Exhibit 10.23
Securities Purchase Agreement
SECURITIES PURCHASE AGREEMENT
between
MULTI-LINK TELECOMMUNICATIONS, INC.
and
GLENAYRE TECHNOLOGIES, INC.
Dated as of June 30, 2000
SECURITIES PURCHASE AGREEMENT
THIS SECURITIES PURCHASE AGREEMENT, dated as of June 30, 2000, is between
MULTI-LINK TELECOMMUNICATIONS, INC., a Colorado corporation (the "Company"), and
GLENAYRE TECHNOLOGIES, INC., a Delaware corporation (the "Purchaser").
Statement of Purpose
The Company proposes to issue to the Purchaser shares of its common stock
and warrants to purchase its common stock on the terms and conditions described
herein.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:
ARTICLE I
DEFINITIONS; CONSTRUCTION
SECTION 1.1 Definitions
As used in this Agreement, and unless the context requires a different
meaning, the following terms have the meanings indicated:
"Affiliate" means, with respect to any Person, any other Person (1)
directly or indirectly controlling or controlled by or under direct or indirect
common control with such Person or (2) directly or indirectly owning or holding
25% or more of the equity interest in such Person; provided, that in no event
shall the Purchaser (or any Affiliate of the Purchaser) be deemed to be an
Affiliate of the Company. For purposes of this definition, "control" when used
with respect to any Person means the power to direct the management and policies
of such Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"Agreement" means this Securities Purchase Agreement, as amended or
supplemented from time to time.
"Business Day" means any day other than a Saturday, Sunday or other day on
which commercial banks in Colorado are authorized or required by law or
executive order to close.
"Capital Stock" means, with respect to the Company, the Common Stock, the
$.01 par value Preferred Stock and any and all other capital stock of the
Company.
"Closing" means the issuance and purchase of the Securities and the
consummation of the other Transactions as described in Section 2.02.
"Closing Date" has the meaning set forth in Section 2.02.
"Code" means the Internal Revenue Code of 1986, as amended, or any
successor statute thereto.
"Commission" means the Securities and Exchange Commission or any similar
agency then having jurisdiction to enforce the Securities Act.
"Common Stock" means (1) the no par value common stock of the Company, as
described in the Company Charter Documents, (2) any other class of capital stock
hereafter authorized having the right to share in distributions either of
earnings or assets without limit as to amount or percentage and (3) any other
capital stock into which such Common Stock is reclassified or reconstituted.
"Company Charter Documents" means the Articles of Incorporation and Bylaws
of the Company, as in effect on the date hereof, and as amended or supplemented
from time to time in accordance with the provisions hereof and thereof.
"Contractual Obligation" means, as to any Person, any provision of any
securities issued by such Person or of any indenture or credit agreement or any
agreement, instrument or other undertaking to which such Person is a party or by
which it or any of its property is bound or to which it may be subject.
"Environmental Laws" means any and all federal, state and local laws,
statutes, ordinances, rules, regulations, permits, licenses, approvals,
interpretations and orders of courts or Governmental Authorities (including
common law), relating to the protection of human health or the environment,
including requirements pertaining to the manufacture, processing, distribution,
use, treatment, storage, disposal, transportation, handling, reporting,
licensing, permitting, investigation or remediation of Hazardous Materials.
"Environmental Liability" means any liability, contingent or otherwise
(including any liability for damages, costs of environmental remediation, fines,
penalties or indemnities), of the Company or any Subsidiary directly or
indirectly resulting from or based upon (1) violation of any Environmental Law,
(2) the generation, use, handling, transportation, storage, treatment or
disposal of any Hazardous Materials, (3) exposure to any Hazardous Materials,
(4) the release or threatened release of any Hazardous Materials into the
environment or (5) any contract, agreement or other consensual arrangement
pursuant to which liability is assumed or imposed with respect to any of the
foregoing.
"Exchange Act" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations of the Commission thereunder.
"Financial Statements" has the meaning set forth in Section 5.12.
"GAAP" means generally accepted accounting principles applied on a
consistent basis.
"Glenayre Electronics" means Glenayre Electronics, Inc., a Colorado
corporation and wholly owned subsidiary of the Purchaser.
"Governmental Approvals" means all authorizations, consents, approvals,
licenses, registrations and filings with, and reports to, all Governmental
Authorities.
"Governmental Authority" means any federal, state, local or foreign court
or governmental agency, authority, instrumentality or regulatory body.
"Hazardous Materials" means any substances or materials (1) which are or
become defined as hazardous wastes, hazardous substances, pollutants,
contaminants or toxic substances under any Environmental Law, (2) which are
toxic, explosive, corrosive, flammable, infectious, radioactive, carcinogenic,
mutagenic or otherwise harmful to human health or the environment and are or
become regulated by any Governmental Authority, (3) the presence of which
require investigation or remediation under any Environmental Law, (4) the
discharge or emission or release of which requires a permit or license under any
Environmental Law or other governmental approval, (5) which are deemed by a
Governmental Authority to pose a health or safety hazard to persons or
neighboring properties, (6) which are materials consisting of underground or
aboveground storage tanks, whether empty, filled or partially filled with any
substance, or (7) which contain, without limitation, asbestos, polychlorinated
biphenyls, urea formaldehyde foam insulation, petroleum hydrocarbons, petroleum
derived substances or waste, crude oil, nuclear fuel, natural gas or synthetic
gas.
"Material Adverse Effect" means a material adverse change in or effect upon
(1) the business, assets, properties, results of operation or condition
(financial or otherwise) of the Company or (2) the ability of the Company to
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perform its obligations, or of the Purchaser to enforce its rights, under the
Transaction Documents.
"Person" means any individual, partnership, joint venture, firm,
corporation, limited liability company, association, trust or other enterprise
(whether or not incorporated) or any Governmental Authority.
"Preemptive Rights" means any preemptive or other similar rights (whether
created by contract or any Requirement of Law) applicable at any time to the
Company or any of its Subsidiaries.
"Purchase Order" means a Purchase Order for the purchase of equipment by
the Company from Glenayre Electronics, a copy of which is attached hereto as
Exhibit 1.
"Registration Rights Agreement" means the Registration Rights Agreement
between the Company and the Purchaser in the form of Exhibit 2 hereto.
"Requirement of Law" means, with respect to a Person, any law, treaty,
rule, regulation, right, privilege, qualification, license or franchise or final
and nonappealable determination of an arbitrator or a court or other
Governmental Authority or any other judicial or government restriction, in each
case applicable to or binding upon such Person or any of its property or to
which such Person or any of its property is subject or pertaining to any of the
Transactions.
"SEC Documents" has the meaning set forth in Section 5.13.
"Securities" has the meaning set forth in Section 2.01.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations of the Commission thereunder.
"Shares" has the meaning set forth in Section 2.01.
"Subsidiary" means (1) any corporation more than 50% of whose stock of any
class or classes having by the terms thereof ordinary voting power to elect a
majority of the directors of such corporation is at the time owned by the
Company directly or indirectly through other Subsidiaries of the Company, and
(2) any partnership, association, joint venture or other entity in which the
Company directly or indirectly through its Subsidiaries has more than 50% of the
equity interests at any time.
"Transactions" means the sale and purchase of the Securities and the other
transactions contemplated by this Agreement and the other Transaction Documents.
"Transaction Documents" means, collectively, this Agreement, the
Registration Rights Agreement, the Purchase Order and the Volume Purchase
Agreement.
"Volume Purchase Agreement" means the Volume Purchase Agreement between
Glenayre Electronics and the Company in the form of Exhibit 3 hereto. Warrant"
has the meaning set forth in Section 2.01.
SECTION 1.2 Construction; Accounting Terms. Unless the context otherwise
requires, "or" is not exclusive, and references to Sections refer to Sections of
this Agreement. All pronouns and any variations thereof refer to the masculine,
feminine or neuter, singular or plural, as the context may require. References
to "include" or "including" mean include or including without limitation. All
accounting terms used herein not expressly defined in this Agreement shall have
the respective meanings given to them in accordance with GAAP.
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ARTICLE II
PURCHASE AND SALE OF SECURITIES
SECTION 2.1 Purchase and Sale of Securities
Subject to the terms and conditions set forth in this Agreement, and in
reliance upon the representations and warranties set forth below, on the Closing
Date, the Purchaser shall purchase from the Company, at and for an aggregate,
combined purchase price of $1,000,000 (the "Purchase Price"), and the Company
shall issue and sell to the Purchaser: (1) 104,439 shares of Common Stock (the
"Shares") and (2) a Common Stock Purchase Warrant in the form of Exhibit 4
hereto, exercisable for 100,000 shares (the "Warrant"). The Shares and the
Warrant are collectively referred to in this Agreement as the "Securities".
SECTION 2.2 Closing
(a) Subject to the terms and conditions of this Agreement, the Closing
shall be held contemporaneously with the execution and delivery of this
Agreement (the "Closing Date").
(b) At the Closing, the Company shall:
(1) deliver to the Purchaser (A) evidence that the Company's stock
transfer agent has been given an irrevocable instruction to deliver to the
Purchaser certificates for the Shares and (B) the Warrant;
(2) execute and deliver to the Purchaser the Volume Purchase
Agreement;
(3) execute and deliver to the Purchaser the Purchase Order and
pay to Glenayre Electronics the sum of $800,000, as a credit to
Glenayre against the Purchase Price; and
(4) execute and deliver to the Purchaser the Registration Rights
Agreement.
(c) At the Closing, the Purchaser shall:
(1) pay to the Company the balance of the Purchase Price
($200,000) after the credit pursuant to Section 2.02(b)(3) by wire
transfer of immediately available funds;
(2) deliver to the Company the Volume Purchase Agreement, duly
executed by Glenayre Electronics;
(3) deliver to the Company the Purchase Order, duly acknowledged
by Glenayre Electronics; and
(4) execute and deliver to the Company the Registration Rights
Agreement.
ARTICLE III
CONDITIONS TO THE OBLIGATION
OF THE PURCHASER TO CLOSE
The obligation of the Purchaser to purchase the Securities, to pay the
Purchase Price at the Closing and to perform its other obligations hereunder
shall be subject to the satisfaction as determined by the Purchaser of the
following conditions:
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SECTION 3.1 No Adverse Proceedings
No action, suit or proceeding before any Governmental Authority shall have
been commenced, no investigation by any Governmental Authority shall have been
commenced, and no action, suit or proceeding by any Governmental Authority shall
have been threatened against any of the parties to this Agreement, seeking to
restrain, prevent or challenge the Transactions or questioning the validity or
legality of any of the Transactions or seeking damages in connection with any of
the Transactions. SECTION 3.2 Good Standing Certificates The Purchaser shall
have received certificates as of a recent date as to the existence,
qualification and good standing of the Company under the laws of the State of
Colorado.
SECTION Section 3.3 Secretary's Certificate
The Purchaser shall have received a certificate, dated the Closing Date and
signed by the Secretary of the Company certifying (1) that the attached copies
of the Articles of Incorporation and Bylaws of the Company and resolutions of
the Board of Directors of the Company approving this Agreement, the Other
Transaction Documents and the Transactions, are all true, complete and correct
and remain unamended and in full force and effect and (2) as to the incumbency
and specimen signature of each officer of the Company executing this Agreement
and the other Transaction Documents to which the Company is a party.
SECTION 3.4 Purchase Permitted by Applicable Laws
The acquisition of and payment for Securities and the consummation of the
Transactions (1) shall not be prohibited by any Requirement of Law and (2) shall
not subject the Purchaser to any penalty under or pursuant to any Requirement of
Law.
SECTION 3.5 Consents and Approvals
All consents, exemptions, authorizations or other actions by, or notices
to, or filings with, Governmental Authorities and other Persons under any
Contractual Obligations of the Company required in connection with the
execution, delivery or performance by the Company or enforcement against the
Company of this Agreement and the other Transaction Documents to which the
Company is a party shall have been obtained and be in full force and effect, and
the Purchaser shall have been furnished with appropriate evidence thereof, and
all waiting periods shall have lapsed without extension or the imposition of any
conditions or restrictions.
SECTION 3.6 Legal Opinion
The Purchaser shall have received the legal opinion of Faegre & Xxxxxx LLP,
counsel to the Company, addressing the matters set forth in Exhibit 5 hereto.
ARTICLE IV
CONDITIONS TO THE OBLIGATION
OF THE COMPANY TO CLOSE
The obligations of the Company to issue and sell to the Purchaser the
Securities and to perform its other obligations hereunder shall be subject to
the satisfaction as determined by the Company of the following conditions:
SECTION 4.01 Issuance Permitted by Applicable
Laws The issuance of the Securities by the Company hereunder and the
consummation of the Transactions shall not be prohibited by any Requirement of
Law.
SECTION 4.02 CONSENTS AND APPROVALS
All consents, exemptions, authorizations or other actions by, or notices
to, or filings with, Governmental Authorities and other Persons under any
Contractual Obligations of the Purchaser required in connection with the
execution, delivery or performance by the Purchaser or enforcement against the
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Purchaser of this Agreement and the other Transaction Documents shall have been
obtained and be in full force and effect, and the Company shall have been
furnished with appropriate evidence thereof, and all waiting periods shall have
lapsed without extension or the imposition of any conditions or restrictions.
SECTION 4.03 No Adverse Proceedings
No action, suit or proceeding before any Governmental Authority shall have
been commenced, no investigation by any Governmental Authority shall have been
commenced, and no action, suit or proceeding by any Governmental Authority shall
have been threatened against any of the parties to this Agreement seeking to
restrain, prevent or challenge the Transactions or questioning the validity or
legality of any of the Transactions or seeking damages in connection with any of
the Transactions.
ARTICLE V
REPRESENTATIONS AND
WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to the Purchaser as follows:
SECTION 5.01 Corporate Existence and Power
The Company (1) is a corporation duly organized, validly existing and in
good standing under the laws of Colorado, (2) has all requisite corporate power
and authority to own and operate its property, to lease the property it leases
and to conduct the business in which it is currently, or is currently proposed
to be, engaged, and (3) has the corporate power and authority to execute,
deliver and perform its obligations under this Agreement and each other
Transaction Document to which it is a party.
SECTION 5.02 Corporate Authorization; No Contravention
(a) The execution, delivery and performance by the Company of this
Agreement and each other Transaction Document to which it is a party, including
the issuance by the Company of the Securities, (1) have been duly authorized by
all necessary corporate action, (2) do not contravene the terms of the Company
Charter Documents, and (3) will not violate, conflict with or result in any
breach or contravention of any Contractual Obligation or any Requirement of Law.
(b) Except to the extent that the failure to do so (individually or in the
aggregate) could not reasonably be expected to have a Material Adverse Effect,
each of the Company and its Subsidiaries (1) has all Governmental Approvals
required under any Requirement of Law for it to conduct its business, each of
which is in full force and effect, (2) is in compliance with each Governmental
Approval applicable to it and in compliance with all other Requirements of Law
relating to it or any of its respective properties and (3) has timely filed all
material reports, documents and other materials required to be filed by it under
any Requirement of Law with any Governmental Authority.
SECTION 5.03 Governmental Authorization; Third Party Consents
No Governmental Approval and no approval, consent, compliance, exemption,
authorization or other action by, or notice to, or filing with, any other
Person, and no lapse of a waiting period under a Requirement of Law, is
necessary or required in connection with the execution, delivery or performance
by the Company or enforcement against the Company of this Agreement, the other
Transaction Documents or the Transactions.
SECTION 5.04 Binding Effect
This Agreement and the other Transaction Documents to which the Company is
a party have been duly executed and delivered by the Company and constitute the
legal, valid and binding obligations of the Company enforceable against it in
accordance with their respective terms except as enforceability may be limited
by applicable bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting the enforcement of creditors' rights generally and by
general principles of equity relating to enforceability.
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SECTION 5.05 Capitalization.
(a) The authorized Capital Stock of the Company consists solely of (1)
20,000,000 shares of Common Stock, of which 3,937,508 shares are issued and
outstanding and (2) 5,000,000 shares of $.01 par value Preferred Stock, of which
no shares are issued. Each of the Securities, upon issuance thereof in
accordance with the terms of this Agreement (1) have been duly authorized and
validly issued, (2) will be fully paid and nonassessable and will not be subject
to call and (3) will not have been issued in violation of, and will not be
subject to, any Preemptive Rights.
(b) Except for the Securities and as set forth on Schedule 5.05 hereto, (1)
there are no outstanding subscriptions, warrants, options, calls, commitments or
other rights or agreements to which the Company is bound or entitled to the
benefit of relating to the issuance, sale, redemption, transfer or voting of any
Capital Stock of the Company, (2) no shares of Capital Stock of the Company are
reserved for any purpose and (3) no Person has any right or entitlement to any
Capital Stock of the Company (including as the result of any Preemptive Rights).
SECTION 5.06 Litigation; Environmental Matters.
(c) There are no legal actions, suits, proceedings, claims or disputes
pending, or to the knowledge of the Company, threatened, at law, in equity, in
arbitration or before any Governmental Authority against or affecting the
Company or any of its Subsidiaries (1) which affects the legality, validity or
enforceability of this Agreement or any other Transaction Document or which
seeks to obtain damages or obtain relief as a result of, the Transactions or (2)
which could reasonably be expected to have a Material Adverse Effect. No
injunction, writ, temporary restraining order, decree or any order of any nature
has been issued by any court or other Governmental Authority purporting to
enjoin or restrain the execution, delivery or performance of this Agreement or
any of the other Transaction Documents.
(d) Except with respect to any other matters that, individually or in the
aggregate, could not reasonably be expected to result in a Material Adverse
Effect, neither the Company nor any of its Subsidiaries (1) has failed to comply
with any Environmental Law or to obtain, maintain or comply with any permit,
license or other approval required under any Environmental Law, (2) has become
subject to any Environmental Liability, (3) has received notice of any claim
with respect to any Environmental Liability or (4) knows of any basis for any
Environmental Liability.
SECTION 5.07 No Default or Breach. Neither the Company nor any of its
Subsidiaries is in default under or with respect to any Contractual Obligation
in any respect, which, individually or together with all such defaults, could
reasonably be expected to have a Material Adverse Effect.
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SECTION 5.08 Disclosure. This Agreement and any other document, certificate
or statement furnished to the Purchaser by or on behalf of the Company do not
contain any untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements contained herein or therein, in the
light of the circumstances under which they were made, not misleading. There is
no fact known to the Company which the Company has not disclosed to the
Purchaser in writing which has had or could reasonably be expected to have a
Material Adverse Effect.
SECTION 5.09 Taxes. Each of the Company and its Subsidiaries has timely
filed or caused to be filed all tax returns and reports required to have been
filed and has paid or caused to be paid all taxes required to have been paid by
it, except (1) taxes that are being contested in good faith by appropriate
proceedings and for which the Company or such Subsidiary, as applicable, has set
aside on its books adequate reserves or (2) to the extent that the failure to do
so could not reasonably be expected to result in a Material Adverse Effect.
SECTION 5.10 Private Offering. No form of general solicitation or general
advertising was used by the Company or its representatives in connection with
the offer or sale of the Securities. Assuming the truth of the representations
made in Article VI, no registration of the Securities pursuant to the provisions
of the Securities Act or any state securities or "blue sky" laws will be
required by the offer, sale or issuance of the Securities pursuant to this
Agreement.
SECTION 5.11 Broker's, Finder's or Similar Fees. There are no brokerage
commissions, finder's fees or similar fees or commissions payable in connection
with the Transactions or any other Transaction Document to which the Company is
a party, based on any agreement, arrangement or understanding with the Company
or any action taken by the Company.
SECTION 5.12 Financial Statements. Schedule 5.12 hereto contains copies of
the audited consolidated balances sheet as of September 30, 1999 and the
unaudited interim consolidated balance sheet as of March 31, 2000 (the "Latest
Balance Sheet") for the Company and its Subsidiaries, and the related audited
consolidated statements (other than the unaudited interim consolidated
statements for the period ending March 31, 2000) of operations, shareholders'
equity and cash flows of the Company and its Subsidiaries for the fiscal periods
then ended (collectively, the "Financial Statements"). The Financial Statements
(1) fairly present, in all material respects, the consolidated financial
condition and the consolidated results of operations of the Company and its
Subsidiaries as at the dates and for the periods indicated therein, (2) were
based on the books and records of the Company and were prepared on a consistent
basis for the Company, and (3) have been prepared in accordance with GAAP. Since
March 31, 2000, there has been no material change in the condition, financial or
otherwise, of the Company and its Subsidiaries as shown on the Latest Balance
Sheet as of such date, except changes in the ordinary course of business, none
of which individually or in the aggregate has been materially adverse. The
fiscal year of the Company and each of its Subsidiaries ends on September 30 of
each year.
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SECTION 5.13 SEC Documents. The Company has filed in a timely manner all
documents that the Company was required to file with the Commission under
Sections 13, 14(a) and 15(d) of the Exchange Act, since its initial public
offering. As of their respective filing dates, all documents filed by the
Company with the Commission (the "SEC Documents") complied in all material
respects with the requirements of the Exchange Act or the Securities Act, as
applicable. None of the SEC Documents as of their respective dates contained any
untrue statement of a material fact or omitted to state material fact required
to be stated therein or necessary to make the statements made therein, in light
of the circumstances under which they were made, not misleading. The financial
statements of the Company included in the SEC Documents comply as to form in all
material respects with applicable accounting requirements and with the published
rules and regulations of the Commission with respect thereto.
SECTION 5.14 Intellectual Property Matters. Each of the Company and its
Subsidiaries owns or possesses rights to use all intellectual property rights
which are required to conduct its business except to the extent that the failure
to do so could not reasonably be expected to have a Material Adverse Effect. No
event has occurred which permits, or after notice or lapse of time or both would
permit, the revocation or termination of any such rights, and neither the
Company nor its Subsidiaries is liable to any Person for infringement under any
Requirement of Law with respect to any such rights as a result of its business
operation except to the extent that the failure to do so could not reasonably be
expected to have a Material Adverse Effect.
ARTICLE VI
REPRESENTATIONS AND
WARRANTIES OF THE PURCHASER
The Purchaser hereby represents and warrants to the Company as follows:
SECTION 6.04 Authorization; No Contravention. The execution, delivery and
performance by the Purchaser of this Agreement and the other Transaction
Documents to which the Purchaser is a party (1) are within the Purchaser's
corporate power and authority and has been duly authorized by all necessary
action, (2) does not contravene the terms of the Purchaser's Certificate of
Incorporation or Bylaws and (3) will not violate, conflict with or result in any
breach or contravention of any Contractual Obligation or any Requirement of Law.
SECTION 6.05 Binding Effect. This Agreement and the other Transaction
Documents to which the Purchaser is a party have been duly executed and
delivered by the Purchaser and constitute the legal, valid and binding
obligation of the Purchaser enforceable against it in accordance with their
respective terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or
other similar laws affecting the enforcement of creditors' rights generally or
by general equitable principles relating to enforceability.
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SECTION 6.06 Accredited Investor; Purchase for Own Account. The Purchaser
is an "accredited investor" within the meaning of Regulation D under the
Securities Act. The Securities are being acquired for its own account and with
no intention of distributing or reselling such securities or any part thereof in
any transaction that would be in violation of the Securities Act or the
securities laws of any state, without prejudice, however, to the rights of the
Purchaser at all times to sell or otherwise dispose of all or any part of the
Securities under an effective registration statement under the Securities Act,
or under an exemption from such registration available under the Securities Act.
The Company has made available to the Purchaser, and its attorneys and
accountants, any and all documents that the Purchaser has requested relating to
the Securities (including the SEC Documents) and has provided answers to all of
the Purchaser's questions concerning the Company and the Securities. The
Purchaser understands that: (i) the Securities have not been registered under
the Securities Act or the securities laws of any state, based upon the exemption
from such registration requirements pursuant to Section 4(2) and/or Regulation D
under the Securities Act; (ii) the Securities are and will be "restricted
securities," as such term is defined in Rule 144 under the Securities Act; (iii)
the Securities may not be sold or otherwise transferred unless they have been
first registered under the Securities Act and all applicable state securities
laws, or unless exemptions from such registration provisions are available with
the respect to said resale and transfer; and (iv) the certificates representing
the Securities will bear a legend to the effect that the transfer of the
Securities represented thereby is subject to the provisions hereof.
SECTION 6.04 Broker's, Finder's or Similar Fees. There are no brokerage
commissions, finder's fees or similar fees or commissions payable in connection
with the transactions contemplated hereby, or by any other Transaction Document
to which the Purchaser is a party, based on any agreement, arrangement or
understanding with the Purchaser or any action taken by the Purchaser.
SECTION 6.05 Governmental Authorization; Third Party Consent. No
Governmental Approval and no approval, consent, compliance, exemption,
authorization or other action by, or notice to, or filing with, any other Person
in respect of any Requirement of Law, and no lapse of a waiting period under a
Requirement of Law, is necessary or required in connection with the execution,
delivery or performance by the Purchaser or enforcement against the Purchaser of
this Agreement, the other Transaction Documents or the Transactions.
ARTICLE VII
FINANCIAL INFORMATION AND NOTICES
Until such time as the Securities are no longer held by the Purchaser, the
Company hereby covenants and agrees with the Purchaser as follows:
SECTION 7.07 Financial Statements and Other Information. The Company shall
deliver to the Purchaser:
(a) As soon as available, but in any event not later than 45 days after the
end of each of the first three fiscal quarters of each fiscal year of the
Company, the consolidated balance sheet of the Company and its Subsidiaries as
at the end of such quarter and the related unaudited consolidated statements of
income, shareholders' equity and of cash flows of the Company and its
Subsidiaries for such quarter and the portion of the fiscal year through the end
of such quarter;
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(b) As soon as available and in any event within 90 days after the end of
each fiscal year, (1) the consolidated balance sheet of the Company and its
Subsidiaries as at the end of such year and the related consolidated statements
of income, stockholders' equity and cash flows for such fiscal year, and (2) a
report with respect to the financial statements from the independent accounting
firm selected by the Company to audit the Company's financial statements.
(c) Promptly upon receipt thereof, copies of all significant reports
submitted to the Company or any of its Subsidiaries by independent public
accountants in connection with each annual, interim or special audit of the
financial statements of the Company and its Subsidiaries made by such
accountants, including the comment letter submitted by such accountants to
management in connection with their annual audit.
(d) Promptly upon their becoming available, copies of: (1) all financial
statements, reports, notices and proxy statements sent or made available by the
Company to its shareholders, (2) all regular and periodic reports and all
registration statements and prospectuses, if any, filed by the Company with any
securities exchange or with the Commission or any governmental or private
regulatory authority and (3) all press releases and other statements made
available by the Company or any Subsidiary to the public concerning developments
in the business of the Company or any Subsidiary.
(e) With reasonable promptness, such other information and data with
respect to the Company or any Subsidiary as from time to time may be reasonably
requested by the Purchaser.
(f) Promptly (but in no event later than 30 days after an officer of the
Company obtains knowledge thereof) written notice of: (1) the commencement of
all proceedings and investigations by or before any Governmental Authority
(including any notice of violation of any Requirement of Law) and all actions
and proceedings in any court or before any arbitrator against or involving the
Company or any Subsidiary, in each case involving a claim or liability in excess
of $250,000 and not fully covered by insurance, (2) any labor controversy that
has resulted in or threatens to result in, a strike or other work action against
the Company or any Subsidiary, (3) any attachment, judgment, levy or order
exceeding $250,000 that could reasonably be expected to be assessed against the
Company or any Subsidiary, and (4) any event, occurrence, condition, change,
development or effect that, individually or in the aggregate, has resulted in,
or could reasonably be expected to become or result in, a Material Adverse
Effect.
SECTION 7.08 Board of Directors Observation Rights
(a) The Company shall provide the Purchaser the right to have one
representative present (whether in person or by telephone, at the option of the
Purchaser) at all meetings of the Board of Directors of the Company and all
Committees of such Board (including its Audit Committee and Compensation
Committee); provided, that (1) such representative shall not be entitled to vote
at such meetings and (2) such representative shall not be entitled to attend
that portion of meetings during which the Board of Directors or any Committee of
such Board shall discuss (i) any matter which the Board of Directors or such
Committee believes, in good faith, would represent a conflict of interest
vis-a-vis the Purchaser, or (ii) any matter which, in the reasonable written
opinion of the Company's counsel, is entitled to attorney/client privilege.
(b) The Company shall provide the Purchaser with a notice of each meeting
of the Board of Directors of the Company or its Committees as is distributed to
its directors or members, as the case may be, in accordance with the Company
Charter Documents together with all materials that are distributed to the
directors or members, as the case may be, pertaining to such meeting.
SECTION 7.09 Confidentiality The Purchaser shall hold any confidential
information it may learn pursuant to this Agreement (the "Confidential
Information") in strict confidence and safeguard such Confidential Inforamtion
using procedures no less stringent than those used with respect to its own
proprietary, confidential and private information of a similar nature. The
Purchaser shall not use, disclose or make copies of such Confidential
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Information without the prior written consent of the Company. The Purchaser
acknowldeges that the Company is allowing access to the Confidential Information
in reliance upon the Purchaser's promise of confidentiality.
ARTICLE VIII
AFFIRMATIVE COVENANTS
Until such time as the Securities are no longer held by the Purchaser, the
Company hereby covenants and agrees with the Purchaser that the Company shall
cause each Subsidiary to:
SECTION 8.01 Preservation of Corporate Existence and Related Matters.
Preserve and maintain its separate corporate existence and all rights,
franchises, licenses and privileges necessary to the conduct of its business;
and qualify and remain qualified as a foreign corporation and authorized to do
business in each jurisdiction in which the character of its properties or the
nature of its business requires such qualification or authorization, except in
each case to the extent that the failure to be or remain so qualified could not
reasonably be expected to have a Material Adverse Effect.
SECTION 8.02 Maintenance of Property. Protect and preserve all properties
necessary and material to its business, including copyrights, patents, trade
names and trademarks; maintain in good working order and condition (ordinary
wear and tear excepted) all buildings, equipment and other tangible real and
personal property necessary and material to its business.
SECTION 8.03 Maintenance of Insurance. Maintain insurance with responsible
insurance companies against such risks and in such amounts as are customarily
maintained by similar businesses or as may be required by any Requirement of Law
or any Contractual Obligation.
SECTION 8.04 Payment of Taxes and Governmental Charges. Pay all material
taxes, assessments and other governmental charges that may be levied or assessed
upon it or any of its property, provided that the Company may contest such
taxes, assessments and other governmental charges in good faith so long as
adequate reserves are maintained with respect thereto in accordance with GAAP.
SECTION 8.05 Accounting Methods and Financial Records. Maintain a system of
accounting, and keep such books, records and accounts as may be required or as
may be necessary to permit the preparation of financial statements in accordance
with GAAP consistently applied and in compliance with the regulations of any
Governmental Authority having jurisdiction over it or any of its properties.
SECTION 8.06 Compliance With Laws and Obligations. Observe and remain in
material compliance with all Requirements of Law and Contractual Obligations and
maintain in full force and effect all Governmental Approvals, in each case
applicable or necessary to the conduct of its business.
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SECTION 8.07 Visits and Inspections. Permit representatives of the
Purchaser, from time to time during normal business hours and upon reasonable
prior notice, to visit and inspect its books, records and files, including
management letters prepared by independent accountants; and discuss with its
principal officers and its independent accountants, its business, assets,
liabilities, financial condition, results of operations and business prospects.
ARTICLE IX
INDEMNIFICATION
SECTION 9.01 Indemnification. In addition to all other sums due hereunder
or provided for in this Agreement, the Company shall indemnify and hold harmless
the Purchaser and its Affiliates and its officers, directors, agents, employees,
subsidiaries, partners and controlling persons (each, an "Indemnified Party") to
the fullest extent permitted by law, from and against any and all losses,
claims, damages, expenses (including reasonable fees, disbursements and other
charges of counsel) or other liabilities (collectively, "Losses") resulting from
or arising out of any breach of any representation or warranty, covenant or
agreement of the Company, or any legal, administrative or other actions
(including actions brought by the Company or any equity holders of the Company
or derivative actions brought by any Person claiming through or in the Company's
name), proceedings or investigations (whether formal or informal), based upon,
relating to or arising out of the Transactions, or any Indemnified Party's role
therein or in the Transactions. In connection with the obligation of the Company
to indemnify for expenses as set forth above, the Company shall, upon
presentation of appropriate invoices containing reasonable detail, reimburse
each Indemnified Party for all such expenses (including reasonable fees,
disbursements and other charges of counsel) as they are incurred by such
Indemnified Party.
SECTION 9.02 Notification. Each Indemnified Party under this Article IX
will, promptly after the receipt of notice of the commencement of any action,
investigation, claim or other proceeding against such Indemnified Party in
respect of which indemnity may be sought from the Company under this Article IX,
notify the Company in writing of the commencement thereof. In case any such
action, claim or other proceeding shall be brought against any Indemnified Party
and it shall notify the Company of the commencement thereof, the Company shall
be entitled to assume the defense thereof at its own expense, with counsel
reasonably satisfactory to the Indemnified Party. Notwithstanding the Company's
election to appoint counsel to represent the Indemnified Parties in an action,
each Indemnified Party shall have the right to employ separate counsel at its
own expense. The Company agrees that it will not, without the prior written
consent of the Purchaser, settle, compromise or consent to the entry of any
judgment in any pending or threatened claim, action or proceeding relating to
the matters contemplated hereby (if any Indemnified Party is a party thereto or
has been actually threatened to be made a party thereto) unless such settlement,
compromise or consent includes an unconditional release of the Purchaser and
each other Indemnified Party from all liability arising or that may arise out of
such claim, action or proceeding. The rights accorded to Indemnified Parties
hereunder shall be in addition to any rights that any Indemnified Party may have
at common law, by separate agreement or otherwise.
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ARTICLE X
MISCELLANEOUS
SECTION 10.01 Survival. All of the representations, warranties and
agreements made herein shall survive the execution and delivery of this
Agreement, any investigation by or on behalf of the Purchaser, acceptance of the
Securities and payment therefor.
SECTION 10.02 Notices. All notices, demands and other communications
provided for or permitted hereunder shall be made in writing and shall be by
registered or certified first-class mail, return receipt requested, telecopy,
overnight courier service or personal delivery:
(a) if to the Company:
Multi-Link Telecommunications, Inc.
0000 Xxxxxx Xxxxxx
Xxxxx 000
Xxxxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxxxx
Chief Executive Officer
Telecopy: (000) 000-0000
(b) if to Purchaser:
Glenayre Technologies, Inc.
0000 Xxxxxxxx Xxxxxxxxx
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
Attention: Xxxx X. Xxxxxxx
President & CEO
Telecopy: (000) 000-0000
With a copy to:
Xxxxxxx Xxxxxxxxx Xxxxxxx Xxxxxxx, L.L.P.
Bank of America Corporate Center
000 X. Xxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxxx, XX 00000-0000
Attention: Xxxxxx X. Xxxxxxx, Esq.
Telecopy: (000) 000-0000
All such notices and communications shall be deemed to have been duly
given: when delivered by hand, if personally delivered; when delivered by
courier, if delivered by commercial overnight courier service; five Business
Days after being deposited in the mail, postage prepaid, if mailed; and when
receipt is acknowledged, if telecopied.
SECTION 10.03 Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the successors and permitted assigns of the
parties hereto. Subject to applicable securities laws, the Purchaser may assign
any of its rights under this Agreement. The Company may not assign any of its
rights under this Agreement without the prior written consent of the Purchaser.
Except as provided in Article XI no Person other than the parties hereto and
their successors and permitted assign is intended to be a beneficiary of any of
the Transaction Documents.
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SECTION 10.04 Remedies Cumulative. No failure or delay on the part of the
Company or the Purchaser in exercising any right, power or remedy hereunder
shall operate as a waiver thereof, nor shall any single or partial exercise of
any such right, power or remedy preclude any other or further exercise thereof
or the exercise of any other right, power or remedy. The remedies provided for
herein are cumulative and are not exclusive of any remedies that may be
available to the Company or the Purchaser at law, in equity or otherwise.
SECTION 10.05 Determinations, Requests or Consents. Any amendment,
supplement or modification of or to any provision of this Agreement, any waiver
of any provision of this Agreement, and any consent to any departure of the
Company from the terms of any provision of this Agreement, shall be effective
(1) only if it is made or given in writing and signed by the Company and the
Purchaser, and (2) only in the specific instance and for the specific purpose
for which made or given.
SECTION 10.06 Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
SECTION 10.07 Headings. The headings in this Agreement are for convenience
of reference only and shall not limit or otherwise affect the meaning hereof.
SECTION 10.08 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF COLORADO, WITHOUT REGARD
TO THE PRINCIPLES OF CONFLICTS OF LAW OF SUCH STATE.
SECTION 10.09 Severability. If any one or more of the provisions contained
herein, or the application thereof in any circumstance, is held invalid, illegal
or unenforceable in any respect for any reason, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions hereof shall not be in any way impaired, unless the provisions held
invalid, illegal or unenforceable shall substantially impair the benefits of the
remaining provisions hereof.
SECTION 10.10 Entire Agreement. This Agreement, together with the exhibits
and schedules hereto and the other Transaction Documents, is intended by the
parties as a final expression of their agreement and intended to be a complete
and exclusive statement of the agreement and understanding of the parties hereto
in respect of the subject matter contained herein and therein. There are no
restrictions, promises, warranties or undertakings, other than those set forth
or referred to herein or therein. This Agreement, together with the exhibits
hereto, and the other Transaction Documents, supersede all prior agreements and
understandings between the parties with respect to such subject matter.
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SECTION 10.11 Expenses. The Company and the Purchaser shall each bear its
own costs and expenses in connection with (1) the negotiation, preparation,
execution and delivery of this Agreement and the other Transaction Documents and
the consummation of the Transactions and (2) any amendment, modification or
waiver of any of the terms of this Agreement or the other Transaction Documents.
SECTION 10.12 Publicity. Except as may be required by applicable law, none
of the parties hereto shall issue a publicity release or announcement or
otherwise make any public disclosure concerning this Agreement or the
Transactions, without prior approval by the other party hereto (which approval
will not be unreasonably withheld). If any announcement is required by law to be
made by any party hereto, prior to making such announcement such party will
deliver a draft of such announcement to the other parties and shall give the
other parties an opportunity to comment thereon.
SECTION 10.13 Further Assurances. Each of the parties shall execute such
documents and perform such further acts (including obtaining any consents,
exemptions, authorizations, or other actions by, or giving any notices to, or
making any filings with, any Governmental Authority or any other Person) as may
be reasonably required or desirable to carry out or to perform the provisions of
this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered by their respective officers hereunto duly authorized as
of the date first above written.
MULTI-LINK TELECOMMUNICATIONS, INC.
By:
-------------------------------------
Xxxxx X. Xxxxxxxxx
Chief Executive Officer
GLENAYRE TECHNOLOGIES, INC.
By:
-------------------------------------
Xxxx X. Xxxxxxx
President & Chief Executive Officer
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