Active Link Communications, Inc.
Form 8-K
Exhibit 10(a)
ACTIVE LINK COMMUNICATIONS, INC.
0000 XXXXXX XXXXX XXXXXX
XXXXXXXXXX, XX 00000
November 12, 2002
Xx. Xxxxxxxx X. Xxxx
000 X. Xxxxxxx Xxxxxx
Xxxx 0000
Xxxxxxx, Xxxxxxxx
Dear Xxxxxxxx:
The purpose of this letter is to confirm our understandings and agreements
regarding the investment you are making in, and the services you will be
providing to, Active Link. We have reviewed in detail Active Xxxx's difficult
financial condition, and you have agreed to provide Active Link with additional
funding, but only under certain conditions as described in this letter and as
may be mutually agreed to by us in the future.
We understand that you expect to provide Active Link a minimum of $2,000,000 and
up to $3,000,000 in a series of advances to be covered by a Promissory Note in
the form attached as Exhibit A to this Letter Agreement. We understand that
advances will not be made by you unless certain creditors of Active Link agree
to restructuring, extending and/or converting to equity their obligations. We
will work together to finalize these arrangements, it being understood that
final approval regarding any advances to Active Link, for purposes of paying
creditors or for other corporate purposes, will be made by you. In particular,
we agree that a substantial amount of Active Link's debt which is in the form of
convertible promissory notes must be converted into equity.
In addition to the Promissory Note, we will issue to you a warrant to purchase
up to 3,000,000 shares at $.25 per share in the form of the Warrant attached as
Exhibit B to this Letter Agreement. The Warrant will be exercisable through
November 12, 2006.
The Promissory Note and Warrant constitute "Securities" and are subject to
restriction under U.S. securities law. In connection with the purchase and sale
of these Securities, we would appreciate your confirmation by your signature
below of the following representations by you to Active Link:
1. The Securities have not been registered under the U.S.
securities laws and may not be resold except pursuant to an
effective registration statement under the U.S. Securities Act
of 1933 (the "Act") or pursuant to an exemption from
registration, the
Xx. Xxxxxxxx X. Xxxx
November 12, 2002
Page 2
availability of which is to be established to the Company's
satisfaction. You will not sell or otherwise transfer any of
the Securities unless registered or pursuant to an exemption;
2. The Note and the Warrant contain restricted legends regarding
the restrictions on transfer under the Act;
3. Active Link will lodge "stop transfer" instructions in its
transfer records concerning the "restricted" nature of the
Securities;
4. There are no legal restrictions applicable to you which would
preclude the issuance of the Note and Warrants to you;
5. You are purchasing the Securities for your own account and
have no plan to resell or otherwise distribute the Securities;
6. You have the legal right and power to purchase the Securities
and to make the representations to Active Link in this letter.
7. You have had the opportunity to review information regarding
Active Link and have had the opportunity to ask questions of
and receive answers from representatives of Active Link and to
obtain any additional information desired by you in making
your decision to invest in Securities of Active Link. You have
had the opportunity to review reports made by Active Link
which were filed with the Securities and Exchange Commission
(the "SEC") since January 1, 2001. In particular, you have had
the opportunity to review the Report on Form 10-KSB for the
year ended 3/30/02 and the Report on Form 10-QSB for the
quarter ended 6/30/02, and the draft of the Report on Form
10-QSB for the quarter ended 9/30/02. You understand that the
management's discussion and analysis of the results of Active
Link's operations and financial condition in the most recent
10-QSB Report describes Active Link's substantial losses from
operations, Active Link's substantial working capital deficit
and payables and the current lack of funding available to
satisfy those payables.
You understand that the amount paid by you for the Securities
will not be sufficient for Active Link to meet all of its
current obligations and that your funds will most likely be
utilized by Active Link within the next several months to pay
payroll, accounts payable and for other immediate working
capital needs. You understand that your funds will only be a
"bridge" to additional financing and if such financing is not
available, the possible risk of loss of your entire investment
would be greatly increased. You understand that although
Active Xxxx has engaged in discussions with investment bankers
who may provide assistance in locating financing sources,
there are no agreements for financing and such financing may
not be available, or, if available, the terms may not be
advantageous to Active Link.
Xx. Xxxxxxxx X. Xxxx
November 12, 2002
Page 3
8. You are sophisticated in transactions of this type and capable
of evaluating the risks and merits of this type of
transaction. You are an "accredited investor" as that term is
defined in the regulations under the Act, have the financial
ability to bear the economic risk of your investment, have
adequate means for providing for your current needs and
personal contingencies and have no need for liquidity with
respect to its investment in the Company.
Thank you for your investment. We greatly appreciate your support of Active
Link.
Sincerely,
Xxx Xxxxxxxxxx
Chairman of the Board of Directors
AGREED:
/s/ Xxxxxxxx X. Xxxx
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Xxxxxxxx X. Xxxx
