AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER is made as of the 10th day of December, 1999.
AMONG:
ILINK TELECOM INC., a body corporate formed pursuant to the laws of
the State of Nevada and having an office for business located at ▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
("iLink")
AND:
9278 DISTRIBUTOR ACQUISITION CORPORATION, a body corporate formed
pursuant to the laws of the State of New York and a wholly-owned
subsidiary of iLink
(the "Acquirer")
AND:
9278 DISTRIBUTOR INC., a body corporate formed pursuant to the laws
of the State of New York and having an office for business located
at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
(the "Company")
WHEREAS:
A. the Company is engaged in the business of wholesaling prepaid phone cards;
B. iLink is engaged in the business of providing customized
telecommunications switching solutions;
C. the respective Boards of Directors of the Company and the Acquirer deem it
advisable and in the best interests of iLink, the Company and the Acquirer
that the Company merge with and into the Acquirer (the "Merger") pursuant
to this Agreement and the Certificate of Merger, and the applicable
provisions of the laws of the State of New York; and
D. it is intended that the Merger shall qualify for Federal income tax
purposes as a reorganization within the meaning of Section 368 of the
Internal Revenue Code of 1986, as amended.
NOW THEREFORE THIS AGREEMENT WITNESSETH THAT in consideration of the premises
and the mutual covenants, agreements, representations and warranties contained
herein, the parties hereto hereby agree as follows:
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ARTICLE 1
DEFINITIONS AND INTERPRETATION
Definitions
1.1 In this Agreement the following terms will have the following meanings:
(a) "Acquirer" means 9278 Distributor Acquisition Corporation;
(b) "Acquisition Price" means the sum of $3,000,000 to be delivered to
the ▇▇▇▇▇ ▇▇▇▇▇▇▇ by iLink at Closing and consisting of the Cash
Acquisition Price and the Promissory Note;
(c) "Acquisition Shares" means the 14,900,000 iLink Shares to be issued
to the Company Shareholders at Closing;
(d) "Agreement" means this agreement and plan of merger among iLink, the
Acquirer and the Company;
(e) "Audited Company Financial Statements" means the audited financial
statements of the Company for the fiscal year ended December 31,
1998, together with the unqualified auditors' report thereon, a true
copy of which is attached as Schedule "A" hereto;
(f) "Audited iLink Financial Statements" means the audited financial
statements of iLink for the fiscal year ended February 28, 1999,
together with the unqualified auditors' report thereon, a true copy
of which is attached as Schedule "J" hereto;
(g) "Business of iLink" means all aspects of the business conducted by
iLink, including, without limitation, providing customized
telecommunications switching solutions;
(h) "Business of the Company" means all aspects of the business
conducted by the Company, including, without limitation, wholesaling
prepaid phone cards;
(i) "Cash Acquisition Price" means the sum of $1,000,000 to be paid to
▇▇▇▇▇ ▇▇▇▇▇▇▇ by iLink at Closing in partial payment of the
Acquisition Price;
(j) "Century Capital Consulting Agreement" means the consulting
agreement dated December 6, 1999 between iLink and Century Capital
Management Ltd. a copy of which in included in Schedule "Q" attached
hereto;
(k) "Closing" means the completion, on the Closing Date, of the
transactions contemplated hereby in accordance with Article 11
hereof;
(l) "Closing Date" means the day on which all conditions precedent to
the completion of the transaction as contemplated hereby have been
satisfied or waived; provided that in no event shall the Closing
Date be later than December 31, 1999;
(m) "Company" means 9278 Distributor Inc.;
(n) "Company Accounts Payable and Liabilities" means all accounts
payable and liabilities of the Company due and owing or otherwise
constituting a binding
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obligation of the Company and/or its affiliates (other than a
Company Material Contract) as of November 30, 1999 as set forth is
Schedule "C" hereto;
(o) "Company Accounts Receivable" means all accounts receivable owing to
the Company as of November 30, 1999 as set forth in Schedule "D"
hereto;
(p) "Company Assets" means the undertaking and all the property and
assets of the Business of the Company of every kind and description
wherever situated including, without limitation, the Company
Equipment, the Company Inventory, the Company Material Contracts,
the Company Accounts Receivable, the Company Cash, the Company
Intangible Assets and the Company Goodwill, and all credit cards,
charge cards and banking cards issued to the Company;
(q) "Company Bank Accounts" means all of the bank accounts, lock boxes
and safety deposit boxes of the Company or relating to the Business
of the Company as set forth in Schedule "I" hereto;
(r) "Company Cash" means all cash on hand or on deposit to the credit of
the Company on the Closing Date;
(s) "Company Equipment" means all machinery, equipment, furniture, and
furnishings used in the Business of the Company, including, without
limitation, the items more particularly described in Schedule "E"
hereto;
(t) "Company Financial Statements" means, collectively, the Audited
Company Financial Statements and the Quarterly Company Financial
Statements;
(u) "Company Goodwill" means the goodwill of the Business of the Company
together with the exclusive right of iLink to represent itself as
carrying on the Business of the Company in succession of the Company
subject to the terms hereof, and the right to use any words
indicating that the Business of the Company is so carried on
including the right to use the name "9278 Distributors" or any
variation thereof as part of the name of or in connection with the
Business of the Company or any part thereof carried on or to be
carried on by the Company, the right to all corporate, operating and
trade names associated with the Business of the Company, or any
variations of such names as part of or in connection with the
Business of the Company, all telephone listings and telephone
advertising contracts, all lists of customers, books and records and
other information relating to the Business of the Company, all
necessary licenses and authorizations and any other rights used in
connection with the Business of the Company;
(v) "Company Insurance Policies" means the public liability insurance
and insurance against loss or damage to the Company Assets and the
Business of the Company as described in Schedule "F" hereto;
(w) "Company Intangible Assets" means all of the intangible assets of
the Company, including, without limitation, the Company Goodwill,
all trademarks, logos, copyrights, designs, and other intellectual
and industrial property of the Company and including, without
limitation, the Kick Code 10-10-9278;
(x) "Company Inventory" means all inventory and supplies of the Business
of the Company as of November 30, 1999 as set forth in Schedule "G"
hereto;
(y) "Company Material Contracts" means the burden and benefit of and the
right, title and interest of the Company in, to and under all trade
and non-trade
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contracts, engagements or commitments, whether written or oral, to
which the Company is entitled in connection with the Business of the
Company whereunder the Company is obligated to pay or entitled to
receive the sum of $10,000 or more including, without limitation,
any pension plans, profit sharing plans, bonus plans, loan
agreements, security agreements, indemnities and guarantees, any
agreements with employees, lessees, licensees, managers,
accountants, suppliers, agents, distributors, officers, directors,
attorneys or others which cannot be terminated without liability on
not more than one month's notice, and those contracts listed in
Schedule "H" hereto;
(z) "Company Shareholders" means ▇▇▇▇▇ ▇▇▇▇▇▇▇, KAPH Groups, Inc.,
▇▇▇▇▇▇ & Co. and P.T.N. Ltd.
(aa) "Company Shares" means all of the issued and outstanding shares of
the Company's equity stock;
(bb) "Employment Agreement" means the employment agreement between the
Company and ▇▇▇▇▇ ▇▇▇▇▇▇▇ to be entered into pursuant to Article 8
hereof substantially in the form attached hereto as Schedule "R";
(cc) "iLink" means iLink Telecom, Inc.;
(dd) "Effective Time" means the date of the filing of an appropriate
Certificate of Merger in the form required by the State of New York,
which certificate shall provide that the Merger shall become
effective upon such filing;
(ee) "iLink Accounts Payable and Liabilities" means all accounts payable
and liabilities of iLink due and owing or otherwise constituting a
binding obligation of iLink and/or its affiliates (other than an
iLink Material Contract) as of November 30, 1999 as set forth is
Schedule "L" hereto;
(ff) "iLink Accounts Receivable" means all accounts receivable and other
debts owing to iLink as of November 30, 1999 as set forth in
Schedule "M" hereto;
(gg) "iLink Assets" means the undertaking and all the property and assets
of the Business of iLink of every kind and description wheresoever
situated including, without limitation, iLink Equipment, iLink
Material Contracts, iLink Accounts Receivable, iLink Cash, iLink
Intangible Assets and iLink Goodwill, and all credit cards, charge
cards and banking cards issued to iLink;
(hh) "iLink Bank Accounts" means all of the bank accounts, lock boxes and
safety deposit boxes of iLink or relating to the Business of iLink
as set forth in Schedule "N" hereto;
(ii) "iLink Cash" means all cash on hand or on deposit to the credit of
iLink on the Closing Date;
(jj) "iLink Common Shares" means the shares of common stock in the
capital of iLink;
(kk) "iLink Equipment" means all machinery, equipment, furniture, and
furnishings used in the Business of iLink, including, without
limitation, the items more particularly described in Schedule "O"
hereto;
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(ll) "iLink Financial Statements" means, collectively, the Audited iLink
Financial Statements and the Quarterly iLink Financial Statements;
(mm) "iLink Goodwill" means the goodwill of the Business of iLink
including the right to all corporate, operating and trade names
associated with the Business of iLink, or any variations of such
names as part of or in connection with the Business of iLink, all
telephone listings and telephone advertising contracts, all lists of
customers, books and records and other information relating to the
Business of iLink, all necessary licenses and authorizations and any
other rights used in connection with the Business of iLink;
(nn) "iLink Insurance Policies" means the public liability insurance and
insurance against loss or damage to iLink Assets and the Business of
iLink as described in Schedule "P" hereto;
(oo) "iLink Intangible Assets" means all of the intangible assets of
iLink, including, without limitation, iLink Goodwill, all
trademarks, logos, copyrights, designs, and other intellectual and
industrial property of iLink;
(pp) "iLink Material Contracts" means the burden and benefit of and the
right, title and interest of iLink in, to and under all trade and
non-trade contracts, engagements or commitments, whether written or
oral, to which iLink is entitled in connection with the Business of
iLink whereunder iLink is obligated to pay or entitled to receive
the sum of $10,000 or more including, without limitation, any
pension plans, profit sharing plans, bonus plans, loan agreements,
security agreements, indemnities and guarantees, any agreements with
employees, lessees, licensees, managers, accountants, suppliers,
agents, distributors, officers, directors, attorneys or others which
cannot be terminated without liability on not more than one month's
notice, and those contracts listed in Schedule "Q" hereto;
(qq) "Merger Consideration" means the Acquisition Shares and the
Acquisition Price;
(rr) "Place of Closing" means the offices of ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇
or such other place as iLink and the Company may mutually agree
upon;
(ss) "Preferred Shares" means the shares of Series B Convertible
Preferred Stock in the capital of iLink;
(tt) "Private Placement" means the private sale by iLink of up to 1,500
Preferred Shares at a price of $1,000.00 per Preferred Share and up
to 500,000 Common Shares at a price of $2.00 per Common Share;
(uu) "Promissory Note" means the promissory note in the amount of
$2,000,000 in favour of ▇▇▇▇▇ ▇▇▇▇▇▇▇ to be delivered to ▇▇▇▇▇
▇▇▇▇▇▇▇ at Closing by iLink in partial payment of the Acquisition
Price, substantially in the form attached hereto as Schedule "T";
(vv) "Quarterly Company Financial Statements" means the unaudited
financial statements of the Company for the nine month period ended
September 30, 1999, a true copy of which are attached as Schedule
"B" hereto;
(ww) "Quarterly iLink Financial Statements" means the unaudited financial
statements of iLink for the six month period ended August 31, 1999,
a true copy of which are attached as Schedule "K" hereto;
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(xx) "▇▇▇▇▇▇▇▇ Agreement" means the Agreement to Issue Shares between
iLink and ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ dated December 10, 1999, a copy of which is
included as Schedule "Q" attached hereto;
(yy) "State Corporation Law" means the Business Corporation Law of the
State of New York;
(zz) "Subscription Agreements" means the form of subscription agreements
to be used in the Private Placement, substantially in the form
attached hereto as Schedule "S"; and
(aaa) "Surviving Company" means the Acquirer following the merger with the
Company.
Any other terms defined within the text of this Agreement will have the meanings
so ascribed to them.
Captions and Section Numbers
1.2 The headings and section references in this Agreement are for convenience of
reference only and do not form a part of this Agreement and are not intended to
interpret, define or limit the scope, extent or intent of this Agreement or any
provision thereof.
Section References and Schedules
1.3 Any reference to a particular "Article", "section", "paragraph", "clause" or
other subdivision is to the particular Article, section, clause or other
subdivision of this Agreement and any reference to a Schedule by letter will
mean the appropriate Schedule attached to this Agreement and by such reference
the appropriate Schedule is incorporated into and made part of this Agreement.
The Schedules to this Agreement are as follows:
Information concerning the Company
Schedule "A" Audited Company Financial Statements
Schedule "B" Quarterly Company Financial Statements
Schedule "C" Company Accounts Payable and Liabilities
Schedule "D" Company Accounts Receivable
Schedule "E" Company Equipment
Schedule "F" Company Insurance Policies
Schedule "G" Company Inventory
Schedule "H" Company Material Contracts
Schedule "I" Company Bank Accounts
Schedule "I-A" Company Litigation
Information concerning iLink
Schedule "J" Audited iLink Financial Statements
Schedule "K" Quarterly iLink Financial Statements
Schedule "L" iLink Accounts Payable and Liabilities
Schedule "M" iLink Accounts Receivable
Schedule "N" iLink Bank Accounts
Schedule "O" iLink Equipment
Schedule "P" iLink Insurance Policies
Schedule "Q" iLink Material Contracts
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Schedule "Q-A" iLink Trademark Infringements
Agreements
Schedule "R" Employment Agreement
Schedule "S" Subscription Agreements
Note
Schedule "T" Promissory Note
Other Schedule "U" Share Ownership and Allocation of Merger
Consideration
Guaranty Schedule "V" Guaranty of Acquirer
Severability of Clauses
1.4 If any part of this Agreement is declared or held to be invalid for any
reason, such invalidity will not affect the validity of the remainder which will
continue in full force and effect and be construed as if this Agreement had been
executed without the invalid portion, and it is hereby declared the intention of
the parties that this Agreement would have been executed without reference to
any portion which may, for any reason, be hereafter declared or held to be
invalid.
ARTICLE 2
THE MERGER
The Merger
2.1 At Closing, the Company shall be merged with and into the Acquirer pursuant
to this Agreement and the Plan of Merger and the separate corporate existence of
the Company shall cease and the Acquirer, as it exists from and after the
Closing, shall be the Surviving Company.
Effect of the Merger
2.2 The Merger shall have the effect provided therefor by the State Corporation
Law. Without limiting the generality of the foregoing, and subject thereto, at
Closing (i) all the rights, privileges, immunities, powers and franchises, of a
public as well as of a private nature, and all property, real, personal and
mixed, and all debts due on whatever account, including without limitation
subscriptions to shares, and all other choses in action, and all and every other
interest of or belonging to or due to the Company or the Acquirer, as a group,
subject to the terms hereof, shall be taken and deemed to be transferred to, and
vested in, the Surviving Company without further act or deed; and all property,
rights and privileges, immunities, powers and franchises and all and every other
interest shall be thereafter as effectually the property of the Surviving
Company, as they were of the Company and the Acquirer, as a group, and (ii) all
debts, liabilities, duties and obligations of the Company and the Acquirer, as a
group, subject to the terms hereof, shall become the debts, liabilities and
duties of the Surviving Company and the Surviving Company shall thenceforth be
responsible and liable for all debts, liabilities, duties and obligations of the
Company and the Acquirer, as a group, and neither the rights of creditors nor
any liens upon the property of the Company or the Acquirer, as a group, shall be
impaired by the Merger, and may be enforced against the Surviving Company.
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Articles of Incorporation; Bylaws; Directors and Officers
2.3 The Articles of Incorporation of the Surviving Company from and after the
Closing shall be the Articles of Incorporation of the Acquirer until thereafter
amended in accordance with the provisions therein and as provided by the
applicable provisions of the State Corporation Law. The Bylaws of the Surviving
Company from and after the Closing shall be the Bylaws of the Acquirer as in
effect immediately prior to the Closing, continuing until thereafter amended in
accordance with their terms, the Articles of Incorporation of the Surviving
Company and as provided by the State Corporation Law. The Directors of the
Company at the Effective Time shall continue to be the Directors and the
Officers of the Company at the Effective Time shall continue to be the Officers
of the Surviving Company.
Conversion of Securities
2.4 At the Effective Time, by virtue of the Merger and without any action on the
part of the Acquirer, the Company or the Company Shareholders, the shares of
capital stock of each of the Company and the Acquirer shall be converted as
follows:
(a) Capital Stock of the Acquirer. Each issued and outstanding share of
the Acquirer's capital stock shall continue to be issued and
outstanding and shall be converted into one share of validly issued,
fully paid, and non-assessable common stock of the Surviving
Company. Each stock certificate of the Acquirer evidencing ownership
of any such shares shall continue to evidence ownership of such
shares of capital stock of the Surviving Company.
(b) Conversion of Company Shares. Each Company Share that is issued and
outstanding at the Effective Time shall automatically be cancelled
and extinguished and converted, without any action on the part of
the holder thereof, into the right to receive at the time and in the
amounts described in this Agreement (i) an amount of cash equal to
the Acquisition Price divided by the number of shares of Company
Shares outstanding immediately prior to the Time of Closing and (ii)
an amount of Acquisition Shares equal to the number of Acquisition
Shares divided by the number of Company Shares outstanding
immediately prior to Closing. All such Company Shares, when so
converted, shall no longer be outstanding and shall automatically be
cancelled and retired and shall cease to exist, and each holder of a
certificate representing any such shares shall cease to have any
rights with respect thereto, except the right to receive the
Acquisition Shares and the Acquisition Price paid in consideration
therefor upon the surrender of such certificate in accordance with
this Agreement.
ARTICLE 3
REGISTRATION RIGHTS
3.1 As soon as practicable after the Closing iLink shall file a registration
statement on Form SB-2 (or similar form) under the Securities Act of 1933 and
under all applicable Blue Sky laws covering not more than 3,400,000 of the
Acquisition Shares and will use its best efforts to cause such registration
statement to be declared effective by the Securities and Exchange Commission at
the earliest practicable date, all at iLink's sole cost and expense. Such best
efforts shall include responding to all comments received by the staff of the
Securities and Exchange Commission and promptly preparing and filing amendments
to such registration statement which are responsive to the comments received
from the staff of the Securities and Exchange
9
Commission. Such registration statement shall provide for the sale of up to
3,400,000 of the Acquisition Shares being registered and sold from time to time
directly to purchasers or in the over-the-counter market or through or to
securities brokers or dealers that may receive compensation in the form of
discounts, concessions, or commissions or in other public or private
transactions. None of the foregoing shall in any way limit the Company
Shareholders' rights to sell the Acquisition Shares in reliance on an exemption
from the registration requirements under the Securities Act of 1933 in
connection with a particular transaction.
3.2 iLink shall use its best efforts to maintain the currency of the
registration statement filed with the Securities and Exchange Commission and
under all applicable Blue Sky laws in respect of the Acquisition Shares being
registered until such time as deemed necessary to complete the distribution
thereof by a majority of the Company Shareholders, but in no event shall iLink
be required to maintain such effectiveness beyond the date which is twelve
months following the effective date thereof.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF
THE COMPANY
Representations and Warranties
The Company represents and warrants in all material respects to iLink and
the Acquirer, with the intent that iLink will rely thereon in entering into this
Agreement and in completing the transactions contemplated hereby, that:
The Company - Corporate Status and Capacity
(a) Incorporation. The Company is a corporation duly incorporated and
validly subsisting under the laws of the State of New York, and is
in good standing with the office of the Secretary of State of the
State of New York;
(b) Carrying on Business. The Company carries on business primarily in
the States of New York, New Jersey, and Connecticut and does not
carry on any material business activity in any other jurisdiction.
The Company has an office in Bronx, New York and in no other
locations. The nature of the Business of the Company does not
require the Company to register or otherwise be qualified to carry
on business in any other jurisdiction;
(c) Corporate Capacity. The Company has the corporate power, capacity
and authority to own the Company Assets, to carry on the Business of
the Company and to enter into and complete this Agreement;
The Company - Capitalization
(d) Authorized Capital. The authorized capital of the Company consists
of 200 shares without par value;
(e) Ownership of Company Shares. The issued and outstanding share
capital of the Company will on Closing consist of 200 shares (being
the Company Shares), which shares on Closing shall be validly issued
and outstanding as fully paid and non-assessable shares. The Company
Shareholders will be at Closing the registered and beneficial owner
of all of the Company Shares. The Company Shareholders own and will
on Closing own the Company Shares free and clear of
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any and all liens, charges, pledges, encumbrances, restrictions on
transfer and adverse claims whatsoever;
(f) No Option. No person, firm or corporation has any agreement, option,
warrant, preemptive right or any other right capable of becoming an
agreement or option for the acquisition of the Company Shares or for
the purchase, subscription or issuance of any of the unissued shares
in the capital of the Company;
(g) No Restrictions. There are no restrictions on the transfer, sale or
other disposition of the Company Shares contained in the charter
documents of the Company or under any agreement;
The Company - Records and Company Financial Statements
(h) Charter Documents. The charter documents of the Company have not
been altered since the incorporation of the Company, except as filed
in the record book of the Company;
(i) Corporate Minute Books. The corporate minute books of the Company
are complete and each of the minutes contained therein accurately
reflect the actions that were taken at a duly called and held
meeting or by consent without a meeting. All actions by the Company
which required director or shareholder approval are reflected on the
corporate minute books of the Company. The Company is not in
violation or breach of, or in default with respect to, any term of
its Certificate of Incorporation (or other charter documents) or
by-laws.
(j) Company Financial Statements. The Company Financial Statements
present fairly, in all material respects, the assets and liabilities
(whether accrued, absolute, contingent or otherwise) of the Company
as of the respective dates thereof, and the sales and earnings of
the Business of the Company during the periods covered thereby, in
all material respects, and have been prepared in substantial
accordance with generally accepted accounting principles
consistently applied;
(k) Company Accounts Payable and Liabilities. There are no material
liabilities, contingent or otherwise, of the Company which are not
disclosed in Schedules "C" or "I-A" hereto or reflected in the
Company Financial Statements except those incurred in the ordinary
course of business since the date of the said schedule and the
Quarterly Company Financial Statements, and the Company has not
guaranteed or agreed to guarantee any debt, liability or other
obligation of any person, firm or corporation. Without limiting the
generality of the foregoing, all accounts payable and liabilities of
the Company as at November 30, 1999 are described in Schedule "C"
hereto;
(l) Company Accounts Receivable. All Company Accounts Receivable result
from bona fide business transactions and services actually rendered
without, to the knowledge and belief of the Company, any claim by
the obligor for set-off or counterclaim;
(m) Company Bank Accounts. All of the Company Bank Accounts, their
location, numbers and the authorized signatories thereto are as set
forth in Schedule "I" hereto;
(n) No Debt to Related Parties. The Company is not, and on Closing will
not be, materially indebted to the Company Shareholders nor to any
family member
11
thereof, nor to any affiliate, director or officer of the Company or
the Company Shareholders except accounts payable on account of bona
fide business transactions of the Company incurred in normal course
of the Company Business, none of which are more than 30 days in
arrears;
(o) No Related Party Debt to the Company. The Company Shareholders is
not now indebted to or under any financial obligation to the Company
on any account whatsoever, except for advances on account of travel
and other expenses not exceeding $5,000 in total;
(p) No Dividends. No dividends or other distributions on any shares in
the capital of the Company have been made, declared or authorized
since the date of the Quarterly Company Financial Statements except
for a dividend of $65,000 declared in November 1999;
(q) No Payments. No payments of any kind have been made or authorized
since the date of the Quarterly Company Financial Statements to or
on behalf of the Company Shareholders or to or on behalf of
officers, directors, shareholders or employees of the Company or
under any management agreements with the Company, except (1)
payments made in the ordinary course of business and at the regular
rates of salary or other remuneration payable to them, (2) a
dividend of $65,000, and (3) the repayment of approximately $235,000
of indebtedness to a shareholder;
(r) No Pension Plans. There are no pension, profit sharing, group
insurance or similar plans or other deferred compensation plans
affecting the Company;
(s) No Adverse Events. Since the date of the Quarterly Company Financial
Statements and except as set forth in Schedule "I-A" hereto:
(i) there has not been any material adverse change in the
financial position or condition of the Company, its
liabilities or the Company Assets or any damage, loss or other
change in circumstances materially affecting the Company, the
Business of the Company or the Company assets or the Company's
right to carry on the Business of the Company, other than
changes in the ordinary course of business,
(ii) there has not been any damage, destruction, loss or other
event (whether or not covered by insurance) materially and
adversely affecting the Company, the Business of the Company
or the Company Assets,
(iii) there has not been any material increase in the compensation
payable or to become payable by the Company to the Company
Shareholders or to any of the Company's officers, employees or
agents or any bonus, payment or arrangement made to or with
any of them,
(iv) the Business of the Company has been and continues to be
carried on in the ordinary course,
(v) the Company has not waived or surrendered any right of
material value.
(vi) the Company has not discharged or satisfied or paid any lien
or encumbrance or obligation or liability other than current
liabilities in the ordinary course of business, and
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(vii) no capital expenditures in excess of $100,000 individually or
$300,000 in total have been authorized or made;
The Company - Income Tax Matters
(t) Tax Returns. All tax returns and reports of the Company required by
law to be filed have been filed and are true, complete and correct,
and any taxes payable in accordance with any return filed by the
Company or in accordance with any notice of assessment or
reassessment issued by any taxing authority have been so paid;
(u) Current Taxes. Adequate provisions have been made for taxes payable
for the current period for which tax returns are not yet required to
be filed and there are no agreements, waivers, or other arrangements
providing for an extension of time with respect to the filing of any
tax return by, or payment of, any tax, governmental charge or
deficiency by the Company. The Company is not aware of any
contingent tax liabilities or any grounds which would prompt a
reassessment including aggressive treatment of income and expenses
in filing earlier tax returns;
The Company - Applicable Laws and Legal Matters
(v) Licences. The Company holds all licenses and permits as may be
requisite for carrying on the Business of the Company in the manner
in which it has heretofore been carried on, which licenses and
permits have been maintained and continue to be in good standing
except where the failure to obtain or maintain such licenses or
permits would not have a material adverse effect on the Company
Business;
(w) Applicable Laws. The Company has not been charged with or received
notice of breach of any laws, ordinances, statutes, regulations,
by-laws, orders or decrees to which it is subject or which apply to
it the violation of which would have a material adverse effect on
the Company, and, to its knowledge, the Company is not in breach of
any laws, ordinances, statutes, regulations, by-laws, orders or
decrees the contravention of which would result in a material
adverse impact on the Business of the Company;
(x) Pending or Threatened Litigation. There is no material litigation or
administrative or governmental proceeding or enquiry pending or
threatened against or relating to the Company, the Business of the
Company, or any of the Company Assets, nor does the Company have any
knowledge of any deliberate act or omission of the Company that
would form any material basis for any such action, proceeding or
enquiry, except as set forth in Schedule "I-A" hereto;
(y) No Bankruptcy. The Company has not made any voluntary assignment or
proposal under applicable laws relating to insolvency and bankruptcy
and no bankruptcy petition has been filed or presented against the
Company and no order has been made or a resolution passed for the
winding-up, dissolution or liquidation of the Company;
(z) Labour Matters. The Company is not party to any collective agreement
relating to the Business of the Company with any labour union or
other association of employees and no part of the Business of the
Company has been certified as a unit appropriate for collective
bargaining or, to the knowledge of the Company, has made any attempt
in that regard and the Company has no reason to believe
13
that any current employees will leave the Company's employ as a
result of this Merger.Finder's Fees. The Company is not party to any
agreement which provides for the payment of finder's fees, brokerage
fees, commissions or other fees or amounts which are or may become
payable to any third party in connection with the execution and
delivery of this Agreement and the transactions contemplated herein;
Execution and Performance of Agreement
(aa) Authorization and Enforceability. The execution and delivery of this
Agreement, and the completion of the transactions contemplated
hereby, constitute a legal, valid and binding obligation of the
Company and is enforceable against it in accordance with its terms;
(bb) No Violation or Breach. The execution and performance of this
Agreement will not
(i) violate the charter documents of the Company or result in any
breach of, or default under, any loan agreement, mortgage,
deed of trust, or any other agreement to which the Company, is
a party,
(ii) give any person any right to terminate or cancel any agreement
including, without limitation, the Company Material Contracts,
or any right or rights enjoyed by the Company,
(iii) result in any alteration of the Company's obligations under
any agreement to which the Company is party including, without
limitation, the Company Material Contracts,
(iv) result in the creation or imposition of any lien, encumbrance
or restriction of any nature whatsoever in favour of a third
party upon or against the Company Assets,
(v) result in the imposition of any tax liability to the Company
relating to the Company Assets or the Company Shares, or
(vi) violate any court order or decree to which the Company is
subject;
The Company Assets - Ownership and Condition
(cc) Business Assets. The Company Assets comprise all of the property and
assets of the Business of the Company, and neither the Company
Shareholder nor any other person, firm or corporation owns any
assets used by the Company in operating the Business of the Company,
whether under a lease, rental agreement or other arrangement, other
than as disclosed in Schedules "E" or "H" hereto;
(dd) Title. The Company is the legal and beneficial owner of the Company
Assets, free and clear of all mortgages, liens, charges, pledges,
security interests, encumbrances or other claims whatsoever, save
and except as disclosed in Schedules "E" or "H" hereto;
(ee) No Option. No person, firm or corporation has any agreement or
option or a right capable of becoming an agreement for the purchase
of any of the Company Assets;
14
(ff) Company Insurance Policies. The Company maintains the public
liability insurance and insurance against loss or damage to the
Company Assets and the Business of the Company as described in
Schedule "F" hereto;
(gg) Company Material Contracts. The Company Material Contracts listed in
Schedule "H" constitute all of the material contracts of the
Company;
(hh) No Default. There has not been any default in any material
obligation of the Company or any other party to be performed under
any of the Company Material Contracts, each of which is in good
standing and in full force and effect and unamended, and the Company
is not aware of any default in the obligations of any other party to
any of the Company Material Contracts;
(ii) No Compensation on Termination. There are no agreements, commitments
or understandings relating to severance pay or separation allowances
on termination of employment of any employee of the Company. The
Company is not obliged to pay benefits or share profits with any
employee after termination of employment except as required by law;
The Company Assets - Company Equipment
(jj) Company Equipment. The Company Equipment has been maintained in a
manner consistent with that of a reasonably prudent owner and such
equipment is in good working condition;
The Company Assets - Company Goodwill and Other Assets
(kk) Company Goodwill. The Company carries on the Business of the Company
only under the name "9278 Distributors" and variations thereof and
under no other business or trade names. The Company does not have
any knowledge of any infringement by the Company of any patent,
trademark, copyright or trade secret;
The Business of the Company
(ll) Maintenance of Business. Since the date of the Company Financial
Statements, the Business of the Company has been carried on in the
ordinary course and the Company has not entered into any material
agreement or commitment except in the ordinary course and save and
except as set forth in Schedule "I-B" hereto;
(mm) Subsidiaries. The Company does not own any subsidiary and does not
otherwise own, directly or indirectly, any shares or interest in any
other corporation, partnership, joint venture or firm; and
(nn) Year 2000 Compliance. The Company has taken all necessary steps to
ensure that its computer systems do not contain date-sensitive
software which may recognize a date using "00" as the year 1900
rather than the year 2000 or otherwise cease to function as intended
due to a program fault arising therefrom.
15
ARTICLE 5
COVENANTS OF THE COMPANY
Covenants
5.1 The Company covenants and agrees with iLink that it will:
(a) Reporting and Internal Controls. From and after the Effective Time,
the Company shall forthwith take all required actions to implement
internal controls on the Business of the Surviving Company to ensure
that the Company complies with Section 13b(2) of the Securities and
Exchange Act of 1934; and
(b) No Option Grants. From the Closing and for a period of six months
thereafter, the Company shall not issue any bonus, shares or rights
to purchase any security to any of the Company Shareholders.
Authorization
5.2 The Company agrees to authorize and direct any and all federal, state,
municipal, foreign and international governments and regulatory authorities
having jurisdiction respecting the Company to release any and all information in
their possession respecting the Company to iLink. The Company shall execute and
deliver to iLink any and all consents to the release of information and specific
authorizations which iLink reasonably require to gain access to any and all such
information.
Survival
5.3 The covenants set forth in this Article shall survive the Closing for the
benefit of iLink.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF ILINK
Representations and Warranties
iLink represents and warrants in all material respects to the Company,
with the intent that the Company will rely thereon in entering into this
Agreement and in approving and completing the transactions contemplated hereby,
that:
iLink - Corporate Status and Capacity
(a) Incorporation. iLink is a corporation duly incorporated and validly
subsisting under the laws of the State of Nevada, and is in good
standing with the office of the Secretary of State for the State of
Nevada;
(b) Carrying on Business. iLink carries on business in the Province of
British Columbia and Alberta only and does not carry on any material
business activity in any other jurisdiction, save and except for the
application for a PCS license filed with the Governments of Trinidad
and Tobago. iLink has offices in Vancouver, British Columbia,
Calgary, Alberta and San Francisco, California and in no other
locations. The nature of the Business of iLink does not require
16
iLink to register or otherwise be qualified to carry on business in
any other jurisdiction;
(c) Corporate Capacity. iLink has the corporate power, capacity and
authority to own the iLink Assets and to enter into and complete
this Agreement;
(d) Reporting Status; Listing. iLink is required to file current reports
with the Securities and Exchange Commission pursuant to section
15(d) of the Securities Exchange Act of 1934 and iLink Shares are
quoted on the NASD "Bulletin Board";
iLink - Capitalization
(e) Authorized Capital. The authorized capital of iLink consists of
25,000,000 iLink Common Shares, $0.001 par value and 5,000,000
shares of preferred stock. $0.001 par value, of which 5,809,629
iLink Common Shares and no shares of preferred stock are presently
issued and outstanding;
(f) No Option. No person, firm or corporation has any agreement or
option or any right capable of becoming an agreement or option for
the acquisition of iLink Shares or for the purchase, subscription or
issuance of any of the unissued shares in the capital of iLink other
than pursuant to iLink's Non-Qualified Stock Option Plan adopted
June 1, 1999 under which options to acquire 23,000 iLink Shares at a
price of $5.25 per iLink Share have been granted to certain
employees of iLink and pursuant to the Subscription Agreements, the
Century Capital Consulting Agreement, and the ▇▇▇▇▇▇▇▇ Agreement;
(g) Capacity. iLink has the full right, power and authority to enter
into this Agreement on the terms and conditions contained herein;
iLink - Records and Financial Statements
(h) Charter Documents. The charter documents of iLink have not been
altered since the incorporation of iLink, except as filed in the
record books of iLink;
(i) iLink Financial Statements. The iLink Financial Statements present
fairly, in all material respects, the assets and liabilities
(whether accrued, absolute, contingent or otherwise) of iLink as of
the respective dates thereof, and the sales and earnings of the
Business of iLink during the periods covered thereby, in all
material respects and have been prepared in substantial accordance
with generally accepted accounting principles consistently applied;
(j) iLink Accounts Payable and Liabilities. There are no material
liabilities, contingent or otherwise, of iLink which are not
disclosed in Schedule "L" hereto (provided that, at the Closing,
iLink shall have paid down the Accounts Payable and Liabilities by
not less than $100,000) or reflected in the iLink Financial
Statements except those incurred in the ordinary course of business
since the date of the said schedule and the Quarterly iLink
Financial Statements, and iLink has not guaranteed or agreed to
guarantee any debt, liability or other obligation of any person,
firm or corporation. Without limiting the generality of the
foregoing, all accounts payable and liabilities of iLink are
described in Schedule "L" hereto;
(k) iLink Accounts Receivable. All the iLink Accounts Receivable result
from bona fide business transactions and services actually rendered
without, to the
17
knowledge and belief of iLink, any claim by the obligor for set-off
or counterclaim;
(l) iLink Bank Accounts. All of the iLink Bank Accounts, their location,
numbers and the authorized signatories thereto are as set forth in
Schedule "N" hereto;
(m) No Debt to Related Parties. iLink is not, and on Closing will not
be, materially indebted to any director or officer or affiliate of
iLink, or any family member thereof;
(n) No Related Party Debt to iLink. No director or officer or affiliate
of iLink is now indebted to or under any financial obligation to
iLink on any account whatsoever, except for advances on account of
travel and other expenses not exceeding $5,000 in total;
(o) No Dividends. No dividends or other distributions on any shares in
the capital of iLink have been made, declared or authorized since
the date of Quarterly iLink Financial Statements;
(p) No Payments. No payments of any kind have been made or authorized
since the date of Quarterly iLink Financial Statements to or on
behalf of officers, directors, shareholders or employees of iLink or
under any management agreements with iLink except payments made in
the ordinary course of business and at the regular rates of salary
or other remuneration payable to them;
(q) No Pension Plans. There are no pension, profit sharing, group
insurance or similar plans or other deferred compensation plans
affecting iLink;
(r) No Adverse Events. Since the date of the Quarterly iLink Financial
Statements
(i) there has not been any material adverse change in the
financial position or condition of iLink, its liabilities or
the iLink Assets or any damage, loss or other change in
circumstances materially affecting iLink, the Business of
iLink or the iLink Assets or iLink's right to carry on the
Business of iLink, other than changes in the ordinary course
of business,
(ii) there has not been any damage, destruction, loss or other
event (whether or not covered by insurance) materially and
adversely affecting iLink, the Business of iLink or the iLink
Assets,
(iii) there has not been any material increase in the compensation
payable or to become payable by iLink to any of iLink's
officers, employees or agents or any bonus, payment or
arrangement made to or with any of them,
(iv) the Business of iLink has been and continues to be carried on
in the ordinary course,
(v) iLink has not waived or surrendered any right of material
value,
(vi) iLink has not discharged or satisfied or paid any lien or
encumbrance or obligation or liability other than current
liabilities in the ordinary course of business, and
18
(vii) no capital expenditures in excess of $10,000 individually or
$30,000 in total have been authorized or made;
iLink - Income Tax Matters
(s) Tax Returns. All tax returns and reports of iLink required by law to
be filed have been filed and are true, complete and correct, and any
taxes payable in accordance with any return filed by the Company or
in accordance with any notice of assessment or reassessment issued
by any taxing authority have been so paid;
(t) Current Taxes. Adequate provisions have been made for taxes payable
for the current period for which tax returns are not yet required to
be filed and there are no agreements, waivers, or other arrangements
providing for an extension of time with respect to the filing of any
tax return by, or payment of, any tax, governmental charge or
deficiency by iLink. iLink is not aware of any contingent tax
liabilities or any grounds which would prompt a reassessment
including aggressive treatment of income and expenses in filing
earlier tax returns;
iLink - Applicable Laws and Legal Matters
(u) Licences. iLink holds all licenses and permits as may be requisite
for carrying on the Business of iLink in the manner in which it has
heretofore been carried on, which licenses and permits have been
maintained and continue to be in good standing except where the
failure to obtain or maintain such licenses or permits would not
have a material adverse effect on the Company Business;
(v) Applicable Laws. iLink has not been charged with or received notice
of breach of any laws, ordinances, statutes, regulations, by-laws,
orders or decrees to which it is subject or which apply to it the
violation of which would have a material adverse effect on the
Business of iLink;
(w) Pending or Threatened Litigation. There is no material litigation or
administrative or governmental proceeding or enquiry pending or
threatened against or relating to iLink, the Business of iLink, or
any of the iLink Assets nor does iLink have any knowledge of any
deliberate act or omission of iLink that would form any material
basis for any such action, proceeding or enquiry;
(x) No Bankruptcy. iLink has not made any voluntary assignment or
proposal under applicable laws relating to insolvency and bankruptcy
and no bankruptcy petition has been filed or presented against iLink
and no order has been made or a resolution passed for the
winding-up, dissolution or liquidation of iLink;
(y) Labour Matters. iLink is not party to any collective agreement
relating to the Business of iLink with any labour union or other
association of employees and no part of the Business of iLink has
been certified as a unit appropriate for collective bargaining or,
to the knowledge of iLink, has made any attempt in that regard;
(z) Finder's Fees. iLink is not party to any agreement which provides
for the payment of finder's fees, brokerage fees, commissions or
other fees or amounts which are or may become payable to any third
party in connection with the
19
execution and delivery of this Agreement and the transactions
contemplated herein, save and except pursuant to the Century Capital
Consulting Agreement;
Execution and Performance of Agreement
(aa) Authorization and Enforceability. The execution and delivery of this
Agreement, and the completion of the transactions contemplated
hereby, have been duly and validly authorized by all necessary
corporate action on the part of iLink and this Agreement constitutes
a legal, valid and binding obligation of iLink and is enforceable
against it in accordance with its terms;
(bb) No Violation or Breach. The execution and performance of this
Agreement will not
(i) violate the charter documents of iLink or result in any breach
of, or default under, any loan agreement, mortgage, deed of
trust, or any other agreement to which iLink is a party,
(ii) give any person any right to terminate or cancel any agreement
including, without limitation, the iLink Material Contracts,
or any right or rights enjoyed by iLink other than pursuant to
iLink's agreement with Telus,
(iii) result in any alteration of iLink's obligations under any
agreement to which iLink is party including, without
limitation, the iLink Material Contracts,
(iv) result in the creation or imposition of any lien, encumbrance
or restriction of any nature whatsoever in favour of a third
party upon or against the iLink Assets,
(v) result in the imposition of any tax liability to iLink
relating to the iLink Assets, or
(vi) violate any court order or decree to which iLink is subject;
The iLink Assets - Ownership and Condition
(cc) Business Assets. The iLink Assets comprise all of the property and
assets of the Business of iLink, and no other person, firm or
corporation owns any assets used by iLink in operating the Business
of iLink, whether under a lease, rental agreement or other
arrangement, other than as disclosed in Schedules "O" or "Q" hereto;
(dd) Title. iLink is the legal and beneficial owner of the iLink Assets,
free and clear of all mortgages, liens, charges, pledges, security
interests, encumbrances or other claims whatsoever, save and except
as disclosed in Schedules "O" or "Q" hereto;
(ee) No Option. No person, firm or corporation has any agreement or
option or a right capable of becoming an agreement for the purchase
of any of the iLink Assets;
(ff) iLink Insurance Policies. iLink maintains the public liability
insurance and insurance against loss or damage to the iLink Assets
and the Business of iLink as described in Schedule "P" hereto;
20
(gg) iLink Material Contracts. The iLink Material Contracts listed in
Schedule "Q" constitute all of the material contracts of iLink;
(hh) No Default. There has not been any default in any material
obligation of iLink or any other party to be performed under any of
the iLink Material Contracts, each of which is in good standing and
in full force and effect and unamended, and iLink is not aware of
any default in the obligations of any other party to any of the
iLink Material Contracts;
(ii) No Compensation on Termination. There are no agreements, commitments
or understandings relating to severance pay or separation allowances
on termination of employment of any employee of iLink. iLink is not
obliged to pay benefits or share profits with any employee after
termination of employment except as required by law;
iLink Assets - iLink Equipment
(jj) iLink Equipment. The iLink Equipment has been maintained in a manner
consistent with that of a reasonably prudent owner;
iLink Assets - iLink Goodwill and Other Assets
(kk) iLink Goodwill. iLink carries on the Business of iLink only under
the name "iLink" and variations thereof and under no other business
or trade names. iLink does not have any knowledge of infringement of
any patent, trademarks, copyright or trade secret except as set
forth in Schedule"Q-A" hereto.
The Business of iLink
(ll) Maintenance of Business. Since the date of the iLink Financial
Statements, the Business of iLink has been carried on in the
ordinary course and iLink has not entered into any material
agreement or commitment except in the ordinary course and except as
disclosed herein;
(mm) Subsidiaries. iLink does not own any subsidiaries other than iLink
Telecom (B.C.) Inc. and iLink Telecom (BVI) Inc. and does not
otherwise own, directly or indirectly, any shares or interest in any
other corporation, partnership, joint venture or firm, save and
except for iLink Telecom (BVI) Inc.'s 49% interest in iLink Trinidad
and Tobago Telecom Inc.;
(nn) Year 2000 Compliance. ILink has taken all necessary steps to ensure
that its computer systems do not contain date-sensitive software
which may recognize a date using "00" as the year 1900 rather than
the year 2000 or otherwise cease to function as intended due a
program fault arising therefrom; and
iLink - Acquisition Shares
(oo) Acquisition Shares. The Acquisition Shares when delivered to the
Company shareholders shall be validly issued and outstanding as
fully paid and non-assessable shares and the Acquisition Shares
shall be transferable upon the books of iLink, in all cases subject
to the provisions and restrictions of all applicable securities
laws.
21
ARTICLE 7
COVENANTS OF ILINK
Covenants
7.1 iLink covenants and agrees with the Company that it will:
(a) Reporting and Internal Controls. From and after the Effective Date
iLink shall forthwith take all required actions to implement
internal controls on the Business of the Company to ensure that
iLink complies with Section 13b(2) of the Exchange Act; and
(b) No Option Grants. From the Closing and for a period of six months
thereafter, iLink shall not issue any rights to purchase any
security at the Closing including with limiting the generality of
the foregoing compensatory stock options, to any of the Company
Shareholders.
Authorization
7.2 iLink agrees to authorize and direct any and all federal, state, municipal,
foreign and international governments and regulatory authorities having
jurisdiction respecting iLink to release any and all information in their
possession respecting iLink to the Company. iLink shall promptly execute and
deliver to the Company any and all consents to the release of information and
specific authorizations which the Company reasonably require to gain access to
any and all such information.
Survival
7.3 The covenants set forth in this Article shall survive the Closing for the
benefit of the Company.
ARTICLE 8
EMPLOYMENT AGREEMENT
At the Closing, iLink and the Company shall enter into the Employment
Agreement with ▇▇▇▇▇ ▇▇▇▇▇▇▇ pursuant to which he will provide services to iLink
and the Company. The Employment Agreement shall be substantially in the form
attached hereto as Schedule "R".
ARTICLE 9
CONDITIONS PRECEDENT
Conditions Precedent in favour of iLink
9.1 iLink's obligations to carry out the transactions contemplated hereby are
subject to the fulfillment of each of the following conditions precedent on or
before the Closing:
(a) all documents or copies of documents required to be executed
and delivered to iLink hereunder will have been so executed
and delivered;
22
(b) all of the terms, covenants and conditions of this Agreement
to be complied with or performed by the Company at or prior to
the Closing will have been complied with or performed;
(c) title to the Company Shares and Company Assets will be free
and clear of all mortgages, liens, charges, pledges, security
interests, encumbrances or other claims whatsoever, save and
except as disclosed herein;
(d) the Certificate of Merger shall be executed by the Company;
(e) subject to Article 10 hereof, there will not have occurred
(i) any material adverse change in the financial position or
condition of the Company, its liabilities or the Company
Assets or any damage, loss or other change in
circumstances materially and adversely affecting the
Business of the Company or the Company Assets or the
Company's right to carry on the Business of the Company,
other than changes in the ordinary course of business,
none of which has been materially adverse, or
(ii) any damage, destruction, loss or other event, including
changes to any laws or statutes applicable to the
Company or the Business of the Company (whether or not
covered by insurance) materially and adversely affecting
the Company, the Business of the Company or the Company
Assets;
(f) the Escrow Agent (as that term is defined in the Subscription
Agreements) shall have received duly executed Subscription
Agreements for subscriptions pursuant to the Private
Placement, in the aggregate, of not less than $2,500,000,
shall have in its trust account not less than $2,500,000 and
shall have provided evidence thereof to iLink;
(g) iLink's issued and outstanding common share capital shall be
reduced to 4,059,629 iLink Shares by the return to treasury of
1,750,000 iLink Shares and iLink shall have received releases
in form satisfactory to the Company from the persons returning
the 1,750,000 iLink Shares; and
(h) the transactions contemplated hereby shall have been approved
by all other regulatory authorities having jurisdiction over
the subject matter hereof, if any.
Waiver by iLink
9.2 The conditions precedent set out in the preceding section are inserted for
the exclusive benefit of iLink and any such condition may be waived in whole or
in part by iLink at or prior to Closing by delivering to the Company a written
waiver to that effect signed by iLink. In the event that the conditions
precedent set out in the preceding section are not satisfied on or before the
Closing iLink shall be released from all obligations under this Agreement.
Conditions Precedent in Favour of the Company
9.3 The obligation of the Company to carry out the transactions contemplated
hereby is subject to the fulfillment of each of the following conditions
precedent on or before the Closing:
23
(a) all documents or copies of documents required to be executed and
delivered to the Company hereunder will have been so executed and
delivered;
(b) all of the terms, covenants and conditions of this Agreement to be
complied with or performed by iLink at or prior to the Closing will
have been complied with or performed;
(c) iLink will have delivered the Acquisition Shares to the Company
Shareholders at the Closing in accordance with Schedule "U" attached
hereto and the Acquisition Shares will be registered on the books of
iLink in the name of the Company Shareholders at Effective Time;
(d) title to the Acquisition Shares will be free and clear of all
mortgages, liens, charges, pledges, security interests, encumbrances
or other claims whatsoever;
(e) the Certificate of Merger shall be executed by the Acquirer in form
acceptable for filing with the New York Secretary of State.;
(f) subject to Article 10 hereof, there will not have occurred
(i) any material adverse change in the financial position or
condition of iLink, its liabilities or iLink Assets or any
damage, loss or other change in circumstances materially and
adversely affecting iLink, the Business of iLink or iLink
Assets or iLink's right to carry on the Business of iLink,
other than changes in the ordinary course of business, none of
which has been materially adverse, or
(ii) any damage, destruction, loss or other event, including
changes to any laws or statutes applicable to iLink or the
Business of iLink (whether or not covered by insurance)
materially and adversely affecting iLink, the Business of
iLink or iLink Assets;
(g) the Escrow Agent (as that term is defined in the Subscription
Agreements) shall have received duly executed Subscription
Agreements for subscriptions pursuant to the Private Placement, in
the aggregate, of not less than $2,500,000, shall have in its trust
account not less than $2,500,000 and shall have provided evidence
thereof to the Company;
(h) iLink's issued and outstanding common share capital shall be reduced
to 4,059,629 iLink Shares by the return to treasury of 1,750,000
iLink Shares and iLink shall have received releases in form
satisfactory to the Company from the persons returning the 1,750,000
iLink Shares; and
(i) the transactions contemplated hereby shall have been approved by all
other regulatory authorities having jurisdiction over the subject
matter hereof, if any.
Waiver by Company
9.4 The conditions precedent set out in the preceding section are inserted for
the exclusive benefit of the Company and any such condition may be waived in
whole or in part by the Company at or prior to the Closing by delivering to
iLink a written waiver to that effect signed by the Company. In the event that
the conditions precedent set out in the preceding section are not satisfied on
or before the Closing the Company shall be released from all obligations under
this Agreement.
24
Nature of Conditions Precedent
9.5 The conditions precedent set forth in this Article are conditions of
completion of the transactions contemplated by this Agreement and are not
conditions precedent to the existence of a binding agreement. Each party
acknowledges receipt of the sum of $1.00 and other good and valuable
consideration as separate and distinct consideration for agreeing to the
conditions of precedent in favour of the other party or parties set forth in
this Article.
Termination
9.6 Notwithstanding any provision herein to the contrary, if the Closing does
not occur on or before December , 1999, this Agreement will be at an end and
will have no further force or effect, unless otherwise agreed upon by the
parties in writing.
Confidentiality
9.7 Notwithstanding any provision herein to the contrary, the parties hereto
agree that the existence and terms of this Agreement are confidential and that
if this Agreement is terminated pursuant to the preceding section the parties
agree to return to one another any and all financial, technical and business
documents delivered to the other party or parties in connection with the
negotiation and execution of this Agreement and shall keep the terms of this
Agreement and all information and documents received from the Company and iLink
and the contents thereof confidential and not utilize nor reveal or release
same, provided, however, that iLink will be required to issue one or more news
releases and file a Current Report on Form 8-K with the Securities and Exchange
Commission respecting the proposed Merger contemplated hereby together with such
other documents as are required to maintain the currency of iLink's filings with
the Securities and Exchange Commission.
ARTICLE 10
RISK
Material Change in the Business of the Company
10.1 If any material loss or damage to the Business of the Company occurs prior
to Closing and such loss or damage, in iLink's reasonable opinion, cannot be
substantially repaired or replaced within sixty (60) days, iLink shall, within
seven (7) days following any such loss or damage, by notice in writing to the
Company, at its option, either:
(a) terminate this Agreement, in which case no party will be under any
further obligation to any other party; or
(b) elect to complete the Merger and the other transactions contemplated
hereby, in which case the proceeds and the rights to receive the
proceeds of all insurance covering such loss or damage will, as a
condition precedent to iLink's obligations to carry out the
transactions contemplated hereby, be vested in the Company or
otherwise adequately secured to the satisfaction of iLink on or
before the Closing Date.
Material Change in the Business of iLink
10.2 If any material loss or damage to the Business of iLink occurs prior to
Closing and such loss or damage, in the Company's reasonable opinion, cannot be
substantially repaired or
25
replaced within sixty (60) days, the Company shall, within seven (7) days
following any such loss or damage, by notice in writing to iLink, at its option,
either:
(a) terminate this Agreement, in which case no party will be under any
further obligation to any other party; or
(b) elect to complete the Merger and the other transactions contemplated
hereby, in which case the proceeds and the rights to receive the
proceeds of all insurance covering such loss or damage will, as a
condition precedent to the Company's obligations to carry out the
transactions contemplated hereby, be vested in iLink or otherwise
adequately secured to the satisfaction of the Company on or before
the Closing Date.
ARTICLE 11
CLOSING
Closing
11.1 The Merger and the other transactions contemplated by this Agreement will
be closed at the Place of Closing in accordance with the closing procedure set
out in this Article.
Documents to be Delivered by the Company
11.2 On or before the Closing, the Company will deliver or cause to be delivered
to iLink:
(a) the original or certified copies of the charter documents of the
Company and all corporate records documents and instruments of the
Company, the corporate seals of the Company and all books and
accounts of the Company;
(b) certificates representing the Company Shares, duly endorsed in blank
in accordance with Schedule "U" attached hereto;
(c) all reasonable consents or approvals required to be obtained by the
Company and the Company for the purposes of completing the Merger
and preserving and maintaining the interests of the Company under
any and all Company Material Contracts and in relation to the
Company Assets;
(d) certified copies of such resolutions of the shareholder and director
of the Company as are required to be passed to authorize the
execution, delivery and implementation of this Agreement;
(e) an acknowledgement from the Company of the satisfaction of the
conditions precedent set forth in section 9.3 hereof;
(f) the Employment Agreement, duly executed by the Company and the ▇▇▇▇▇
▇▇▇▇▇▇▇ ;
(g) the Certificate, duly executed by the Company ; and
(h) such other documents as iLink may reasonably require to give effect
to the terms and intention of this Agreement.
26
Documents to be Delivered by iLink
11.3 On or before the Closing, iLink shall deliver or cause to be delivered to
the Company:
(a) wire transfer of the Cash Acquisition Price to the trust account of
the attorneys for the Company Shareholders to be disbursed in
accordance with Schedule "U" hereto;
(b) the Promissory Note, duly executed by iLink to be disbursed in
accordance with Schedule "U" hereto;
(c) share certificates representing the Acquisition Shares duly
registered in the names of the Company Shareholders required in
accordance with Schedule "U" hereto;
(d) certified copies of such resolutions of the directors of iLink as
are required to be passed to authorize the execution, delivery and
implementation of this Agreement;
(e) an acknowledgement from iLink of the satisfaction of the conditions
precedent set forth in section 9.1 hereof;
(f) copies of the Subscription Agreements duly executed by the
subscribers to the Private Placement together with evidence that the
Escrow Agent (as that term is defined in the Subscription
Agreements) has received into its trust account not less than
$2,500,000 pursuant to the Subscription Agreements;
(g) the Employment Agreement, duly executed by iLink;
(h) the Certificate of Merger, duly executed by the Company; and
(i) such other documents as the Company may reasonably require to give
effect to the terms and intention of this Agreement.
(j) The Guaranty of the Acquirer in the form set forth in Schedule V.
ARTICLE 11A
POST-CLOSING MATTERS
Forthwith after the Closing, iLink and the Company agree to use all its
best efforts to:
(a) file the Certificate of Merger with Secretary of State of the
State of New York;
(b) iLink shall accept the resignation of ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, and
▇▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇ shall be appointed directors of
iLink;
(c) ILink and the Company acknowledge that the acquisition of the
Company by iLink, and iLink and the Company agree that the
value of iLink shall be determined by an independent valuation
of iLink to be prepared by a duly qualified business valuator
forthwith after the Closing Date with due regard to lack of
liquidity of the trading market of the iLink Common Shares and
the value of iLink's net assets on the Closing Date;
27
(d) file Form D with the Securities and Exchange Commission; and
(e) file Form 8-K with the Securities and Exchange Commission.
ARTICLE 12
GENERAL PROVISIONS
Arbitration
12.1 The parties hereto shall attempt to resolve any dispute, controversy,
difference or claim arising out of or relating to this Agreement by negotiation
in good faith. If such good faith negotiation fails to resolve such dispute,
controversy, difference or claim within fifteen (15) days after any party
delivers to any other party a notice of its intent to submit such matter to
arbitration, then any party to such dispute, controversy, difference or claim
may submit such matter to arbitration in the City of New York. The arbitration
panel shall consist of a single arbitrator selected by the joint agreement of
the parties to the dispute; provided that if the parties cannot agree upon the
identity of a single arbitrator within fifteen (15) days, then the arbitration
panel shall consist of three (3) arbitrators, one (1) of whom shall be appointed
by each party within ten (10) days and the third duly appointed by mutual
agreement of the two (2) arbitrators so appointed by the parties; provided
further that if the two arbitrators cannot select the third arbitrator within
ten (10) days after their appointment, the selection of the third arbitrator
shall be made in accordance with the general rules of arbitration in relation to
arbitrations in the State of New York (the "Rules"). If no such arbitrator is
appointed within ten (10) days of such request, either party may apply to a
court having jurisdiction to make such appointment. Once the arbitration panel
has been selected, the arbitration of the dispute shall be conducted in English
in accordance with the Rules in the State of New York, unless otherwise provided
or limited by the Rules. The arbitrator(s) shall give each of the parties a fair
opportunity to prepare, including pre-arbitration hearing discoveries, and
present its position with respect to the dispute, and each party shall be
entitled to call witnesses to testify, examine and cross-examine witnesses that
the other party calls to testify, introduce documents and other materials and
submit written statements of position and arguments. The arbitration panel shall
make a final determination, to be provided in writing to each party, that
resolves the dispute and includes an allocation of the aggregate fees, costs and
expenses of the arbitration between the parties to the dispute, such allocation
to be made in the sole discretion of the arbitration panel after giving due
consideration to the relative merits of the parties positions in the dispute.
All results of the arbitration proceedings shall be final, conclusive and
binding on all parties to this Agreement, and shall not be subject to judicial
review. Judgment upon the award rendered by the arbitrator may be entered in the
State of New York or any other court having competent jurisdiction.
Notice
12.2 Any notice required or permitted to be given by any party will be deemed to
be given when in writing and delivered to the address for notice of the intended
recipient by personal delivery, prepaid single certified or registered mail, or
telecopier. Any notice delivered by mail shall be deemed to have been received
on the fourth business day after and excluding the date of mailing, except in
the event of a disruption in regular postal service in which event such notice
shall be deemed to be delivered on the actual date of receipt. Any notice
delivered personally or by telecopier shall be deemed to have been received on
the actual date of delivery.
Addresses for Service
12.3 The address for service of notice of each of the parties hereto is as
follows:
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(a) iLink or the Acquirer:
iLink Telecom Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
Copy to:
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ Eng Linn & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
(b) the Company:
9278 Distributor Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
Copy to:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
Change of Address
12.4 Any party may, by notice to the other parties change its address for notice
to some other address in North America and will so change its address for notice
whenever the existing address or notice ceases to be adequate for delivery by
hand. A post office box may not be used as an address for service.
Further Assurances
12.5 Each of the parties will execute and deliver such further and other
documents and do and perform such further and other acts as any other party may
reasonably require to carry out and give effect to the terms and intention of
this Agreement.
Time of the Essence
12.6 Time is expressly declared to be the essence of this Agreement.
29
Entire Agreement
12.7 The provisions contained herein constitute the entire agreement among the
Company and iLink respecting the subject matter hereof and supersede all
previous communications, representations and agreements, whether verbal or
written, among the Company and iLink with respect to the subject matter hereof.
Enurement
12.8 This Agreement will enure to the benefit of and be binding upon the parties
hereto and their respective heirs, executors, administrators, successors and
permitted assigns.
Assignment
12.9 This Agreement is not assignable without the prior written consent of the
parties hereto.
Counterparts
12.10 This Agreement may be executed in counterparts, each of which when
executed by any party will be deemed to be an original and all of which
counterparts will together constitute one and the same Agreement. Delivery of
executed copies of this Agreement by telecopier will constitute proper delivery,
provided that originally executed counterparts are delivered to the parties
within a reasonable time thereafter.
Applicable Law
12.11 This Agreement is subject to the laws of the State of New York.
[Remainder of page intentionally left blank]
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IN WITNESS WHEREOF the parties have executed this Agreement effective as of the
day and year first above written.
ILINK TELECOM INC.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇
------------------------------ ---------------------------
Witness Authorized Signatory
------------------------------
Name
------------------------------
Address
------------------------------
9278 DISTRIBUTOR
ACQUISITION CORPORATION
By /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇
------------------------------ ---------------------------
Witness Authorized Signatory
------------------------------
Name
------------------------------
Address
------------------------------
9278 DISTRIBUTOR INC.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
------------------------------ ---------------------------
Witness Authorized Signatory
------------------------------
Name
------------------------------
Address
------------------------------
This is Page 30 to the Agreement and Plan of Merger dated December 10, 1999
among iLink Telecom, Inc., 9278 Distributor Acquisition Corporation and 9278
Distributor Inc.