ACTIVE LINK COMMUNICATIONS, INC.
FORM 8K
EXHIBIT 2.1
AMENDED AND RESTATED AGREEMENT
THIS AMENDED AND RESTATED AGREEMENT (the "Agreement"), dated October
18, 2001, by and among Active Link Communications, Inc., a Colorado corporation
("Active Link"), ALCI Acquisition Corp., a Colorado corporation ("ALCI"),
Mobility Concepts, Inc., a Wisconsin corporation ("MC"), Xxxxxxx Xxxx ( the
"Shareholder") and Xxxxx Xxxxxxxxxx.
RECITALS
A. Active Link, ALCI, MC, the Shareholder and Xxxxxxxxxx are parties to
that certain Agreement dated as of June 1, 2001 (the "Initial Agreement").
Active Link, ALCI, MC the Shareholder and Xxxxxxxxxx desire to amend and restate
the Initial Agreement as set forth herein.
B. The Shareholder owns an aggregate of 100% of the outstanding capital
stock of MC.
C. ALCI is a wholly owned subsidiary of Active Link.
D. The respective Boards of Directors of Active Link, ALCI and XX xxxx
it advisable and in the best interest of each corporation and their respective
shareholders that ALCI merge with and into MC pursuant to this Agreement, and MC
shall continue as the surviving party and shall become a wholly owned subsidiary
of Active Link (the "Merger").
E. The parties hereto intend that the Merger constitute a tax-free
reorganization within the meaning of Section 368(a)(1)(A) of the Internal
Revenue Code of 1986, as amended (the "Code").
F. The respective Boards of Directors of Active Link, ALCI and MC have
determined that the Merger in the manner contemplated herein is desirable and in
the best interest of their respective shareholders and, by resolutions duly
adopted, have approved and adopted this Agreement.
STATEMENT OF AGREEMENT
NOW, THEREFORE, in consideration of the premises and of the respective
covenants and provisions herein contained, and intending to be legally bound
hereby, the parties agree as follows:
1. THE MERGER.
1.1 THE MERGER. Upon the terms and subject to the conditions
set forth in this Agreement, ALCI shall be merged with and into MC. Following
the Merger, the separate corporate existence of ALCI shall cease and MC shall
continue as the surviving party in the Merger.
1.2 EFFECTIVE TIME OF THE MERGER. At the Closing, ALCI and MC
shall file articles of merger in such form as is required by and executed in
accordance with the Colorado Business Corporation Act and the Wisconsin Business
Corporation Law. The Merger shall become effective on the date which is the
later of such time as the Articles of Merger are duly filed with the Colorado
Secretary of State and the Wisconsin Secretary of State or at such time as ALCI
and MC shall agree and as shall be specified in the Articles of Merger (the
"Effective Time of the Merger").
1.3 ARTICLES OF INCORPORATION, BYLAWS, BOARD OF DIRECTORS AND
OFFICERS OF MC AS THE SURVIVING PARTY.
(i) The Articles of Incorporation of MC, as in effect
immediately prior to the Effective Time of the Merger, shall be the Articles of
Incorporation of the surviving party until thereafter changed or amended as
provided therein or by applicable law.
(ii) The Bylaws of MC, as in effect immediately prior
to the Effective Time of the Merger, shall be the Bylaws of the surviving party
until thereafter changed or amended as provided therein or by applicable law.
(iii) Directors and officers of MC, as the surviving
party, shall be the persons listed in Schedule 1.3(iii), and each person shall
hold his or her respective office or offices from and after the Effective Time
of the Merger until his or her successor shall have been elected and shall have
qualified or as otherwise provided in the Bylaws of MC as the surviving party.
1.4 CERTAIN INFORMATION WITH RESPECT TO THE CAPITAL STOCK OF
ACTIVE LINK, ALCI AND MC. The respective designations and numbers of outstanding
shares of each class of outstanding capital stock of Active Link, ALCI and MC as
of the date of this Agreement are as follows:
(i) The authorized capital stock of Active Link
consists of (a) 75,000,000 shares of common stock, no par value, of which
10,366,167 shares are issued and outstanding (the "Active Link Common Stock"),
and (b) 3,000,000 shares of preferred stock, of which no shares are issued and
outstanding;
(ii) The authorized, issued and outstanding capital
stock of ALCI consists of 100 shares of common stock (the "ALCI Stock"); and
(iii) The authorized capital stock of MC consists of
9,000 shares of common stock, $.02 par value, of which 1,000 shares are issued
and 440 shares are outstanding (the "MC Stock").
1.5 EFFECT OF MERGER. At the Effective Time of the Merger, the
effect of the Merger shall be as provided in Section 180.1107 of the Wisconsin
Business Corporation Law.
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1.6 CONVERSION OF MC STOCK. At the Effective Time of the
Merger and without any action on the part of the Shareholder, the MC Stock shall
be converted into the right to receive (i) 9,959,651 shares of Active Link
Common Stock; and (ii) a contingent stock issuance if Active Link issues for up
to $1,000,000 in cash additional Active Link securities (exclusive of
conversions, exchanges or exercise of securities outstanding on the Closing
Date) during the period from the Closing Date through March 31, 2002. In the
event of such issuance, the Shareholder shall receive 0.961 shares of Active
Link Common Stock for each 1 share of Active Link Common Stock issued by Active
Link If during the period from the Closing Date through March 31, 2002 Active
Link issues for cash up to $1,000,000 in securities which are convertible,
exchangeable or exercisable into Active Link Common Stock, then the Shareholder
shall receive additional shares of Active Link Common Stock only if such
securities are converted, exchanged or exercised and only if the conversion,
exchange or exercise occurs prior to October 1, 2006. The Shareholder shall only
be entitled to receive additional shares based upon issuances by Active Link for
consideration of up to $1,000,000 and in no event shall the Shareholder receive
more than an additional 2,000,000 shares of Active Link Common Stock. The
following examples shall illustrate the potential contingent stock issuances:
(a) If in December 2001 Active Link were to sell
2,000,000 shares of Active Link Common Stock
at $1 per share for $2,000,000, then the
Shareholder would be issued 961,000 shares
of Active Link Common Stock.
(b) If the example in (a) did not occur, but
instead in December 2001 Active Link were to
sell for $2,000,000 a convertible promissory
note providing for conversion of the note at
the holder's option at any time prior to
December 1, 2003 at the rate of 1 share of
Active Link Common Stock for each $1 of
debt, the Shareholder would receive no
additional shares of Active Link Common
Stock upon the making of the note. However,
if on December 1, 2003, the noteholder
converted the note in full, then the
Shareholder would be issued 961,000 shares
of Active Link Common Stock.
1.7 EFFECT OF MERGER ON ALCI CAPITAL STOCK. At the Effective
Time of the Merger without any action on the part of the holder of ALCI Stock,
each share of ALCI Stock issued and outstanding immediately prior to the
Effective Time of the Merger shall be converted into one share of MC Stock.
1.8 EXCHANGE PROCEDURE; DELIVERY OF CERTIFICATES. At the
Effective Time of the Merger the Shareholder shall, on surrender of certificates
representing the MC Stock (the "MC Certificates"), receive instruments
evidencing the ownership of the Active Link Common Stock. The Shareholder shall
deliver to Active Link, at the Closing, the MC Certificates representing the
shares of MC Stock owned by the Shareholder, duly endorsed in blank by the
Shareholder, or accompanied by blank stock powers together with customary
representations as
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to valid title and investment intent. The Shareholder agrees to use all
commercially reasonable efforts to cure any deficiencies with respect to the
endorsement of his MC Certificates or other documents of conveyance with respect
to the MC Stock or with respect to the stock powers accompanying any MC Stock.
Until surrender is contemplated by this Section 1.8, each MC Certificate shall
be deemed at any time after the Effective Time of the Merger to represent only
the right to receive upon such surrender the consideration set forth in Section
1.6, and the Shareholder shall cease to have any rights with respect to the MC
Stock.
1.9 ACCOUNTING. For the purposes of this Agreement, the
Closing Date shall have the meaning set forth in Section 2; provided, however,
that for purposes of accounting, the parties agree that the Closing shall have
been deemed to have occurred as of the close of business on September 30, 2001.
2. CLOSING.
Subject to the terms and conditions of this Agreement, the
closing of the transactions contemplated by this Agreement (the "Closing") will
take place at 3:00 p.m. on October 17, 2001, unless another time or date is
agreed to in writing by the parties hereto (the actual time and date of the
Closing being referred to herein as the "Closing Date"). The Closing shall be
held at the offices of Xxxxxx Xxxxx, LLP, 0000 Xxxxxxx Xxxxxx, Xxxxx 0000,
Xxxxxx, Xxxxxxxx 00000, unless another place is agreed to in writing by the
parties hereto.
3. REPRESENTATIONS AND WARRANTIES OF MC.
MC represents and warrants to Active Link and ALCI that all of
the following representations and warranties in this Section 3 are true on the
date of this Agreement. As used in this Agreement, the "MC Disclosure Letter"
shall mean the disclosure letter delivered by MC regarding MC pursuant to this
Section 3 on or before the Closing Date, unless otherwise agreed to in writing
by the parties hereto. "Knowledge" when used with respect to MC means (a) the
actual knowledge, after due inquiry, of Xxxxxxx Xxxx, and (b) such facts and
circumstances Xxxxxxx Xxxx should have known regarding MC given his involvement
in the business of MC and the information available to him.
3.1 DUE ORGANIZATION. MC is a corporation, validly existing
and in good standing under the laws of the State of Wisconsin, and has the
requisite power and authority to carry on its business as it is now being
conducted. MC is duly qualified to do business and is in good standing in each
jurisdiction in which the nature of its business or the ownership or leasing of
its properties makes such qualification necessary, except (i) as set forth on
Schedule 3.1 to the MC Disclosure Letter, or (ii) where the failure to be so
authorized or qualified would not have a material adverse effect on the
business, operations, properties, assets or condition (financial or otherwise)
of MC (as used herein with respect to MC, an "MC Material Adverse Effect").
Schedule 3.1 to the MC Disclosure Letter sets forth the jurisdiction in which MC
is incorporated and contains a list of all jurisdictions in which MC is
authorized or qualified to do business. Copies of both the Certificate of
Incorporation, as amended, of MC, certified by the Secretary of State for the
State of Wisconsin, and the Bylaws, as amended, of MC, certified by an
authorized officer of MC (collectively, the "MC Charter Documents") have been
delivered to Active Link
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prior to the Closing Date. The stock records of MC as heretofore made available
to Active Link, are correct and complete in all material respects, except as
disclosed on Schedule 3.1. There are no minutes or other material records or
proceedings of MC in the possession of MC or the Shareholder, which have not
been made available to Active Link prior to the Closing Date, and all of such
minutes or other records of proceedings are correct and complete in all material
respects.
3.2 SUBSIDIARIES. MC has no subsidiaries.
3.3 CAPITAL STRUCTURE. The authorized capital stock of MC
consists of 9,000 shares of common stock, $.02 par value, of which 1,000 shares
are issued and 440 shares are outstanding on the Closing Date. All of the
outstanding MC Stock is currently owned by the Shareholder. All of the
outstanding MC Stock has been duly authorized and is validly issued, fully paid
and non-assessable. Except as set forth in Schedule 3.3 to the MC Disclosure
Letter, MC has no MC Stock or other shares of capital stock reserved for or
otherwise subject to issuance. Except as listed in Schedule 3.3 to the MC
Disclosure Letter or as set forth above, there are no pre-emptive or other
outstanding rights, options, warrants, conversion rights, stock appreciation
rights, redemption rights, repurchase rights, agreements, arrangements or
commitments to issue or sell any shares of capital stock or other securities of
MC or any securities or obligations convertible or exchangeable into or
exercisable for, or giving any person a right to subscribe for or acquire, any
securities of MC, and no securities or obligations evidencing such rights are
authorized, issued or outstanding. MC does not have outstanding any bonds,
debentures, notes or other debt obligations the holders of which have the right
to vote (or convertible into or exercisable for securities having the right to
vote). There are no outstanding or authorized stock appreciation, phantom stock,
profit participation, or similar rights with respect to MC. There are no voting
trusts, proxies or other agreements or understandings with respect to the voting
of the capital stock of MC.
3.4 PREDECESSOR STATUS; ETC. Set forth in Schedule 3.4 to the
MC Disclosure Letter is an accurate list of all names of all predecessor
companies of MC, including the names of any entities acquired by MC (by stock
purchase, merger or otherwise) or owned by MC or from whom MC previously
acquired material assets, in any case, from the earliest date upon which any
person acquired his stock in MC. Except as disclosed on Schedule 3.4 to the MC
Disclosure Letter, MC has not been, within such period of time, a subsidiary or
division of another corporation or, to the best of MC's Knowledge, a part of an
acquisition which was later rescinded.
3.5 SPIN-OFF BY MC. Except as set forth on Schedule 3.5 to the
MC Disclosure Letter, to the best of MC's Knowledge, there has not been any
sale, spin-off or split-up of material assets of either MC or any other person
or entity that directly, or indirectly through one or more intermediaries,
controls, or is controlled by, or is under common control with, MC
("Affiliates") since its inception.
3.6 FINANCIAL STATEMENTS. Schedule 3.6 to the MC Disclosure
Letter includes copies of the following financial statements of MC (the "MC
Financial Statements"): MC's audited Balance Sheets as of March 31, 2001 and
2000, audited Statement of Operations for each
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of the fiscal years ended March 31, 2001 and 2000, unaudited Balance Sheet as of
July 31, 2001 and unaudited Statement of Operations for the four month period
ended July 31, 2001. Except as set forth on Schedule 3.6 to the MC Disclosure
Letter, the MC Financial Statements have been prepared in accordance with
generally accepted accounting principles ("GAAP") applied on a consistent basis.
Each of the MC Financial Statements is complete and correct, in all material
respects, is in accordance with the books and records of MC as of the dates and
for the periods indicated and presents fairly the financial position and results
of operations of MC as at the dates and for the periods indicated subject, in
the case of the unaudited Financial Statements, to normal year-end adjustments
which are not expected to be material in amount.
3.7 LIABILITIES AND OBLIGATIONS. Schedule 3.7 to the MC
Disclosure Letter includes accurate lists as of July 31, 2001 (the "MC BALANCE
SHEET DATE") of (i) all material liabilities of MC which are not reflected on
the MC Financial Statements; and (ii) all loan agreements, indemnity or guaranty
agreements, bonds, mortgages, liens, pledges or other security agreements which
are material to the business, operations, properties, assets or condition
(financial or otherwise) of MC. Except as set forth on Schedule 3.7 to the MC
Disclosure Letter, since the MC Balance Sheet Date, MC has not incurred any
material liabilities of any kind, character and description, whether accrued,
absolute, secured or unsecured, contingent or otherwise, other than liabilities
incurred in the ordinary course of business. Schedule 3.7 to the MC Disclosure
Letter also includes, in the case of those contingent liabilities related to
pending or threatened litigation, or other liabilities which are not fixed or
otherwise accrued or reserved, a good faith and reasonable estimate of the
maximum amount which MC reasonably expects will be payable. For each such
contingent liability or liability for which the amount is not fixed or is
contested, MC has provided to Active Link the following information:
(i) A summary description of the liability together
with the following:
(a) copies of all relevant
documentation relating thereto;
(b) amounts claimed and any other
action or relief sought; and
(c) name of claimant and all other
parties to the claim, suit or
proceeding;
(ii) The name of each court or agency before which
such claim, suit or proceeding is pending; and
(iii) The date such claim, suit or proceeding was
instituted; and
(iv) A good faith and reasonable estimate of the
maximum amount, if any, which is likely to become payable with respect to each
such liability. If no estimate is provided, the estimate shall for purposes of
this Agreement be deemed to be zero.
3.8 PERMITS AND INTANGIBLES.
(i) MC holds all licenses, franchises, permits and
other governmental authorizations required for the ownership or occupying of its
properties and assets, and the
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carrying on of its business, the absence of which would have a MC Material
Adverse Effect. Schedule 3.8(i) to the MC Disclosure Letter includes an accurate
list and summary description of all such licenses, franchises, permits and other
governmental authorizations, including permits (it being understood and agreed
that a list of all environmental permits and other environmental approvals is
set forth on Schedule 3.9 to the MC Disclosure Letter), titles (including motor
vehicle titles and current registrations), fuel permits, licenses, franchises
and certificates. Each of the licenses, franchises, permits and other
governmental authorizations listed on Schedules 3.8(i) and 3.9 to the MC
Disclosure Letter is valid and in full force and effect, and MC has not received
any notice that any governmental authority intends to cancel, terminate or not
renew any such license, franchise, permit or other governmental authorization,
the cancellation, termination or non-renewal of which would have a MC Material
Adverse Effect. MC has conducted and is conducting its business in compliance
with the requirements, standards, criteria and conditions set forth in the
licenses, franchises, permits and other governmental authorizations listed on
Schedules 3.8(i) and 3.9 of the MC Disclosure Letter, except where
non-compliance would not have a MC Material Adverse Effect. Except as
specifically provided in Schedule 3.8(i) to the MC Disclosure Letter, the
transactions contemplated by this Agreement will not result in a default under
or a material breach or violation of, or materially and adversely affect the
rights and benefits afforded to MC by, any such licenses, franchises, permits or
government authorizations.
(ii) Schedule 3.8(ii) to the MC Disclosure Letter
contains a complete and correct list of each patent, trademark, trade name,
service xxxx and copyright owned or used by MC, as well as all registrations
thereof and pending applications therefor, and each license or other agreement
relating thereto. Except as set forth on Schedule 3.8(ii), each of the foregoing
is owned by MC, free and clear of all material liens, claims, pledges, charges,
agreements, restrictions and encumbrances of any kind (collectively, the
"Liens"), and is in good standing and not the subject of any challenge or
contest. There have been no claims made and MC has not received any notice or
otherwise has Knowledge that any of the foregoing is invalid or conflicts with
the asserted rights of others. MC possesses all patents, patent licenses, trade
names, trademarks, service marks, brand marks, brand names, copyrights,
know-how, formulae and other proprietary and trade rights necessary for the
conduct of its business as now conducted, the absence of which would not have a
MC Material Adverse Effect, and is not subject to any restrictions and without
any known conflict with the rights of others, and MC has not forfeited or
otherwise relinquished any such patent, patent license, trade name, trademark,
service xxxx xxxxx xxxx, brand name, copyright, know-how, formulae or other
proprietary right necessary for the conduct of its business as conducted on the
date hereof. MC is not under any obligation to pay any royalties or similar
payments in connection with any license or other intellectual property right to
any Shareholder or any affiliate of any Shareholder.
3.9 ENVIRONMENTAL MATTERS. Except as set forth on Schedule 3.9
to the MC Disclosure Letter, and except where any failure to comply or action
would not have an MC Material Adverse Effect, (i) MC has complied with, and is
in compliance with, all Federal, state, local and foreign statutes (civil and
criminal), laws, ordinances, regulations, rules, notices, permits, judgments,
orders and decrees applicable thereto or to any of its properties, assets,
operations and businesses relating to environmental protection (collectively
"Environmental Laws") including, without limitation, Environmental Laws relating
to air, water, land and the
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generation, storage, use, handling, transportation, treatment or disposal of
Hazardous Wastes and Hazardous Substances including petroleum and petroleum
products (as such terms are defined in any applicable Environmental Laws); (ii)
MC has obtained and adhered to all necessary permits and other approvals
necessary to treat, transport, store, dispose of and otherwise handle Hazardous
Wastes and Hazardous Substances, an accurate list of all of which permits and
approvals is set forth on Schedule 3.9 to the MC Disclosure Letter, and has
reported to the appropriate authorities, to the extent required by all
Environmental Laws, all past and present sites owned and operated by MC where
Hazardous Wastes or Hazardous Substances have been treated, stored, disposed of
or otherwise handled by MC; (iii) to MC's Knowledge, there have been no releases
or threats of releases (as defined in Environmental Laws) at, from, in or on any
property operated by MC, except as permitted by Environmental Laws; (iv) to MC's
Knowledge, there is no on-site or off-site location to which MC has transported
or disposed of Hazardous Wastes and Hazardous Substances or arranged for the
transportation of Hazardous Wastes and Hazardous Substances, which site is the
subject of any Federal, state, local or foreign enforcement action or any other
investigation which is reasonably likely to lead to any claim against MC for any
clean-up cost, remedial work, damage to natural resources, property damage or
personal injury including, but not limited to, any claim under the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended; and
(v) MC has no contingent liability in connection with any release of any
Hazardous Waste or Hazardous Substance into the environment.
3.10 PERSONAL PROPERTY.
(i) Schedule 3.10 to the MC Disclosure Letter
includes an accurate list of (a) all personal property owned by MC with an
individual value in excess of $50,000 and (b) all leases and agreements in
respect of the personal property of MC, including, in the case of each of (a)
and (b), (1) true, complete and correct copies of all such leases, and (2) an
indication as to which assets are currently owned, or were formerly owned, by
the Shareholder . Except as set forth on Schedule 3.10 to the MC Disclosure
Letter, all material personal property used by MC in its business is either
owned by MC or leased by MC pursuant to a lease included on Schedule 3.10 to the
MC Disclosure Letter, to the best of MC's Knowledge, all leases and agreements
included on Schedule 3.10 to the MC Disclosure Letter are in full force and
effect.
(ii) The inventory of MC (including raw materials,
work-in-process and finished goods) is in good and merchantable condition, and
is saleable in the ordinary course of business, excluding inventory maintained
by MC solely for purposes of honoring warranty and service commitments. Each
item of MC's inventory is carried on the Balance Sheet at the lower of cost or
market, with cost determined on a first-in, first-out basis.
(iii) All receivables of MC, either reflected on the
Balance Sheet or created subsequent to the MC Balance Sheet Date, are, to the
extent not previously collected in full, true and valid receivables, created in
the ordinary course of business of MC and to the best of MC's Knowledge, fully
collectable. Set forth in Schedule 3.10 to the MC Disclosure Letter is a list of
all accounts receivable in excess of sixty days. Except as set forth in Schedule
3.10, MC has not permitted or agreed to any extension in the payment of
receivables other than in the ordinary course of business and consistent with
past practice.
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(iv) The buildings, machinery and equipment owned or
used by MC (a) are adequate for the conduct of the business of MC, and (b) are
in good operating condition and repair, and free from any known defects, except
for such minor defects as do not substantially interfere with the continued use
thereof in the conduct of normal operations and which require no more than
regular maintenance.
3.11 MATERIAL CONTRACTS AND COMMITMENTS. Schedule 3.11 to the
MC Disclosure Letter includes an accurate list as of the Closing Date, of all
material written or oral leases, agreements or other contracts or legally
binding contractual rights or contractual obligations or contractual commitments
relating to or in any way affecting the operation or ownership of the business
of MC (the "Material Contracts") including, but not limited to, those of a type
described below:
(i) Any consulting agreement, employment agreement,
change-in-control agreement, and collective bargaining arrangements with any
labor union and any such agreements currently in negotiation or proposed;
(ii) Any contract for capital expenditures or the
acquisition or construction of fixed assets in excess of $50,000.
(iii) Any contract for the purchase, maintenance or
acquisition, or the sale or furnishing, of materials, supplies, merchandise,
products, machinery, equipment, parts or other property or services (except if
such contract is made in the ordinary course of business and requires aggregate
future payments of less than $50,000);
(iv) Any contract other than trade payables in the
ordinary course of business relating to the borrowing of money, or the guaranty
of another person's borrowing of money, including, without limitation, any
notes, mortgages, indentures and other obligations, guarantees of performance,
agreements and instruments for or relating to any lending or borrowing,
including assumed indebtedness;
(v) Any contract granting any person a lien on all or
any part of the assets of MC;
(vi) Any contract for the cleanup, abatement or other
actions in connection with hazardous materials as defined under any
Environmental Laws, the remediation of any existing environmental liabilities or
relating to the performance of any environmental audit or study;
(vii) Any contract granting to any person an option
or a first refusal, first-offer or similar preferential right to purchase or
acquire any material assets of MC;
(viii) Any contract with any agent, distributor or
representative which is not terminable by MC upon ninety (90) calendar days or
less notice without penalty;
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(ix) Any contract under which MC is (1) a lessee or
sublessee of any machinery, equipment, vehicle or other tangible personal
property, or (2) a lessor of any tangible personal property owned by MC, in
either case having an original value in excess of $50,000;
(x) Any contract under which MC has granted or
received a license or sublicense or under which it is obligated to pay or has
the right to receive a royalty, license fee or similar payment;
(xi) Any contract between MC and the Shareholder, or
between MC and Xxxxxx Xxxx, or between MC and any business entity or
organization controlled by either the Shareholder or Xxxxxx Xxxx, or any member
of the immediate family of the Shareholder or Xxxxxx Xxxx;
(xii) Any contract providing for the indemnification
or holding harmless of any officer, director, employee or other person, other
than as provided in the by-laws of MC;
(xiii) Any contract for purchase or sale by MC or the
granting of any options with respect to, or providing for any labor, services or
materials (including brokerage or management services) involving any real
property on which MC conducts any aspect of its business involving aggregate
future payments of more than $50,000;
(xiv) Any contract limiting, restricting or
prohibiting MC from conducting business anywhere in the United States or
elsewhere in the world;
(xv) Any joint venture or partnership agreement;
(xvi) Any lease, sublease or associated agreements
relating to the property leased by MC;
(xvii) Any material contract requiring prior notice,
consent or other approval upon a change of control in the equity ownership of
MC, which contracts shall be separately identified on Schedule 3.11 to the MC
Disclosure Letter;
(xviii) Any contract with a customer of MC involving
work to be performed or product to be delivered, in each case subsequent to
October 31, 2000, in excess of $50,000; and
(xix) Any other contract, whether or not made in the
ordinary course of business, which involves future payments in excess of
$50,000.
On or prior to the Closing Date, MC has provided Active Link a true and complete
copy of each written Material Contract and a true and complete summary of each
oral Material Contract, in each case including all amendments or other
modifications thereto. Except as set forth on Schedule 3.11 to the MC Disclosure
Letter, to the best of MC's Knowledge, each Material Contract is in full force
and effect. Except as set forth on Schedule 3.11 of the MC Disclosure Letter, MC
has performed substantially all obligations required to be performed by it as of
the date hereof and will have performed substantially all obligations required
to be performed by it
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as of the Closing Date under each Material Contract, and neither MC, nor any
other party to any Material Contract, is in breach or default thereunder, and
there exists no condition which would, with or without the lapse of time or the
giving of notice, or both, constitute a breach or default thereunder, except
where any such breach or default would not have a MC Material Adverse Effect. MC
has not been notified that any party to any Material Contract intends to cancel,
terminate, not renew, or exercise an option under any Material Contract, whether
in connection with the transactions contemplated hereby or otherwise, which
cancellation, termination, non-renewal or notification would have a MC Material
Adverse Effect.
3.12 REAL PROPERTY. Schedule 3.12 to the MC Disclosure Letter
is a correct and complete list, and a brief description of all real property
leased by MC (the "Leased Real Property"), and all facilities thereon. Except as
lessee of Leased Real Property, MC is not a lessee under or otherwise a party to
any lease, sublease, license, concession or other agreement, whether written or
oral, pursuant to which another person or entity has granted to MC the right to
use or occupy all or any portion of any real property. MC does not have an
ownership interest in any real property.
MC has a valid leasehold interest in the Leased Real
Property, free and clear of all liens, assessments or restrictions, except as
set forth in the subject leases and except for taxes, matters of record and
other interests of the owner of the subject property of which MC has no notice
(including, without limitation, inchoate liens arising out of the provision of
labor, services or materials to any such Leased Real Property). The Leased Real
Property constitutes all the real properties reflected on the MC Financial
Statements or used or occupied by MC in connection with its business or
otherwise.
With respect to the Leased Real Property, except as
reflected on Schedule 3.12 to the MC Disclosure Letter:
(i) MC is in exclusive possession thereof and no
easements, licenses or rights are necessary to conduct business thereon in
addition to those which exist as of the date hereof;
(ii) (a) the structures and fixtures at the Leased
Real Property, including, without limitation, heating, ventilation and air
conditioning systems, roofs, foundations and floors, are in good operating
condition and repair; (b) to the best of MC's Knowledge, the Leased Real
Property is not in violation of any health, safety, building, or environmental
ordinances, laws, codes or regulations; nor has any notice of any claimed
violation of any such ordinances, laws, codes or regulations been served on MC;
(iii) The Leased Real Property is supplied with
utilities and other third-party services, such as water, sewer, electricity,
gas, roads, rail service and garbage collection, necessary for the current
operation of the business and, to the best of MC's Knowledge, such Leased Real
Property is maintained in all material respects in accordance with all laws
applicable to MC or the Leased Real Property;
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(iv) MC is not a party to any written or oral
agreement or undertaking with owners or users of properties adjacent to the
Leased Real Property relating to the use, operation or maintenance of such
facility or any adjacent real property;
(v) MC is not a party to any lease, sublease,
license, concession or other agreement, whether written or oral, pursuant to
which MC has granted to any party or parties the right to use or occupy all or
any portion of the Leased Real Property;
(vi) To the extent that MC has responsibility under
the lease(s) for the Leased Real Property for compliance with the provisions of
the ADA, all alterations, rehabilitations, structures, or improvements in the
Leased Property comply in all material respects with the ADA;
(vii) To the best of MC's Knowledge: (a) there are no
material defects in any improvements on or to the Leased Real Property; (b) MC
has not installed at the Leased Real Property regulated quantities of asbestos;
and (c) the Leased Real Property is free from flooding and leaks, except some
minor roof leaks currently under repair.
3.13 INSURANCE. Schedule 3.13 to the MC Disclosure Letter
includes (i) an accurate list of all insurance policies carried by MC since
January 1, 1998, and (ii) an accurate list of all insurance loss claims or
workers compensation claims received since January 1, 1998 and complete copies
of the foregoing items have been delivered to Active Link on or prior to the
Closing Date. Such insurance policies evidence all of the insurance that MC has
been required to carry pursuant to all of its contracts and other agreements and
pursuant to all applicable laws. All insurance policies for the current policy
periods are in full force and effect and shall remain in full force and effect
through the Closing Date. Since January 1, 1998, no insurance carried by MC has
been canceled by the insurer and MC has not been denied coverage.
3.14 COMPENSATION; EMPLOYMENT AGREEMENTS; ORGANIZED LABOR
MATTERS. Schedule 3.14 to the MC Disclosure Letter includes an accurate list of
(i) all officers, directors and key employees of MC, (ii) all employment
agreements with such officers, directors and key employees and the rate of
compensation (and the portions thereof attributable to salary, bonus and other
compensation, respectively) of each of such persons as of the MC Balance Sheet
Date and the date hereof. MC has provided to Active Link true, complete and
correct copies of any employment agreements for persons listed on Schedule 3.14
to the MC Disclosure Letter. Since the MC Balance Sheet Date, except as
disclosed in Schedule 3.14, there have been no increases in the compensation
payable or any special bonuses to any officer, director, key employee or other
employee, except ordinary salary increases implemented on a basis consistent
with past practices. Except as set forth on Schedule 3.14 to the MC Disclosure
Letter, (i) MC is not bound by or subject to (and none of its assets or
properties is bound by or subject to) any arrangement with any labor union, (ii)
no employees of MC are represented by any labor union or covered by any
collective bargaining agreement, (iii) no campaign to establish such
representation is in progress and (iv) there is no pending or threatened labor
dispute involving MC and any group of its employees nor has MC experienced any
labor interruptions over the past three years. MC believes its relationship with
its employees to be good.
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3.15 EMPLOYEE BENEFIT PLANS. Schedule 3.15 to the MC
Disclosure Letter sets forth all employee benefit plans of MC, including all
employment agreements and other agreements or arrangements containing "golden
parachute" or other similar provisions, and deferred compensation agreements. MC
has delivered to Active Link true, complete and correct copies of such plans,
agreements and any trusts related thereto, and classifications of employees
covered thereby as of the MC Balance Sheet Date. Except for the employee benefit
plans, if any, described on Schedule 3.15 to the MC Disclosure Letter, MC does
not sponsor, maintain or contribute to any plan program, fund or arrangement
that constitutes an "employee pension benefit plan," or an "employee welfare
benefit plan," nor has MC any obligation to contribute to or accrue or pay any
benefits under any deferred compensation or retirement funding arrangement on
behalf of any employee or employees (such as, for example, and without
limitation, any individual retirement account or annuity, any "excess benefit
plan" (within the meaning of Section 3(36) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), or any non-qualified deferred
compensation arrangement). For the purposes of this Agreement, the term
"employee welfare benefit plan" shall have the same meaning as given that term
in Section 3(1) of ERISA and "employee pension benefit plan" shall have the same
meaning as is given that term in Section 3(2) of ERISA. MC has not sponsored,
maintained or contributed to any employee pension benefit plan other than the
plans set forth on Schedule 3.15 to the MC Disclosure Letter, nor is MC required
to contribute to any retirement plan pursuant to the provisions of any
collective bargaining agreement establishing the terms and conditions of
employment of any employees of MC. All accrued contribution obligations of MC
with respect to any plan listed on Schedule 3.15 to the MC Disclosure Letter
have either been fulfilled in their entirety or are fully reflected on the
balance sheet of MC as of the MC Balance Sheet Date.
3.16 COMPLIANCE WITH THE CODE AND ERISA. All plans listed on
Schedule 3.15 to the MC Disclosure Letter that are intended to qualify (the
"Qualified Plans") under Section 401(a) of the Code are, and have been so
qualified and have been determined by the Internal Revenue Service to be so
qualified, and copies of such determination letters are included as part of
Schedule 3.15 to the MC Disclosure Letter. Further, all plans listed in Schedule
3.15 which are "employee welfare benefit plans" have been established and
operated in compliance with the provisions of the Code and ERISA and, except as
disclosed on Schedule 3.16 to the MC Disclosure Letter, all reports and other
documents required to be filed with any governmental agency or distributed to
plan participants or beneficiaries (including, but not limited to, actuarial
reports, audits or tax returns) have been timely filed or distributed, and
copies thereof are included as part of Schedule 3.15 to the MC Disclosure
Letter. None of the MC stockholders has engaged in any transaction prohibited
under the provisions of Section 4975 of the Code or Section 406 of ERISA. No
plan listed in Schedule 3.15 to the MC Disclosure Letter has incurred an
accumulated funding deficiency, as defined in Section 412(a) of the Code and
Section 302(1) of ERISA; and MC has not incurred any liability for excise tax or
penalty due to the Internal Revenue Service nor any liability to the Pension
Benefit Guaranty Corporation.
(i) There have been no terminations, partial
terminations or discontinuance of contributions to any such Qualified Plan
intended to qualify under Section 401(a) of the Code without notice to and
approval by the Internal Revenue Service;
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(ii) No plan listed in Schedule 3.15 to the MC
Disclosure Letter, subject to the provisions of Title IV of ERISA, has been
terminated;
(iii) There have been no "reportable events" (as that
phrase is defined in Section 4043 of ERISA) with respect to any such plan listed
in Schedule 3.15 to the MC Disclosure Letter;
(iv) MC has not incurred liability under Section 4062
of ERISA; and
(v) No circumstances exist pursuant to which MC could
have any direct or indirect liability whatsoever (including, but not limited to,
any liability to any multiemployer plan or the PBGC under Title IV of ERISA or
to the Internal Revenue Service for any excise tax or penalty, or being subject
to any statutory lien to secure payment of any such liability) with respect to
any plan now or heretofore maintained or contributed to by MC or any entity
other than MC that is, or at any time was, a member of a "controlled group" or
"affiliated service group" (as defined in Sections 414(b), (c) or (m) of the
Code) that includes MC.
3.17 CONFORMITY WITH LAW; LITIGATION.
(i) Except as set forth in Schedule 3.17 to the MC
Disclosure Letter, MC is not in violation of any law or regulation or any order
of any court or Federal, state, municipal or other governmental department,
commission, board, bureau, agency or instrumentality having jurisdiction over it
which would have an MC Material Adverse Effect.
(ii) Except as set forth in Schedule 3.17 to the MC
Disclosure Letter (which shall disclose the parties to, nature of and relief
sought for each matter to be disclosed), other than collection actions by MC, in
the ordinary course of business on its own behalf, MC is not a party to any
litigation involving a single claim for an amount which is greater than $25,000
or multiple claims which in the aggregate do not exceed $50,000; furthermore:
(a) There is no suit, action,
proceeding, investigation, claim or
order pending or threatened against
MC, or with respect to any Employee
Plan, or any fiduciary of any such
plan (or pending or threatened
against any of the officers,
directors or employees of MC with
respect to the business or
currently proposed business
activities of MC, or to which MC is
otherwise a party, or which may
have or is likely to have an MC
Material Adverse Effect, before any
court, or before any governmental
authority, department, commission,
bureau, agency or other
governmental department or
arbitrator (collectively,
"Claims"), nor is there any basis
for any such Claims.
(b) Except as set forth in Schedule
3.17 to the MC Disclosure Letter,
MC is not subject to any
unsatisfied or continuing judgment,
order or decree of any court or
governmental authority, and MC is
not otherwise exposed to any
liability or disadvantage which
could have an MC Material Adverse
Effect.
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3.18 TAXES. Except as set forth in Schedule 3.18 to the MC
Disclosure Letter, on or before the Closing Date, MC shall have filed all
requisite federal, state and other tax returns or extension requests for all
fiscal periods ended on or before the MC Balance Sheet Date and as of the
Closing Date; except as set forth in Schedule 3.18 to the MC Disclosure Letter,
there are no examinations in progress or claims against MC for federal, state
and other Taxes (including penalties and interest) for any period or periods
prior to and including the MC Balance Sheet Date and no notice of any claim for
taxes, whether pending or threatened, has been received. Except as set forth in
Schedule 3.18 to the MC Disclosure Letter, on or before the Closing Date, all
taxes, including interest and penalties (whether or not shown on any tax return)
owed by MC, any member of an affiliated or consolidated group which includes or
included MC, or with respect to any payment made or deemed made by MC herein
have been paid. To the knowledge of MC, the amounts shown as accruals for taxes
on the MC Audited Financial Statements are sufficient for the payment of all
taxes of the kinds indicated (including penalties and interest) for all fiscal
periods ended on or before that date. Copies of (i) any tax examinations, (ii)
extensions of statutory limitations, (iii) the federal and local income tax
returns and franchise tax returns of MC for the last three (3) fiscal years have
been provided to Active Link on or prior to the Closing Date. In addition, the
accountants for MC shall provide a letter evidencing that the personal tax
returns of the Shareholder for 1998 and 1999 have been prepared and delivered to
the Shareholder and that the Shareholder shall certify that said tax returns
have been filed. Furthermore, the Shareholder shall certify that the extension
for 2000, has been filed.
3.19 NO VIOLATIONS; NO CONFLICTS. MC is not in violation of
any of the MC Charter Documents. MC is not in default under any lease,
instrument, agreement, license, or permit set forth on the Schedules to the MC
Disclosure Letter, or any other material agreement to which it is a party or by
which its properties are bound (the "Material Documents"), which default would
constitute a MC Material Adverse Effect; and, except as set forth in Schedule
3.19 to the MC Disclosure Letter, (a) the rights and benefits of MC under the
Material Documents will not be adversely affected by the transactions
contemplated hereby, and (b) the execution of this Agreement and the performance
of the obligations hereunder and the consummation of the transactions
contemplated hereby will not result in any violation of, or breach of, or
constitute a default under, any of the terms or provisions of the Material
Documents or the Charter Documents, or violate the provisions of any statute, or
any order, rule or regulation of any governmental body or agency or
instrumentality thereof, of any order, writ, injunction or decree of any court
or any arbitrator having jurisdiction over MC or the property of MC in such a
manner as shall constitute a MC Material Adverse Effect. Except as set forth on
Schedule 3.19 to the MC Disclosure Letter, none of the Material Documents
requires notice to, or the consent or approval of, any governmental agency or
other third party with respect to any of the transactions contemplated hereby in
order to remain in full force and effect and consummation of the transactions
contemplated hereby will not give rise to any right to termination, cancellation
or acceleration or loss of any right or benefit. Except as set forth on Schedule
3.19 to the MC Disclosure Letter, none of the Material Documents prohibits the
use or publication by MC of the name of any other party to such Material
Document, and none of the Material Documents prohibits or restricts MC from
freely providing services to any other customer or potential customer of MC.
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3.20 GOVERNMENT CONTRACTS. Except as set forth on Schedule
3.20 to the MC Disclosure Letter, MC is not now a party to any governmental
contract subject to price redetermination or renegotiation.
3.21 ABSENCE OF CHANGES. Since July 31, 2001, except as set
forth on Schedule 3.21 to the MC Disclosure Letter, there has not been:
(i) Any material adverse change in the financial
condition, assets, liabilities (contingent or otherwise), income or business of
MC;
(ii) Any damage, destruction or loss (whether or not
covered by insurance) materially adversely affecting the properties or business
of MC;
(iii) Any change in the authorized capital of MC or
its outstanding securities or any change in its ownership interests or any grant
of any options, warrants, calls, conversion rights or commitments;
(iv) Any declaration or payment of any dividend or
distribution in respect of the capital stock or any direct or indirect
redemption, purchase or other acquisition of any of the capital stock of MC;
(v) Any increase in the compensation, bonus, sales
commissions or fee arrangement payable or to become payable by MC to any of
their respective officers, directors, stockholders, employees, consultants or
agents, except for ordinary and customary bonuses and salary increases for
employees in accordance with past practice;
(vi) Any work interruptions, labor grievances or
claims filed, or any event or condition of any character, materially adversely
affecting the business of MC;
(vii) Any sale or transfer, or any agreement to sell
or transfer, any material assets, property or rights of MC to any person,
including, without limitation, any of the stockholders and their affiliates;
(viii) Any cancellation, or agreement to cancel, any
indebtedness or other obligation owing to MC, including without limitation any
indebtedness or obligation of any stockholder or any affiliate thereof;
(ix) Any plan, agreement or arrangement granting any
preferential rights to purchase or acquire any interest in any of the assets,
property or rights of MC or requiring consent of any party to the transfer and
assignment of any such assets, property or rights;
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(x) Any purchase or acquisition of, or agreement,
plan or arrangement to purchase or acquire, any property, rights or assets
outside of the ordinary course of business of MC;
(xi) Any waiver of any material rights or claims of
MC;
(xii) Any amendment or termination of any Material
Documents or other right to which MC is a party;
(xiii) Any transaction by MC outside the ordinary
course of its business;
(xiv) Any cancellation or termination of a Material
Contract with a customer or client prior to the scheduled termination date; or
(xv) Any other distribution of property or assets by
MC other than in the ordinary course of business.
3.22 RELATED PARTY TRANSACTIONS AND INTEREST. Except as set
forth on Schedule 3.22, no Shareholder nor any officer or director of MC or any
of their respective affiliates owns any direct or indirect interest of any kind
in, or controls or is a director, officer, employee or partner of, or consultant
to, or lender to or borrower from, or has the right to participate in the
profits of any person which is (i) a competitor, supplier, customer, landlord,
tenant, creditor or debtor of MC, (ii) engaged in a business related to the
business of MC or (iii) participating in any transaction to which MC is a party.
It is understood that any officer or director of MC or any of their respective
affiliates may make investments of up to 5% in a company or companies whose
stock is listed on a national securities exchange or actively traded in the
over-the-counter market, which investment does not give such person the right to
control or influence the policy decisions of any such company.
3.23 RELATIONS WITH GOVERNMENTS. All political contributions
made by MC since May 30, 1998, have been made in a lawful manner. MC has not
made, offered or agreed to offer anything of value to any governmental official,
political party or candidate for government office, except in a lawful manner,
nor has it otherwise taken any action which would cause MC to be in violation of
the Foreign Corrupt Practices Act of 1977, as amended or any law of similar
effect.
3.24 DISCLOSURE. This Agreement, including the Exhibits and MC
Disclosure Letter and the Schedules thereto, together with the other information
furnished to Active Link and ALCI by MC in connection herewith, do not contain
an untrue statement of a material fact or omit to state a material fact
necessary to make the statements herein and therein, in light of the
circumstances under which they were made, not misleading.
3.25 PROHIBITED ACTIVITIES. Except as set forth on Schedule
3.25 to the MC Disclosure Letter, MC has not, between July 31, 2001 and the date
hereof, taken any Prohibited Activities as defined in Section 7.3.
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3.26 AUTHORITY. MC has full corporate power and authority to
execute and deliver this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly and validly
approved by the Board of Directors and the Shareholder of MC. No additional
corporate proceedings on the part of MC are necessary to approve this Agreement
and to consummate the transactions contemplated hereby. This Agreement has been
duly and validly executed and delivered by MC and this Agreement constitutes a
valid and (assuming due authorization, execution and delivery by Active Link and
ALCI) legally binding obligation of MC, enforceable in accordance with its
terms, except (i) as limited by applicable bankruptcy, insolvency,
reorganization, moratorium and other laws of general application affecting
enforcement of creditors' rights generally, and (ii) as limited by laws relating
to the availability of specific performance, injunctive relief or other
equitable remedies.
4. REPRESENTATIONS AND WARRANTIES OF ACTIVE LINK AND ITS SUBSIDIARIES.
Active Link and ALCI jointly and severally represent and
warrant to MC that all of the following representations and warranties in this
Section 4 are true on the date of this Agreement. As used in this Agreement, the
"Active Link Disclosure Letter" shall mean the disclosure letter delivered by
Active Link to MC regarding Active Link and each of its subsidiaries
(collectively, the "Subsidiaries") pursuant to this Section 4 on or before the
Closing Date, unless otherwise agreed to in writing by the parties hereto. As
used in this Section 4, "Active Link" refers to Active Link and all of its
Subsidiaries.
4.1 DUE ORGANIZATION. Active Link and its Subsidiaries are
each a corporation duly organized, validly existing and in good standing under
the laws of the state of its incorporation, and has the requisite power and
authority to carry on its business as it is now being conducted. Active Link and
each of its Subsidiaries is duly qualified to do business and is in good
standing in each jurisdiction in which the nature of its business or the
ownership or leasing of its properties makes such qualification necessary,
except (i) as set forth on Schedule 4.1 to Active Link Disclosure Letter or (ii)
where the failure to be so authorized or qualified would not have an material
adverse effect on the business, operations, properties, assets or condition
(financial or otherwise), of Active Link taken as a whole (as used herein with
respect to Active Link, or any Subsidiary, an "Active Link Material Adverse
Effect"). Schedule 4.1 to the Active Link Disclosure Letter sets forth the
jurisdiction in which Active Link and each of its Subsidiaries is incorporated
and contains a list of all jurisdictions in which Active Link and each of its
Subsidiaries are authorized or qualified to do business. True, complete and
correct copies of the Articles of Incorporation and Bylaws, each as amended, of
Active Link (the "Active Link Charter Documents") have been delivered to MC.
True, complete and correct copies of the Articles of Incorporation and Bylaws,
each as amended, of each of the Subsidiaries (the "Subsidiary Charter
Documents") have been delivered to MC. The stock records of Active Link and the
Subsidiaries as heretofore made available to MC, are correct and complete in all
material respects. There are no minutes or other records or proceedings of
Active Link or the Subsidiaries which have not been made available to MC, and
all of such minutes or other records of proceedings are correct and complete in
all respects.
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4.2 SUBSIDIARIES. The names and jurisdiction of incorporation
of the Subsidiaries of Active Link are set forth in Schedule 4.2. ALCI has no
subsidiaries.
4.3 CAPITAL STRUCTURE. The authorized capital stock of each of
the Subsidiaries is set forth on Schedule 4.3. All of the issued and outstanding
shares of the capital stock of each of the Subsidiaries have been duly
authorized and are validly issued, fully paid and non-assessable. The authorized
capital stock of Active Link consists of (a) 75,000,000 shares of common stock,
no par value, of which 10,366,167 shares are issued and outstanding (the "Active
Link Common Stock"), and (b) 3,000,000 shares of preferred stock, of which no
shares are issued and outstanding (the "Active Link Preferred Stock"). All of
the outstanding Active Link Common Stock is duly authorized, validly issued,
fully paid and non-assessable. All of the Active Link Preferred Stock has been
duly authorized. Except as listed in Schedule 4.3, neither Active Link nor any
of its Subsidiaries has any common stock, or other shares of capital stock,
reserved for, or otherwise subject to, issuance. Except as listed in Schedule
4.3, there are no pre-emptive or other outstanding rights, options, warrants,
conversion rights, stock appreciation rights, redemption rights, repurchase
rights, agreements, arrangements or commitments to issue or sell any shares of
capital stock or other securities of Active Link or any Subsidiary or any
securities or obligations convertible or exchangeable into or exercisable for,
or giving any person a right to subscribe for or acquire, any securities of any
Active Link or Subsidiary, and no securities or obligations evidencing such
rights are authorized, issued or outstanding. Except as listed in Schedule 4.3,
neither Active Link nor any Subsidiary has outstanding bonds, debentures, notes
or other debt obligations the holders of which have the right to vote (or
convertible into or exercisable for securities having the right to vote). There
are no outstanding or authorized stock appreciation, phantom stock, profit
participation, or similar rights with respect to either Active Link or any
Subsidiary. There are no voting trusts, proxies or other agreements or
understandings with respect to the voting of the capital stock of Active Link or
any Subsidiary.
4.4 SEC FILINGS; FINANCIAL STATEMENTS.
(i) Active Link and each of its Subsidiaries has
filed all forms, reports and documents required to be filed by it with the
Securities and Exchange Commission (the "SEC"). Active Link has delivered to MC
, in the form filed with the SEC, (i) its Annual Report on Form 10-KSB for the
fiscal year ended April 30, 2001 and its Quarterly Report on Form 10-QSB for the
fiscal quarter ended July 31, 2001 (the "SEC Reports"). The SEC reports (i) were
prepared in accordance with the requirements of the Securities Exchange Act of
1934, as amended, and (ii) did not at the time they were filed, contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary in order to make the statements therein, in light
of the circumstances under which they were made, not misleading.
(ii) Schedule 4.4 to Active Link Disclosure Letter
includes copies of the following financial statements of Active Link (the
"Active Link Financial Statements"): Active Link's audited Balance Sheets as of
April 30, 2001 and 2000, audited Statements of Income and Comprehensive Income,
Stockholders' Equity and Cash Flows for each of the fiscal years ended April 30,
2001 and 2000, unaudited Balance Sheet as of July 31, 2001, and unaudited
Statement of Operations for the three month period ended July 31, 2001. The
Active Link Financial Statements have been prepared in accordance with generally
accepted accounting
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principles ("GAAP") applied on a consistent basis throughout the periods
indicated (except as noted thereon or on Schedule 4.4 to Active Link Disclosure
Letter). Except as set forth on Schedule 4.4 to Active Link Disclosure Letter,
each of the foregoing financial statements is complete and correct in all
material respects, is in accordance with the books and records of Active Link as
of the dates and for the periods indicated and, presents fairly the financial
position and results of operations of Active Link as at the dates and for the
periods indicated subject, in the case of the unaudited financial statements to
normal year-end adjustments which are not expected to be material in amount.
4.5 CONFORMITY WITH LAW; LITIGATION.
(i) Except as set forth in Schedule 4.5 to Active
Link Disclosure Letter, Active Link is not in violation of any law or regulation
or any order of any court or Federal, state, municipal or other governmental
department, commission, board, bureau, agency or instrumentality having
jurisdiction over it which would have an Active Link Material Adverse Effect.
(ii) Except as set forth on Schedule 4.5 to Active
Link Disclosure Letter (which shall disclose the parties to, nature of and
relief sought for each matter to be disclosed), other than collection actions by
Active Link, in the ordinary course of business, Active Link is not a party to
any litigation involving a single claim for an amount, greater than $25,000 or
multiple claims which in the aggregate do not exceed $50,000; furthermore:
(a) There is no suit, action,
proceeding, investigation, claim or
order pending or threatened against
Active Link, or with respect to any
employee plan of Active Link, or
any fiduciary of any such plan (or
pending or threatened against any
of the officers, directors or
employees of Active Link with
respect to the business or
currently proposed business
activities of Active Link, or to
which Active Link is otherwise a
party, or which may have or is
likely to have an Active Link
Material Adverse Effect, before any
court, or before any governmental
authority, department, commission,
bureau, agency or other
governmental department or
arbitrator (collectively,
"Claims"), nor is there any basis
for any such Claims.
(b) Except as set forth in Schedule 4.5
to the Active Link Disclosure
Letter, Active Link is not subject
to any unsatisfied or continuing
judgment, order or decree of any
court or governmental authority,
and Active Link is not otherwise
exposed, from a legal standpoint,
to any liability or disadvantage
which could have an Active Link
Material Adverse Effect. Schedule
4.5 to Active Link Disclosure
Letter sets forth all closed
litigation matters to which Active
Link was a party during the
preceding five (5) years,
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the dates such litigation was
commenced and concluded, and the
nature of the resolution thereof
(including amounts paid in
settlement or judgment).
4.6 TAXES. Except as set forth in Schedule 4.6 to the Active
Link Disclosure Letter, on or before the Closing Date, Active Link shall have
filed all requisite federal, state and other tax returns or extension requests
for all fiscal periods required, including through July 31, 2001 (the "Active
Link Balance Sheet Date"); and except as set forth on Schedule 4.6 to Active
Link Disclosure Letter, there are no examinations in progress or claims against
any of them for federal, state and other Taxes (including penalties and
interest) for any period or periods prior to and including the Active Link
Balance Sheet Date and no notice of any claim for taxes, whether pending or
threatened, has been received. All Taxes, including interest and penalties
(whether or not shown on any tax return) owed by Active Link, any member of an
affiliated or consolidated group which includes or included Active Link, or with
respect to any payment made or deemed made by Active Link herein have been paid.
The amounts shown as accruals for Taxes on Active Link Financial Statements are
sufficient for the payment of all Taxes of the kinds indicated (including
penalties and interest) for all fiscal periods ended on or before that date.
Copies of (i) any tax examinations, (ii) extensions of statutory limitations and
(iii) the federal and local income tax returns and franchise tax returns of
Active Link for the last three (3) fiscal years have been provided to MC on or
prior to the Closing Date.
4.7 NO VIOLATIONS; NO CONFLICTS. Active Link is not in
violation of any of the Active Link Charter Documents. No Subsidiary is in
violation of any Subsidiary Charter Documents. Active Link is not in default
under any lease, instrument, agreement, license, or permit set forth on the
Schedules to Active Link Disclosure Letter, or any other material agreement to
which it is a party or by which its properties are bound (collectively, the
"Material Documents") which default would constitute an Active Link Material
Adverse Effect; and, except as set forth in Schedule 4.7 to Active Link
Disclosure Letter, (a) the rights and benefits of Active Link under the Material
Documents will not be adversely affected by the transactions contemplated hereby
and (b) the execution of this Agreement and the performance of the obligations
hereunder and the consummation of the transactions contemplated hereby will not
result in any violation of, or breach of, or constitute a default under, any of
the terms or provisions of the Material Documents or the Active Link Charter
Documents or the Subsidiary Charter Documents, or violate the provisions of any
statute, or any order, rule or regulation of any governmental body or agency or
instrumentality thereof, or any order, writ, injunction or decree of any court
or any arbitrator having jurisdiction over Active Link or the property of Active
Link in such a manner as shall constitute an Active Link Material Adverse
Effect. Except as set forth on Schedule 4.7 to Active Link Disclosure Letter,
none of the Material Documents requires notice to, or the consent or approval
of, any governmental agency or other third party with respect to any of the
transactions contemplated hereby in order to remain in full force and effect and
consummation of the transactions contemplated hereby will not give rise to any
right to termination, cancellation or acceleration or loss of any right or
benefit. Except as set forth on Schedule 4.7 to Active Link Disclosure Letter,
none of the Material Documents prohibits the use or publication by Active Link
of the name of any other party to such Material Document, and none of the
Material Documents prohibits or restricts Active Link from freely providing
services to any other customer or potential customer of Active Link.
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4.8 ABSENCE OF CHANGES. Since July 31, 2001, except for the
matters set forth on Schedule 4.8 to Active Link Disclosure Letter, there has
not been:
(i) Any material adverse change in the financial
condition, assets, liabilities (contingent or otherwise), income or business of
Active Link;
(ii) Any damage, destruction or loss (whether or not
covered by insurance) materially adversely affecting the properties or business
of Active Link;
(iii) Any change in the authorized capital of Active
Link or its outstanding securities or any change in its ownership interests or
any grant of any options, warrants, calls, conversion rights or commitments;
(iv) Any declaration or payment of any dividend or
distribution in respect of the capital stock or any direct or indirect
redemption, purchase or other acquisition of any of the capital stock of Active
Link;
(v) Any increase in the compensation, bonus, sales
commissions or fee arrangement payable or to become payable by Active Link to
any of their respective officers, directors, stockholders, employees,
consultants or agents, except for ordinary and customary bonuses and salary
increases for employees in accordance with past practice;
(vi) Any work interruptions, labor grievances or
claims filed, or any event or condition of any character, materially adversely
affecting the business of Active Link;
(vii) Any sale or transfer, or any agreement to sell
or transfer, any material assets, property or rights of Active Link to any
person, including, without limitation, any of the stockholders and their
affiliates;
(viii) Any cancellation, or agreement to cancel, any
indebtedness or other obligation owing to Active Link, including without
limitation any indebtedness or obligation of any stockholder or any affiliate
thereof;
(ix) Any plan, agreement or arrangement granting any
preferential rights to purchase or acquire any interest in any of the assets,
property or rights of Active Link or requiring consent of any party to the
transfer and assignment of any such assets, property or rights;
(x) Any purchase or acquisition of, or agreement,
plan or arrangement to purchase or acquire, any property, rights or assets
outside of the ordinary course of business of Active Link;
(xi) Any waiver of any material rights or claims of
Active Link;
(xii) Any amendment or termination of any Material
Documents or other right to which Active Link is a party;
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(xiii) Any transaction by Active Link outside the
ordinary course of its business;
(xiv) Any cancellation or termination of a Material
Contract with a customer or client prior to the scheduled termination date; or
(xv) Any other distribution of property or assets by
Active Link other than in the ordinary course of business.
4.9 DISCLOSURE. This Agreement, including the Exhibits and
Active Link Disclosure Letter and the Schedules thereto, together with the other
information furnished to MC by Active Link in connection herewith, do not
contain an untrue statement of a material fact or omit to state a material fact
necessary to make the statements herein and therein, in light of the
circumstances under which they were made, not misleading.
4.10 PROHIBITED ACTIVITIES. Except as set forth on Schedule
4.10 to Active Link Disclosure Letter, Active Link has not, between July 31,
2001 and the date hereof, taken any of the actions (Prohibited Activities) set
forth in Section 7.2.
4.11 AUTHORITY. Each of Active Link and ALCI has full
corporate power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby. The execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby have
been duly approved by the Board of Directors of Active Link, the Board of
Directors of ALCI and Active Link, as the sole shareholder of ALCI. No
additional corporate proceedings on the part of Active Link or ALCI are
necessary to approve this Agreement and to consummate the transactions
contemplated hereby. This Agreement has been duly and validly executed and
delivered by Active Link and ALCI and (assuming due authorization, execution and
delivery by MC and the Shareholder) constitutes a valid and legally binding
obligation of each of Active Link and ALCI, enforceable in accordance with its
terms, except (i) as limited by applicable bankruptcy, insolvency,
reorganization, moratorium and other laws of general application affecting
enforcement of creditors' rights generally, and (ii) as limited by laws relating
to the availability of specific performance, injunctive relief or other
equitable remedies. All corporate proceedings required on the part of Active
Link and each of its Subsidiaries that are necessary to expand the Board of
Directors to seven members, to elect the Shareholder and Xxxxxx Xxxx to the
Active Link Board of Directors and to elect two additional persons designated by
the Shareholder to the Board of Directors shall have been consummated and no
other action shall be required.
4.12 EMPLOYEE BENEFIT PLANS. Schedule 4.12 to the Active Link
Disclosure Letter sets forth all employee benefit plans of Active Link,
including all employment agreements and other agreements or arrangements
containing "golden parachute" or other similar provisions, and deferred
compensation agreements. Active Link has delivered to MC true, complete and
correct copies of such plans, agreements and any trusts related thereto, and
classifications of employees covered thereby as of the Active Link Balance Sheet
Date. Except for the employee benefit plans, if any, described on Schedule 4.12
to the Active Link Disclosure Letter, Active Link does not sponsor, maintain or
contribute to any plan program, fund or arrangement that
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constitutes an "employee pension benefit plan," or an "employee welfare benefit
plan," nor has Active Link any obligation to contribute to or accrue or pay any
benefits under any deferred compensation or retirement funding arrangement on
behalf of any employee or employees (such as, for example, and without
limitation, any individual retirement account or annuity, any "excess benefit
plan" (within the meaning of Section 3(36) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), or any non-qualified deferred
compensation arrangement). For the purposes of this Agreement, the term
"employee welfare benefit plan" shall have the same meaning as given that term
in Section 3(1) of ERISA and "employee pension benefit plan" shall have the same
meaning as is given that term in Section 3(2) of ERISA. Active Link has not
sponsored, maintained or contributed to any employee pension benefit plan other
than the plans set forth on Schedule 4.12 to the Active Link Disclosure Letter,
nor is Active Link required to contribute to any retirement plan pursuant to the
provisions of any collective bargaining agreement establishing the terms and
conditions of employment of any employees of Active Link. All accrued
contribution obligations of Active Link with respect to any plan listed on
Schedule 4.12 to the Active Link Disclosure Letter have either been fulfilled in
their entirety or are fully reflected on the balance sheet of Active Link as of
the Active Link Balance Sheet Date.
4.13 COMPLIANCE WITH THE CODE AND ERISA. All plans listed on
Schedule 4.12 to the Active Link Disclosure Letter that are intended to qualify
(the "Qualified Plans") under Section 401(a) of the Code are, and have been so
qualified and have been determined by the Internal Revenue Service to be so
qualified, and copies of such determination letters are included as part of
Schedule 4.12 to the Active Link Disclosure Letter. Further, all plans listed in
Schedule 4.12 which are "employee welfare benefit plans" have been established
and operated in compliance with the provisions of the Code and ERISA and, except
as disclosed on Schedule 4.13 to the Active Link Disclosure Letter, all reports
and other documents required to be filed with any governmental agency or
distributed to plan participants or beneficiaries (including, but not limited
to, actuarial reports, audits or tax returns) have been timely filed or
distributed, and copies thereof are included as part of Schedule 4.12 to the
Active Link Disclosure Letter. None of the Active Link stockholders has engaged
in any transaction prohibited under the provisions of Section 4975 of the Code
or Section 406 of ERISA. No plan listed in Schedule 4.12 to the Active Link
Disclosure Letter has incurred an accumulated funding deficiency, as defined in
Section 412(a) of the Code and Section 302(1) of ERISA; and Active Link has not
incurred any liability for excise tax or penalty due to the Internal Revenue
Service nor any liability to the Pension Benefit Guaranty Corporation.
5. REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDER CONCERNING THE
TRANSACTION.
The Shareholder represents and warrants to Active Link and
ALCI, as to himself , that all of the following representations and warranties
in this Section 5 are true at the date of this Agreement and shall be true at
the time of Closing.
5.1 OWNERSHIP OF THE SHARES. The Shareholder is the record and
beneficial owner of the number of shares of MC Stock set forth opposite his name
in Schedule 3.3 to the MC Disclosure Letter, free and clear of all Liens, except
as set forth in Schedule 3.3 to the MC
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Disclosure Letter. The Shareholder has the full legal right, power and authority
to sell, transfer, assign and deliver the MC Stock to Active Link pursuant to
this Agreement and such delivery will convey lawful and valid title to the
shares of MC Stock to Active Link, free and clear of all Liens. There is not
outstanding any security, option, warrant, right, agreement, understanding or
commitment of any kind entitling any person to acquire or vote any shares of the
MC Stock, except as set forth in Schedule 3.3 to the MC Disclosure Letter.
5.2 LEGAL AUTHORITY. The Shareholder has full legal right,
power, authority and capacity to execute this Agreement and all other
agreements, instruments and documents executed or to be executed by the
Shareholder in connection with this Agreement (such other related agreements,
instruments and documents, whether or not executed or to be executed by the
Shareholder, are collectively referred to as the "Related Documents"), and to
perform and observe the terms and provisions of this Agreement and the Related
Documents. All action on the part of the Shareholder necessary for the
authorization, execution and delivery of this Agreement and the performance of
all obligations of the Shareholder hereunder has been taken, and this Agreement
constitutes a valid and legally binding obligation of the Shareholder,
enforceable in accordance with its terms, except (i) as limited by applicable
bankruptcy, insolvency, reorganization, moratorium and other laws of general
application affecting enforcement of creditors' rights generally, and (ii) as
limited by laws relating to the availability of specific performance, injunctive
relief or other equitable remedies.
5.3 NO CONFLICTS. Except as disclosed in Schedule 5.3, the
execution, delivery and performance of this Agreement by the Shareholder and the
consummation by the Shareholder of the transactions contemplated hereby will not
conflict with, or result in a breach or violation of, any term or provision of,
or (with or without notice or passage of time, or both) constitute a default
under, any indenture, mortgage, deed of trust, trust (constructive and other),
loan agreement or other agreement or instrument to which the Shareholder is a
party or violate the provisions of any statute, or any order, rule or regulation
of any governmental body or agency or instrumentality thereof, or any order,
writ, injunction or decree of any court or any arbitrator, having jurisdiction
over the Shareholder or the property of the Shareholder.
5.4 PURCHASE ENTIRELY FOR HIS OWN ACCOUNT. The Active Link
securities will be acquired for investment for the Shareholder's own account,
not as a nominee or agent, and not with the view to the resale or distribution
of any part thereof, and the Shareholder has no present intention of selling,
granting any participation in, or otherwise distributing Active Link securities.
Except as set forth in Schedule 3.3, the Shareholder has no contract,
undertaking, agreement or arrangement with any person to sell, transfer or grant
participation to such person with respect to any of the securities of Active
Link.
5.5 DISCLOSURE OF INFORMATION. Shareholder has received, and
had the opportunity to review, the reports filed by Active Link with the SEC and
has had the opportunity to ask questions of, and receive answers from,
representatives of Active Link to obtain additional information regarding Active
Link.
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5.6 RESTRICTIONS ON TRANSFER.
(i) The securities of Active Link that the
Shareholder will acquire have not been registered under the Securities Act of
1933, as amended (the "Securities Act") and, accordingly, such securities will
not be fully transferable except as permitted under various exemptions contained
in the Securities Act, upon satisfaction of the registration and prospectus
delivery requirements of the Securities Act, or otherwise in accordance with any
registration rights agreement entered into prior to Closing. The Shareholder
must bear the economic risk of his investment in such securities for an
indefinite period of time as such securities have not been registered under the
Securities Act and therefore cannot be sold unless they are subsequently
registered or an exemption from registration is available. At or prior to
Closing, the Shareholder shall deliver a completed investor questionnaire. The
Shareholder is acquiring the Active Link Common Stock for investment purposes
only, for his own account, and not as nominee or agent for any other person, and
not with the view to, or for resale in connection with, any distribution thereof
within the meaning of the Securities Act.
(ii) The certificates evidencing the securities of
Active Link will be acquired by the Shareholder pursuant to this Agreement, and
each instrument or certificate issued in transfer thereof, will bear
substantially the following legend:
THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND
HAVE BEEN TAKEN FOR INVESTMENT PURPOSES ONLY AND NOT WITH A
VIEW TO THE DISTRIBUTION THEREOF, AND SUCH SECURITIES MAY NOT
BE SOLD OR TRANSFERRED UNLESS THERE IS AN EFFECTIVE
REGISTRATION STATEMENT UNDER SUCH ACT COVERING SUCH SECURITIES
OR AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE. IF THE
SECURITIES ARE TO BE SOLD OR TRANSFERRED PURSUANT TO AN
EXEMPTION, ACTIVE LINK MAY REQUIRE AN OPINION OF COUNSEL
REASONABLY SATISFACTORY THERETO, STATING THAT SUCH SALE OR
TRANSFER IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS
DELIVERY REQUIREMENTS OF SUCH ACT AND WILL NOT VIOLATE SUCH
ACT OR ANY OTHER APPLICABLE SECURITIES LAWS.
(iii) Shareholder understands a notation on the
records of Active Link and its transfer agent will be made in order to implement
the restrictions on transfer set forth in this Section 5.6.
6. OBLIGATIONS OF MC AND THE SHAREHOLDER AT CLOSING.
At the Closing, MC and the Shareholder shall deliver, or cause
to be delivered, to Active Link and ALCI, unless waived by Active Link and ALCI:
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6.1 GOOD STANDING CERTIFICATES. A certificate, dated as of a
date no later than ten (10) days prior to the Closing Date, duly issued by the
Secretary of State of MC's state of incorporation that MC is in good standing
and that all state franchise and/or income tax returns and taxes for each for
all periods prior to the Closing have been filed and paid.
6.2 OFFICER'S CERTIFICATE. A certificate or certificates,
dated the Closing Date and signed by the President of MC, certifying the truth
and correctness of attached copies of the Certificate of Incorporation
(including all amendments thereto) and Bylaws (including all amendments thereto)
of MC .
6.3 INCUMBENCY CERTIFICATE AND OTHER DOCUMENTS. An incumbency
certificate or certificates, dated the Closing Date and signed by the Secretary
of MC certifying the names, titles and signatures of the officers of MC
authorized to execute the documents referred to in this Section 6 and the
corresponding resolutions authorizing the transactions hereunder.
6.4 RELEASE OF OBLIGATIONS. A release of each of the officers
and directors of MC related to all matters involving MC.
6.5 REGISTRATION RIGHTS AGREEMENT. Xxxxxxx Xxxx and Active
Link shall have each executed and delivered a registration rights agreement as
shall be mutually agreed to thereby.
6.6 VALUATION. Active Link shall have received a valuation of
MC from Xxxxxxx Xxxxxxxxx LLP, or another firm qualified to provide valuations,
in form and substance satisfactory to Active Link.
6.7 AUDITED FINANCIAL STATEMENTS OF MC. Active Link shall have
received Balance Sheets as of March 31, 2000 and 2001, and Statements of
Operations for each of the twelve (12) month periods ending March 31, 2000 and
2001 of MC, audited by Xxxxxxxxx, Melvoin and Xxxxxxx LLP or another independent
certified public accounting firm (the "MC Audited Financial Statements),
satisfactory to Active Link, and MC shall have provided other financial
information needed by Active Link to satisfy Active Link's reporting
requirements related to the Merger under the Securities Exchange Act of 1934.
6.8 OFFICER'S CERTIFICATE. MC shall execute and deliver an
Officer's Certificate, substantially in the form attached hereto as Exhibit B.
6.9 CONSENTS. The consent of MC's primary lender to the
Merger.
6.10 REQUESTED INFORMATION. Active Link shall have received
from MC all information requested by Active Link regarding the business,
operations, properties, assets and condition (financial or otherwise) of MC and
information confirming the payment of all personal income tax (or the making of
reasonable provisions therefor) by the Shareholder. Such information shall be
reasonably satisfactory to Active Link and its counsel.
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6.11 OPINION OF COUNSEL. Active Link shall have received an
opinion from counsel for MC and the Shareholder, dated the Closing Date, in the
form and substance reasonably satisfactory to counsel for Active Link.
7. OBLIGATIONS OF ACTIVE LINK AND ALCI AT CLOSING.
At the Closing, Active Link and ALCI shall deliver, or cause to be
delivered, to MC and the Shareholder, unless waived by MC and the Shareholder:
7.1 GOOD STANDING CERTIFICATES. Active Link and each of the
Subsidiaries shall have delivered to MC certificates, dated as of the date no
later than ten (10) days prior to the Closing Date, duly issued by the Secretary
of State of Colorado or such other jurisdiction as each Subsidiary may be
incorporated in, to the effect that Active Link and each of the Subsidiaries is
in good standing and have filed all state franchise tax returns and/or income
tax returns and have paid all taxes for all periods prior to the Closing.
7.2 OFFICER'S CERTIFICATE. A certificate or certificates,
dated the Closing Date and signed by the President or another authorized officer
of Active Link, certifying the truth and correctness of attached copies of
Active Link's Articles of Incorporation (including amendments thereto), and
Bylaws (including all amendments thereto). MC shall have received a certificate
or certificates, dated the Closing Date and signed by the President or another
authorized officer of each of the Subsidiaries, certifying the truth and
correctness of attached copies of each of the Subsidiaries' Articles of
Incorporation (including all amendments thereto), and Bylaws (including all
amendments thereto).
7.3 INCUMBENCY CERTIFICATE AND OTHER DOCUMENTS. An incumbency
certificate or certificates, dated the Closing Date, and signed by the Secretary
of Active Link, certifying the names, titles and signatures of the officers
authorized to execute the documents referred to in this Section 7 and the
corresponding resolutions authorizing the transactions hereunder.
7.4 RELEASE OF OBLIGATIONS. Active Link shall have obtained a
release of each of the officers and directors of Active Link related to all
matters involving Active Link.
7.5 OFFICER'S CERTIFICATE. Active Link shall execute and
deliver an Officer's Certificate, substantially in the form attached hereto as
Exhibit C.
7.6 TAX OPINION. Xxxx & Xxxxxxx shall deliver an opinion to MC
and the Shareholder to the effect that the Merger shall constitute a tax-free
reorganization within the meaning of Section 368(a)(1)(A) of the Code; provided,
however, that Xxxx & Xxxxxxx shall have no obligation to deliver such an opinion
if the Merger does not so constitute a tax-free reorganization under Section
368(a)(1)(A) of the Code.
7.7 REGISTRATION RIGHTS AGREEMENT. At or prior to the Closing,
Xxxxxxx Xxxx and Active Link shall have each executed and delivered a
registration rights agreement as shall be mutually agreed to thereby.
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7.8 CORPORATE PROCEEDINGS OF ACTIVE LINK. All corporate
proceedings required on the part of Active Link and each of its Subsidiaries
that are necessary to effect the Merger and to expand the Board of Directors of
Active Link to elect the Shareholder, Xxxxxx Xxxx and Xxxxx X. Xxxxxxx to the
Board of Directors of Active Link shall have been consummated and no other
action shall be required. All necessary corporate proceedings required on the
part of Active Link and ALCI to elect Xxxxxxx Xxxx, Xxxxxx Xxxx, Xxxxxxx X.
Xxxx, Xxxxx X. Xxxxxxx and Xxxxxxxxxxx Xxxx to serve as the sole members of the
Board of Directors of MC, the surviving party, shall have been consummated and
no other actions shall be required. The Board of Directors of Active Link and
the Shareholder shall have received the undated resignation letter from the
Board of Directors of Active Link of Xxxxxx Xxxxx, effective immediately upon
the Closing, and the Board of Directors shall have passed a resolution that the
Shareholder may designate a person to serve as the seventh member of the Board
of Directors of Active Link.
7.9 PROXY. Xxx Xxxxxxxxxx shall have delivered to the
Shareholder a proxy granting thereto the authority to vote that number of shares
of Active Link Stock owned by Xx. Xxxxxxxxxx which constitutes approximately 5%
of the then issued and outstanding Active Link Common Stock immediately prior to
the Merger (the "Proxy"). The Proxy shall remain in full force and effect until
the latter of Xx. Xxxxxxxxxx'x resignation or departure from the Board of
Directors of Active Link or the first anniversary of the Closing Date, but in no
event later than October 17, 2006 ("Proxy Termination Event"). Xx. Xxxxxxxxxx
hereby undertakes that he will not sell, transfer, pledge or encumber shares of
Active Link Common Stock owned or controlled thereby and subject to the Proxy,
until the first anniversary of the Closing Date.
7.10 FINANCIAL STATEMENTS. MC shall have received a
consolidated Balance Sheet of Active Link and its Subsidiaries as of April 30,
2000 and 2001, and Consolidated Statement of Operations for each of the twelve
(12) month periods ending April 30, 2000 and 2001 of Active Link and its
Subsidiaries, audited by Xxxx + Associates, LLP or another independent public
accounting firm of national standing, satisfactory to MC along with unaudited
consolidated balance sheet at July 31, 2001 and Statement of Operations for the
three month period ended July 31, 2001. The unaudited financial statements shall
be certified by the chief financial office of Active Link, as having been
prepared substantially in accordance with GAAP and as being complete and
correct, in all material respects, in accordance with the books and records of
Active Link and its Subsidiaries as of the dates and for the periods indicated
and shall present fairly the financial position and results of operations of
Active Link and its Subsidiaries as at the dates and for the period indicated
subject to normal year-end adjustments which are not expected to be material in
amount.
7.11 CONSENTS. The consent of Active Link's primary lender to
the Merger.
7.12 REQUESTED INFORMATION. MC shall have received from Active
Link and each of its Subsidiaries all information requested by MC regarding the
business, operations, properties, assets and condition (financial or otherwise)
of Active Link and its Subsidiaries. Such information shall be reasonably
satisfactory to MC and its counsel.
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7.13 OPINION OF COUNSEL. MC shall have received an opinion
from counsel for Active Link and the subsidiaries, dated the Closing Date, in
form and substance reasonably satisfactory to counsel for MC.
7.14 EMPLOYMENT AGREEMENTS. At or prior to the Closing,
Xxxxxxx Xxxx shall have executed and delivered an employment agreement with
Active Link which shall be satisfactory to Xxxxxxx Xxxx, and Xxxxxx Xxxx shall
have executed and delivered an employment with Mobility Concepts which shall be
satisfactory to Xxxxxx Xxxx.
8. ADDITIONAL AGREEMENTS.
8.1 FURTHER ASSURANCES. Subject to the terms and conditions of
this Agreement, each of the parties hereto agrees to use all commercially
reasonable efforts to take, or cause to be taken, all action, and to do, or
cause to be done, all things necessary, common, proper or advisable under
applicable legal requirements, to consummate and make effective the transactions
contemplated by this Agreement. If at any time after the Closing any further
action is necessary or desirable to carry out the purposes of this Agreement,
Active Link, ALCI, MC and the Shareholder, as the case may be, shall take or
cause to be taken all such necessary or convenient action and execute, and
deliver and file, or cause to be executed, delivered and filed, all necessary or
convenient documentation.
8.2 TAXES. The Shareholder shall be solely responsible for the
payment of any and all taxes due and owing by the Shareholder and arising as a
result of the purchase and sale of the securities pursuant to this Agreement. In
addition, MC shall be solely responsible for the payment of any taxes of MC with
respect to taxable periods that end on or prior to the Closing Date and the
Shareholder covenants to take any and all actions to cause the timely payment of
any taxes when due. In the case of taxable periods beginning prior to and ending
after the Closing Date, the Shareholder covenants to reimburse Active Link for
their pro-rata share of such taxes which shall be calculated (i) in the case of
any taxes other than taxes based upon or related to income, the amount of such
tax for the entire taxable period multiplied by a fraction the numerator of
which is the number of days in the taxable period ending on the Closing Date and
the denominator of which is the number of days in the entire taxable period, and
(ii) in the case of any tax based upon or related to income, the amount of such
tax that would have been payable if the relevant taxable period ended on the
Closing Date.
9. INDEMNIFICATION.
9.1 INDEMNIFICATION BY THE SHAREHOLDER. The Shareholder agrees
to indemnify and hold harmless Active Link and its officers, directors, agents
and representatives against any and all losses, claims, damages, liabilities,
costs and expenses (including, but not limited to, reasonable attorneys' fees
and other expenses of investigation and defense of any claims or actions),
directly or indirectly resulting from, relating to or arising out of: (i) any
breach of any covenant, agreement, warranty or representation of the Shareholder
or MC contained in this Agreement, (ii) any misstatement of a material fact
contained in this Agreement or in any of the documents executed in connection
with the transactions contemplated by this Agreement, but only if the
misstatement relates to information concerning the Shareholder or
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MC, or (iii) the omission to state any fact necessary to make the statements
contained in this Agreement or in any of the documents executed in connection
with the transactions contemplated by this Agreement not misleading, but only if
the omission relates to information concerning the Shareholder or MC.
9.2 INDEMNIFICATION BY ACTIVE LINK. Active Link agrees to
indemnify and hold harmless the Shareholder against any and all losses, claims,
damages, liabilities, costs and expenses (including, but not limited to,
reasonable attorneys' fees and other expenses of investigation and defense of
any claims or actions) directly or indirectly resulting from, relating to or
arising out of: (i) any breach of any covenant, agreement, warranty or
representation of Active Link contained in this Agreement, (ii) any misstatement
of a material fact contained in this Agreement or in any of the documents
executed in connection with the transactions contemplated by this Agreement, but
only if the misstatement relates to information concerning Active Link or any
Subsidiary, or (iii) the omission to state any fact necessary to make the
statements contained in this Agreement or in any of the documents executed in
connection with the transactions contemplated by this Agreement not misleading,
but only if the omission relates to information concerning Active Link or any
Subsidiary.
9.3 INDEMNIFICATION NOTICE. Should any party (the "Indemnified
Party") suffer any loss, damage or expense for which another party (the
"Indemnifying Party") is obligated to indemnify and hold such Indemnified Party
harmless pursuant to this Section 9 of this Agreement, the following shall
apply: If an Indemnified Party intends to exercise its right to indemnification
provided in this Section 9, such Indemnified Party shall notify each
Indemnifying Party in writing of such Indemnified Party's intention to do so and
the facts or circumstances giving rise to the claim (the "Indemnification
Claim"). An Indemnification Claim, at the option of the Indemnified Party, may
be asserted as soon as any situation, event or occurrence has been noticed by
the Indemnified Party regardless of whether actual harm has been suffered or
out-of-pocket expenses incurred. During the period of fifteen (15) days after
notice by the Indemnified Party, each Indemnifying Party shall be entitled to
cure the defect or situation giving rise to the Indemnification Claim to the
satisfaction of the Indemnified Party. If the Indemnifying Parties are unwilling
or unable to cure the defect giving rise to the Indemnification Claim during the
fifteen (15) day period, the Indemnified Party shall thereafter be entitled to
indemnification as provided in this Section 9.
9.4 MATTERS INVOLVING THIRD PARTIES. If any third party shall
notify any Indemnified Party with respect to any matter (a "Third Party Claim")
which may give rise to a claim for indemnification against any Indemnifying
Party under this Section 9, then the Indemnified Party shall promptly notify
each Indemnifying Party thereof in writing; provided, however, that no delay on
the part of the Indemnified Party in notifying any Indemnifying Party shall
relieve the Indemnifying Party from any obligation hereunder unless (and then
solely to the extent) the Indemnifying Party thereby is prejudiced. Any
Indemnifying Party will have the right to defend the Indemnified Party against
the Third Party Claim with counsel of its choice reasonably satisfactory to the
Indemnified Party so long as (i) the Indemnifying Party notifies the Indemnified
Party in writing within fifteen (15) days after the Indemnified Party has given
notice of the Third Party Claim that the Indemnifying Party will indemnify the
Indemnified Party from any adverse consequences the Indemnified Party may suffer
resulting from or caused by the
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Third Party Claim, (ii) the Indemnifying Party provides the Indemnified Party
with evidence reasonably acceptable to the Indemnified Party that the
Indemnifying Party will have the financial resources to defend against the Third
Party Claim and fulfill its indemnification obligations hereunder, and (iii) the
Indemnifying Party conducts the defense of the Third Party Claim actively and
diligently. The Indemnifying Party shall not consent to the entry of any
judgment or enter into any settlement with respect to the Third Party Claim
without the prior written consent of the Indemnified Party, which consent shall
not be withheld unreasonably.
9.5 THRESHOLD FOR LIABILITIES. No indemnification shall be
required under this Section 9 for the breach of any covenant, agreement,
warranty or representation until the aggregate amount of liability shall have
exceeded $250,000 and indemnification shall be made by the Indemnifying Party
only to the extent the aggregate amount of liability shall have exceeded
$250,000; provided, however, that the liabilities which did not constitute a
breach of a covenant, agreement, warranty or representation as a result of the
definition of MC Material Adverse Effect shall be included in the calculation of
such $250,000 threshold, regardless of the amount of such liabilities; provided,
further, that payment of any and all claims hereunder by the Shareholder shall
be paid by the Shareholder tendering that amount of Active Link Common Stock to
Active Link at its then fair market value. In no event shall the Shareholder be
obligated to tender cash, including cash from the proceeds of the sale of the
Active Link Common Stock previously owned by the Shareholder.
10. GENERAL PROVISIONS.
10.1 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS.
The representations and warranties of the parties hereto contained in this
Agreement or in any writing delivered pursuant hereto or at the Closing shall
survive the execution and delivery of this Agreement and the Closing and the
consummation of the transactions contemplated hereby (and any examination or
investigation by or on behalf of any party hereto) until the date three (3)
years after the Closing Date except for claims in respect thereof pending at
such time, which shall survive until finally resolved or settled). No action may
be commenced with respect to any representation, warranty, covenant or agreement
in this Agreement, or in any writing delivered pursuant hereto, unless written
notice, setting forth in reasonable detail the claimed breach thereof, shall be
delivered pursuant to Section 10.7 to the party or parties against whom
liability for the claimed breach is charged on or before the termination of the
survival period specified in Section 10.1 for such representation, warranty,
covenant or agreement.
10.2 ASSIGNMENT. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
hereto, in whole or in part (whether by operation of law or otherwise), without
the prior written consent of the other parties, and any attempt to make any such
assignment without such consent shall be null and void. Subject to the preceding
sentence, this Agreement will be binding upon, inure to the benefit of and be
enforceable by the parties and their respective successors and assigns.
10.3 ENTIRE AGREEMENT. This Agreement and any and all
exhibits, schedules and attachments hereto, the MC Disclosure Letter (including
the schedules, exhibits and
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annexes attached thereto), the Active Link Disclosure Letter (including the
schedules, exhibits and annexes attached thereto) and the other documents
delivered pursuant hereto constitute the entire agreement and understanding
among the parties and supersede any prior agreement and understanding relating
to the subject matter of this Agreement, including the Initial Agreement. This
Agreement, upon execution, constitutes a valid and binding agreement of the
parties hereto enforceable in accordance with its terms and may be modified or
amended only by a written instrument executed by all parties.
10.4 COUNTERPARTS. This Agreement may be executed
simultaneously in counterparts, each of which shall be deemed an original and
all of which together shall constitute but one and the same instrument.
10.5 BROKERS AND AGENTS. Each party represents and warrants
that it employed no broker or agent in connection with this transaction, except
as provided in Schedule 10.5.
10.6 EXPENSES. Except as otherwise specifically provided
herein, each party to this Agreement shall bear its own direct and indirect
expenses incurred in connection with the negotiation and preparation of this
Agreement and the consummation and performance of the transactions contemplated
hereby, including, without limitation, all legal fees and fees of any brokers,
finders or similar agents; provided, however, that expenses related to the
valuation analysis contemplated pursuant to Section 6.6 shall be borne equally
by Active Link and the Shareholder.
10.7 NOTICES. All notices and other communications hereunder
shall be in writing and shall be deemed duly given (i) on the date of delivery
if delivered personally, or by telecopy or facsimile upon confirmation of
receipt, (ii) on the first business day following the date of dispatch if
delivered by a recognized next-day courier service, or (iii) on the 5th business
day following the date of mailing if delivered by registered or certified mail,
return receipt requested, postage prepaid. All notices hereunder shall be
delivered as set forth below, or pursuant to such other instructions as may be
designated in writing by the party to receive such notice:
(i) If to Active Link or ALCI:
Active Link Communications, Inc.
0000 Xxxxx Xxxxxx Xxxxxxx, #0000
Xxxxxxxxx, Xxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxx Xxxxxxxxxx, CEO
with a copy to:
Xxxxxx Xxxxx, L.L.P.
0000 Xxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000
Facsimile No.: (000) 000-0000
Attention: Xxxxxx X. Xxxxxxx, Esq.
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(ii) If to MC or the Shareholder:
Mobility Concepts, Inc.
0000 Xxxxxx Xxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxx 00000-0000
Facsimile: (000) 000-0000
Attention: Xx. Xxxxxxx Xxxx
with a copy to:
Xxxx & Xxxxxxx
000 Xxxxx Xxxxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxx, Xxxxxxxx 00000-0000
Facsimile: (000) 000-0000
Attention: Xxxxxxxx Xxxx, Esq. and
Xxxx Xxx, Esq.
10.8 GOVERNING LAW. This Agreement shall be construed in
accordance with the laws of the State of Illinois.
10.9 EXERCISE OF RIGHTS AND REMEDIES. Except as otherwise
provided herein, no delay of or omission in the exercise of any right, power or
remedy accruing to any party as a result of any breach or default by any other
party under this Agreement shall impair any such right, power or remedy, nor
shall it be construed as a waiver of or acquiescence in any such breach or
default, or of any similar breach or default occurring later; nor shall any
waiver of any single breach or default be deemed a waiver of any other breach or
default occurring before or after that waiver.
10.10 TIME. Time is of the essence with respect to this
Agreement.
10.11 REFORMATION AND SEVERABILITY. In case any provision of
this Agreement shall be invalid, illegal or unenforceable, it shall, to the
extent possible, be modified in such manner as to be valid, legal and
enforceable but so as to most nearly retain the intent of the parties, and if
such modification is not possible, such provision shall be severed from this
Agreement, and in either case the validity, legality and enforceability of the
remaining provisions of this Agreement shall not in any way be affected or
impaired thereby.
10.12 CONSENT TO JURISDICTION AND VENUE. EACH OF THE PARTIES
HERETO, INCLUDING ACTIVE LINK, MC, XXXXXXX XXXX, XXX XXXXXXXXXX AND ALCI, HEREBY
IRREVOCABLY SUBMITS TO THE EXCLUSIVE JURISDICTION OF ANY UNITED STATES FEDERAL
OR ILLINOIS STATE COURT SITTING IN THE CITY OF CHICAGO IN ANY ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY DOCUMENT EXECUTED
BY ANY SUCH PARTY PURSUANT TO THIS AGREEMENT AND EACH SUCH PARTY HEREBY
IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY
BE HEARD AND DETERMINED IN ANY SUCH COURT AND IRREVOCABLY WAIVES ANY OBJECTION
IT MAY NOW OR HEREAFTER HAVE AS
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TO THIS VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN SUCH A COURT OR
THAT SUCH COURT IS AN INCONVENIENT FORUM.
10.13 REMEDIES CUMULATIVE. No right, remedy or election given
by any term of this Agreement shall be deemed exclusive, but each shall be
cumulative with all other rights, remedies and elections available at law or in
equity.
10.14 CAPTIONS; CONSTRUCTION. The headings of this Agreement
are inserted for convenience only, and shall not constitute a part of this
Agreement or be used to construe or interpret any provision hereof. This
Agreement has been fully reviewed and negotiated by the parties and no
uncertainty or ambiguity in any term or provision of this Agreement shall be
construed strictly against any party under any rule of construction or
otherwise.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
ACTIVE LINK COMMUNICATIONS, INC. MOBILITY CONCEPTS, INC.,
a Colorado corporation a Wisconsin corporation
By: /s/ Xxxxx Xxxxxxxxxx By: /s/ Xxxxxxx X. Xxxx
---------------------------------- -------------------------------
Its: Chief Executive Officer Its: President
--------------------------------- ------------------------------
Name: Name:
--------------------------------- ------------------------------
ALCI ACQUISITION CORP.,
a Colorado corporation
By: /s/ Xxxxx X. Xxxxxxxxxx
----------------------------------
Its: Chief Executive Officer
---------------------------------
Name:
---------------------------------
XXXXXXX XXXX, XXXXX XXXXXXXXXX,
an individual, but solely as to Sections an individual, but solely as to
5 and 9 Sections 7.8 and 7.9
/s/ Xxxxxxx X. Xxxx /s/ Xxxxx Xxxxxxxxxx
-------------------------------------- -----------------------------------
Xxxxxxx Xxxx Xxxxx Xxxxxxxxxx
SCHEDULE 1.3(III)
I.A. DIRECTORS OF ACTIVE LINK, INC. IMMEDIATELY FOLLOWING THE EFFECTIVE
DATE OF THE MERGER.
Xxxxxx X. Xxxxxx
Xxx Xxxxxxxxxx, Chairman
Xxxxxxx Xxxx
Xxxxxx Xxxx
Xxxx Xxxxxxx
Xxxxx X. Xxxxxxx
B. OFFICERS
Xxxxxxx Xxxx, President and Chief Executive Officer
Xxxxx Xxxxx, Vice President - Finance, Chief Financial Officer,
Secretary and Treasurer
II.A. DIRECTORS OF MOBILITY CONCEPTS, INC. IMMEDIATELY FOLLOWING THE EFFECTIVE
DATE OF THE MERGER.
Xxxxxxx Xxxx
Xxxxxx Xxxx
Xxxxxxxx X. Xxxx
Xxxxx X. Xxxxxxx
Xxxxxxxxxxx Xxxx
B. OFFICERS
Xxxxxx Xxxx, President and Chief Executive Officer
Xxxx Xxxxx, Vice President and Chief Financial Officer,
Secretary and Treasurer
ACTIVE LINK COMMUNICATIONS, INC. OFFICER'S CERTIFICATE
Xxxx & Xxxxxxx
000 Xxxxx Xxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Xxxxxx Xxxxx, L.L.P.
0000 Xxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000
Ladies and Gentlemen:
THE UNDERSIGNED, Active Link Communications, Inc., a Colorado
corporation ("Acquirer"), and ALCI Acquisition Corp., a Colorado corporation and
wholly-owned subsidiary of Acquirer ("Acquisition Sub"), in connection with the
merger of Acquisition Sub with and into Mobility Concepts, Inc., a Wisconsin
corporation ("Seller") pursuant to that certain Amended and Restated Agreement
dated October 18, 2001, by and between Seller, Acquirer and Acquisition Sub (the
"Merger Agreement"), does hereby make and deliver to Xxxx & Xxxxxxx, counsel to
Seller, and Xxxxxx Xxxxx, L.L.P., counsel to Acquirer, the representations set
forth below. Unless otherwise provided herein, capitalized terms used herein
shall have the meanings assigned to them in the Merger Agreement.
1. Following the Merger, Seller will hold at least 90% of the fair
market value of its net assets and at least 70% of the fair market value of its
gross assets and at least 90% of the fair market value of Acquisition sub's net
assets and 70% of the fair market value of Acquisition Sub's gross assets held
immediately prior to the Merger. For purposes of this representation, amounts
paid by Seller or Acquisition Sub to dissenters, amounts used by Seller or
Acquisition Sub to pay expenses incurred in connection with the Merger, and all
redemptions and distributions, if any, (except for regular, normal dividends)
made by Seller or Acquisition Sub, and Seller or Acquisition Sub assets disposed
of by Seller or Acquisition Sub prior to the Merger and in contemplation thereof
(including without limitation any asset disposed of, other than in the ordinary
course of business, during the period ending on the Effective Time of the Merger
and beginning with the commencement of negotiations (whether formal or
information) between Seller and Acquirer regarding the Merger) will be included
as assets of Seller or Acquisition Sub, respectively, immediately prior to the
Merger. However, as to Acquisition Sub, neither the Acquirer Common Stock issued
by Acquirer in the Merger nor the cash contributed by Acquirer to Acquisition
Sub to pay off dissenters, round off fractional shares, pay Seller creditors,
and pay Merger related expenses will be included as assets of Acquisition Sub
immediately prior to the Merger.
2. The Merger is the result of arm's length bargaining between Seller
and Acquirer. Accordingly, the fair market value of the Acquirer Common Stock
and other consideration received by each holder of Seller Common Stock pursuant
to the Merger will be approximately equal to the value of the Seller Common
Stock surrendered in exchange therefor.
Exhibit B
(to the Agreement)
3. Prior to the Merger, Acquirer will be in "control" of Acquisition
Sub within the meaning of Section 368(c) of the Internal Revenue Code of 1986,
as amended (the "Code").
4. In the Merger, shares of stock of the Seller representing "control"
of the Seller, as defined in Section 368(c) of the Code, will be exchanged
solely for voting stock of Acquirer. For purposes of this paragraph, shares of
stock of the Seller exchanged in the Merger for cash and other property
(including, without limitation, cash paid to shareholders of the Seller
perfecting dissenters' rights, if any, or in lieu of fractional shares of
Acquirer Common Stock) will be treated as shares of stock of the Seller
outstanding on the date of the Merger but not exchanged for shares of voting
stock of Acquirer.
5. Acquisition Sub was formed solely for the purposes of effecting the
Merger and has conducted no business or other activities except in connection
with the Merger.
6. Acquirer has no plan or intention to cause or permit the Seller to
issue additional shares of stock after the Merger, or take any other action,
that would result in Acquirer losing "control" of the Seller, as defined in
Section 368(c) of the Code.
7. Acquirer has no plan or intention to reacquire, directly or
indirectly, any of its stock issued in the Merger or to make any extraordinary
distribution with respect to such stock. Neither Acquirer nor any person related
to Acquirer within the meaning of Treasury Regulation Section 1.368-1(e)(3)
will, in connection with the Merger, directly or indirectly, purchase, redeem or
otherwise acquire (including by derivative transactions such as an equity swap
that would have the economic effect of an acquisition) any of the Acquirer
Common Stock issued in the Merger.
8. Except for transfers described in both Section 368(a)(2)(C) of the
Code and the Treasury Regulations promulgated thereunder, Acquirer has no plan
or intention to: (a) liquidate the Seller; (b) except for the Merger, merge the
Seller with or into another corporation including Acquirer or its affiliates;
(c) sell, distribute or otherwise dispose of stock of the Seller, or cause the
Seller to sell or otherwise dispose of stock of the Seller; or (d) cause the
Seller to sell or otherwise dispose of any of its assets or of any assets
acquired from Acquisition Sub, except for dispositions made in the ordinary
course of business or payment of expenses incurred by the Seller pursuant to the
Merger, including payments with respect to fractional shares, if any.
9. In the Merger, Acquisition Sub will have no liabilities assumed by
the Seller and will not transfer to the Seller any assets subject to
liabilities.
10. Following the Merger, Acquirer will cause the Seller to either
continue the historic business of the Seller or use a significant portion of its
historic business assets in a business.
11. As of the Effective, neither Acquirer nor any person that is
related to Acquirer within the meaning of Treas. Reg. Section 1.368-1(e)(3) will
own beneficially or of record, or will have owned beneficiary or of record
during the five years preceding the Effective Time, any
Exhibit B
(to the Agreement)
B-2
shares of Seller Common Stock or other securities, options, warrants or
instruments giving the holder thereof the right to acquire Seller Common Stock
or other securities issued by Seller.
12. Neither Acquirer nor Acquisition Sub is, nor will be at the
Effective Time of the Merger, an "investment company" within meaning of Section
368(a)(2)(F)(iii) and (iv) of the Code.
13. Each of Acquisition Sub, Acquirer and the Seller and each
shareholder of the Seller will pay separately his, her or its own expenses
relating to the Merger.
14. There is no intercorporate indebtedness existing between Acquirer
and the Seller or between Acquisition Sub and the Seller that was issued,
acquired, or will be settled at a discount as a result of the Merger. Acquirer
will assume no liabilities of the Seller or any shareholder of the Seller in
connection with the Merger and none of the Seller Common Stock to be surrendered
in exchange for Acquirer Common Stock in the Merger will be subject to any
liabilities.
15. None of the compensation received from Acquirer or Acquisition Sub
by any shareholder-employee of the Seller will be separate consideration for, or
allocable to, any of their shares of stock of the Seller; none of the shares of
Acquirer Common Stock received by any shareholder-employee of the Seller will be
separate consideration for, or allocable to, any employment agreement or any
covenants not to compete; and the compensation paid by Acquirer or Acquisition
Sub to any shareholder-employee of the Seller will be for the services actually
rendered and will be commensurate with amounts paid to third parties bargaining
at arm's length for similar services.
16. No shares of Acquisition Sub have been or will be used as
consideration or issued to shareholder of the Seller pursuant to the Merger.
17. Acquirer is authorized to make all of the representations set forth
herein on behalf of itself and on behalf of Acquisition Sub.
The undersigned hereby certifies and represents that the statements and
representations stated herein are true, correct and complete in all material
respects as of the Effective Time. The undersigned is authorized to make all of
the representations set forth herein and the undersigned acknowledges that the
foregoing representations will be relied upon by Xxxxxx Xxxxx, and Xxxx &
Xxxxxxx in rendering their opinions with respect to certain federal income tax
consequences of the Merger.
DATED: October 18, 2001 ACTIVE LINK COMMUNICATIONS, INC.
By:
---------------------------------------
Its: Chief Executive Officer
Exhibit B
(to the Agreement)
B-3
MOBILITY CONCEPTS, INC. OFFICER'S CERTIFICATE
Xxxx & Xxxxxxx
000 Xxxxx Xxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Xxxxxx Xxxxx, LLP
0000 Xxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000
Ladies and Gentlemen:
THE UNDERSIGNED, Mobility Concepts, Inc., a Wisconsin corporation
("Seller"), in connection with the merger of ALCI Acquisition Corp., a Colorado
corporation ("Acquisition Sub"), a wholly-owned subsidiary of Active Link
Communications, a Colorado corporation ("Acquirer"), with and into Seller,
pursuant to that certain Amended and Restated Agreement dated October 18, 2001,
by and between Seller, Acquisition Sub and Acquirer (the "Merger Agreement"),
does hereby make and deliver to Xxxxxx Xxxxx, LLP, counsel to Acquirer, and Xxxx
& Xxxxxxx, counsel to Seller, the representations set forth below. Unless
otherwise provided herein, capitalized terms used herein shall have the meanings
assigned to them in the Merger Agreement.
1. Following the Merger, Seller will hold at least 90% of the fair
market value of its net assets and at least 70% of the fair market value of its
gross assets and at least 90% of the fair market value of Acquisition Sub's net
assets and 70% of the fair market value of Acquisition Sub's gross assets held
immediately prior to the Merger. For purposes of this representation, amounts
paid by Seller or Acquisition Sub to dissenters, amounts used by Seller or
Acquisition Sub to pay expenses incurred in connection with the Merger, and all
redemptions and distributions, if any, (except for regular, normal dividends)
made by Seller or Acquisition Sub, and Seller or Acquisition Sub assets disposed
of by Seller or Acquisition Sub prior to the Merger and in contemplation thereof
(including without limitation any asset disposed of, other than in the ordinary
course of business, during the period ending on the Effective Time of the Merger
and beginning with the commencement of negotiations (whether formal or informal)
between Seller and Acquirer regarding the Merger) will be included as assets of
Seller or Acquisition Sub, respectively, immediately prior to the Merger.
However, as to Acquisition Sub, neither the Acquirer Common Stock issued by
Acquirer in the Merger nor the cash contributed by Acquirer to Acquisition Sub
to pay off dissenters, round off fractional shares, pay Seller creditors, and
pay Merger related expenses will be included as assets of Acquisition Sub
immediately prior to the Merger.
2. The Merger is the result of arm's length bargaining between Seller
and Acquirer. Accordingly, the fair market value of the Acquirer Common Sock and
other consideration received by each holder of Seller Common Stock pursuant to
the Merger will be approximately equal to the value of the Seller Common Stock
surrendered in exchange therefor.
Exhibit C
(to the Agreement)
3. Prior to and in connection with the Merger, (i) Seller has not
redeemed (and will not redeem) any Seller Common Stock and has not made (and
will not make) any distributions with respect thereto, and (ii) the persons that
are related to Seller within the meaning of Treas. Reg. Section 1.368-1(e)(3)
have not acquired Seller Common Stock from any holder thereof with consideration
other than either Seller Common Stock or Acquirer Common Stock.
4. Other than in the ordinary course of business or pursuant to its
obligation under the Agreement, Seller has not transferred or distributed any of
its assets or made any extraordinary distributions with respect to its stock,
prior to and in connection with the Merger.
5. In the Merger, shares of stock of the Seller representing "control"
of the Seller, as defined in Section 368(c) of the Code, will be exchanged
solely for voting stock of Acquirer. For purposes of this paragraph, shares of
stock of the Seller exchanged in the Merger for cash and other property
(including, without limitation, cash paid to shareholders of the Seller
perfecting dissenters' rights, if any, or in lieu of fractional shares of
Acquirer Common Stock) will be treated as shares of stock of the Seller
outstanding on the date of the Merger but not exchanged for shares of voting
stock of Acquirer.
6. At the Effective Time of the Merger, Seller will have no outstanding
warrants, options, or convertible securities or any other type of right
outstanding pursuant to which any person could acquire shares of Seller Common
Stock or any other equity interest in Seller (or the right to vote (or restrict
or otherwise control the vote of) such shares of capital stock or other equity
interest) that, if exercised, could affect Acquirer's acquisition or retention
of control of Seller, as defined in Section 368(c) of the Code.
7. Seller has no plan or intention to issue additional shares of stock
after the Merger, or take any other action, that would result in Acquirer losing
control of Seller, as defined in Section 368(c) of the Code.
8. Except for transfers described in both Section 368(a)(2)(C) of the
Code and Treasury Regulations promulgated thereunder, to the best knowledge of
Seller, Acquirer has no plan or intention to (a) liquidate Seller; (b) except
for the Merger, merge Seller with or into another corporation including Acquirer
or any of its affiliates; (c) sell, distribute, or otherwise dispose of stock of
Seller, or cause Seller to sell or otherwise dispose of stock of Seller; or (d)
cause Seller to sell or otherwise to dispose of any of its assets or of any
assets acquired from Acquisition Sub, except for dispositions made in the
ordinary course of business or payment of expenses incurred by Seller pursuant
to the Merger (including payments with respect to fractional shares, if any).
9. To the best knowledge of Seller, Acquirer intends to cause Seller to
continue Seller's historic business or use a significant portion of Seller's
historic business assets in a business following the Merger. Seller has not
sold, transferred or otherwise disposed of and will not sell, transfer or
otherwise dispose of assets which would prevent Seller from continuing its
historic business or from using a significant portion of its historic business
assets in a business following the Merger.
Exhibit C
(to the Agreement)
C-2
10. The liabilities of Seller and the liabilities to which the assets
of Seller are subject were incurred by Seller in the ordinary course of its
business.
11. The fair market value of Seller`s assets will, at the Effective
Time of the Merger, exceed the aggregate liabilities of Seller plus the amount
of liabilities, if any, to which such assets are subject.
12. To the best knowledge of Seller, as of the Effective Time, neither
Acquirer nor any person that is related to Acquirer within the meaning of Treas.
Reg. Section 1.368-l(e)(3) will own beneficially or of record, or will have
owned beneficially or of record during the five years preceding the Effective
Time, any shares of Seller Common Stock or other securities, options, warrants
or instruments giving the holder thereof the right to acquire Seller Common
Stock or other securities issued by Seller.
13. Seller is not and will not be at the Effective Time of the Merger
an "investment company" within the meaning of Section 368(a)(2)(F)(iii) and (iv)
of the Code.
14. Seller is not and will not be at the Effective Time of the Merger
under the jurisdiction of a court in a Title 11 or similar case within the
meaning of Section 368(a)(3)(A) of the Code.
15. Each of Acquisition Sub, Acquirer and Seller and each shareholder
of Seller will pay separately his, her or its own expenses relating to the
Merger.
16. There is no intercorporate indebtedness existing between Acquirer
and Seller or between Acquisition Sub and Seller that was issued, acquired, or
will be settled at a discount as a result of the Merger. Acquirer will assume no
liabilities of Seller or any shareholder of Seller in connection with the
Merger, and none of the Seller Common Stock to be surrendered in exchange for
Acquirer Common Stock in the Merger will be subject to any liabilities.
17. None of the compensation received from Seller by any
shareholder-employees of Seller will be separate consideration for, or allocable
to, any of their shares of stock of Seller; none of the shares of Acquirer
Common Stock received by any shareholder-employees of Seller will be separate
consideration for, or allocable to, any employment agreement or any covenants
not to compete; and the compensation paid by Seller to any shareholder-employees
of Seller will be for services actually rendered and will be commensurate with
amounts paid to third parties bargaining at arm's length for similar services.
18. No shares of Acquisition Sub have been or will be used as
consideration or issued to shareholders of Seller pursuant to the Merger.
19. Seller is authorized to make all of the representations set forth
herein.
Exhibit C
(to the Agreement)
C-3
The undersigned hereby certifies and represents that the statements and
representations stated herein are true, correct and complete in all material
respects as of the Effective Time. The undersigned is authorized to make all of
the representations set forth herein and the undersigned acknowledges that the
foregoing representations will be relied upon by Xxxxxx Xxxxx, XXX, Xxxxxxxxxxx,
Xxxxxxxxx and Xxxx & Xxxxxxx in rendering their opinions with respect to certain
federal income tax consequences of the Merger.
DATED: October 18, 2001 MOBILITY CONCEPTS, INC.
By
--------------------------------
Its
-------------------------
Exhibit C
(to the Agreement)
C-4
