Exhibit 10.22
Letter of Intent by and between Multi-Link Telecommunications, Inc. and
Glenayre Technologies, Inc., dated as of May 17, 2000
May 17, 2000
Multi-Link Telecommunications, Inc.
0000 Xxxxxx Xxxxxx
Xxxxx 000
Xxxxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxxxx
Chief Executive Officer
LETTER OF INTENT
Dear Nigel:
The purpose of this Letter of Intent is to confirm the current intention of
Glenayre Technologies, Inc., a Delaware corporation ("Glenayre"), to offer to
acquire common stock of Multi-Link Telecommunications, Inc., a Colorado
corporation ("MLT"). This Letter of Intent is not, nor should it be construed to
be, an agreement or an offer of an agreement between us (except for the
provisions of Paragraphs 6 and 7 below, which are intended to be binding), but
rather is an expression of our mutual current intentions.
This proposal is based upon the information provided by MLT and other
publicly available information. Based upon our review of this information and
subject to our concluding due diligence, we propose to purchase common stock of
MLT on the following basis:
1. Description of Transaction.
(a) Glenayre would purchase up to $1.5 million of shares of the voting
common stock of MLT (the "MLT Stock") directly from MLT, the number of shares to
be issued to Glenayre to be determined by dividing $1.5 million by the average
closing price for MLT Stock reported on NASDAQ-SCM for the five trading days
immediately before the date of Closing (defined below) (the "Average Closing
Price Per Share"). However, if the total number of shares of MLT Stock to be
purchased from MLT and Van Page would exceed 5.0% of the outstanding common
stock of MLT, on a fully diluted basis, then the $1.5 million investment would
be reduced until Glenayre's total ownership interest is reduced to approximately
5.0%.
(b) The MLT Stock to be purchased by Glenayre would be unregistered but
would be subject to the terms of a mutually acceptable Registration Rights
Agreement which would provide, among other things, (i) for Glenayre to have two
demand registration rights and "piggy-back" registration rights (such piggy-back
rights not to apply to the secondary offering of MLT Stock in the summer of
2000) and (ii) if the MLT Stock is not registered with a reasonable period after
Glenayre exercises its demand registration rights (with MLT using its best
efforts to register such stock as soon as possible), for MLT to issue to
Glenayre, without any additional payment by Glenayre, warrants to purchase
50,000 shares of MLT Stock at a price equal to 120% of the Average Closing Price
Per Share. The warrants shall expire on the fifth anniversary of the Closing
date.
(c) At the Closing, MLT would place an immediate non-cancellable purchase
order for $1.5 million of MVP Voice Messaging Equipment from Glenayre
Electronics, Inc. at full list price for delivery within 12 months after the
Closing date, with $500,000 of such order to be paid to Glenayre at the Closing
and $300,000 of such order to be guaranteed by an irrevocable letter of credit
issued at the Closing. In addition, at the Closing Glenayre Electronics, Inc.
and MLT would enter into a Volume Purchase Agreement pursuant to which MLT would
purchase (at standard volume discounts) from Glenayre Electronics, Inc.
messaging equipment, as needed, over a period of five years after the Closing
(with a guaranteed purchase of $1.0 million during the two-year period beginning
on the first anniversary of the Closing date). MLT estimates that the total
purchase price of the additional equipment purchased under the Volume Purchase
Agreement would be a minimum of $3.5-6.5 million.
(d) In connection with its purchase of MLT Stock, Glenayre would have the
right to have one representative present at all meetings of the Board of
Directors of MLT and MLT's Board Committees (including the Audit and
Compensation Committees). Glenayre would receive notice of each meeting and
would receive all materials distributed to directors or Committee members
pertaining to the meetings.
(e) At the Closing, MLT shall issue warrants to Glenayre, without any
additional payment by Glenayre, to purchase 100,000 shares of MLT Stock at a
price equal to 150% of the Average Closing Price Per Share. The warrants shall
expire on the fifth anniversary of the Closing date.
2. Conditions to Closing. Glenayre's obligation to close the purchase of
MLT Stock will be conditioned upon mutually satisfactory customary conditions
for transactions of this nature, including the following:
(a) satisfactory completion by Glenayre of due diligence;
(b) negotiation and execution of the Definitive Agreement;
(c) approval of the Definitive Agreement, prior to execution, by Glenayre's
Board of Directors and MLT's Board of Directors;
(d) there being no material adverse change in the business or financial
condition of MLT;
(e) MLT being operated in the ordinary course of business between the date
of execution of this Letter of Intent and the Closing date; and
(f) the execution and delivery of the Registration Rights Agreement
referred to in Paragraph 1(b) above and the order and Volume Purchase Agreement
referred to in Paragraph 1(c) above.
3. Definitive Agreement. Commencing promptly after the execution of this
Letter of Intent, the parties and their respective advisers would proceed with
the preparation and negotiation of a definitive purchase agreement (or
agreements) to evidence the purchase of MLT Stock and other matters contemplated
herein (the "Definitive Agreement"). It is intended that the Definitive
Agreement be negotiated and executed within 30 days after execution of this
Letter of Intent. The Definitive Agreement would include customary covenants,
representations, warranties and indemnities, all satisfactory in form and
substance to counsel for Glenayre and MLT.
4. Due Diligence. Immediately upon execution of this Letter of Intent, MLT
would permit Glenayre (and Glenayre's accountants, attorneys and other advisors)
to inspect, to their reasonable satisfaction, the books and records of MLT and
its subsidiaries.
5. Closing. The Closing of the purchase of MLT Stock contemplated herein
(the "Closing") would take place as soon as reasonably possible after the
execution of the Definitive Agreement. The specific date, time and place of
Closing would be designated in the Definitive Agreement.
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6. Non-Disclosure. Glenayre acknowledges and agrees that it has previously
executed and delivered to MLT the Confidentiality Agreement attached hereto as
Exhibit A and the Confidentiality Agreement remain in full force and effect. The
parties will cooperate with each other in making any public disclosures
(including any press releases) about the proposed transactions.
7. Expenses. MLT and Glenayre shall each bear their own fees and expenses
(including attorneys' fees and expenses) in connection with the transactions
contemplated by this Letter of Intent.
* * *
Please indicate your agreement to the above proposal and the conditions set
forth herein by countersigning a copy of this proposal in the space provided
below and returning it to the undersigned. Glenayre reserves the right, at its
sole discretion, to consider this proposal null and void if not accepted by the
undersigned on or before May 17, 2000. This Letter of Intent may be signed in
multiple counterparts which taken together shall be deemed as one document.
Very truly yours,
Glenayre Technologies, Inc.
By: /s/ Xxxx X. Xxxxxxx
------------------------------
Xxxx X. Xxxxxxx
President & CEO
Agreed and Accepted as of
May 17, 2000:
Multi-Link Telecommunications, Inc.
By: /s/ Xxxxx X. Xxxxxxxxx
------------------------------------
Name: Xxxxx X. Xxxxxxxxx
Title: Chief Executive Officer
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