SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 1
TO FORM 8-K
ON
FORM 8-K/A
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) July 20, 1998
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GLOBALINK, INC.
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(Exact Name of Registrant as Specified in Charter)
Delaware 33-60296 54-1473222
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(State or other jurisdiction (Commission File (IRS Employer
of incorporation) Number) Identification No.)
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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Not Applicable
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(Former Name or Former Address, if Changed Since Last Report)
Item 1. Changes in Control of Registrant
On July 20, 1998, Globalink, Inc. (the "Company") entered into an Agreement
and Plan of Merger (the "Merger Agreement") with Lernout & Hauspie Speech
Products N.V., a Belgian corporation ("L&H"), and a wholly-owned subsidiary of
L&H. The Merger Agreement provides for the merger of that subsidiary into the
Company and for the Company to be the surviving corporation. The following
summary of the terms of the Merger Agreement and certain related agreements is
qualified in its entirety by the actual agreements, copies or the forms of which
are filed as exhibits to this report or as parts of exhibits to this report.
Merger Consideration
Under the terms of the Merger Agreement, at the effective time of the
merger, Globalink stockholders would receive .095726 of a share of L&H common
stock for each share of Globalink common stock, subject to a 10% "collar"
arrangement. At the closing price of L&H common stock of $58.50 on July 20,
1998, that would result in a price of $5.60 for each Globalink share. There will
be no adjustment in the number of shares of L&H stock payable in the merger if
the average market value of L&H common stock for the 20 consecutive trading days
ending with the third-to-last trading day before the day of the special meeting
of stockholders of the Company (the "Special Meeting") at which the stockholders
will be asked to approve the merger (the "Average Market Value") does not
represent an increase or decrease of more than 10% from $58.50. If the Average
Market Value represents an increase or decrease of more than 10% from $58.50,
the number of shares of L&H common stock payable to Globalink stockholders would
decrease or increase, respectively, to maintain a per-share consideration at the
collared prices of $6.16 or $5.04. In addition, if the Average Market Value is
less than $43.00, L&H will have the option either not to proceed with the merger
or to pay a combination of cash and stock with an aggregate value of $5.04 per
share, provided that L&H may not pay cash in a total amount that would prevent
L&H's counsel and the Company's counsel from rendering opinions that the merger
would constitute a tax-free reorganization under Section 368 of the Internal
Revenue Code of 1986, as amended (the "Code"), and L&H may not deliver less
shares than it would have had to deliver had the Average Market Value been
$43.00. Also, in the event the Average Market Value is less than $43.00, L&H
will be entitled to require that the merger be restructured so that the
subsidiary of L&H to be merged with the Company will be the surviving entity, so
that more of the merger consideration may be paid in cash without losing the tax
advantages of the merger. In such event, the Company will be permitted to amend
its proxy materials relating to the Special Meeting. The L&H shares to be issued
in the merger will be registered under the Securities Act of 1933, as amended
(the "Securities Act"), on a registration statement on Form F-4.
No fractional shares of L&H stock will be issued. In lieu of any fractional
shares that would otherwise be issued, stockholders of the Company will receive
cash in an amount equal to the number of fractional shares they hold multiplied
by the Average Market Value.
At the effective time of the merger, certain warrants and options to
purchase common stock of the Company (other than options held by employees of
the Company), the Company's 10% Convertible Debentures and shares of the
Company's Series A-2 Preferred Stock (collectively, the "Convertible
Securities"), to the extent permitted by the terms of such Convertible
Securities or agreed to by the holders, will be terminated or surrendered, as
applicable, and the holders will be entitled to receive, for each of such
securities, the same merger consideration received by holders of outstanding
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shares of common stock of the Company based upon a number of shares of Company
common stock, in the case of warrants and options, equal to the positive
difference, if any, obtained by subtracting the exercise or conversion price of
the Convertible Security from $5.60 and dividing the result by $5.60, and in the
case of the 10% Convertible Debentures and the Series A-2 Preferred Stock, equal
to the number of shares of Company common stock into which such securities would
convert. The Merger Agreement requires, as a condition to closing the merger,
that all of the holders of Convertible Securities agree to such conversion of
their securities into shares of L&H stock.
As required by the Merger Agreement and permitted by the Company's Stock
Option Plan (the "Plan"), the Company's board of directors has adopted a
resolution preventing the merger from causing unvested employee options issued
pursuant to the Plan to become vested. Instead, prior to consummation of the
merger, but subject to such consummation, with certain exceptions, L&H will
offer to each employee of the Company, in consideration of such employee
remaining in the employ of the Company until consummation of the merger, either
(i) in exchange for such employee's options to purchase common stock of the
Company, substantially equivalent warrants to purchase common stock of L&H, plus
such number of additional warrants to purchase common stock of L&H as L&H
determines in its discretion to grant, or (ii) an amount, payable in cash
promptly after the closing of the merger, in exchange for cancellation of any
options held by such employee, equal to the product of the number of shares of
Company common stock underlying all vested and unvested options held by such
employee multiplied by the amount, if any, by which $5.60 exceeds the exercise
price of such options. L&H will be required to register the shares underlying
all such substituted and new warrants issued to the employees under the
Securities Act on a registration statement on Form S-8.
To the extent the holders of any other securities of the Company
exercisable or convertible into common stock of the Company ("derivative
securities") agree, such securities will be converted into shares of L&H common
stock in the same manner as the Convertible Securities are converted. If the
holders of any of such derivative securities do not agree to such conversion,
then, to the extent permitted by the Delaware General Corporation Law and
applicable Belgian law, such derivative securities will be converted into
substantially equivalent rights to purchase or acquire shares of L&H common
stock.
It is intended that the merger will constitute a tax free reorganization
under the Code and that, therefore, no gain or loss will be recognized by any of
the parties as a result of the merger or by any stockholder of the Company as a
result of the conversion of Company common stock into L&H common stock.
Notwithstanding the foregoing, it is likely that an exchange of options or
warrants to buy Company stock for L&H stock will be a taxable event if the
option or warrant to purchase Company stock was issued in connection with
services rendered by the holder thereof to the Company. There can be no
assurance as to the tax treatment of the merger, however, and holders of the
Company's securities should consult with their tax advisors.
Prohibited Actions
The Company is required to conduct its operations in the normal course of
business and use its reasonable best efforts to preserve intact its current
business operations and maintain and preserve its physical assets and
relationships with its employees, suppliers and customers. In addition, there
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are a number of customary restrictions on what the parties are permitted to do
before the merger is consummated. Any failure of a party to comply with one or
more of such restrictions may be waived by the other party.
Access
The Merger Agreement provides that each of the parties will permit
representatives of the other to have access to its premises, properties,
financial and accounting records and other records and documents, and personnel,
subject to confidentiality agreements executed by the parties, provided that the
parties and their representatives may not make any copies or other records of
the names of each others' customers.
Conditions to the Merger
The merger is subject to a number of conditions, including the requirement
that the merger be approved by the Company's stockholders and that it receive
all necessary regulatory approvals, including the approval of the Federal Trade
Commission and the Antitrust Division of the Department of Justice.
To obtain stockholder approval, the Company will file a proxy statement
with the Securities and Exchange Commission and hold the Special Meeting at
which the stockholders will be asked to approve the merger. The proxy statement
will also constitute a prospectus for the offer of the L&H stock to the
Company's stockholders, and will be filed with the Commission by L&H as part of
a registration statement under the Securities Act. Subject to certain exceptions
discussed below, the proxy statement/prospectus must include the recommendation
of the Company's board of directors that the stockholders approve the merger.
The Company and L&H will jointly file a notification under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976 with the Federal Trade
Commission and the Department of Justice and will cooperate in responding to any
comments and concerns that may be expressed by such agencies relating to
compliance with the federal antitrust laws.
There are a number of other usual and customary conditions that must be
satisfied before the merger can occur. The failure of any of such conditions may
be waived by the party that such conditions were meant to benefit or protect.
Exclusivity
Under the terms of the Merger Agreement, the Company and its officers,
directors and other representatives cannot, except in limited circumstances,
discuss with third parties other offers to acquire or merge with the Company.
Specifically, the Merger Agreement prohibits the Company and all such persons
from doing anything to encourage, solicit, initiate, engage or participate in
negotiations with any third party or take any other action to facilitate the
efforts of any third party towards a competing transaction with the Company,
including a merger, consolidation, share exchange or business combination, or
any sale, lease, exchange, transfer or other disposition of 15% or more of the
Company's assets, any tender offer or exchange offer for 15% or more of the
Company's outstanding common stock or the acquisition by any person or group of
15% or more of the Company's outstanding common stock in any manner, or any
public announcement of a proposal, plan or intention of the Company to do any of
the foregoing (each an "Acquisition Transaction").
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In the event the Company receives an unsolicited proposal or indication of
interest for any such Acquisition Transaction from a third party, the Company
will be entitled to communicate with such third party and give such third party
any public information about the Company. The Company will not be entitled to
give such third party any non-public information about the Company or otherwise
negotiate with such party unless (A) two business days' prior written notice
shall have been given to L&H and the Company's investment banker shall have
advised the board of directors that it believes the third party is financially
capable, without any financing contingency, of consummating the proposed
Acquisition Transaction, (B) the board of directors shall have received the
reasoned opinion of counsel to the Company that the failure to provide such
non-public information would be reasonably likely to constitute a breach of the
board's fiduciary responsibilities and (C) the board, after weighing such
advice, determines that it would constitute a breach of its fiduciary
responsibilities not to provide such information. If the Company provides
non-public information to a third party, then, as discussed below, whether or
not an Acquisition Transaction is consummated, L&H will have the right to
terminate the Merger Agreement and the Company will be liable to pay L&H up to
$1.5 million to reimburse L&H for its out-of-pocket expenses incurred in
connection with the Merger Agreement and the merger.
Termination
The Merger Agreement may be terminated only under limited circumstances,
including:
o by mutual written consent of the boards of directors of both the Company
and L&H;
o by either L&H or the Company if without the fault of either party the
merger is not consummated on or before November 30, 1998;
o by either L&H or the Company if a court or other governmental body shall
have issued an order, decree or ruling or taken any other action
restraining, enjoining or otherwise prohibiting the merger;
o by either L&H or the Company if the Company's stockholders fail to approve
the merger;
o by either L&H or the Company if the board of directors of the Company
withdraws, modifies or changes its recommendation to the stockholders so
that it is not in favor of the merger, or resolves to do any of the
foregoing, or if the board of directors recommends or resolves to recommend
to the stockholders that an Acquisition Transaction by or with a third
party be approved;
o by L&H if the Company fails in any material respect to comply with any of
its covenants or agreements contained in the Merger Agreement or if there
is a material breach of any of the Company's representations or warranties
contained in the Merger Agreement;
o by L&H if the Company provides non-public information to a third party with
respect to any proposed Acquisition Transaction or shall have resolved to
do so and publicly announced such resolution;
o by L&H if the Average Market Value is less than $43.00;
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o by the Company if L&H fails in any material respect to comply with any of
its covenants or agreements contained in the Merger Agreement or if there
is a material breach of any of L&H's representations or warranties
contained in the Merger Agreement; and
o by the Company if the Average Market Value is not greater than $20.00.
Under certain circumstances, the Company will be required to pay L&H up to
$1.5 million to reimburse L&H for its out-of-pocket expenses incurred in
connection with the Merger Agreement and the merger. The Company will be
required to pay such expenses in the event the Merger Agreement is terminated
(i) by either party if the Company's stockholders fail to approve the merger or
the Company's board of directors withdraws, modifies or changes its
recommendation to the stockholders so that it is not in favor of the merger, or
resolves to do any of the foregoing or recommends or resolves to recommend to
the stockholders that an Acquisition Transaction by or with a third party be
approved, (ii) by L&H in the event the Company fails in any material respect to
comply with any of its covenants or agreements contained in the Merger Agreement
or there is a material breach of any of the Company's representations or
warranties, except a breach of representation or warranty that was caused by
factors outside the control of the Company, or (iii) by L&H if the Company
provides non-public information to a third party with respect to any Acquisition
Transaction. Notwithstanding the foregoing, the Company will not be required to
pay any of L&H's expenses if L&H has failed in any material respect to comply
with any of its covenants or agreements contained in the Merger Agreement or if
there is a material breach of any of L&H's representations or warranties.
If the Merger Agreement is terminated by either party in the event the
Company's board of directors withdraws, modifies or changes its recommendation
to the stockholders so that it is not in favor of the merger, or resolves to do
any of the foregoing, or the board of directors recommends or resolves to
recommend to the stockholders that an Acquisition Transaction by or with a third
party be approved, the Company will also be liable to pay L&H a separate
termination fee of $1.5 million (the "Termination Fee"). The Termination Fee
will also be payable if, prior to any termination because (i) a court or other
governmental agency has, in connection with an Acquisition Transaction, issued
an order, degree or ruling or taken any other action restraining, enjoining or
otherwise prohibiting the merger, (ii) the stockholders have failed to approve
the merger, (iii) the Company fails in any material respect to comply with any
of its covenants or agreements contained in the Merger Agreement or there is a
material breach of any of its representations or warranties, or (iv) the Company
provides non-public information to a third party with respect to any Acquisition
Transaction, which termination causes the Company to become obligated to pay
L&H's expenses, any person shall have made or discussed with the Company a
proposal concerning an Acquisition Transaction and prior to or within 12 months
after the termination of the Merger Agreement the Company enters into an
agreement with a third party with respect to such an Acquisition Transaction or
an Acquisition Transaction is effected.
L&H will be required to pay the Company up to $1.5 million to reimburse the
Company for its out-of-pocket expenses incurred in connection with the Merger
Agreement and the merger if the Company terminates the Merger Agreement because
L&H has failed in any material respect to comply with any of its covenants or
agreements contained in the Merger Agreement or there is a material breach of
any of L&H's representations or warranties contained in the Merger Agreement,
except a breach of representation or warranty that was caused by factors outside
of the control of L&H. Notwithstanding the foregoing, L&H will not be required
to pay any of the Company's expenses if the Company has failed in any material
respect to comply with any of its covenants or agreements contained in the
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Merger Agreement or there is a material breach of any of the Company's
representations or warranties. Additionally, if L&H terminates the Merger
Agreement because the Average Market Value is less than $43.00, L&H will be
required to pay the Company up to $1.5 million to reimburse the Company for its
out-of-pocket expenses incurred in connection with the Merger Agreement and the
merger and will be required to purchase $750,000 of the Company's common stock
at a price per share equal to the average closing price of the Company's common
stock over the 10 consecutive trading days beginning five days prior to the date
the Merger Agreement is terminated. Notwithstanding the foregoing, L&H will not
be required to make the $750,000 investment in the Company's stock if the
Company fails to obtain a ruling from the Commercial Court of Nantere prior to
the date that is three business days before the Special Meeting requiring SARL
Mansoft or an affiliate to pay the Company at least $1,160,250 of accounts
receivable owed by SARL Mansoft to the Company.
Option to Purchase 16% of the Company's Equity Securities
Pursuant to the Merger Agreement, and on the day the Merger Agreement was
executed, the Company granted L&H an option to purchase 16% of the Company's
common stock at a price of $5.60 per share, payable in cash, in the event the
Merger Agreement is terminated and as a result thereof the Company is required
to pay the Termination Fee, provided that within certain prescribed time periods
after termination the Company enters into an agreement with a third party with
respect to an Acquisition Transaction or an Acquisition Transaction is effected.
The option will remain exercisable until the later of (i) one year from
termination of the Merger Agreement or (ii) 90 days from the consummation of the
Acquisition Transaction. The Company will have the right to repurchase the
option or the shares issuable upon exercise of the option from L&H upon 30 days'
notice, at any time after the option becomes exercisable and within 30 days
following the exercise of the option, at a repurchase price equal to, in the
case of the option, the product of the number of shares for which the option is
exercisable multiplied by the positive difference, if any, between the exercise
price of the option and the highest (the "market/offer price") of (i) the price
per share of common stock at which a tender offer or exchange offer therefor has
been made, (ii) the price per share of common stock to be paid by a third party
in an Acquisition Transaction, (iii) the highest closing price per share of
common stock for the 30 trading days immediately preceding the Company's
election to repurchase the option or the underlying shares, or (iv) in the case
of a sale of a substantial portion of the Company's assets, the sum of the price
paid in such sale and the value of the remaining assets of the Company divided
by the number of shares of common stock outstanding, and in the case of the
option shares, the product of the number of shares multiplied by the
market/offer price. The option will terminate in the event that the merger is
consummated, the Merger Agreement is terminated in a manner that would not cause
the option to become exercisable, or if it expires unexercised. Upon the request
of L&H, the Company will be required to register the option and the underlying
shares for resale under the Securities Act.
Investment Bankers
The Company has retained M.H. Meyerson & Co. Inc. ("MHM"), an investment
banking firm, to assist the Company in structuring and negotiating the merger.
MHM will be paid a fee, only if the merger is consummated, of $350,000. The fee
would be payable in L&H stock valued at the last sale price of L&H stock on the
Nasdaq National Market on the last trading day prior to the date on which the
merger is consummated. The Company also retained Ferris, Baker Watts,
Incorporated ("FBW"), another investment banking firm, to render an opinion to
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the Company that the merger was fair to the Company's stockholders from a
financial point of view. The Company paid FBW $50,000 for such services. FBW
considered several valuation methods to evaluate the effect of the transaction
on the Company's stockholders. These methods included the discounted free cash
flow method; the publicly traded guideline company method where pricing multiple
comparisons are made between the subject company and guideline companies engaged
in similar businesses; the guideline merger and acquisition method where merger
and acquisition pricing multiples of guideline companies engaged in similar
businesses are evaluated; and the control premium method where control premiums
paid by acquirors over the market price of target companies prior to the
takeover announcement date are analyzed.
Affiliates' Agreement to Vote in Favor of the Merger
The Merger Agreement requires the Company to obtain the agreement of all
executive officers, directors and other persons or entities who are "affiliates"
of the Company for purposes of Rule 145 under the Securities Act (generally,
persons or entities who control, are controlled by or under common control with,
the Company) (i) not to transfer their shares prior to the termination of the
Merger Agreement, (ii) acknowledging that the shares of L&H stock to be received
by them in exchange for their Company common stock (or securities exercisable
for or convertible into Company common stock) will be subject to certain resale
restrictions under Rule 145, and, with respect to substantially all of such
persons, (iii) agreeing to vote all shares of Company common stock owned by them
or over which they have voting control in favor of the merger and granting an
irrevocable proxy to L&H to vote such shares in favor of the merger.
Employment Agreements
Harry E. Hagerty, Jr., Ronald W. Johnston and John F. McCarthy, III, the
Company's Chairman and Chief Executive Officer, President and Chief Operating
Officer and Vice President and General Counsel, respectively, have entered into
employment agreements with L&H, which will become effective upon the closing of
the merger, pursuant to which they will aid in the transition of the Company
from a stand-alone business to an operating unit of L&H. The terms of their
employment with L&H are as follows:
o Through December 31, 1998, Messrs. Hagerty, Johnston and McCarthy will
devote 100% of their business time to the affairs of L&H and the Globalink
subsidiary of L&H and will be compensated at the rate of 100% of their
pre-merger base salaries. From January 1, 1999 through June 30, 1999, they
will each devote approximately 50% of their business time to such affairs
and will be compensated at the rate of 50% of their pre- merger base
salaries. From July 1, 1999 through September 30, 1999, they will each
devote approximately 25% of their business time to such affairs and will be
compensated at the rate of 25% of their pre-merger base salaries.
o Messrs. Hagerty, Johnston and McCarthy will be paid 50% of their pre-merger
base salaries as incentive bonus in equal installments on December 31,
1998, March 31, 1999, June 30, 1999 and September 30, 1999 to the extent
that the Globalink subsidiary of L&H reaches certain agreed-upon
performance milestones.
o L&H will grant options to purchase L&H common stock to Messrs. Hagerty,
Johnston and McCarthy in the following amounts:
Hagerty 20,000 shares
Johnston 15,000 shares
McCarthy 15,000 shares
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The options will be exercisable at the closing price of L&H common
stock on the date of the closing of the merger and will vest no later
than five years after the date of such closing. However, one third of
the options will vest earlier upon the attainment of performance goals
for the period between the closing of the merger and December 31, 1999,
one third will vest earlier upon the attainment of performance goals
for the 12- month period following the first anniversary of the closing
and one third of the options will vest earlier upon the attainment of
performance goals for the 12-month period following the second
anniversary of the closing of the merger. The options will expire 72
months after the closing of the merger. L&H will be required to include
the shares underlying the options on the registration statement on Form
S-8 filed to register the shares under the substitute warrants and new
warrants issued to Company employees.
In order to terminate the present employment agreements of Messrs. Hagerty,
Johnston and McCarthy with the Company, they will be paid lump sum severance at
the closing of the merger of $200,000, $180,000 and $160,000, respectively.
Additionally, all of their Company options will be accelerated (and exchanged
for L&H stock on the same terms as the Convertible Securities) and the bonuses
already earned by Messrs. Hagerty, Johnston and McCarthy for fiscal year 1997
(Hagerty--$100,000, Johnston--$90,000, and McCarthy--$80,000), will be paid
prior to the closing of the merger.
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Item 7. Financial Statements, Pro Forma Financial Statements and Exhibits
Exhibit Number Description
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2.1 Agreement and Plan of Merger dated as of July 20, 1998 by and among
Lernout & Hauspie Speech Products N.V., Beach Acquisition Corp. and
Globalink, Inc., with all Exhibits thereto.*
10.1 Stock Option Agreement dated July 20, 1998 between Globalink, Inc. and
Lernout & Hauspie Speech Products N.V.**
10.2 Confidentiality Agreement between Globalink, Inc. and Lernout & Hauspie
Speech Products N.V. dated July 1, 1998.***
99.1 Press release of Globalink, Inc. dated July 21, 1998.****
- ---------------------------
* Incorporated by reference from Exhibits 99.1 and 99.2 to Amendment No.
1 to a statement on Schedule 13D filed by Lernout & Hauspie Speech
Products N.V. on August 3, 1998 (the "L&H Schedule 13D").
** Incorporated by reference from Exhibit 99.2 to the L&H Schedule 13D.
*** Incorporated by reference from Exhibit 99.1 to the L&H Schedule 13D.
**** Previously filed.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Dated: August 4, 1998 GLOBALINK, INC.
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(Registrant)
/s/ Ronald W. Johnston
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Ronald W. Johnston
President and Chief Operating Officer
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EXHIBIT INDEX
Exhibit Number Description
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2.1 Agreement and Plan of Merger dated as of July 20, 1998 by and
among Lernout & Hauspie Speech Products N.V., Beach Acquisition
Corp. and Globalink, Inc., with all Exhibits thereto.*
10.1 Stock Option Agreement dated July 20, 1998 between Globalink,
Inc. and Lernout & Hauspie Speech Products N.V.**
10.2 Confidentiality Agreement between Globalink, Inc. and Lernout &
Hauspie Speech Products N.V. dated July 1, 1998.***
99.1 Press release of Globalink, Inc. dated July 21, 1998.****
- ---------------------------
* Incorporated by reference from Exhibits 99.1 and 99.2 to Amendment No.
1 to a statement on Schedule 13D filed by Lernout & Hauspie Speech
Products N.V. on August 3, 1998 (the "L&H Schedule 13D").
** Incorporated by reference from Exhibit 99.2 to the L&H Schedule 13D.
*** Incorporated by reference from Exhibit 99.1 to the L&H Schedule 13D.
**** Previously filed.
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