legal counsel;
(b) Delivery by the Buyer to the Escrow Agent of good funds as payment in
full of an amount equal to the purchase price for the Warrants in accordance
with Section 1(c) hereof; and
(c) The accuracy on the Closing Date of the representations and warranties
of the Buyer contained in this Agreement and in the Questionnaire as if made on
the Closing Date and the performance by the Buyer on or before the Closing Date
of all covenants and agreements of the Buyer required to be performed on or
before the Closing Date.
9. CONDITIONS TO THE BUYER'S OBLIGATION TO PURCHASE.
The Company understands that the Buyer's obligation to purchase the
Warrants on the Closing Date is conditioned upon:
(a) Delivery by the Company to the Escrow Agent of the Warrants in
accordance with this Agreement;
(b) The accuracy on the Closing Date of the representations and warranties
of the Company contained in this Agreement as if made on the Closing Date and
the performance by the Company on or before the Closing Date of all covenants
and agreements of the Company required to be performed on or before such Closing
Date; and
(c) Receipt by the Buyer on the Closing Date of an opinion of counsel for
the Company, dated the Closing Date, in form, scope and substance reasonably
satisfactory to the Buyer, to the effect set forth in Annex V attached hereto;
and
(d) The Common Shares shall have been approved for listing, subject to
official notice of issuance, by the AMEX.
10. GOVERNING LAW; MISCELLANEOUS.
(a) This Agreement shall be governed by and interpreted in accordance with
the laws of the Commonwealth of Virginia.
(b) This Agreement may be executed in counterparts and by the parties
hereto on separate counterparts, all of which
-9-
together shall constitute one and the same instrument. A facsimile transmission
of this Agreement bearing a signature on behalf of a party hereto shall be legal
and binding on such party.
(c) The headings of this Agreement are for convenience of reference and
shall not form part of, or affect the interpretation of, this Agreement.
(d) If any provision of this Agreement shall be invalid or unenforceable in
any jurisdiction, such invalidity or unenforceability shall not affect the
validity or enforceability of the remainder of this Agreement or the validity or
enforceability of this Agreement in any other jurisdiction.
(e) No failure or delay by any party in exercising any right or remedy
under this Agreement or otherwise, and no course of dealing between the parties,
shall operate as a waiver thereof or amendment of this Agreement, nor shall any
single or partial exercise of any such right or power, or any abandonment or
discontinuance of steps to enforce such a right or power, preclude any other or
further exercise thereof or exercise of any other right or power.
(f) Neither this Agreement nor any term thereof (including this paragraph)
may be amended, changed, waived, discharged or terminated unless such amendment,
change, waiver, discharge or termination is in a writing signed by the party to
be charged with enforcement.
(g) Any notices required or permitted to be given under the terms of this
Agreement shall be sent by mail or delivered personally (which shall include
telephone line facsimile transmission) or by courier and shall be effective five
days after being placed in the mail, if mailed, or upon receipt, if delivered
personally or by courier, in each case addressed to a party at such party's
address shown in the introductory paragraph or on the signature page of this
Agreement, as the case may be (facsimile number 000-000-0000, in the case of the
Company, and as set forth on the signature page hereof, in the case of the
Buyer), or such other address as a party shall have provided by notice to the
other party in accordance with this provision. The Buyer hereby designates as
its address and telephone line facsimile transmission number for any notice
required or permitted to be given to the Buyer pursuant to the Certificate of
Designations or the Registration Rights Agreement the address and telephone line
facsimile transmission number set forth on the signature page hereof, until the
Buyer shall by notice to the Company designate another address or telephone line
facsimile transmission number for such purpose.
(h) The Buyer shall have the right to assign its rights and obligations
under this Agreement with respect to the purchase of all or any portion of the
Warrants to another investment fund, provided such assignee, by written
instrument duly executed by such assignee, assumes all obligations of the Buyer
-10-
hereunder with respect to the purchase of the portion of the Warrants so
assigned and makes the same representations and warranties with respect thereto
as the Buyer makes in this Agreement, whereupon the Buyer shall be relieved of
any further obligations, responsibilities and liabilities with respect to the
purchase of all or the portion of the Warrants the obligation for the purchase
of which has been so assigned. In the case of any such assignment, the Company
shall agree in writing with such assignee to make available to such assignee the
benefits of the Registration Rights Agreement with respect to the Common Shares
issuable on exercise of the Warrants with respect to which the purchase under
this Agreement has been so assigned.
-11-
IN WITNESS WHEREOF, this Agreement has been duly executed by the Buyer or
one of its officers thereunto duly authorized as of the date set forth below.
AGGREGATE PURCHASE PRICE: $1,500,000.00
NAME OF BUYER: Pangaea Fund LIMITED
SIGNATURE ____________________________
Title: _______________________________
Date: ____________________________
Address:
Facsimile Number:
This Agreement has been accepted as of the date set forth below.
GLOBALINK, INC.
By: ________________________
Title: _____________________
Date: _____________________
-12-
