AMERALINK, INC. AGREEMENT AND PLAN OF MERGER August 11, 2006
AMERALINK,
INC.
AGREEMENT
AND PLAN OF MERGER
August
11, 2006
AGREEMENT
AND PLAN OF MERGER
This
Agreement and Plan of Merger (the “Agreement”)
is
made and entered into as of August 11,, 2006, by and among Ameralink, Inc.,
a
Nevada corporation (“Ameralink”),
AMLK
Sub Corp.,
a Nevada
corporation (“Merger
Sub”)
and
wholly owned subsidiary of Ameralink, 518 Media, Inc.,
a
California corporation (“518”)
and
the stockholders of 518 as
set
forth on the signature pages to this Agreement
(“518
Stockholders”).
RECITALS
A. The
Boards of Directors of 518, Ameralink and Merger Sub believe it is in the
best
interests of their respective companies and the stockholders of their respective
companies that 518 and Merger Sub combine into a single company through the
merger of Merger Sub and 518 (the “Merger”)
and,
in furtherance thereof, have approved the Merger. Pursuant to the Merger,
among
other things, the outstanding shares of capital stock of 518 (the “518
Common Stock”)
shall
be converted into shares of the Common Stock of Ameralink (the “Ameralink
Common Stock”),
at
the rates set forth herein.
B. 518,
518
Stockholders, Ameralink and Merger Sub desire to make certain representations
and warranties and other agreements in connection with the Merger.
C. The
parties intend, by executing this Agreement, to adopt a plan of reorganization
within the meaning of Section 368 of the Internal Revenue Code of 1986, as
amended (the “Code”),
and
to cause the Merger to qualify as a reorganization under the provisions of
Sections 368(a)(1)(A) and 368(a)(2)(E) of the Code.
AGREEMENT
The
parties hereby agree as follows:
SECTION
ONE
1. The
Merger.
1.1
The
Merger.
At the
Effective Time (as defined in Section 1.2) and subject to and upon the terms
and
conditions of this Agreement, the Certificate of Merger attached hereto as
Exhibit A
(the
“Certificate
of Merger”)
and
the applicable provisions of the California Corporations Code (“California
Law),
Merger
Sub shall be merged with and into 518, the separate corporate existence of
Merger Sub shall cease and 518 shall continue as the surviving corporation
of
the Merger. 518 as the surviving corporation after the Merger is hereinafter
sometimes referred to as the “Surviving
Corporation.”
1.2
Closing;
Effective Time.
The
closing of the transactions contemplated by this Agreement (the “Closing”)
shall
take place as soon as practicable, (and in no event later than five business
days after the satisfaction or waiver of each of the conditions set forth
in
Sections 4 and 5 below or at such other time as the parties agree (the
“Closing
Date”).
In
connection with the Closing, the parties shall cause the Merger to be
consummated by filing the Certificate of Merger, together with the required
officers’ certificates, with the Secretary of State of the State of California,
in accordance with the relevant provisions of California Law (the time of
such
filing being the “Effective Time”).
The
Closing shall take place at the offices of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Attorney at
Law,
LLC, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇, or at such
other location as the parties agree.
1.3
Effect
of the Merger.
At the
Effective Time, the effect of the Merger shall be as provided in this Agreement,
the Certificate of Merger and the applicable provisions of
California Law.
At
the Effective Time, all the property, rights, privileges, powers and franchises
of 518 and Merger Sub shall vest in the Surviving Corporation, and all debts,
liabilities and duties of 518 and Merger Sub shall become the debts, liabilities
and duties of the Surviving Corporation.
1.4
Articles
of Incorporation; Bylaws.
(a) At
the
Effective Time, the Articles of Incorporation of 518, as in effect immediately
prior to the Effective Time, shall be the Articles of Incorporation of the
Surviving Corporation until thereafter amended as provided by
California Law
and
such Articles of Incorporation.
(b) At
the
Effective time, the Bylaws of 518, as in effect immediately prior to the
Effective Time, shall be the Bylaws of the Surviving Corporation until
thereafter amended as provided by law, the Articles of Incorporation of the
Surviving Corporation and such Bylaws.
1.5
Directors
and Officers.
At
the
Effective Time, the officers and directors of Ameralink and Merger Sub
immediately prior to the Effective Time shall resign and ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇. and a nominee of Ameralink
to be
appointed at Closing shall be the directors of the Surviving Corporation
and
Ameralink. The officers of Ameralink and Merger Sub immediately prior to
the
Effective Time shall resign and ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
shall be the officers of the Surviving Corporation and Ameralink, in each
case
until their respective successors are duly elected or appointed and
qualified.
1.6
Effect
on Capital Stock.
By
virtue of the Merger and without any action on the part of Merger Sub, 518
or
any of their respective stockholders, the following shall occur at the Effective
Time:
(a) Conversion
of 518 Common Stock.
All
of
the issued and outstanding shares of Common Stock, no par value per share,
of
518 (the “518
Common Stock”)
issued
and outstanding immediately prior to the Effective Time shall be converted
and
exchanged for that number of shares of Ameralink Common Stock as set forth
on
Exhibit
B
attached
hereto (the “Merger
Consideration”).
All
shares of 518 Common Stock, 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 of 518 Common Stock
shall cease to have any rights with respect thereto, except the right to
receive
the Merger Consideration therefor upon the surrender of such certificate
in
accordance with Section 1.7, without interest.
(b) Capital
Stock of Merger Sub.
At
the
Effective Time, each share of Common Stock of Merger Sub (“Merger
Sub Common Stock”)
issued
and outstanding immediately prior to the Effective Time shall be converted
into
and exchanged for one validly issued, fully paid and nonassessable share
of
Common Stock of the Surviving Corporation. Each stock certificate of Merger
Sub
evidencing ownership of any such shares shall continue to evidence ownership
of
such shares of capital stock of the Surviving Corporation.
(c) Dissenters’
Rights.
518
Common Stock held by persons who have not executed this Agreement and approved
the Merger contemplated hereby are entitled to exercise dissenters’ rights in
accordance with Chapter 13 of California Law (“Dissenting
Shares”).
Dissenting Shares shall not be converted into Ameralink Common Stock but
shall
instead be converted into the right to receive such consideration as may
be
determined to be due with respect to such Dissenting Shares pursuant to
California Law.
518
agrees that, except with the prior written consent of Ameralink, or as required
under California Law,
it
will not voluntarily make any payment with respect to, or settle or offer
to
settle, any such purchase demand.
1.7
Surrender
of Certificates.
(a) Exchange
Agent.
First
American Stock Transfer shall act as exchange agent (the “Exchange
Agent”)
in the
Merger.
(b) Ameralink
to Provide Common Stock.
Promptly
after the Effective Time, Ameralink shall make available to the Exchange
Agent
for exchange in accordance with this Section 1, through such reasonable
procedures as Ameralink may adopt, (i) the shares of Ameralink Common Stock
issuable pursuant to Section 1.6(a).
(c) Exchange
Procedures.
Promptly
after the Effective Time, the Surviving Corporation shall cause to be mailed
to
each holder of record of a certificate or certificates (the “Certificates”)
which
immediately prior to the Effective Time represented outstanding shares of
518
Common Stock, whose shares were converted into the right to receive shares
of
Ameralink Common Stock pursuant
to Section 1.6, (i) a letter of transmittal (which shall specify that
delivery shall be effected, and risk of loss and title to the Certificates
shall
pass, only upon receipt of the Certificates by the Exchange Agent, and shall
be
in such form and have such other provisions as Ameralink may reasonably specify)
and (ii) instructions for use in effecting the surrender of the
Certificates in exchange for certificates representing shares of Ameralink
Common Stock. Upon surrender of a Certificate for cancellation to the Exchange
Agent or to such other agent or agents as may be appointed by Ameralink,
together with such letter of transmittal, duly completed and validly executed
in
accordance with the instructions thereto, the holder of such Certificate
shall
be entitled to receive in exchange therefor a certificate representing the
number of whole shares of Ameralink Common Stock and
the
Certificate so surrendered shall forthwith be cancelled. Until so surrendered,
each Certificate will be deemed from and after the Effective Time, for all
corporate purposes, to evidence the ownership of the number of full shares
of
Ameralink Common Stock into which such shares of 518 Common Stock shall have
been so converted.
(d) No
Liability.
Notwithstanding
anything to the contrary in this Section 1.7, none of the Exchange Agent,
the
Surviving Corporation or any party hereto shall be liable to any person for
any
amount properly paid to a public official pursuant to any applicable abandoned
property, escheat or similar law.
(e) Distributions
With Respect to Unexchanged Shares.
No
dividends or other distributions with respect to Ameralink Common Stock with
a
record date after the Effective Time will be paid to the holder of any
unsurrendered Certificate with respect to the shares of Ameralink Common
Stock
represented thereby until the holder of record of such Certificate shall
surrender such Certificate. Subject to applicable law, following surrender
of
any such Certificate, there shall be paid to the record holder of the
certificates representing whole shares of Ameralink Common Stock issued in
exchange therefor, without interest, at the time of such surrender, the amount
of any such dividends or other distributions with a record date after the
Effective Time payable (but for the provisions of this Section 1.7(e)) with
respect to such shares of Ameralink Common Stock.
(f) Transfers
of Ownership.
If any
certificate for shares of Ameralink Common Stock is to be issued in a name
other
than that in which the Certificate surrendered in exchange therefor is
registered, it will be a condition of such issuance that the Certificate
so
surrendered will be properly endorsed and otherwise in proper form for transfer
and that the person requesting such exchange will have paid to Ameralink
or any
agent designated by it any transfer or other taxes required by reason of
the
issuance of a certificate for shares of Ameralink Common Stock in any name
other
than that of the registered holder of the Certificate surrendered, or
established to the satisfaction of Ameralink or any agent designated by it
that
such tax has been paid or is not payable. In addition, the transferee of
such
issuance shall agree to the placing of any required restrictive legends on
the
new certificate for shares of Ameralink common stock.
1.8
No
Further Ownership Rights in 518 Common Stock.
All
shares of Ameralink Common Stock issued upon the surrender for exchange of
shares of 518 Common Stock in accordance with the terms hereof shall be deemed
to have been issued in full satisfaction of all rights pertaining to such
shares
of 518 Common Stock, and there shall be no further registration of transfers
on
the records of the Surviving Corporation of shares of 518 Common Stock which
were outstanding immediately prior to the Effective Time. If, after the
Effective Time, Certificates are presented to the Surviving Corporation for
any
reason, they shall be cancelled and exchanged as provided in this
Section 1.
1.9
Tax
and Accounting Consequences.
It
is
intended by the parties that the Merger shall constitute a reorganization
within
the meaning of Section 368 of the Code.
1.10 Ameralink
Charter Documents.
At or
prior to the Closing Date, the Articles of Incorporation and By Laws of
Ameralink shall be amended and restated in the forms of Exhibits C-1 and
C-2,
respectively, attached hereto and incorporated herein by reference.
1.11 Taking
of Necessary Action; Further Action.
If
at any
time after the Effective Time, any further action is necessary or desirable
to
carry out the purposes of this Agreement and to vest the Surviving Corporation
with full right, title and possession to all assets, property, rights,
privileges, powers and franchises of 518 and Merger Sub, the officers and
directors of 518 and Merger Sub are fully authorized in the name of their
respective corporations or otherwise to take, and will take, all such lawful
and
necessary action, so long as such action is not inconsistent with this
Agreement.
SECTION
TWO
2. Representations
and Warranties of 518 and 518 Stockholders.
In
this
Agreement, any reference to a “Material
Adverse Effect”
with
respect to any entity or group of entities means any event, change or effect
that, when taken individually or together with all other adverse changes
and
effects, is or is reasonably likely to be materially adverse to the condition
(financial or otherwise), properties, assets, liabilities, business, operations,
results of operations or prospects of such entity and its subsidiaries, taken
as
a whole, or to prevent or materially delay consummation of the Merger or
otherwise to prevent such entity and its subsidiaries from performing their
obligations under this Agreement.
In
this
Agreement, any reference to a party’s “knowledge”
means
such party’s actual knowledge after due and diligent inquiry of officers,
directors and other employees of such party reasonably believed to have
knowledge of the matter in questions.
Except
as
disclosed in a document dated as of the date of this Agreement and delivered
by
518 to Ameralink prior to the execution and delivery of this Agreement and
referring to the representations and warranties in this Agreement (the
“518
Disclosure Schedule”),
518
and 518 Stockholders hereby jointly and severally represent and warrant to
Ameralink and Merger Sub as follows:
2.1
Organization;
Subsidiaries.
518
is a
corporation duly organized, validly existing and in good standing under the
laws
of its jurisdiction of organization. 518 has the requisite corporate power
and
authority and all necessary government approvals to own, lease and operate
its
properties and to carry on its business as now being conducted and as proposed
to be conducted, except where the failure to have such power, authority and
governmental approvals would not, individually or in the aggregate, have
a
Material Adverse Effect on 518. 518 is duly qualified or licensed as a foreign
corporation to do business, and is in good standing, in each jurisdiction
where
the character of the properties owned, leased or operated by it or the nature
of
its business makes such qualification or licensing necessary, except for
such
failures to be so qualified or licensed and in good standing that would not,
individually or in the aggregate, have a Material Adverse Effect on 518.
518 has
no subsidiaries and the 518 does not directly or indirectly own any equity
or
similar interest in, or any interest convertible into or exchangeable or
exercisable for, any equity or similar interest in, any corporation,
partnership, limited liability company, joint venture or other business
association or entity.
2.2
Articles
of Incorporation and Bylaws.
518
has
delivered to Ameralink a true and correct copy of the Articles of Incorporation
and Bylaws or other charter documents of 518 as amended to date. The 518
is not
in violation of any of the provisions of its Articles of Incorporation or
Bylaws
or equivalent organizational documents.
2.3
Capital
Structure.
The
authorized capital stock of 518 consists of 1,000,000 shares of Common Stock,
no
par value per share, of which 500,000 shares were issued and outstanding
as of
the close of business on August 11, 2006. There are no other outstanding
shares
of capital stock or voting securities and no outstanding commitments to issue
any shares of capital stock or voting securities. All outstanding shares
of 518
Common Stock are duly authorized, validly issued, fully paid and non-assessable
and are free of any liens or encumbrances other than any liens or encumbrances
created by or imposed upon the holders thereof, and are not subject to
preemptive rights or rights of first refusal created by statute, the Articles
of
Incorporation or Bylaws of 518 or any agreement to which 518 is a party or
by
which it is bound. All outstanding shares of 518 Common Stock were issued
in
compliance with all applicable federal and state securities laws. There are
no
contracts, commitments or agreements relating to voting, purchase or sale
of
518’s capital stock (i) between or among 518 and any of its stockholders and
(ii) to the best of 518’s knowledge, between or among any of 518’s stockholders.
2.4
Authority.
518
has
all requisite corporate power and authority to enter into 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 authorized by all necessary corporate action on the part of 518.
518’s
Board of Directors has unanimously approved the Merger and this Agreement.
This
Agreement has been duly executed and delivered by 518 and all 518 Stockholders
and assuming due authorization, execution and delivery by Ameralink and Merger
Sub, constitutes the valid and binding obligation of 518 enforceable against
518
in accordance with its terms.
2.5
No
Conflicts; Required Filings and Consents.
(a) The
execution and delivery of this Agreement by 518 does not, and the consummation
of the transactions contemplated hereby will not, conflict with, or result
in
any violation of, or default under (with or without notice or lapse of time,
or
both), or give rise to a right of termination, cancellation or acceleration
of
any obligation or loss of any benefit under (i) any provision of the
Articles of Incorporation or Bylaws of 518, as amended, or (ii) any
material mortgage, indenture, lease, contract or other agreement or instrument,
permit, concession, franchise, license, judgment, order, decree, statute,
law,
ordinance, rule or regulation applicable to 518 or any of its properties
or
assets.
(b) No
consent, approval, order or authorization of, or registration, declaration
or
filing with, any court, administrative agency or commission or other
governmental authority or instrumentality (“Governmental
Entity”)
is
required by or with respect to 518 in connection with the execution and delivery
of this Agreement or the consummation of the transactions contemplated hereby,
except for (i) the filing of the Certificate of Merger, together with the
required officers’ certificates, as provided in Section 1.2,
(ii) such consents, approvals, orders, authorizations, registrations,
declarations and filings as may be required under the Securities Exchange
Act of
1934, as amended (the “Exchange
Act”),
the
Securities Act of 1933, as amended (the “Securities
Act”),
applicable state securities laws and the securities laws of any foreign country;
and (iii) such other consents, authorizations, filings, approvals and
registrations which, if not obtained or made, would not have a Material Adverse
Effect on 518 and would not prevent, or materially alter or delay any of
the
transactions contemplated by this Agreement.
2.6
Financial
Statements.
Section 2.6 of the 518 Disclosure Schedule includes a true, correct and
complete copy of 518’s audited financial statements for each of the fiscal year
ended December 31, 2005, and its unaudited financial statements (balance
sheet,
statement of operations and statement of cash flows) on a consolidated basis
as
at, and for the six-month period ended June 30, 2006, (collectively, the
“Financial
Statements”).
The
Financial Statements have been prepared in accordance with generally accepted
accounting principles (except that the unaudited financial statements do
not
have notes thereto) applied on a consistent basis throughout the periods
indicated and with each other. The Financial Statements accurately set out
and
describe the financial condition and operating results of 518 as of the dates,
and for the periods, indicated therein, subject to normal year-end audit
adjustments. 518 maintains and will continue to maintain a standard system
of
accounting established and administered in accordance with generally accepted
accounting principles. The balance sheet for the period ended June 30, 2006,
(the “518
Balance Sheet”)
shows
shareholders' equity of no less than $90,000.
2.7
Absence
of Undisclosed Liabilities.
The
518
has no material obligations or liabilities of any nature (matured or unmatured,
fixed or contingent) other than (i) those set forth or adequately provided
for in the 518 Balance Sheet, (ii) those incurred in the ordinary course of
business and not required to be set forth in the 518 Balance Sheet under
generally accepted accounting principles, (iii) those incurred in the
ordinary course of business since the date of the 518 Balance Sheet and
consistent with past practice, and (iv) those incurred in connection with
the execution of this Agreement.
2.8
Absence
of Certain Changes.
Except
as
set forth on 518 Disclosure Schedule, since June 30, 2006 (the “518
Balance Sheet Date”)
there
has not been, occurred or arisen any material change in 518’s business or
corporate operations or its financial condition.
2.9
Litigation.
There
is
no private or governmental action, suit, proceeding, claim, arbitration or
investigation pending before any agency, court or tribunal, foreign or domestic,
or, to the knowledge of 518, threatened against 518 or any of its properties
or
any of its officers or directors (in their capacities as such) that,
individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect on 518. There is no judgment, decree or order against
518 or, to the best knowledge of 518, any of its directors or officers (in
their
capacities as such), that could prevent, enjoin, or materially alter or delay
any of the transactions contemplated by this Agreement, or that could reasonably
be expected to have a Material Adverse Effect on 518.
2.10 Restrictions
on Business Activities.
There
is
no agreement, judgment, injunction, order or decree binding upon 518 which
has
or could reasonably be expected to have the effect of prohibiting or materially
impairing any current or future business practice of 518, any acquisition
of
property by 518 or the overall conduct of business by 518 as currently conducted
or as proposed to be conducted by 518. 518 has not entered into any agreement
under which 518 is restricted from selling, licensing or otherwise distributing
any of its products to any class of customers, in any geographic area, during
any period of time or in any segment of the market.
2.11 Permits;
Company Products; Regulation.
(a) 518
is in
possession of all franchises, grants, authorizations, licenses, permits,
easements, variances, exceptions, consents, certificates, approvals and orders
necessary for 518, to own, lease and operate its properties or to carry on
its
business as it is now being conducted (the “518
Authorizations”).
(b) 518
has
obtained, in all countries where either 518 is marketing or has marketed
its
products, all applicable licenses, registrations, approvals, clearances and
authorizations required by local, state or federal agencies in such countries
regulating the safety, effectiveness and market clearance of the products
currently or previously marketed by 518 in such countries, except for any
such
failures as would not, individually or in the aggregate, have a Material
Adverse
Effect on 518.
2.12 Title
to Property.
(a) 518
has
good and marketable title to all of its respective properties, interests
in
properties and assets, real and personal, reflected in the 518 Balance Sheet
or
acquired after the 518 Balance Sheet Date (except properties, interests in
properties and assets sold or otherwise disposed of since the 518 Balance
Sheet
Date in the ordinary course of business), or with respect to leased properties
and assets, valid leasehold interests in, free and clear of all mortgages,
liens, pledges, charges or encumbrances of any kind or character, except
(i) the lien of current taxes not yet due and payable, (ii) such
imperfections of title, liens and easements as do not and will not materially
detract from or interfere with the use of the properties subject thereto
or
affected thereby, or otherwise materially impair business operations involving
such properties, and (iii) liens securing debt which is reflected on the
518 Balance Sheet.
(b) Section
2.12(b) of the 518 Disclosure Schedule also sets forth a true, correct and
complete list of all equipment (the “Equipment”)
owned
or leased by 518, and such Equipment is, taken as a whole, (i) adequate for
the conduct of 518’s business, consistent with its past practice, and
(ii) in good operating condition (except for ordinary wear and
tear).
2.13 Intellectual
Property.
(a) 518
owns,
or is licensed or otherwise possesses legally enforceable rights to use all
patents, patent rights, trademarks, trademark rights, trade names, trade
name
rights, service marks, copyrights, and any applications for any of the
foregoing, maskworks, net lists, schematics, industrial models, inventions,
technology, know-how, trade secrets, inventory, ideas, algorithms, processes,
computer software programs or applications (in both source code and object
code
form), and tangible or intangible proprietary information or material
(“Intellectual
Property”)
that
are used or proposed to be used in 518’s business as currently conducted or as
proposed to be conducted by 518, except to the extent that the failure to
have
such rights have not had and could not reasonably be expected to have a Material
Adverse Effect on 518.
(b) There
is
no material unauthorized use, disclosure, infringement or misappropriation
of
any Intellectual Property rights of 518, any trade secret material to 518
or any
Intellectual Property right of any third party to the extent licensed by
or
through 518, by any third party, including any employee or former employee
of
518. 518 has not entered into any agreement to indemnify any other person
against any charge of infringement of any Intellectual Property, other than
indemnification provisions contained in purchase orders arising in the ordinary
course of business.
(c) 518
is
not or will not be as a result of the execution and delivery of this Agreement
or the performance of its obligations under this Agreement, in breach of
any
license, sublicense or other agreement relating to the Intellectual Property
or
Third Party Intellectual Property Rights, the breach of which would have
a
Material Adverse Effect on 518.
2.14 Taxes.
(a) For
purposes of this Section 2.14 and other provisions of this Agreement relating
to
Taxes, the following definitions shall apply:
(i) The
term
“Taxes”
shall
mean all taxes, however denominated, including any interest, penalties or
other
additions to tax that may become payable in respect thereof, (A) imposed by
any federal, territorial, state, local or foreign government or any agency
or
political subdivision of any such government, which taxes shall include,
without
limiting the generality of the foregoing, all income or profits taxes (including
but not limited to, federal, state and foreign income taxes), payroll and
employee withholding taxes, unemployment insurance contributions, social
security taxes, sales and use taxes, ad valorem taxes, excise taxes, franchise
taxes, gross receipts taxes, withholding taxes, business license taxes,
occupation taxes, real and personal property taxes, stamp taxes, environmental
taxes, transfer taxes, workers’ compensation, Pension Benefit Guaranty
Corporation premiums and other governmental charges, and other obligations
of
the same or of a similar nature to any of the foregoing, which are required
to
be paid, withheld or collected, (B) any liability for the payment of
amounts referred to in (A) as a result of being a member of any affiliated,
consolidated, combined or unitary group, or (C) any liability for amounts
referred to in (A) or (B) as a result of any obligations to indemnify another
person.
(ii) The
term
“Returns”
shall
mean all reports, estimates, declarations of estimated tax, information
statements and returns required to be filed in connection with any Taxes,
including information returns with respect to backup withholding and other
payments to third parties.
(b) All
Returns required to be filed by or on behalf of 518 have been duly filed
on a
timely basis and such Returns are true, complete and correct. All Taxes shown
to
be payable on such Returns or on subsequent assessments with respect thereto,
and all payments of estimated Taxes required to be made by or on behalf of
518
under Section 6655 of the Code or comparable provisions of state, local or
foreign law, have been paid in full on a timely basis, and no other Taxes
are
payable by 518 Subsidiary with respect to items or periods covered by such
Returns (whether or not shown on or reportable on such Returns). 518 has
withheld and paid over all Taxes required to have been withheld and paid
over,
and complied with all information reporting and backup withholding in connection
with amounts paid or owing to any employee, creditor, independent contractor,
or
other third party. 518 has received, from each employee who holds stock that
is
subject to a substantial risk of forfeiture as of the date hereof, a copy
of the
election(s) made under Section 83(b) of the Code with respect to all such
shares, and such elections were validly made and filed with the Internal
Revenue
Service in a timely fashion. There are no liens on any of the assets of 518
with
respect to Taxes, other than liens for Taxes not yet due and payable or for
Taxes that 518 is contesting in good faith through appropriate proceedings.
518
has not been at any time a member of an affiliated group of corporations
filing
consolidated, combined or unitary income or franchise tax returns for a period
for which the statute of limitations for any Tax potentially applicable as
a
result of such membership has not expired.
(c) The
amount of 518’s liabilities for unpaid Taxes for all periods through the date of
the Financial Statements do not, in the aggregate, exceed the amount of the
current liability accruals for Taxes reflected on the Financial Statements,
and
the Financial Statements properly accrue in accordance with generally accepted
accounting principles (“GAAP”) all liabilities for Taxes of 518 payable after
the date of the Financial Statements attributable to transactions and events
occurring prior to such date. No liability for Taxes of 518 has been incurred
or
material amount of taxable income has been realized (or prior to and including
the Effective Time will be incurred or realized) since such date other than
in
the ordinary course of business.
(d) Ameralink
has been furnished by 518 true and complete copies of (i) relevant portions
of income tax audit reports, statements of deficiencies, closing or other
agreements received by or on behalf of 518 relating to Taxes, and (ii) all
federal, state and foreign income or franchise tax returns and state sales
and
use tax Returns for or including 518 for all periods since 518’s
inception.
(e) No
audit
of the Returns of or including 518 by a government or taxing authority is
in
process, threatened or, to 518’s knowledge, pending (either in writing or
orally, formally or informally). No deficiencies exist or have been asserted
(either in writing or orally, formally or informally) or are expected to
be
asserted with respect to Taxes of 518, and 518 has not received notice (either
in writing or orally, formally or informally) nor does it expect to receive
notice that it has not filed a Return or paid Taxes required to be filed
or
paid. 518 is not a party to any action or proceeding for assessment or
collection of Taxes, nor has such event been asserted or threatened (either
in
writing or orally, formally or informally) against 518 or any of its assets.
No
waiver or extension of any statute of limitations is in effect with respect
to
Taxes or Returns of 518. 518 has disclosed on its federal and state income
and
franchise tax returns all positions taken therein that could give rise to
a
substantial understatement penalty within the meaning of Code Section 6662
or
comparable provisions of applicable state tax laws.
2.15 Employee
Matters.
518
is in
compliance in all material respects with all currently applicable federal,
state, local and foreign laws and regulations respecting employment,
discrimination in employment, terms and conditions of employment, wages,
hours
and occupational safety and health and employment practices, and is not engaged
in any unfair labor practice. There are no pending claims against 518 under
any
workers compensation plan or policy or for long term disability. 518 has
no
material obligations under COBRA or any similar state law with respect to
any
former employees or qualifying beneficiaries thereunder.
2.16 Material
Contracts.
(a) Section 2.16(a)
of the 518 Disclosure Schedule contain a list of all contracts and agreements
to
which 518 is a party and that are material to the business, results of
operations, or condition (financial or otherwise), of 518 taken as a whole
(such
contracts, agreements and arrangements as are required to be set forth in
Section 2.16(a) of the 518 Disclosure Schedule being referred to herein
collectively as the “Material
Contracts”).
(b) Except
as
would not, individually or in the aggregate, have a Material Adverse Effect
on
518, each 518 license, each Material is a legal, valid and binding agreement,
and none of the 518 licenses or Material Contracts is in default by its terms
or
has been cancelled by the other party; 518 is not in receipt of any claim
of
default under any such agreement; and 518 does not anticipate any termination
or
change to, or receipt of a proposal with respect to, any such agreement as
a
result of the Merger or otherwise. 518 has furnished Ameralink with true
and
complete copies of all such agreements together with all amendments, waivers
or
other changes thereto.
2.17 Interested
Party Transactions.
518
is
not indebted to any director, officer, employee or agent of 518 (except for
amounts due as normal salaries and bonuses and in reimbursement of ordinary
expenses), and no such person is indebted to 518. To 518’s knowledge, none of
518’s officers or directors, or any members of their immediate families, are,
directly or indirectly, indebted to 518 (other than in connection with purchases
of the 518’s stock) or have any direct or indirect ownership interest in any
firm or corporation with which 518 is affiliated or with which 518 has a
business relationship, or any firm or corporation which competes with 518
except
that officers, directors and/or stockholders of 518 may own stock in (but
not
exceeding two percent of the outstanding capital stock of) any publicly traded
companies that may compete with 518. To 518’s knowledge, none of 518’s officers
or directors or any members of their immediate families are, directly or
indirectly, interested in any material contract with 518. 518 is not a guarantor
or indemnitor of any indebtedness of any other person, firm or
corporation.
2.18 Insurance.
518
has
policies of insurance and bonds of the type and in amounts customarily carried
by persons conducting businesses or owning assets similar to those of 518.
There
is no material claim pending under any of such policies or bonds as to which
coverage has been questioned, denied or disputed by the underwriters of such
policies or bonds. All premiums due and payable under all such policies and
bonds have been paid and 518 are otherwise in compliance with the terms of
such
policies and bonds.
2.19 Compliance
With Laws.
518
has
complied with, is not in violation of, and has not received any notices of
violation with respect to, any federal, state, local or foreign statute,
law or
regulation with respect to the conduct of its business, or the ownership
or
operation of its business, except for such violations or failures to comply
as
could not reasonably be expected to have a Material Adverse Effect on
518.
2.20 Minute
Books.
The
minute book of 518 made available to Ameralink contains a complete summary
of
all meetings of directors and stockholders or actions by written consent
since
the time of incorporation of 518 through the date of this Agreement, and
reflect
all transactions referred to in such minutes accurately in all material
respects.
2.21 Complete
Copies of Materials.
518
has
delivered or made available true and copies of each document which has been
requested by Ameralink or its counsel in connection with their legal and
accounting review of 518.
2.22 Brokers’
and Finders’ Fees.
518
has
not incurred, nor will it incur, directly or indirectly, any liability for
brokerage or finders’ fees or agents’ commissions or investment bankers’ fees or
any similar charges in connection with this Agreement or any transaction
contemplated hereby.
2.23 No
Vote Required.
Upon
the
execution of this Agreement by all 518 Stockholders, no other vote of the
holders of 518 Common Stock is necessary to approve this Agreement and the
transactions contemplated hereby.
2.24 Third
Party Consents.
No
consent or approval is needed from any third party in order to effect the
Merger, this Agreement or any of the transactions contemplated
hereby.
2.25 Representations
Complete.
None
of
the representations or warranties made by 518 herein or in any Schedule hereto,
including the 518 Disclosure Schedule, or certificate furnished by 518 pursuant
to this Agreement, when all such documents are read together in their entirety,
contains or will contain at the Effective Time any untrue statement of a
material fact, or omits or will omit at the Effective Time to state any material
fact necessary in order to make the statements contained herein or therein,
in
the light of the circumstances under which made, not misleading.
SECTION
THREE
3. Representations
and Warranties of Ameralink and Merger Sub.
Except
as
disclosed in a document dated as of the date of this Agreement and delivered
by
Ameralink to 518 prior to the execution and delivery of this Agreement and
referring to the representations and warranties in this Agreement (the
“Ameralink
Disclosure Schedule”),
Ameralink and Merger Sub hereby jointly and severally represent and warrant
to
518 and 518 Stockholders as follows:
3.1
Organization,
Standing and Power.
Each of
Ameralink and Merger Sub is a corporation duly organized, validly existing
and
in good standing under the laws of its jurisdiction of organization. Each
of
Ameralink and Merger Sub has the corporate power to own its properties and
to
carry on its business as now being conducted and as proposed to be conducted
and
is duly qualified to do business and is in good standing in each jurisdiction
in
which the failure to be so qualified and in good standing would have a Material
Adverse Effect on Ameralink. Ameralink has delivered a true and correct copy
of
the Articles of Incorporation and Bylaws or other charter documents, as
applicable, of Ameralink and Merger Sub, each as amended to date, to 518.
Neither Ameralink nor any of its subsidiaries is in violation of any material
provisions of its Articles of Incorporation or Bylaws or equivalent
organizational documents.
3.2
Capital
Structure.
(a) The
authorized capital stock of Ameralink consists of 25,000,000 shares of Common
Stock, $0.001 par value, of which 7,000,000 shares
were issued and outstanding as of the close of business on August 11, 2006.
Other than as contemplated under this Agreement, there are no options, warrants,
calls, rights, commitments or agreements of any character to which Ameralink
or
Merger Sub is a party or by which either of them is bound obligating Ameralink
or Merger Sub to issue, deliver, sell, repurchase or redeem, or cause to
be
issued, delivered, sold, repurchased or redeemed, any shares of the capital
stock of Ameralink or obligating Ameralink or Merger Sub to grant, extend
or
enter into any such option, warrant, call, right, commitment or agreement.
The
shares of Ameralink Common Stock to be issued pursuant to the Merger will
be
duly authorized, validly issued, fully paid, and non-assessable.
(b) The
authorized capital stock of Merger Sub consists of 10,000 shares of Common
Stock
of which 100 are issued and outstanding and are held by Ameralink. All
outstanding shares of Ameralink and Merger Sub have been duly authorized,
validly issued, fully paid and are nonassessable and free of any liens or
encumbrances other than any liens or encumbrances created by or imposed upon
the
holders thereof. There are no options, warrants, calls, rights, commitments
or
agreements of any character to which Ameralink or Merger Sub is a party or
by
which either of them is bound obligating Ameralink or Merger Sub to issue,
deliver, sell, repurchase or redeem, or cause to be issued, delivered, sold,
repurchased or redeemed, any shares of the capital stock of Merger Sub or
obligating Ameralink or Merger Sub to grant, extend or enter into any such
option, warrant, call, right, commitment or agreement.
3.3
Authority.
Ameralink
and Merger Sub have all requisite corporate power and authority to enter
into
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 authorized by all necessary
corporate action on the part of Ameralink and Merger Sub (other than, with
respect to the Merger, the filing and recordation of appropriate merger
documents as required by California law). This Agreement has been duly executed
and delivered by Ameralink and Merger Sub and constitutes the valid and binding
obligations of Ameralink and Merger Sub.
3.4
No
Conflict; Required Filings and Consents.
(a) The
execution and delivery of this Agreement do not, and the consummation of
the
transactions contemplated hereby will not, conflict with, or result in any
violation of, or default under (with or without notice or lapse of time,
or
both), or give rise to a right of termination, cancellation or acceleration
of
any obligation or loss of a benefit under (i) any provision of the Articles
of Incorporation or Bylaws of Ameralink or Merger Sub, as amended, or
(ii) any material mortgage, indenture, lease, contract or other agreement
or instrument, permit, concession, franchise, license, judgment, order, decree,
statute, law, ordinance, rule or regulation applicable to Ameralink or Merger
Sub or their properties or assets.
(b) No
consent, approval, order or authorization of, or registration, declaration
or
filing with, any Governmental Entity, is required by or with respect to
Ameralink or Merger Sub in connection with the execution and delivery of
this
Agreement by Ameralink and Merger Sub or the consummation by Ameralink and
Merger Sub of the transactions contemplated hereby, except for (i) the
filing of appropriate merger documents as required by California Law,
(ii) the filing of a Form 8-K with the SEC within five days after the
Closing Date, (iii) the filing with the SEC of a notice on Form D and any
other filings as may be required under applicable state securities laws and
the
securities laws of any foreign country, and (iv) such other consents,
authorizations, filings, approvals and registrations which, if not obtained
or
made, would not have a Material Adverse Effect on Ameralink and would not
prevent, materially alter or delay any the transactions contemplated by this
Agreement.
3.5
SEC
Documents; Financial Statements.
(a) Ameralink
has filed all forms, reports and documents required to be filed by Ameralink
with the SEC since February 7, 2001 through the date hereof, and 518 and
518
Stockholders have had access to all such forms, reports and documents through
the SEC Edger website. Included in those filings are all Annual Reports on
Form
10-KSB and Quarterly Reports on Form 10-QSB including the Annual Report on
Form
10-KSB for the year ending December 31, 2005 filed with the SEC on April
17,
2006. In addition, Ameralink will have made available to 518 true and complete
copies of any additional documents filed with the SEC by Ameralink after
the
date hereof and prior to the Effective Time (collectively, the “Ameralink
SEC Documents”).
As of
their respective filing dates, the Ameralink SEC Documents complied in all
material respects with the requirements of the Exchange Act and the Securities
Act, and none of the Ameralink SEC Documents contained any untrue statement
of a
material fact or omitted to state a material fact required to be stated therein
or necessary to make the statements made therein, in light of the circumstances
in which they were made, not misleading, except to the extent corrected by
a
subsequently filed Ameralink SEC Document.
(b) The
financial statements of Ameralink, including the notes thereto, included
in the
Ameralink SEC Documents (the “Ameralink
Financial Statements”)
were
complete and correct in all material respects as of their respective filing
dates, complied as to form in all material respects with applicable accounting
requirements and with the published rules and regulations of the SEC with
respect thereto as of their respective dates, and have been prepared in
accordance with United States generally accepted accounting principles applied
on a basis consistent throughout the periods indicated and consistent with
each
other (except as may be indicated in the notes thereto or, in the case of
unaudited statements, included in Quarterly Reports on Forms 10-Q). The
Ameralink Financial Statements fairly present the consolidated financial
condition and operating results of Ameralink and its subsidiaries at the
dates
and during the periods indicated therein (subject, in the case of unaudited
statements, to normal, recurring year-end adjustments). There has been no
change
in Ameralink accounting policies except as described in the notes to the
Ameralink Financial Statements.
3.6
Absence
of Undisclosed Liabilities.
Ameralink has no material obligations or liabilities of any nature (matured
or
unmatured, fixed or contingent) other than (i) those set forth or
adequately provided for in the Balance Sheet included in Ameralink’s Annual
Report on Form 10-KSB heretofore made available to 518 for the period ended
December 31, 2005 (the “Ameralink
Balance Sheet”),
(ii) those incurred in the ordinary course of business and not required to
be set forth in the Ameralink Balance Sheet under United States generally
accepted accounting principles, and (iii) those incurred in the ordinary
course of business since the Ameralink Balance Sheet Date and consistent
with
past practice.
3.7
Absence
of Certain Changes.
Since
December 31, 2005 (the “Ameralink
Balance Sheet Date”),
Ameralink has conducted its business in the ordinary course in a manner
consistent with past practice and there has not occurred: (i) any change,
event or condition (whether or not covered by insurance) that has resulted
in,
or might reasonably be expected to result in, a Material Adverse Effect to
Ameralink; (ii) any declaration, setting aside, or payment of a dividend or
other distribution with respect to the shares of Ameralink, or any direct
or
indirect redemption, purchase or other acquisition by Ameralink of any of
its
shares of capital stock; (iii) any material amendment or change to
Ameralink’s Articles of Incorporation or Bylaws; or (iv) any negotiation or
agreement by Ameralink to do any of the things described in the preceding
clauses (i) through (iii) (other than negotiations with 518 and its
representatives regarding the transactions contemplated by this
Agreement).
3.8
Litigation.
There
is
no private or governmental action, suit, proceeding, claim, arbitration or
investigation pending before any agency, court or tribunal, foreign or domestic,
or, to the knowledge of Ameralink or any of its subsidiaries, threatened
against
Ameralink or any of its subsidiaries or any of their respective properties
or
any of their respective officers or directors (in their capacities as such)
that, individually or in the aggregate, could reasonably be expected to have
a
Material Adverse Effect on Ameralink. There is no judgment, decree or order
against Ameralink or any of its subsidiaries or, to the knowledge of Ameralink
or any of its subsidiaries, any of their respective directors or officers
(in
their capacities as such) that could prevent, enjoin, or materially alter
or
delay any of the transactions contemplated by this Agreement, or that could
reasonably be expected to have a Material Adverse Effect on
Ameralink.
3.9
Governmental
Authorization.
Each of
Ameralink and its subsidiaries has obtained each federal, state, county,
local
or foreign governmental consent, license, permit, grant, or other authorization
of a Governmental Entity that is required for the operation of Ameralink’s or
any of its subsidiaries’ business (“Ameralink
Authorizations”),
and
all of such Ameralink Authorizations are in full force and effect, except
where
the failure to obtain or have any of such Ameralink Authorizations could
not
reasonably be expected to have a Material Adverse Effect on
Ameralink.
3.10 Compliance
With Laws.
Each of
Ameralink and Merger Sub has complied with, are not in violation of, and
has not
received any notices of violation with respect to, any federal, state, local
or
foreign statute, law or regulation with respect to the conduct of its business,
or the ownership or operation of its business, except for such violations
or
failures to comply as could not reasonably be expected to have a Material
Adverse Effect on Ameralink.
3.11 Broker’s
and Finders’ Fees.
Except
for sales commissions in connection with the private placement of equity
funding
as set forth in Section 5.11, Ameralink has not incurred, nor will it incur,
directly or indirectly, any liability for brokerage or finders’ fees or agents’
commissions or investment bankers’ fees or any similar charges in connection
with this Agreement or any transaction contemplated hereby.
3.12 Accounting
and Tax Matters.
Neither
Ameralink nor Merger Sub nor, to the knowledge of Ameralink and Merger Sub,
any
of their respective affiliates or agents is aware of any agreement, plan
or
other circumstance that would prevent the Merger from constituting a transaction
under Section 368(a) of the Code.
SECTION
FOUR
4. Conduct
Prior to the Effective Time.
4.1
Conduct
of Business of 518 and Ameralink.
During
the period from the date of this Agreement and continuing until the earlier
of
the termination of this Agreement or the Effective Time, each of 518 and
Ameralink agrees (except to the extent expressly contemplated by this Agreement
or as consented to in writing by the other parties), to carry on its and
its
subsidiaries’ business in the usual, regular and ordinary course in
substantially the same manner as heretofore conducted, to pay and to cause
its
subsidiaries to pay debts and Taxes when, to pay or perform other obligations
when due, and to use all reasonable efforts consistent with past practice
and
policies to preserve intact its and its subsidiaries’ present business
organization, keep available the services of its and its subsidiaries’ present
officers and key employees and preserve its and its subsidiaries’ relationships
with customers, suppliers, distributors, licensors, licensees, and others
having
business dealings with it or its subsidiaries, to the end that its and its
subsidiaries’ goodwill and ongoing businesses shall be unimpaired at the
Effective Time. Each of 518 and Ameralink agrees to promptly notify the other
of
any event or occurrence not in the ordinary course of its or its subsidiaries’
business, and of any event which could have a Material Adverse Effect. Without
limiting the foregoing, except as expressly contemplated by this Agreement,
neither 518 nor Ameralink shall do, cause or permit any of the following,
or
allow, cause or permit any of its subsidiaries to do, cause or permit any
of the
following, without the prior written consent of the other:
(a) Charter
Documents.
Cause
or
permit any amendments to its articles of incorporation or bylaws (except
in the
case of Ameralink’s amending and restating its articles of incorporation and
bylaws pursuant to Section 5.12(f) hereof);
(b) Dividends;
Changes in Capital Stock.
Declare
or pay any dividends on or make any other distributions (whether in cash,
stock
or property) in respect of any of its capital stock, or (except in the case
of
Ameralink’s recapitalization of its shares as set forth in Section 5.12(a) and
its issuance of the stock option as set forth in Section 12(e) hereof) split,
combine or reclassify any of its capital stock or issue or authorize the
issuance of any other securities in respect of, in lieu of or in substitution
for shares of its capital stock, or repurchase or otherwise acquire, directly
or
indirectly, any shares of its capital stock except from former employees,
directors and consultants in accordance with agreements providing for the
repurchase of shares in connection with any termination of service to it
or its
subsidiaries;
(c) Stock
Option Plans, Etc.
Approve
and adopt any stock plans or stock option plans; or
(d) Other.
Take,
or agree in writing or otherwise to take, any of the actions described in
Sections 4.1(a) through (c) above, or any action which would make any of
its representations or warranties contained in this Agreement untrue or
incorrect or prevent it from performing or cause it not to perform its covenants
hereunder.
4.2
Conduct
of Business of 518.
During
the period from the date of this Agreement and continuing until the earlier
of
the termination of this Agreement or the Effective Time, except as expressly
contemplated by this Agreement, 518 shall not do, cause or permit any of
the
following, without the prior written consent of Ameralink:
(a) Material
Contracts.
Enter
into any material contract or commitment, or violate, amend or otherwise
modify
or waive any of the terms of any of its Material Contracts, other than in
the
ordinary course of business consistent with past practice;
(b) Issuance
of Securities.
Issue,
deliver or sell or authorize or propose the issuance, delivery or sale of,
or
purchase or propose the purchase of, any shares of its capital stock or
securities convertible into, or subscriptions, rights, warrants or options
to
acquire, or other agreements or commitments of any character obligating it
to
issue any such shares or other convertible securities;
(c) Intellectual
Property.
Transfer
to any person or entity any rights to its Intellectual Property;
(d) Exclusive
Rights.
Enter
into or amend any agreements pursuant to which any other party is granted
exclusive marketing or other exclusive rights of any type or scope with respect
to any of its products or technology;
(e) Dispositions.
Sell,
lease, license or otherwise dispose of or encumber any of its properties
or
assets which are material, individually or in the aggregate, to its business,
taken as a whole, except in the ordinary course of business consistent with
past
practice;
(f) Indebtedness.
Incur
any
indebtedness for borrowed money or guarantee any such indebtedness or issue
or
sell any debt securities or guarantee any debt securities of
others;
(g) Insurance.
Materially
reduce the amount of any material insurance coverage provided by existing
insurance policies;
(h) Termination
or Waiver.
Terminate
or waive any right of substantial value, other than in the ordinary course
of
business;
(i) Employee
Benefit Plans; New Hires; Pay Increases.
Adopt
any
employee benefit or stock purchase or option plan, or hire any new director
level or officer level employee, pay any special bonus or special remuneration
to any employee or director, or increase the salaries or wage rates of its
employees;
(j) Taxes.
Other
than in the ordinary course of business, make or change any material election
in
respect of Taxes, adopt or change any accounting method in respect of Taxes,
file any material Tax Return or any amendment to a material Tax Return, enter
into any closing agreement, settle any claim or assessment in respect of
Taxes,
or consent to any extension or waiver of the limitation period applicable
to any
claim or assessment in respect of Taxes;
(k) Revaluation.
Revalue
any of its assets, including without limitation writing down the value of
inventory or writing off notes or accounts receivable other than in the ordinary
course of business; or
(l) Other.
Take
or
agree in writing or otherwise to take, any of the actions described in Sections
4.2(a) through (k) above, or any action which would make any of its
representations or warranties contained in this Agreement untrue or incorrect
or
prevent it from performing or cause it not to perform its covenants
hereunder.
4.3
No
Solicitation.
518
and
its officers, directors, employees or other agents of 518 will not, directly
or
indirectly, (i) take any action to solicit, initiate or encourage any Takeover
Proposal (as defined below) or (ii) engage in negotiations with, or disclose
any
nonpublic information relating to 518 to, or afford access to the properties,
books or records of 518 to, any person that has advised 518 that it may be
considering making, or that has made, a Takeover Proposal. 518 will promptly
notify Ameralink after receipt of any Takeover Proposal or any notice that
any
person is considering making a Takeover Proposal or any request for nonpublic
information relating to 518 or for access to the properties, books or records
of
518 by any person that has advised 518 that it may be considering making,
or
that has made, a Takeover Proposal and will keep Ameralink fully informed
of the
status and details of any such Takeover Proposal notice or request. For purposes
of this Agreement, “Takeover
Proposal”
means
any offer or proposal for, or any indication of interest in, a merger or
other
business combination involving 518 or the acquisition of any significant
equity
interest in, or a significant portion of the assets of 518, other than the
transactions contemplated by this Agreement.
SECTION
FIVE
5. Additional
Agreements.
5.1
Best
Efforts and Further Assurances.
Each
of
the parties to this Agreement shall use its best efforts to effectuate the
transactions contemplated hereby and to fulfill and cause to be fulfilled
the
conditions to closing under this Agreement. Each party hereto, at the reasonable
request of another party hereto, shall execute and deliver such other
instruments and do and perform such other acts and things as may be necessary
or
desirable for effecting completely the consummation of this Agreement and
the
transactions contemplated hereby.
5.2
Consents;
Cooperation.
(a) Each
of
Ameralink and 518 shall use its reasonable best efforts to promptly (i) obtain
from any Governmental Entity any consents, licenses, permits, waivers,
approvals, authorizations or orders required to be obtained or made by
Ameralink, Merger Sub or 518 in connection with the authorization, execution
and
delivery of this Agreement and the consummation of the transactions contemplated
hereunder, and (ii) make all necessary filings, and thereafter make any other
required submissions, with respect to this Agreement and the Merger required
under the Securities Act and the Exchange Act and any other applicable federal,
state or foreign securities laws.
(b) 518
and
each 518 Stockholder shall cooperate with Ameralink in the preparation of
the
private placement memorandum and other offering materials for the additional
equity funding described in Section 5.11 below and provide Ameralink with
accurate and complete descriptions of 518’s business operations, financial
condition and other required disclosure information. The information supplied
by
518 or any of 518 Stockholders for inclusion in the offering materials shall
not
contain any untrue statement of material fact or omit to state any material
fact
required to be stated therein or necessary in order to make the statements
therein not misleading.
(c) From
the
date of this Agreement until the earlier of the Effective Time or the
termination of this Agreement, each party shall promptly notify the other
party
in writing of any pending or, to the knowledge of such party, threatened
action,
proceeding or other event that may cause a Material Adverse Effect.
5.3
Access
to Information.
(a) 518
shall
afford Ameralink and its accountants, counsel and other representatives,
reasonable access during normal business hours during the period prior to
the
Effective Time to (i) all of 518’s properties, books, contracts,
commitments and records, and (ii) all other information concerning the
business, properties and personnel of 518 as Ameralink may reasonably request.
518 agrees to provide to Ameralink and its accountants, counsel and other
representatives copies of internal financial statements promptly upon request.
Ameralink shall afford 518 and its accountants, counsel and other
representatives, reasonable access during normal business hours during the
period prior to the Effective Time to (i) all of Ameralink’s and Merger
Sub’s properties, books, contracts, commitments and records, and (ii) all
other information concerning the business, properties and personnel of Ameralink
and Merger Sub as 518 may reasonably request. Ameralink agrees to provide
to 518
and its accountants, counsel and other representatives copies of internal
financial statements promptly upon request.
(b) Subject
to compliance with applicable law, from the date hereof until the Effective
Time, each of Ameralink and 518 shall confer on a regular and frequent basis
with one or more representatives of the other party to report operational
matters of materiality and the general status of ongoing
operations.
(c) No
information or knowledge obtained in any investigation pursuant to this
Section 5.3 shall affect or be deemed to modify any representation or
warranty contained herein or the conditions to the obligations of the parties
to
consummate the Merger.
5.4
Confidentiality.
The
information received in accordance with Section 5.3 shall be deemed to be
“Confidential
Information.”
Each
of Ameralink and 518 and each 518 Stockholder agrees that it will treat in
confidence all documents, materials, and other Confidential Information that
it
shall have obtained regarding any other party during the course of the
negotiations leading to the consummation of the transactions contemplated
hereby
(whether obtained before or after the date of this Agreement), the investigation
provided for herein, and the preparation of this Agreement and other related
documents. Such documents, materials, and other Confidential Information
shall
not be communicated to any third person (other than to its respective counsel,
accountants, financial advisors, or lenders) and shall not be used for any
purpose to the detriment of any other party. No party shall use any Confidential
Information in any manner whatsoever except solely for the purpose of evaluating
a possible business relationship as contemplated by this Agreement. No party
and
no representative of a party will, during the term of this Agreement or at
any
time during the two years thereafter, irrespective of the time, manner, or
cause
of termination of this Agreement, use, disclose, copy, or assist any other
person in the use, disclosure, or copying of any documents, materials, or
other
Confidential Information of any other party hereto.
5.5
Public
Disclosure.
Unless
otherwise permitted by this Agreement, Ameralink and 518 shall consult with
each
other before issuing any press release or otherwise making any public statement
or making any other public (or non-confidential) disclosure (whether or not
in
response to an inquiry) regarding the terms of this Agreement and the
transactions contemplated hereby, and neither shall issue any such press
release
or make any such statement or disclosure without the prior approval of the
other
(which approval shall not be unreasonably withheld), except as may be required
by law.
5.6 State
Statutes.
If any
state takeover law shall become applicable to the transactions contemplated
by
this Agreement, Ameralink and its Board of Directors or 518 and its Board
of
Directors, as the case may be, shall use their reasonable best efforts to
grant
such approvals and take such actions as are necessary so that the transactions
contemplated by this Agreement may be consummated as promptly as practicable
on
the terms contemplated by this Agreement and otherwise to minimize the effects
of such state takeover law on the transactions contemplated by this
Agreement.
5.7 Filings
or Notices Pursuant to Securities Laws.
(a) Ameralink
shall prepare and file with the SEC a notice on Form D and such other notices
or
applications as Ameralink may deem appropriate under state securities laws
in
connection with the transactions contemplated by this Agreement. 518 and
each
518 Stockholder and Ameralink shall take any action required to be taken
under
any applicable federal or state securities laws in connection with the issuance
of the Merger Consideration. 518 and each 518 Stockholder shall furnish,
or
cause such part to furnish, to Ameralink all information concerning 518 and
the
518 Stockholders as Ameralink may reasonably request in connection with such
actions.
(b) The
information supplied by any party for inclusion in the notices or other filings
in accordance with this Section 5.7 shall not, at the time filed, contain
any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein
not
misleading. If at any time prior to the Closing any event or circumstance
relating to any party or any party’s affiliates, or its or their respective
officers or directors, is discovered by any party that should be set forth
in a
supplement or amendment to any notices or other filings in accordance with
this
Section 5.7, such party shall promptly inform each other party thereof in
writing. All documents that such party is responsible for filing with the
SEC or
any state authority in connection with the transactions contemplated herein
shall comply as to form in all material respects with the applicable
requirements of the Securities Act and the rules and regulations thereunder,
the
Exchange Act and the rules and regulations thereunder, state securities laws,
and other applicable state laws
5.8
Unanimous
Consent of Stockholders.
As
promptly as practicable after the date hereof, 518 shall take all action
necessary in accordance with California Law and its Articles of Incorporation
and Bylaws to secure the unanimous consent of all 518 Stockholders approving
the
Merger and the transactions contemplated herein.
5.9
Acquisition
of Ameralink Common Stock.
The
consummation of this Agreement and the transactions contemplated herein,
including the issuance of the Ameralink Common Stock to the 518 Stockholders
as
contemplated hereby, constitutes the offer and sale of securities under the
Securities Act and applicable state securities Laws. Such transactions shall
be
consummated in reliance on exemptions from the registration and prospectus
delivery requirements of such statutes that depend, among other items, on
the
circumstances under which the 518 Stockholders acquire such securities
comprising the Merger Consideration.
(a) In
order
to provide documentation for reliance upon exemptions from the registration
and
prospectus delivery requirements for the issuance of Ameralink Common Stock
in
the Merger, each 518 Stockholder hereby makes the following representations
and
warranties:
(i) Such
518
Stockholder acknowledges that neither the SEC nor the securities commission
of
any state or other federal agency has made any determination as to the merits
of
acquiring the Ameralink Common Stock, and that the transactions contemplated
herein involve certain risks.
(ii) Such
518
Stockholder has received and read this Agreement and understands the risk
related to the consummation of the transactions herein
contemplated.
(iii)
Such
518
Stockholder has such knowledge and experience in business and financial matters
that such 518 Stockholder is capable of evaluating the Merger and Ameralink
and
its business operations.
(iv)
Such
518
Stockholder has been provided with a copy of the Agreement and the related
disclosure schedules of the parties hereto plus all materials and information
requested by each or his or her representative, including any information
requested to verify any information furnished (to the extent such information
is
available or can be obtained without unreasonable effort or expense), and
each
has been provided the opportunity for direct communication with Ameralink
and
its representatives regarding the transactions contemplated hereby.
(v) All
information that each 518 Stockholder has provided to Ameralink or its agents
or
representatives concerning suitability to hold shares in Ameralink following
the
transactions contemplated hereby is complete, accurate, and
correct.
(vi)
Such
518
Stockholder has not offered or sold any interest in this Agreement and has
no
present intention of dividing the Ameralink Common Stock to be received or
the
rights under this Agreement with others or of reselling or otherwise disposing
of any portion of such stock or rights, either currently or after the passage
of
a fixed or determinable period of time or on the occurrence or nonoccurrence
of
any predetermined event or circumstance.
(vii)
Such
518
Stockholder was at no time solicited by any leaflet, public promotional meeting,
circular, newspaper or magazine article, radio or television advertisement,
or
any other form of general advertising or solicitation in connection with
the
offer, sale, or purchase of the Ameralink Common Stock through this
Agreement.
(viii)
As
a
result of the Merger, such 518 Stockholder believes that its financial prospects
resulting from its ownership in Ameralink will not be materially less favorable
than his or her retained ownership in 518. Each 518 Stockholder anticipates
no
need in the foreseeable future to sell the Ameralink Common Stock to be acquired
pursuant hereto. Each is able to bear the economic risks of this investment,
and
consequently, without limiting the generality of the foregoing, is able to
hold
the Ameralink Common Stock to be received for an indefinite period.
(ix)
Such
518
Stockholder understands that the Ameralink Common Stock has not been registered,
but is being acquired by reason of a specific exemption under the Securities
Act
as well as under certain state securities Laws for transactions by an issuer
not
involving any public offering and that any disposition of the Ameralink Common
Stock may, under certain circumstances, be inconsistent with this exemption
and
may make the holder who disposes of such stock an “underwriter” within the
meaning of the Securities Act. It is understood that the definition of
“underwriter” focuses upon the concept of “distribution” and that any subsequent
disposition of the subject Ameralink Common Stock can only be effected in
transactions that are not considered distributions.
(x)
Such
518
Stockholder acknowledges that the shares of Ameralink Common Stock must be
held
and may not be sold, transferred, or otherwise disposed of for value unless
they
are subsequently registered under the Securities Act or an exemption from
such
registration is available. Ameralink is under no obligation to register the
Ameralink Common Stock under the Securities Act. If Rule 144 is available
(and
no assurance is given that it will be except as expressly set forth in this
Agreement), after one year and prior to two years following the Effective
Date,
only routine sales of such Ameralink Common Stock in limited amounts can
be made
in reliance upon Rule 144 in accordance with the terms and conditions of
that
rule. Ameralink is under no obligation to the stockholders of 518 to make
Rule
144 available, except as may be expressly agreed to by it in writing in this
Agreement, and in the event Rule 144 is not available, compliance with
Regulation A or some other disclosure exemption may be required before such
persons can sell, transfer, or otherwise dispose of such Ameralink Common
Stock
without registration under the Securities Act. Ameralink’s registrar and
transfer agent will maintain a stop-transfer order against the registration
of
transfer of the Ameralink Common Stock, and the certificate representing
the
Ameralink Common Stock will bear a legend in substantially the following
form so
restricting the sale of such securities:
The
securities represented by this certificate have not been registered under
the
Securities Act of 1933, as amended (the “Securities Act”), and are “restricted
securities” within the meaning of Rule 144 promulgated under the Securities Act.
The securities have been acquired for investment and may not be sold or
transferred without complying with Rule 144 in the absence of an effective
registration or other compliance under the Securities
Act.
(xi)
Such
518
Stockholder acknowledges that Ameralink may refuse to register transfer shares
of the Ameralink Common Stock in the absence of compliance with Rule 144
unless
the holder furnishes the issuer with a “no-action” or interpretive letter from
the SEC or an opinion of counsel reasonably acceptable to Ameralink stating
that
the transfer is proper. Further, unless such letter or opinion states that
the
shares of Ameralink Common Stock are free of any restrictions under the
Securities Act, Ameralink may refuse to transfer the Ameralink Common Stock
to
any transferee that does not furnish in writing to Ameralink the same
representations and agree to the same conditions respecting such Ameralink
Common Stock as set forth herein. Ameralink may also refuse to transfer the
Ameralink Common Stock if any circumstances are present reasonably indicating
that the transferee’s representations are not accurate.
(b) Such
518
Stockholder shall execute and deliver to Ameralink, at or prior to the Closing,
such further letters of representation, acknowledgment, suitability, or the
like, as Ameralink and its counsel may reasonably request in connection with
reliance on exemptions from registration under such securities
Laws.
(c) Each
Party acknowledges that the basis for relying on exemptions from registration
or
qualifications are factual, depending on the conduct of the various parties,
and
that no legal opinion or other assurance will be required or given to the
effect
that the transactions contemplated hereby are in fact exempt from registration
or qualification.
5.10 [Reserved]
5.11 Additional
Equity Funding.
Prior to
or at the Closing, Ameralink shall use its commercially reasonable efforts
to
sell between 1,000,000 and 1,500,000 shares of Ameralink Common Stock at
not
less than $0.40 per share for gross proceeds of between $400,000 and $600,000
in
transactions exempt from registration under the Securities Act and applicable
provisions of state securities laws. The terms of the offering shall include
50%
warrant coverage for two years at an exercise price of $0.80 and registration
rights. The sale of at least 1,000,000 shares at not less than $0.40 per
share
for gross proceeds of $400,000 shall be a condition precedent to Closing.
The
terms of the offering shall also include the payment of sales commissions
to
authorized persons in connection with the sale of securities.
5.12 Ameralink
Restructuring.
At or
prior to the Closing, Ameralink shall:
(a) forward
split sixty-to-one its 26,000 shares of unlegended issued and outstanding
common
stock and cause its directors ▇▇▇▇▇▇ ▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ to waive
participation in the forward split, resulting in 1,560,000 shares of unlegended
common stock issued and outstanding and 6,974,000 shares of legended common
stock issued and outstanding for a total of 8,534,000 shares of common stock
issued and outstanding;
(b) cause
its
directors, ▇▇▇▇▇▇ ▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ to agree to transfer in the aggregate
5,300,000 shares of Ameralink common stock to the 518 Stockholders as the
Merger
Consideration;
(c) change
the name of Ameralink to 518 Media, Inc. or a derivative thereof acceptable
to
▇▇▇▇▇ ▇▇▇▇▇, to become effective at or immediately following the
Closing;
(d) consent
to the election as directors of the following persons, each to assume office
at
the Closing and to serve until the next annual meeting of stockholders and
until
his successor is elected and qualified:
▇▇▇▇▇
▇▇▇▇▇;
▇▇▇▇▇
▇▇▇▇▇;
▇▇▇▇▇
▇.
▇▇▇▇▇▇▇;
▇▇▇▇▇▇
▇
▇▇▇▇▇▇ ▇▇.; and
a
nominee
of Ameralink;
(e) approve
and issue to Ameralink’s nominee director a three year stock options to purchase
450,000 shares of common stock of Ameralink for an exercise price of
$0.40;
(f) amend
and
restate Ameralink’s articles of incorporation and bylaws;
(g) grant
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇ piggyback rights to register their shares
of
Ameralink common stock on the condition that Messrs Freiheit and ▇▇▇▇ agree
to
restrict the sale of their shares to the number of shares that that they
would
have been able to sell under Rules 144 and 145 if the exemptions provided
by
these Rules were available to them; and
(h) obtain
the approval of the foregoing by the stockholders of Ameralink in the manner
required by Nevada Law and Ameralink’s certificate of incorporation and bylaws.
5.13
518
Stockholder Undertakings. Contemporaneously
with the execution of this Agreement, ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇▇
▇.
▇▇▇▇▇▇▇ shall execute and deliver the Undertaking in substantially the form
attached as Exhibit D-1 requiring each stockholder to offer all current and
future media/movie projects to 518, all subject to the Closing and to become
effective at the Effective Time.
5.14 Officer
and Director Insurance.
The
Parties shall use their commercially reasonable efforts to obtain officer
and
director liability insurance for the directors and executive officers of
Ameralink and its subsidiaries after the Closing in mutually acceptable amounts
with insurers with acceptable financial responsibility.
5.15 Additional
Audited 518 Financial Statements.
As soon
as commercially reasonable following the execution of this Agreement, 518
shall
prepare and engage a firm of certified public accountants registered with
the
Public Company Accounting Oversight Board to examine and issue a report on
such
518’s balance sheet as of June 30, 2006, and its related statements of
operations, cash flows, and stockholders equity for the year ended December
31,
2005 and to review 518’s financial statements as required pursuant to Item 310
of SEC Regulation S-B, all in accordance with GAAP and Regulation S-B under
the
Exchange Act.
SECTION
SIX
6. Conditions
to the Merger.
6.1
Conditions
to Obligations of Each Party to Effect the Merger.
The
respective obligations of each party to this Agreement to consummate and
effect
this Agreement and the transactions contemplated hereby shall be subject
to the
satisfaction on or prior to the Effective Time of each of the following
conditions, any of which may be waived, in writing, by agreement of all the
parties hereto:
(a) Stockholder
Approval.
This
Agreement and the Merger shall have been duly approved and adopted by the
518
Stockholders.
(b) No
Injunctions or Restraints; Illegality.
No
temporary restraining order, preliminary or permanent injunction or other
order
issued by any court of competent jurisdiction or other legal or regulatory
restraint or prohibition preventing the consummation of the Merger shall
be in
effect, nor shall any proceeding brought by an administrative agency or
commission or other governmental authority or instrumentality, domestic or
foreign, seeking any of the foregoing be pending; nor shall there be any
action
taken, or any statute, rule, regulation or order enacted, entered, enforced
or
deemed applicable to the Merger, which makes the consummation of the Merger
illegal. In the event an injunction or other order shall have been issued,
each
party agrees to use its reasonable diligent efforts to have such injunction
or
other order lifted.
(c) Governmental
Approval.
Ameralink, 518 and Merger Sub shall have timely obtained from each Governmental
Entity all approvals, waivers and consents, if any, necessary for consummation
of or in connection with the Merger and the several transactions contemplated
hereby, including, without limitation, such approvals, waivers and consents
as
may be required under the Securities Act and under any state securities
laws.
(d) Approval
of Form 8-K.
Ameralink and 518 have approved the Form 8-K to be filed with the SEC within
four days of the Effective Time.
6.2
Additional
Conditions to Obligations of 518.
The
obligations of 518 to consummate and effect this Agreement and the transactions
contemplated hereby shall be subject to the satisfaction at or prior to the
Effective Time of each of the following conditions, any of which may be waived,
in writing, by 518:
(a) Representations,
Warranties and Covenants
(i) Each of the representations and warranties of Ameralink and Merger Sub
in this Agreement that is expressly qualified by a reference to materiality
shall be true in all respects as so qualified, and each of the representations
and warranties of Ameralink and Merger Sub in this Agreement that is not
so
qualified shall be true and correct in all material respects, on and as of
the
Effective Time as though such representation or warranty had been made on
and as
of such time (except that those representations and warranties which address
matters only as of a particular date shall remain true and correct as of
such
date), and (ii) Ameralink and Merger Sub shall have performed and complied
in all material respects with all covenants, obligations and conditions of
this
Agreement required to be performed and complied with by them as of the Effective
Time.
(b) Certificates
of Ameralink.
(i) Compliance
Certificate of Ameralink.
518
shall have been provided with a certificate executed on behalf of Ameralink
by
its President to the effect that, as of the Effective Time, each of the
conditions set forth in Section 6.2(a) and (d) above has been satisfied with
respect to Ameralink.
(ii)
Certificate
of Secretary of Ameralink.
518
shall have been provided with a certificate executed by the Secretary of
Ameralink certifying:
(A) Resolutions
duly adopted by the Board of Directors and consent of the holders of a majority
of outstanding shares of Ameralink authorizing the execution of this Agreement
and the execution, performance and delivery of all agreements, documents
and
transactions contemplated hereby; and
(B) the
incumbency of the officers of Ameralink executing this Agreement and all
agreements and documents contemplated hereby.
(c) Certificates
of Merger Sub.
(i) Compliance
Certificate of Merger Sub.
518
shall have been provided with a certificate executed on behalf of Merger
Sub by
its President to the effect that, as of the Effective Time, each of the
conditions set forth in Section 6.2(a) and (d) above has been satisfied with
respect to Merger Sub.
(ii) Certificate
of Secretary of Merger Sub.
518
shall have been provided with a certificate executed by the Secretary or
Assistant Secretary of Merger Sub certifying:
(A) Resolutions
duly adopted by the Sole Director and the sole stockholder of Merger Sub
authorizing the execution of this Agreement and the execution, performance
and
delivery of all agreements, documents and transactions contemplated hereby;
and
(B) the
incumbency of the officers of Merger Sub executing this Agreement and all
agreements and documents contemplated hereby.
(d) No
Material Adverse Changes.
No
material adverse change shall have occurred in the condition (financial or
otherwise), properties, assets (including intangible assets), liabilities,
business, operations, results of operations or prospects of Ameralink and
Merger
Sub, taken as a whole.
(e) Good
Standing.
518
shall have received a certificate or certificates of the Secretary of State
of
the State of Nevada certifying as of a date no more than ten business days
prior
to the Effective Time that the Ameralink Merger Sub is, as of such date,
in good
standing and authorized to transact business as a domestic
corporation.
6.3
Additional
Conditions to the Obligations of Ameralink and Merger
Sub.
The
obligations of Ameralink and Merger Sub to consummate and effect this Agreement
and the transactions contemplated hereby shall be subject to the satisfaction
at
or prior to the Effective Time of each of the following conditions, any of
which
may be waived, in writing, by Ameralink:
(a) Representations,
Warranties and Covenants.
(i) Each of the representations and warranties of 518 and the 518
Stockholders in this Agreement that is expressly qualified by a reference
to
materiality shall be true in all respects as so qualified, and each of the
representations and warranties of 518 and the 518 Stockholders in this Agreement
that is not so qualified shall be true and correct in all material respects,
on
and as of the Effective Time as though such representation or warranty had
been
made on and as of such time (except that those representations and warranties
which address matters only as of a particular date shall remain true and
correct
as of such date), and (ii) 518 and the 518 Stockholders shall have
performed and complied in all material respects with all covenants, obligations
and conditions of this Agreement required to be performed and complied with
by
it as of the Effective Time.
(b) No
Material Adverse Changes.
No
material adverse change shall have occurred in the condition (financial or
otherwise), properties, assets (including intangible assets), liabilities,
business, operations, results of operations or prospects of 518, taken as
a
whole.
(c) Certificates
of 518.
(i) Compliance
Certificate of 518.
Ameralink and Merger Sub shall have been provided with a certificate executed
on
behalf of 518 by its President to the effect that, as of the Effective Time,
each of the conditions set forth in Section 6.3(a) and (b) above has been
satisfied.
(ii) Certificate
of Secretary of 518.
Ameralink and Merger Sub shall have been provided with a certificate executed
by
the Secretary of 518 certifying:
(A) Resolutions
duly adopted by the Board of Directors and the 518 Stockholders authorizing
the
execution of this Agreement and the execution, performance and delivery of
all
agreements, documents and transactions contemplated hereby;
(B) The
Articles of Incorporation and Bylaws of 518, as in effect immediately prior
to
the Effective Time, including all amendments thereto; and
(C) the
incumbency of the officers of 518 executing this Agreement and all agreements
and documents contemplated hereby.
(d) Third
Party Consents.
Ameralink shall have been furnished with evidence satisfactory to it that
518
has obtained those consents, waivers, approvals or authorizations of those
Governmental Entities and third parties whose consent or approval are required
in connection with the Merger as set forth in Sections 5.2(a)
(e) Injunctions
or Restraints on Merger and Conduct of Business.
No
proceeding brought by any administrative agency or commission or other
governmental authority or instrumentality, domestic or foreign, seeking to
prevent the consummation of the Merger shall be pending. In addition, no
temporary restraining order, preliminary or permanent injunction or other
order
issued by any court of competent jurisdiction or other legal or regulatory
restraint provision limiting or restricting Ameralink’s conduct or operation of
the business of 518, following the Merger shall be in effect, nor shall any
proceeding brought by an administrative agency or commission or other
Governmental Entity, domestic or foreign, seeking the foregoing be
pending.
(f) Resignation
of Directors and Officers.
Ameralink shall have received letters of resignation from each of its directors
and officers immediately prior to the Effective Time, which resignations
in each
case shall be effective as of the Effective Time.
6.4
Performance
of Additional Agreements.
The
obligations of the respective Parties to effect the Merger and the other
transactions contemplated hereby are subject to the satisfaction at or prior
to
the Closing of the following further conditions and covenants, any or all
of
which may be waived in writing by all other Parties, in whole or in part,
to the
extend permitted by applicable law:
(a) Ameralink,
Merger Sub and 518 shall have completed all appropriate actions and obtained
all
required consents and filings in accordance with the requirements of Section
5.2;
(b) Ameralink
shall have prepared and delivered for transmittal to the SEC, at or promptly
following the Effective Date, a notice on Form D in accordance with the
requirements of Section 5.7 (a);
(c) if
requested by Ameralink, each of the 518 Stockholders shall have executed
and
delivered to Ameralink such additional representations as it may reasonably
request respecting the acquisition of the Ameralink Common Stock in accordance
with the requirements of Section 5.9(b);
(d) Ameralink
shall have received at least $400,000 in gross proceeds from the sale of
shares
of Ameralink common stock and warrants at not less than $0.40 per share in
accordance with the requirements of Section 5.11;
(e) Ameralink
shall have completed its restructuring in accordance with the requirements
of
Section 5.12;
(f) ▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇ shall have entered into Undertakings
in
accordance with the requirements set forth in Section 5.13;
(g) Ameralink
shall have obtained officer and director liability insurance in accordance
with
the requirements of Section 5.14; and
(h) Ameralink
shall have received the additional audited annual and audited interim financial
statements of 518 in accordance with the requirements of Section 5.15 and
the
audited balance sheet for the period ended June 30, 2006, shall show
shareholders' equity of no less than $90,000.
SECTION
SEVEN
7. Termination,
Amendment and Waiver.
7.1
Termination.
At any
time prior to the Effective Time, this Agreement may be terminated and the
Merger may be abandoned:
(a) by
mutual
consent duly authorized by the Boards of Directors of each of Ameralink and
518;
(b) by
either
Ameralink or 518, if, without fault of the terminating party,
(i) the
Effective Time shall not have occurred on or before June 30, 2006 (or such
later
date as may be agreed upon in writing by the parties); or
(ii)
there
shall be any applicable federal or state law that makes consummation of the
Merger illegal or otherwise prohibited or if any court of competent jurisdiction
or Governmental Entity shall have issued an order, decree, ruling or taken
any
other action restraining, enjoining or otherwise prohibiting the Merger and
such
order, decree, ruling or other action shall have become final and nonappealable;
(c) by
Ameralink, if 518 or any of the 518 Stockholders shall materially breach
any of
its representations, warranties or obligations hereunder and such breach
shall
not have been cured within ten calendar business days of receipt by 518 of
written notice of such breach, provided that Ameralink is not in material
breach
of any of its representations, warranties or obligations hereunder, and provided
further, that no cure period shall be required for a breach which by its
nature
cannot be cured;
(d) by
518,
if Ameralink shall materially breach any of its representations, warranties
or
obligations hereunder and such breach shall not have been cured within ten
calendar days following receipt by Ameralink of written notice of such breach,
provided that neither 518 nor any of the 518 Stockholders is not in material
breach of any of its representations, warranties or obligations hereunder,
and
provided further, that no cure period shall be required for a breach which
by
its nature cannot be cured.
7.2
Effect
of Termination.
In the
event of termination of this Agreement as provided in Section 7.1, this
Agreement shall forthwith become void and there shall be no liability or
obligation on the part of Ameralink, Merger Sub or 518 or their respective
officers, directors, stockholders or affiliates, except to the extent that
such
termination results from the breach by a party hereto of any of its
representations, warranties or covenants set forth in this Agreement; provided
that, the provisions of Section 5.4 (Confidentiality), Section 7.3 (Expenses
and
Termination Fees) and this Section 7.2 shall remain in full force and effect
and
survive any termination of this Agreement.
7.3
Expenses
and Termination Fees.
(a) Subject
to subsection (b) of this Section 7.3, whether or not the Merger is
consummated, all costs and expenses incurred in connection with this Agreement
and the transactions contemplated including, without limitation, filing fees
and
the fees and expenses of advisors, accountants, legal counsel and financial
printers, shall be paid by the party incurring such expense.
(b) In
connection with the execution of the Letter of Intent dated February 22,
2006
between the parties, 518 advanced Ameralink $20,000 to help defer the cost
of
completing the transactions contemplated herein. If the Merger is consummated,
Ameralink will credit 518 $20,000 against the assets 518 is delivering pursuant
to the Merger as set forth is its Financial Statements listed in Section
2.6. In
the event that the Merger is not consummated for any reason (except for
termination by Ameralink under Section 7.1(c)), Ameralink will deliver 425,000
shares of Ameralink restricted common stock with piggy-back registration
rights
to 518 as repayment of the advance to be distributed according to 518’s written
instructions.
7.4
Amendment.
The
Boards of Directors of Ameralink and 518 and the 518 Stockholders may cause
this
Agreement to be amended at any time by execution of an instrument in writing
signed on behalf of each of the parties.
7.5
Extension;
Waiver.
At any
time prior to the Effective Time any party may, to the extent legally allowed,
(i) extend the time for the performance of any of the obligations or other
acts of the other parties, (ii) waive any inaccuracies in the
representations and warranties made to such party contained herein or in
any
document delivered pursuant hereto, and (iii) waive compliance with any of
the agreements or conditions for the benefit of such party contained herein.
Any
agreement on the part of a party to any such extension or waiver shall be
valid
only if set forth in an instrument in writing signed on behalf of such
party.
SECTION
EIGHT
8. Indemnification.
8.1
Survival
of Representations and Warranties.
All
covenants to be performed prior to the Effective Time, and all representations
and warranties in this Agreement or in any instrument delivered pursuant
to this
Agreement shall survive the consummation of the Merger and continue until
the
second anniversary of the Effective Time (the “Indemnification
Termination Date”);
provided that if any claims for indemnification have been asserted with respect
to any such representations and warranties prior to the Indemnification
Termination Date, the representations and warranties on which any such claims
are based shall continue in effect until final resolution of any claims.
All
covenants to be performed after the Effective Time shall continue
indefinitely.
8.2
Indemnification
(a) Indemnification
by 518 and 518 Stockholders.
Subject
to the limitations set forth in this Section 8, from and after the Effective
Time, 518 and the 518 Stockholders shall protect, defend, indemnify and hold
harmless Ameralink and the Surviving Corporation and their respective
affiliates, officers, directors, employees, representatives and agents
(Ameralink, Surviving Corporation and each of the foregoing persons or entities
is hereinafter referred to individually as an “Ameralink
Indemnified Person”
and
collectively as “Ameralink
Indemnified Persons”)
from
and against any and all losses, costs, damages, liabilities, fees (including
without limitation attorneys’ fees) and expenses (collectively, the
“Ameralink
Damages”),
that
any of the Ameralink Indemnified Persons by reason of or in connection with
any
claim, demand, action or cause of action alleging misrepresentation, breach
of,
or default in connection with, any of the representations, warranties, covenants
or agreements of 518 and the 518 Stockholders contained in this Agreement,
including any exhibits or schedules attached hereto, and the Certificate
of
Merger, which becomes known to Ameralink prior to the Indemnification
Termination Date. Damages in each case shall be net of the amount of any
insurance proceeds and indemnity and contribution actually recovered by
Ameralink or the Surviving Corporation.
(b) Indemnification
by Ameralink.
Subject
to the limitations set forth in this Section 8, from and after the Effective
Time, Ameralink shall protect, defend, indemnify and hold harmless 518 and
518
Stockholders and their respective affiliates, officers, directors, employees,
representatives and agents (518, 518 Stockholders and each of the foregoing
persons or entities is hereinafter referred to individually as an “518
Indemnified Person”
and
collectively as “518
Indemnified Persons”)
from
and against any and all losses, costs, damages, liabilities, fees (including
without limitation attorneys’ fees) and expenses (collectively, the
“518
Damages”),
that
any of the 518 Indemnified Persons by reason of or in connection with any
claim,
demand, action or cause of action alleging misrepresentation, breach of,
or
default in connection with, any of the representations, warranties, covenants
or
agreements of Ameralink contained in this Agreement, including any exhibits
or
schedules attached hereto, and the Certificate of Merger, which becomes known
to
518 or the 518 Stockholders prior to the Indemnification Termination Date.
Damages in each case shall be net of the amount of any insurance proceeds
and
indemnity and contribution actually recovered by 518 or the 518
Stockholders.
(c) Exclusive
Contractual Remedy and Limitations.
Ameralink,
the 518 Stockholders and 518 each acknowledge that Ameralink Damages or 518
Damages, if any, may relate to unresolved contingencies existing at the
Effective Time, which if resolved at the Effective Time would have led to
a
reevaluation of the total consideration the Parties would have agreed to
transfer in connection with the Merger. The maximum liability of 518 and
the 518
Stockholders for any breach of a representation, warranty or covenant of
518 or
518 Stockholder and the maximum liability of Ameralink for any breach of
a
representation, warranty or covenant of Ameralink shall be limited to $600,000;
provided, however, that nothing herein shall limit the liability: (i) of
518 for any breach of representation, warranty or covenant if the Merger
does
not close, and (ii) of any officer, director or stockholder of the 518 for
such person’s or entity’s fraud or intentional misrepresentation.
SECTION
NINE
9. General
Provisions.
9.1
Survival
of Warranties.
The
representations, warranties and agreements set forth in this Agreement or
in any
instrument delivered pursuant to this Agreement shall survive the Effective
Time
of the Merger and (except to the extent that survival is necessary to effectuate
the intent of such provisions) shall terminate on the second anniversary
of the Effective Time of the Merger, provided that representations, warranties
and agreements relating to Taxes shall terminate on the date which is 30
days
after expiration of all applicable statutes of limitations relating to such
Taxes.
9.2
Notices.
Any
notice required or permitted by this Agreement shall be in writing and shall
be
deemed sufficient upon receipt, when delivered personally or by courier,
overnight delivery service or confirmed facsimile, or 48 hours after being
deposited in the regular mail as certified or registered mail (airmail if
sent
internationally) with postage prepaid, if such notice is addressed to the
party
to be notified at such party’s address or facsimile number as set forth below,
or as subsequently modified by written notice,
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(a)
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if
to Ameralink or Merger Sub, to:
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▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, President
▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇
▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile
No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone
No.: (▇▇▇) ▇▇▇-▇▇▇▇
with
a
copy to:
▇▇▇▇▇▇▇
▇. ▇▇▇▇▇
▇▇▇
▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇
▇▇▇▇
▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile
No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone
No.: (▇▇▇) ▇▇▇-▇▇▇▇
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(b)
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if
to 518 and/or the 518 Stockholders,
to:
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▇▇▇▇▇
▇▇▇▇▇, President
▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇
▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention:
President
Facsimile
No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone
No.: (▇▇▇) ▇▇▇-▇▇▇▇
9.3
Interpretation.
When a
reference is made in this Agreement to Exhibits or Schedules, such reference
shall be to an Exhibit or Schedule to this Agreement unless otherwise indicated.
The words “include,”
“includes”
and
“including”
when
used herein shall be deemed in each case to be followed by the words
“without
limitation.”
The
phrase “made
available”
in
this
Agreement shall mean that the information referred to has been made available
if
requested by the party to whom such information is to be made available.
The
phrases “the
date of this Agreement,”
“the
date hereof,”
and
terms of similar import, unless the context otherwise requires, shall be
deemed
to refer to August 11, 2006. The table of contents and headings contained
in
this Agreement are for reference purposes only and shall not affect in any
way
the meaning or interpretation of this Agreement.
9.4
Counterparts.
This
Agreement may be executed in two or more counterparts, each of which shall
be
deemed an original and all of which together shall constitute one
instrument.
9.5
Entire
Agreement; Nonassignability; Parties in Interest.
This
Agreement and the documents and instruments and other agreements specifically
referred to herein or delivered pursuant hereto, including the Exhibits,
the
Schedules, including the 518 Disclosure Schedule and the Ameralink Disclosure
Schedule (a) constitute the entire agreement among the parties with respect
to the subject matter hereof and supersede all prior agreements and
understandings, both written and oral, among the parties with respect to
the
subject matter hereof and shall survive any termination of this Agreement
or the
Closing, in accordance with its terms; (b) are not intended to confer upon
any other person any rights or remedies hereunder; and (c) shall not be assigned
by operation of law or otherwise except as otherwise specifically
provided.
9.6
Severability.
If
one or
more provisions of this Agreement are held to be unenforceable under applicable
law, the parties agree to renegotiate such provision in good faith, in order
to
maintain the economic position enjoyed by each party as close as possible
to
that under the provision rendered unenforceable. In the event that the parties
cannot reach a mutually agreeable and enforceable replacement for such
provision, then (i) such provision shall be excluded from this Agreement,
(ii) the balance of the Agreement shall be interpreted as if such provision
were so excluded and (iii) the balance of the Agreement shall be
enforceable in accordance with its terms.
9.7
Remedies
Cumulative.
Except
as otherwise provided herein, any and all remedies herein expressly conferred
upon a party will be deemed cumulative with and not exclusive of any other
remedy conferred hereby, or by law or equity upon such party, and the exercise
by a party of any one remedy will not preclude the exercise of any other
remedy.
9.8
Governing
Law.
This
Agreement and all acts and transactions pursuant hereto and the rights and
obligations of the parties hereto shall be governed, construed and interpreted
in accordance with the laws of the State of California, without giving effect
to
principles of conflicts of law.
9.10 Amendments
and Waivers.
Any term
of this Agreement may be amended or waived only with the written consent
of
the parties
or their respective successors and assigns. Any amendment or waiver effected
in
accordance with this Section 9.10 shall be binding upon the parties and
their respective successors and assigns.
[Two
Signature Pages Follow]
518,
518
Stockholders, Ameralink and Merger Sub have executed this Agreement as of
the
date first written above.
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518
MEDIA, INC.:
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||
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By:
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/s/
▇▇▇▇▇
▇▇▇▇▇
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▇▇▇▇▇
▇▇▇▇▇ President
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||
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AMERALINK,
INC.:
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||
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By:
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/s/
▇▇▇▇▇▇
▇▇▇▇▇▇▇▇
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|
▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, President
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||
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AMLK
SUB CORP.
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||
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By:
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/s/
▇▇▇▇▇▇
▇▇▇▇▇▇▇▇
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|
▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, President
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||
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518
STOCKHOLDERS
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/s/
▇▇▇▇▇
▇▇▇▇▇
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Name:
▇▇▇▇▇ ▇▇▇▇▇
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Address: ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇. ▇▇▇▇▇ ▇▇▇▇
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▇▇▇▇▇▇
▇▇▇▇, ▇▇ ▇▇▇▇▇
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/s/
▇▇▇▇▇
▇▇▇▇▇
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|
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Name:
▇▇▇▇▇ ▇▇▇▇▇
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|
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Address:
▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
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▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
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/s/
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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Name:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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|
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Address: ▇▇▇
▇▇▇▇ ▇▇▇▇. ▇▇▇▇▇▇ # ▇▇ ▇
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▇▇▇
▇▇▇▇ ▇▇▇ ▇▇▇▇▇-▇▇▇▇
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/s/
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇.
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|
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Name:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇.
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|
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Address: ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
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▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
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EXHIBITS
|
Exhibit
A -
|
Certificate
of Merger
|
|
Exhibit B
-
|
Merger
Consideration
|
|
Exhibit
C-1 -
|
Amended
and Restated Articles of Incorporation for
Ameralink
|
|
Exhibit
C-2 -
|
Amended
and Restated By Laws for Ameralink
|
|
Exhibit
D-1
|
Form
of Undertaking
|
EXHIBIT
A
CERTIFICATE
OF MERGER
EXHIBIT
B
MERGER
CONSIDERATION
|
Name
and Address
of
Stockholder
|
Number
of Shares of
518
Common Stock
|
Number
of Shares of
Ameralink
Common Stock
|
|
▇▇▇▇▇
▇▇▇▇▇
|
150,000
|
1,590,000
|
|
▇▇▇▇▇
▇▇▇▇▇
|
100,000
|
1,060,000
|
|
▇▇▇▇▇
▇▇▇▇▇▇▇
|
150,000
|
1,590,000
|
|
▇▇▇▇▇▇
▇▇▇▇▇▇
|
100,000
|
1,060,000
|
|
Total
|
500,000
|
5,300,000
|
EXHIBIT
C-1
AMENDED
AND RESTATED ARTICLES OF INCORPORATION
EXHIBIT C-2
AMENDED
AND RESTATED BYLAWS
EXHIBIT
D-1
FORM
OF UNDERTAKING