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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
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Date of Report (date of earliest event reported): June 5, 1997
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Medcross, Inc.
(Exact name of registrant as specified in its charter)
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Florida 0-17973 59-2291344
(State or other jurisdiction (Commission File Number) (I.R.S. Employer
of incorporation) Identification No.)
13751 South Wadsworth Park Drive, Suite 200, Draper, UT 84020
(Address of principal executive offices)
Registrant's telephone number, including area code: (801) 576-5000
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ITEM 5. OTHER EVENTS
On June 6, 1997, Medcross, Inc. (the "Company") entered into a term loan
agreement ("Loan Agreement") and promissory note ("Note") with Winter Harbor,
L.L.C. (the "Lender" or the "Investor") pursuant to which the Lender agreed to
loan to the Company the principal sum of $2,000,000 (the "Loan") for capital
expenditures and working capital purposes. In addition to the Loan Agreement and
Note, the Company executed and delivered to Lender a pledge agreement ("Pledge
Agreement") pursuant to which the Company granted to the Lender a security
interest in all of the issued and outstanding capital stock of I-Link
Communications, Inc., a Utah corporation ("I-Link") and Family
Telecommunications, Incorporated, a Utah corporation ("FTI"), each of which is a
wholly-owned subsidiary of the Company. In addition, I-Link and FTI each
executed a subsidiary guaranty ("Guaranty") pursuant to which I-Link and FTI
each guaranteed the obligations of the Company to Lender under the Loan
Agreement and Note. Further, I-Link and FTI each executed a security agreement
("Security Agreement") pursuant to which I-Link and FTI granted to Lender a
security interest in substantially all of their personal property as collateral
security for their obligations under the Guaranty and for the Company's
obligations under the Loan Agreement and the Note.
As further consideration for Lender's commitment to make the Loan, the
Company granted to Lender a warrant ("Loan Warrant") to purchase up to five
hundred thousand (500,000) shares of common stock of the Company (the "Common
Stock") at a purchase price of $4.97 per share, subject to adjustment, pursuant
to the terms of a Warrant Agreement between the parties. The Loan Warrant
expires on March 11, 2002, and contains demand and piggyback registration rights
and customary anti-dilution terms.
The maturity date of the Note is October 15, 1998; however, the Loan
Agreement anticipates an equity investment in the Company by the Lender (the
"Investment"). Upon closing of the Investment, all principal and accrued
interest then due under the Note shall be credited toward payment of the
Lender's purchase price for the Investment and the Note shall be cancelled. As
provided in the Loan Agreement, if the Company fails to negotiate in good faith
with the Lender, and as a consequence thereof the parties have not entered into
a letter of intent summarizing the principal terms of the Investment by
September 1, 1997, or have not executed definitive agreements with respect to
the Investment by October 15, 1997, then in either such case, the Company shall
be required to make a mandatory prepayment of the Loan in an amount equal to the
entire outstanding principal balance of the Loan plus all accrued interest,
within three days of such date. Mandatory prepayment is also required if there
is a sale by the Company or any of its subsidiaries of any material assets, or
if the Company issues or sells any shares of its capital stock or other equity
interest or incurs any indebtedness for borrowed money. In the latter cases, the
mandatory prepayment amount shall be equal to 100% of the Company's net cash
proceeds of such sale, up to the total amount of principal and accrued interest
then due under the Note.
Also on June 6, 1997 the Company executed a letter of intent ("LOI") with
the Investor as to the Investment. The LOI serves as the basis for negotiations
between the parties and the
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definitive terms of the Investment may differ from the terms set forth herein.
The LOI contemplates that the Investor will invest $12,100,000 in a series of
the Company's convertible preferred stock to be created (the "Series M Preferred
Stock"). The Investor will purchase 4,400,000 shares of Series M Preferred Stock
for $2.75 per share. The Series M Preferred Stock will be entitled to receive
cumulative dividends in the amount of 10% per annum before any other class of
preferred or common stock receives any dividends. Thereafter, the Series M
Preferred Stock will participate with the common stock in the issuance of any
dividends on a per share basis. The Series M Preferred Stock will be senior to
all other series of the Company's preferred stock or Common Stock as to
liquidation rights, which rights shall be deemed to include accrued or unpaid
dividends relating to the Series M Preferred Stock. The Series M Preferred Stock
shall be convertible at any time prior to the fifth anniversary of its issuance,
at the sole option of the Investor, into shares of Common Stock on a one-to-one
basis; provided, however, that the Series M Preferred Stock shall be
automatically converted to Common Stock on the fifth anniversary of its issuance
at no cost to the Investor. The conversion price shall be equal to the lower of
$2.75 per share or 50% of the average closing bid price of the Common Stock for
the ten trading days immediately preceding the fifth anniversary of issuance.
The basis for discretionary conversion, or the conversion price for automatic
conversion, shall be adjusted upon the occurrence of certain events, including
without limitation, issuance of stock dividends, recapitalization of the
Company, or the issuance of stock by the Company at less than the fair market
value thereof. Conversion of the Series M Preferred Stock will be subject to
approval by the Company's shareholders of an increase in the number of shares of
authorized capital stock at the Company's next annual shareholders meeting. The
Series M Preferred Stock will vote with the Common Stock on an as-converted
basis on all matters which are submitted to a vote of the stockholders, except
as may otherwise be provided by law or by the Company's Articles of
Incorporation or By-laws; provided, however, that the Series M Preferred Stock
will have the right to appoint two members of the Company's board of directors.
As stated above, upon closing of the issuance of the Series M Preferred Stock,
the Investor shall be entitled to a credit against the purchase price of the
Series M Preferred Stock in the amount of principal and accrued interest under
the Loan, and the Note evidencing the Loan shall be cancelled.
As additional consideration for its equity financing commitments, the
Investor will be issued additional warrants by the Company to acquire (a)
2,500,000 shares of Common Stock at an exercise price of $2.75 per share (the
"Series A Warrants"), (b) 2,500,000 shares of Common Stock at an exercise price
of $4.00 per share (the "Series B Warrants") and (c) 5,000,000 shares of Common
Stock at an exercise price of $9.31 (the "Series C Warrants"). The respective
exercise prices for the Series A Warrants, the Series B Warrants and the Series
C Warrants (collectively, the "Investment Warrants") shall be subject to
adjustment. The Series A Warrants will be exercisable at any time for thirty
months from the date of issuance, and the Series B Warrants and Series C
Warrants will be exercisable at any time for sixty months from the date of
issuance. All of the Investment Warrants (i) will have demand registration
rights and anti-dilution rights and (ii) will contain standard cashless exercise
provisions.
The LOI also provides that, in the event that certain stockholders of the
Company (including key management) propose to effect a transfer to a third party
of their interests in the
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Company, then the Investor shall have the option to require such selling
stockholders to provide the Investor the right to participate in such
transaction on the same terms and conditions as the selling stockholders.
Further, the Investor shall have (i) preemptive rights with respect to future
issuances of equity interests or securities convertible into or exchangeable for
equity interests of the Company in order that the Investor may maintain its
proportional economic interest in the Company, (ii) a put right to cause the
Company to purchase all of the equity interests then held by Investor in the
Company at the fair market value of such equity interests, in the event of a
change of control of the Company, (iii) the right to require holders of warrants
to acquire an aggregate of 1,000,000 shares of Common Stock, which warrants have
an exercise price of $2.00 or less per share, to enter into agreements with the
Investor to sell such warrants to the Investor for an aggregate purchase price
of $1,000,000, and (iv) the right to review and approve the existing employment,
non-competition and consulting agreements of the Company's key executives.
On June 5, 1997 the Company entered into a letter of agreement (the "MLOI")
with MIBridge, Inc., a New Jersey corporation ("MIBridge") and Mr. Dror Nahumi,
the principal shareholder of MIBridge, pursuant to which the Company will enter
into negotiations with MIBridge to acquire all of the issued and outstanding
stock of MIBridge (the "Acquisition"). MIBridge is the owner of patent-pending
audio-conferencing technology and is a leader in creating speech-encoding and
compression algorithms designed to produce superior audio quality and lower
delay over low-band networks. The MLOI serves as the basis for negotiations
between the parties and the definitive terms of the Acquisition may differ from
the terms set forth herein. The MLOI contemplates that the Company will pay the
stockholders of MIBridge (the "Selling Stockholders") consideration consisting
of (i) an aggregate $2,000,000 in cash, payable in quarterly installments over
three years, and (ii) an aggregate 1,000 shares of a series of the Company's
convertible preferred stock to be created (the "Series D Preferred Stock"). The
1,000 shares of Series D Preferred Stock will be convertible at the option of
the Selling Shareholders, at any time during the nine months following the
closing of the Acquisition, into such number of shares of Common Stock as shall
equal the sum of $6,250,000 divided by $9.13 (the "Conversion Price"), which
price was the closing bid price of the Company's Common Stock on June 5, 1997.
On the nine-month anniversary of the closing of the Acquisition, any unconverted
Series D Preferred Stock shall automatically convert to Common Stock. In either
case, the Series D Preferred Stock shall be converted at the lower of the
Conversion Price or the average closing bid price for the five trading days
immediately preceding the date the Company receives notice of conversion or the
automatic conversion date, as the case may be. The Series D Preferred Stock
shall be entitled to participate in any dividends which may be declared for
Common Stock on an as-converted basis. The Selling Stockholders shall receive
piggy-back registration rights whereby they may participate in any registration
of securities the Company my undertake after the first anniversary of the
closing of the Acquisition (excluding registrations of employee benefit plan
securities). Conversion of the Series D Preferred Stock will be subject to
approval by the Company's shareholders of an increase in the number of shares of
authorized capital stock at the Company's next annual shareholders meeting.
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The MLOI further provides that the Company shall enter into an employment
contract with Mr. Nahumi providing terms, conditions and benefits similar to
those provided in employment contracts with existing members of the Company's
senior management, including standard confidentiality, non-competition and
assignment of invention provisions. Mr. Nahumi's annual salary shall be at
least $100,000, and Mr. Nahumi will devote his full time to managing the
operations of MIBridge under the direction of the Company.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(c) Exhibits
99(a) Loan Agreement dated as of June 6, 1997, by and between the Company and
Winter Harbor, L.L.C. ("Lender" or "Investor").
99(b) Promissory Note dated June 6, 1997, in the principal amount of
$2,000,000, made by Company in favor of Lender.
99(c) Warrant Agreement dated as of June 6, 1997, by and between the Company
and Lender; and related Warrant Certificate.
99(d) Pledge Agreement dated as of June 6, 1997, by and between the Company and
Lender.
99(e) Security Agreement dated as of June 6, 1997, by and among Family
Telecommunications, Incorporated ("FTI"), I-Link Communications, Inc.
("I-Link") and Lender.
99(f) Subsidiary Guaranty dated as of June 6, 1997, by and among FTI, I-Link
and Lender.
99(g) Assignment for Security dated as of June 6, 1997, by and between I-Link
and Lender.
99(h) Letter of Intent dated June 6, 1997, by and between the Company and
Investor.
99(i) Term Sheet for Proposed Equity Investment by Winter Harbor, L.L.C., dated
June 6, 1997.
99(j) Letter of Intent dated June 5, 1997, by and among the Company, MIBridge,
Inc. and Dror Nahumi.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Company
has duly caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
MEDCROSS, INC.
(Registrant)
Dated: June 20, 1997 By: /s/ John W. Edwards
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John W. Edwards, President,
Chief Executive Officer
Dated: June 20, 1997 By: /s/ Karl S. Ryser, Jr.
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Karl S. Ryser, Jr.,
Chief Financial Officer
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Exhibit 99(a)
LOAN AGREEMENT
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THIS LOAN AGREEMENT is made and entered into as of June 6, 1997, by and
between MEDCROSS, INC., a Florida corporation (the "Borrower"), and WINTER
HARBOR, L.L.C., a Delaware limited partnership (the "Lender").
RECITALS:
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Borrower desires to borrow from Lender up to $2,000,000 on a term loan
basis, the proceeds of which will be used for capital expenditures and working
capital purposes in the operations of I-Link Communications, Inc., a wholly
owned subsidiary of Borrower.
AGREEMENTS:
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IN CONSIDERATION of the mutual promises and agreements herein contained,
Lender and Borrower agree as follows:
ARTICLE I. AMOUNT AND TERMS OF THE LOAN
Section 1.1 The Loan. Lender agrees, upon the terms and conditions
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hereinafter set forth, to make a loan or loans to Borrower in an aggregate
principal amount not to exceed at any one time outstanding $2,000,000 (the
"Loan").
Section 1.2 The Note. The outstanding principal amount of the Loan
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shall be evidenced by and subject to the terms of a promissory note, dated the
date of the first borrowing hereunder, substantially in the form set forth as
Exhibit 1 hereto (as amended, renewed, restated, increased, consolidated or
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substituted from time to time, the "Note"), payable to the order of Lender.
Section 1.3 Interest. The Loan shall bear interest on the unpaid
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principal amount thereof at a rate per annum at all times equal to the sum of
the rate of interest announced in the Wall Street Journal (Eastern Edition) as
the prime rate from time to time (the "Prime Rate") plus 2% per annum. The
prime rate functions as a reference rate index. The Prime Rate will
automatically change as and when such prime rate changes. Interest shall be
calculated on the basis of a year of 365 days and the actual number of days
elapsed during the period for which such interest is payable. Interest shall
begin to accrue on the outstanding principal amount of the Loan on the date of
disbursement of all or a portion of the Loan. Accrued interest shall be paid
quarterly on the last business day of each calendar quarter until all principal
and interest hereunder is paid in full at the repayment or maturity of the Loan.
Upon the occurrence of any Event of Default (as that term is defined in Section
7.1), the entire outstanding principal amount of the Loan and (to the extent
permitted by law)
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unpaid interest thereon and all other amounts due hereunder shall bear interest,
from the date of occurrence of such Event of Default until the earlier of the
date the Loan is paid in full and the date on which such Event of Default is
cured or waived in writing, at an interest rate equal to the sum of the Prime
Rate plus 5% per annum, which shall be payable upon demand.
Section 1.4 Principal Repayment. The outstanding principal balance of
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the Loan plus any accrued and unpaid interest thereon shall be due and payable
on October 15, 1998 (the "Maturity Date"). If Lender makes an Investment (as
that term is defined in Section 1.6(b)(iii)) in Borrower, Lender may at its
option convert the outstanding principal balance of the Loan into capital stock
of Borrower or into any debt security, in either case issued to Lender pursuant
to such Investment.
Section 1.5 Use of Proceeds and Advancement of Funds.
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(a) Each borrowing hereunder shall be made by Lender in such amount as
Borrower shall request in writing three business days prior to the date of the
requested borrowing, provided that each borrowing shall be in an amount which is
a minimum of $500,000, and integral multiples of $100,000 in excess thereof.
Borrower shall not be permitted to make more than four borrowings hereunder.
The obligation of Lender to make any portion of the Loan is conditioned upon the
fact that (x) no Event of Default and no event which with the lapse of any
applicable grace period or the giving of notice or both would constitute an
Event of Default (a "Potential Default") shall then exist or immediately after
the Loan would exist; (y) all of the Loan Documents (as that term is defined in
Section 4.2) shall still be in full force and effect; and (z) the
representations and warranties contained herein and in the Loan Documents shall
be true and correct in all material respects as if made on and as of the date of
such borrowing, except to the extent that any thereof expressly relate to an
earlier date.
(b) Borrower shall use the proceeds of the Loan only to fund capital
expenditures by I-Link Communications, Inc., a Utah corporation that is wholly
owned by Borrower ("I-Link"), and for working capital purposes in the operations
of I-Link.
Section 1.6 Prepayments.
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(a) Voluntary Prepayments. By written notice to Lender no later than
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12:00 noon, Delaware time on the business day prior to such prepayment, Borrower
may, at its option, prepay the Loan in whole at any time or in part from time to
time without penalty or premium; provided, however, that each partial prepayment
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shall be in the aggregate
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principal amount of not less than $100,000 or an integral multiple of $50,000 in
excess thereof.
(b) Mandatory Prepayments.
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(i) Prooceeds of Asset Sales. Borrower shall make a mandatory
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prepayment of the Loan in an amount equal to the cash proceeds of any sale by it
or any of its subsidiaries of any material assets, net of any reasonable costs
directly incurred in connection with such sale and any taxes payable in
connection with such sale. Together with any prepayment required by this
Section, Borrower shall deliver to Lender a certificate executed by Borrower's
chief financial officer setting forth the calculation of the net cash proceeds
of such sale, including a calculation of the taxes payable in respect of such
sale. Such prepayment shall be made simultaneously with the consummation of such
sale.
(ii) Net Equity and Debt Proceeds. If Borrower issues or sells
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any shares of its capital stock or other equity interests or securities
convertible into or exercisable for any shares of its capital stock or other
equity interests or incurs any indebtedness for borrowed money, it shall, within
five days of such sale, issuance or incurrence, make a mandatory prepayment of
the Loan in an amount equal to 100% of the cash proceeds thereof, net of any
reasonable costs directly incurred in connection with such sale, issuance or
incurrence; provided, however, that no such prepayment shall be required in
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connection with any such issuance or sale (a) in connection with an acquisition
(including by way of merger or consolidation or share exchange) by Borrower,
which acquisition is approved by Lender, of the stock or assets of another
person in a transaction pursuant to which the purchase price is paid in whole or
in part by the delivery of capital stock of Borrower to the seller or (b) to
employees of Borrower or any of its subsidiaries pursuant to stock option or
other employee benefit plans approved by Lender.
(iii) Failure to enter into Equity Documents. The parties
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acknowledge that Lender desires to make an equity or other investment (the
"Investment") in Borrower, or in one of its subsidiaries, or in an operating
venture to be owned by Borrower or one of its subsidiaries and Lender. Borrower
agrees to negotiate in good faith the terms of such Investment. If Borrower
fails to so negotiate in good faith and, as a consequence thereof, the parties
have not entered into a letter of intent summarizing the principal terms of the
Investment by September 1, 1997, or the parties have not entered into definitive
agreements in respect of the Investment by October 15, 1997, then in either such
case, Borrower shall make a mandatory prepayment of the Loan in an amount equal
to the entire outstanding principal balance of the Loan, plus all accrued
interest, within three days of such date.
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(c) Application of Prepayments. All voluntary and mandatory
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prepayments of the Loan shall be applied first to accrued interest and then to
the principal outstanding under the Loan. No amount so prepaid may be
reborrowed.
Section 1.7 Payment on Non-Business Days. Whenever any payment to be
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made hereunder or under the Note shall be due on a Saturday, Sunday or public
holiday, such payment may be made on the next succeeding business day, and such
extension of time in such case shall be included in the computation of interest
hereunder and under the Note.
Section 1.8 Taxes. All sums payable by Borrower hereunder or under the
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Note, whether of principal, interest, fees, expenses or otherwise, shall be paid
in full, free of any deductions or withholdings for any and all present and
future taxes, levies, imposts, stamps, duties, fees, assessments, deductions,
withholdings, and other governmental charges and all liabilities with respect
thereto. If Borrower is prohibited by law from making payments hereunder or
under the Note free of such deductions or withholdings, then Borrower shall pay
such additional amount as may be necessary in order that the actual amount
received by Lender after such deduction or withholding shall equal the full
amount stated to be payable hereunder or under the Note.
Section 1.9 Warrants. As further consideration for Lender's commitment
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to make the Loan, Borrower has granted to Lender warrants to purchase, for an
aggregate value of $50,000, up to 500,000 shares of Borrower's common stock at a
purchase price of $4.97 per share, pursuant to the terms of a Warrant Agreement
of even date herewith (the "Warrant Agreement"). The balance of the $2,000,000
consideration paid by Lender for the Note and the Warrant Agreement, $1,950,000,
based on the respective fair market values of the Note and the Warrant
Agreement, shall be allocated to the Note.
ARTICLE II. CLOSING
Section 2.1 Closing and Closing Date. The making of the first
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disbursement of the Loan and the other transactions contemplated hereby shall
take place on a date set forth in a notice delivered by Borrower to Lender at
least five days before such date or at such other date and at such place as to
which the parties may agree (the "Closing" and the "Closing Date"). Subject to
the terms and conditions hereof, upon the fulfillment or waiver in writing of
all the conditions precedent set out in Article IV below, Lender shall disburse
such portion of the Loan to Borrower as Borrower may request.
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ARTICLE III. SECURITY
Section 3.1 Guaranty. As partial security for the Loan, Borrower shall
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cause each of I-Link and Family Telecommunications, Incorporated, a Utah
corporation that is wholly owned by Borrower ("FTI"), to execute and deliver to
Lender, on or before the Closing Date, a guaranty (the "Guaranty"), in form and
substance satisfactory to Lender, pursuant to which I-Link and FTI shall
guarantee the obligations of Borrower to Lender hereunder and under the Note.
Section 3.2 Security Interest. As further security for the Loan,
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Borrower shall cause I-Link and FTI to execute and deliver to Lender, on or
before the Closing Date, a security agreement in form and substance satisfactory
to Lender (the "Security Agreement"), pursuant to which I-Link and FTI grant to
Lender a security interest in substantially all of their personal property
(other than equipment leased to I-Link or FTI and any leases which by their
terms prohibit the grant of security interests in, or assignments of, I-Link's
or FTI's leasehold interest therein) as collateral security for their
obligations under the Guaranty and for Borrower's obligations hereunder and
under the Note. In addition, Borrower shall cause I-Link to execute and deliver
to Lender, on or before the Closing Date, a patent assignment in form and
substance satisfactory to Lender (the "Patent Assignment"), pursuant to which I-
Link collaterally assigns to Lender as security for I-Link's obligations under
the Guaranty and Borrower's obligations hereunder and under the Note its
interest in all patent applications it has filed with the United States Patent
and Trademark Office, including without limitation Patent Application No.
08/599,238 filed February 9, 1996 and entitled "Voice Internet Transmission
System" and Patent Application No. 08/585,628 filed January 16, 1996, and
entitle "Facsimile Internet Transmission System."
Section 3.3 Pledge Agreement. As further security for the Loan, on or
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before the Closing Date, Borrower shall execute and deliver to Lender a pledge
agreement in form and substance satisfactory to Lender (the "Pledge Agreement"),
pursuant to which Borrower grants to Lender a security interest in all of the
issued and outstanding capital stock of I-Link and FTI as collateral security
for Borrower's obligations hereunder and under the Note.
ARTICLE IV. CONDITIONS OF LENDING
Section 4.1 Conditions Precedent to Loan. The obligation of Lender to
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disburse from time to time any portion of the Loan hereunder is subject to the
following conditions precedent:
(a) Lender shall have received all of the following, on or before the
Closing Date, in form and substance satisfactory to Lender:
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(i) The Note, duly executed and delivered by Borrower;
(ii) The Guaranty, duly executed and delivered by I-Link
and FTI;
(iii) The Security Agreement, together with appropriate UCC-1
financing statements duly executed and delivered by I-Link and FTI;
(iv) The Pledge Agreement, duly executed and delivered by
Borrower, together with stock certificates and blank stock powers;
(v) Certified copies of the resolutions of the Board of
Directors of each of Borrower, I-Link and FTI evidencing approval of the
execution, delivery and performance of this Agreement, the Note, the Guaranty,
the Security Agreement, the Pledge Agreement and other matters contemplated
hereby;
(vi) Certificates of Good Standing for each of Borrower,
I-Link and FTI from the state of its incorporation and from each other state in
which it is authorized to conduct business issued no more than ten days prior to
the Closing Date;
(vii) Copies of UCC, judgment and tax lien searches in each
jurisdiction in which collateral covered by the Security Agreement is located,
naming I-Link and FTI as debtors;
(viii) Copies of the certificates evidencing the insurance
required to be maintained by Borrower pursuant to Section 6.1(e); and
(ix) Such other agreements, certificates, opinions of
counsel and documents as Lender may reasonably require.
Section 4.2 Compliance. All of the representations and warranties of
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Borrower, I-Link and FTI in this Agreement, the Guaranty, the Security
Agreement, the Pledge Agreement, the Warrant Agreement and in each other
agreement, document, or instrument executed or delivered pursuant hereto or
thereto (collectively, the "Loan Documents") shall be true and accurate in all
material respects on and as of the Closing Date and the date of any subsequent
disbursement of any portion of the Loan, as if made on and as of such date and
time. Borrower shall be in compliance with all of the applicable terms and
provisions of this Agreement and no Event of Default or Potential Default shall
have occurred and be continuing. Borrower shall have performed all obligations
and taken all actions to be performed or taken by it hereunder on or prior to
such date. On the date of each borrowing,
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Borrower shall deliver to Lender a certificate, dated as of such date and signed
by an executive officer of Borrower, certifying compliance with the conditions
of this Section 4.2. Each disbursement of all or a portion of the Loan to
Borrower shall in and of itself, constitute a representation and warranty that
Borrower as of the date of such Loan, is in compliance with this Section, and if
Borrower is not in compliance with this Section, Lender shall not be required to
disburse such Loan to Borrower.
ARTICLE V. REPRESENTATIONS AND WARRANTIES
In order to induce Lender to enter into this Agreement and make the Loan,
Borrower represents and warrants as follows:
Section 5.1 Existence and Standing.
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(a) Borrower is a corporation duly incorporated, validly existing and
in good standing under the laws of the State of Florida, is qualified to do
business and in good standing under the laws of each other jurisdiction in which
it conducts its business, and has all requisite power and authority, corporate
or otherwise, to conduct its business, to own its properties and to execute and
deliver, and to perform all of its obligations under, this Agreement, the Note,
the Pledge Agreement, the Warrant Agreement and all other Loan Documents.
(b) Each of I-Link and FTI is a corporation duly incorporated, validly
existing and in good standing under the laws of its state of incorporation, is
qualified to do business and in good standing under the laws of each other
jurisdiction in which it conducts its business, and has all requisite power and
authority, corporate or otherwise, to conduct its business, to own its
properties and to execute and deliver, and to perform all of its obligations
under, each Loan Document to which it is a party.
Section 5.2 Authorizations, Compliance with Laws. The execution,
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delivery and performance by each of Borrower, I-Link and FTI of each Loan
Document to which it is a party, and of each other document required to be
executed and delivered by it pursuant to this Agreement or any other Loan
Document, have been duly authorized by all necessary corporate action and do not
and will not (i) violate (A) any provision of any law, rule, regulation, order,
writ, judgment, injunction, decree, determination or award presently in effect
having applicability to Borrower, I-Link or FTI or (B) any provision of the
Certificate of Incorporation or By-laws of Borrower, I-Link or FTI; or (ii)
result in a breach of or constitute a default under any agreement or instrument
to which Borrower, I-Link or FTI is a party or by which any of their properties
may be affected; or (iii) result in the creation of a
- 7 -
<PAGE>
lien, charge or encumbrance of any nature upon Borrower's, I-Link's or FTI's
properties or assets other than as contemplated by this Agreement.
Section 5.3 Financial Statements. Borrower has delivered to Lender true
--------------------
and complete copies of (a) the audited consolidated financial statements of
Borrower for the fiscal years ended December 31, 1996, and December 31, 1995,
and (b) the unaudited consolidated financial statements of Borrower as of March
31, 1997, and for the three month period then ended (the "Financial
Statements"). The Financial Statements are true and complete in all material
respects (including, without limitation, a disclosure of all material contingent
liabilities) and present fairly the financial condition and results of
operations of Borrower and its subsidiaries, as of the dates and for the periods
indicated and have been prepared in accordance with generally accepted
accounting principles, consistently applied, subject in the case of statements
for interim periods to normal year-end adjustments and the absence of footnotes.
Section 5.4 Capitalization. All of the issued and outstanding capital
--------------
stock of Borrower has been duly and validly issued, and is fully paid and
nonassessable. All of the issued and outstanding capital stock of each of I-
Link and FTI has been duly and validly issued, and is fully paid and
nonassessable and is free and clear of any liens, security interests or other
claims or encumbrances, except those granted to Lender pursuant to the terms of
this Agreement and the other Loan Documents. Except as set forth on Schedule
--------
5.4 attached hereto, neither Borrower nor any other person has any commitment or
- ---
obligation, either firm or conditional, to issue, deliver, purchase or sell,
under any offer, option agreement, bonus agreement, purchase plan, incentive
plan, compensation plan, warrant, conversion rights, contingent share agreement,
stockholders agreement, partnership agreement or otherwise, any capital stock or
other equity securities or securities convertible into shares of capital stock
or other equity securities.
Section 5.5 No Consent. No authorization, consent, approval, license,
----------
exemption of or filing or registration with any court or governmental department
or agency or any other person is or will be necessary for the valid execution,
delivery and performance by Borrower, I-Link and FTI of this Agreement, the
Note, the Pledge Agreement, the Guaranty, the Security Agreement, the Warrant
Agreement or any other document required to be executed and delivered by
Borrower, I-Link or FTI pursuant to this Agreement.
Section 5.6 Binding Obligations. This Agreement, the Note, the Pledge
-------------------
Agreement, the Guaranty, the Security Agreement, the Warrant Agreement and all
other documents required to be executed and delivered by Borrower, I-Link and
FTI pursuant to this Agreement have been executed and delivered by a duly
authorized officer of Borrower,
- 8 -
<PAGE>
I-Link or FTI and constitute legal, valid and binding obligations of Borrower,
I-Link and FTI, enforceable in accordance with their respective terms.
Section 5.7 Litigation. There are no actions, suits or proceedings
----------
pending, or, to the knowledge of Borrower, threatened against or affecting
Borrower, I-Link or FTI or any of their properties before any court or
governmental department or agency which materially adversely affects the
transactions contemplated by this Agreement or which could have a material
adverse effect on the business, properties, prospects, operation or condition
(financial or otherwise) of Borrower, I-Link or FTI.
Section 5.8 No Default. Neither Borrower nor I-Link nor FTI is in
----------
material default in the performance, observance or fulfillment of any of the
obligations or conditions contained in any material agreement or instrument to
which it is a party, nor with respect to any order, judgment, writ, injunction
or decree of any court, governmental authority or arbitration board.
Section 5.9 Compliance with Laws. Each of Borrower, I-Link and FTI has
--------------------
complied and is in compliance in all material respects with all applicable
federal, state and local laws. Each of Borrower, I-Link and FTI has obtained
all necessary licenses and permits required for the conduct of its business and
operations or such licenses and permits have been applied for and are now being
diligently pursued.
Section 5.10 Taxes. Except as set forth on Schedule 5.10 attached
----- -------------
hereto, each of Borrower, I-Link and FTI has filed all tax returns and reports
(federal, state and local) required to be filed by it, and has paid all taxes
shown thereon, including interest and penalties, and all assessments received by
it (except to the extent that the same are being contested in good faith by
appropriate proceedings diligently prosecuted and as to which adequate reserves
have been set aside on the books of Borrower, I-Link or FTI, as appropriate, in
conformity with generally accepted accounting principles).
Section 5.11 Title to Properties. Each of Borrower, I-Link and FTI has
-------------------
good and marketable title to all of its property and assets and valid and
enforceable leasehold interests in the property which it holds under lease, all
such property, assets and leasehold interests being free and clear of any and
all mortgages, deeds of trust, assignments, liens, security interests, charges,
encumbrances or adverse claims of any nature whatsoever, and no mortgages, deeds
of trust, financing statements or other evidences of security interests covering
all or any of the aforesaid property are on file among the records of any public
office. Each of Borrower, I-Link and FTI owns or possesses the valid right to
use all the patents, patent applications, patent and know-how licenses,
inventions, technology, permits, trademark registrations and applications,
trademarks, service marks, trade names, copyrights,
- 9 -
<PAGE>
product designs, applications, formulae, processes, circulation, and other
subscriber lists, industrial property rights and licenses and rights in respect
of the foregoing used or necessary for the conduct of its business
(collectively, "proprietary rights"). Borrower is not aware of any existing or
threatened infringement or misappropriation of (a) any such proprietary rights
of others by Borrower or any of its subsidiaries or (b) any proprietary rights
of Borrower or any of its subsidiaries by others.
Section 5.12 Absence of Undisclosed Liabilities. Except for (i)
----------------------------------
obligations under the Loan Documents, and (ii) liabilities incurred in the
ordinary course of business (other than for borrowed money), neither Borrower,
nor I-Link nor FTI has any material liabilities or obligations of any nature,
whether accrued, absolute, contingent or otherwise.
Section 5.13 Solvency. Each of Borrower, I-Link and FTI has received, or
--------
has the right to receive, consideration which is the reasonable equivalent value
of the obligations and liabilities that it has incurred to Lender. Neither
Borrower, nor I-Link nor FTI is insolvent as defined in Section 101 of Title 11
of the United States Code or any applicable state insolvency statute, nor, after
giving effect to the consummation of the transactions contemplated herein, will
Borrower, I-Link or FTI be rendered insolvent by the execution and delivery of
this Agreement, the Note or the other Loan Documents to Lender. Neither
Borrower, nor I-Link nor FTI is engaged, and is not about to engage, in any
business or transaction for which the assets retained by it shall be an
unreasonably small capital, taking into consideration the obligations to Lender
incurred hereunder and under the Loan Documents. Neither Borrower, nor I-Link
nor FTI intends to, nor believes that it will, incur debts beyond its ability to
pay them as they mature.
Section 5.14 Material Misstatement. No statement made herein or in any
---------------------
other Loan Document or information, exhibit or report furnished by Borrower, I-
Link or FTI to Lender in connection with this Agreement or its negotiation,
contains any material misstatement of fact or omits to state a material fact or
any fact necessary to make the foregoing not misleading.
ARTICLE VI. COVENANTS OF BORROWER
Section 6.1 Affirmative Covenants. So long as the Note shall remain
---------------------
unpaid and this Agreement shall not have been terminated, Borrower hereby agrees
that it will, and that it will cause each of its subsidiaries to, unless Lender
shall otherwise consent in writing:
(a) Payment of Obligations. Pay punctually and discharge when due:
----------------------
(i) all indebtedness heretofore or hereafter incurred; (ii) all taxes,
assessments and governmental charges or levies imposed upon it or its income or
profits, or upon any
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<PAGE>
properties belonging to it; (iii) all claims or demands of materialmen,
mechanics, carriers, warehousemen, landlords and other like persons which, if
unpaid might become a lien or charge upon the property of Borrower or such
subsidiary; provided that this covenant shall not require the payment of any of
the matters set forth in (i), (ii) and (iii) above if the same shall be
contested in good faith and by proper proceedings diligently pursued and as to
which adequate reserves have been set aside on the books of Borrower or such
subsidiary in accordance with generally accepted accounting principles.
(b) Preservation of Existence. Preserve and maintain its respective
-------------------------
corporate existence, and all material rights, franchises, licenses and
privileges used or useful in the operation of its business.
(c) Maintenance of Properties. Maintain and preserve all of its
-------------------------
properties necessary or useful in the proper conduct of its business in good
working order and condition, ordinary wear and tear excepted.
(d) Compliance with Laws. Comply in all material respects with the
--------------------
requirements of all applicable laws, rules, regulations and orders of any
governmental authority.
(e) Maintenance of Insurance. Maintain with responsible and reputable
------------------------
insurance companies insurance policies on all of its properties and covering
such risks, including public liability and workers' compensation, in such
amounts as are usually carried by companies engaged in similar businesses and
owning similar properties as Borrower or its subsidiaries, and promptly upon
execution thereof provide to Lender copies of all such policies and any riders
or amendments thereto; the policies of insurance required hereunder shall name
Lender as an additional loss payee or additional insured, as applicable, and
shall provide that Lender shall receive at least thirty days written notice
prior to the cancellation, termination or alteration of any such policy.
(f) Operations in Ordinary Course. Continue to operate its business
-----------------------------
in the ordinary course.
(g) Perfection of Liens. Do all things requested by Lender to
-------------------
preserve and perfect as first liens and security interests the liens and
security interests of Lender arising pursuant to the Security Agreement, the
Pledge Agreement or any other agreement required hereunder.
(h) Governmental Approval. If counsel to Lender reasonably determines
---------------------
that the consent of the Federal Communications Commission or any other federal,
state or
- 11 -
<PAGE>
local governmental or licensing authority is required in connection with the
execution, delivery and performance of this Agreement, the Note, the Pledge
Agreement, the Guaranty, the Security Agreement, the Warrant Agreement or any
other document delivered to Lender in connection herewith or therewith or as a
result of any action which may be taken pursuant hereto or thereto, then
Borrower, at its sole cost and expense, agrees to use its best efforts to secure
such consent and to cooperate with Lender in any action commenced by Lender to
secure such consent.
(i) Agreements. Comply with its obligations under the Loan Documents.
----------
(j) Information and Inspection. Furnish to Lender from time to time,
--------------------------
upon request, full information pertaining to any covenant, provision or
condition hereof, or to any matter connected with its books, records,
operations, financial condition, properties, activities or business. At all
reasonable times, Borrower shall permit any authorized representatives
designated by Lender to visit and inspect any of the properties of Borrower or
any of its subsidiaries and its books and records, and to take extracts
therefrom and make copies thereof, and to discuss Borrower's and its
subsidiaries' affairs, finances and accounts with the management and independent
accountants of Borrower.
Section 6.2 Negative Covenants. So long as the Note shall remain unpaid
------------------
and this Agreement shall not have been terminated, Borrower hereby agrees that
it will not, and that it will not permit any of its subsidiaries to, without
Lender's prior written approval:
(a) Indebtedness. Create or incur, assume or suffer to exist any
------------
indebtedness, obligation or liability (or guaranty the indebtedness, obligation
or liability of any other person), whether matured or unmatured, liquidated or
unliquidated, direct or contingent, joint or several, except for: (i)
indebtedness evidenced by the Note; (ii) indebtedness (other than for borrowed
money) incurred in the ordinary course of business, and (iii) obligations or
liabilities arising under the Loan Documents.
(b) Liens. Create, assume or suffer to exist, directly or indirectly,
-----
any security interest, mortgage, deed of trust, pledge, lien, charge or other
encumbrance, of any nature whatsoever upon any of its properties or assets, now
owned or hereafter acquired, excluding, however, from the operation of this
covenant:
(i) any security interest or lien created pursuant to or in
connection with this Agreement or securing the Loan;
- 12 -
<PAGE>
(ii) liens for taxes or assessments either not delinquent or
the validity of which are being contested in good faith by appropriate legal or
administrative proceedings and as to which adequate reserves shall have been set
aside on its books, in conformity with generally accepted accounting principles;
(iii) materialmen's, mechanics', carriers', workmen's,
repairmen's, warehousemen's or other like statutory liens arising in the
ordinary course of business and either not yet due and payable or being
contested in good faith by appropriate legal proceedings and as to which
adequate reserves shall have been set aside on its books, in conformity with
generally accepted accounting principles;
(iv) deposits or pledges to secure payment of workers'
compensation, unemployment insurance or other social security benefits or
obligations; or
(v) any judgment lien, singly or aggregated with other
judgment liens, in an amount less than $25,000, unless the judgment it secures
shall not, within thirty days after the entry thereof, have been discharged,
vacated, reversed, or execution thereof stayed pending appeal, or shall not have
been discharged, vacated or reversed within thirty days after the expiration of
any such stay.
(c) Disposition of Assets. Sell, transfer, lease or otherwise dispose
---------------------
of any of its assets or properties (including without limitation the sale or
other disposition of the capital stock or other equity interests in any
subsidiary) other than sales of assets in the ordinary course of business and
the disposition of obsolete or other assets which the board of directors of
Borrower determines in good faith are no longer useful in the operations of
Borrower's or any of its subsidiaries' business.
(d) Merger; Acquisition; Joint Ventures; Liquidation. Enter into any
------------------------------------------------
consolidation or merger with, or into any acquisition of all or substantially
all of the properties or assets of any person or entity; or enter into any
partnership or joint venture with any other person; or dissolve or liquidate.
(e) Transfer or Issuance of Shares. Issue or permit the transfer of
------------------------------
any shares of the capital stock or other equity interests of Borrower or any
subsidiary, or any options, warrants, convertible securities or other rights to
purchase Borrower's or any subsidiary's stock or other equity interests except
pursuant to the Loan Documents, other than grants of employee stock options
covering less than 50,000 shares per grant and 1,000,000 shares in the aggregate
pursuant to stock option or other employee benefit arrangements acceptable to
Lender.
- 13 -
<PAGE>
(f) Change of Business. Change, in any material respect, the nature
------------------
or character of its business as currently conducted, or engage in any activity
not reasonably related to such business.
(g) Remove Assets. Permit I-Link or FTI to remove any of its assets
-------------
to a jurisdiction in which no financing statement on Form UCC-1 has been filed
by Lender with respect to such assets.
(h) Distributions or Dividends. Declare or make, directly or
--------------------------
indirectly, any payment or distribution to any of the shareholders of Borrower,
or incur any liability for the purchase, acquisition, redemption or retirement
of any capital stock of Borrower or as a dividend, return of capital or other
payment or distribution of any kind to any shareholder of Borrower or any other
affiliate of Borrower (other than any stock dividend or stock split or similar
distribution payable only in capital stock of Borrower) in respect of Borrower's
capital stock.
(i) Transactions with Affiliates. Enter into any transaction or
----------------------------
agreement, other than the Loan Documents, with any affiliate of Borrower or any
affiliate of any shareholder of Borrower unless the terms of such transaction or
agreement are fair and reasonable and no more onerous to Borrower or such
subsidiary than could be obtained from an independent third party in an arms-
length transaction.
(j) Contracts. Enter into any contract or commitment except for
---------
contracts involving aggregate payments of less than $50,000 individually or
$250,000 in the aggregate and contracts which can be terminated without penalty
on thirty days notice or less, or amend or terminate any material contract (or
waive any substantial right thereunder), or incur any obligation (including
obligations relating to the borrowing of money or guarantee of indebtedness).
(k) Adverse Change. Suffer any material adverse change in the
--------------
business, assets, properties, prospects or condition (financial or otherwise) of
Borrower or any subsidiary, or any damage, destruction or loss affecting any
assets used or useful in the conduct of the business of Borrower or any
subsidiary.
(l) Employee Compensation. Suffer any material increase in excess of
---------------------
the reasonable range in the telecommunications industry for similarly situated
companies in the same or similar markets in compensation payable or to become
payable to any employees, or any bonus payment made or promised to any employee,
or any material change in personnel policies, insurance benefits or other
compensation arrangements affecting any employees,
- 14 -
<PAGE>
provided that nothing in this clause shall be construed to limit or restrict the
commission compensation of employees who may be participating in I-Link's multi-
level marketing program.
(m) Cancellation of Debts. Cancel any material debts owed to or
---------------------
claims held by Borrower or any subsidiary.
(n) Investments. Purchase or otherwise acquire, hold or invest in any
-----------
stock or other securities or evidences of indebtedness of, or any interest or
investment in, or make or permit to exist any loans or advances to, any other
person, except:
(i) direct obligations of the United States Government
maturing within one year;
(ii) certificates of deposit of a member bank of the Federal
Reserve System having capital, surplus and undivided profits in excess of
$2,000,000,000;
(iii) any investment in commercial paper which at the time
of such investment is assigned the highest quality rating in accordance with the
rating systems employed by either Moody's Investors Service, Inc. or Standard &
Poor's Corporation;
(iv) money market funds; and
(v) investments in its existing subsidiaries.
(o) Write-Down. Suffer any significant write-down of the value of any
----------
assets or any significant write-off as uncollectible of any accounts receivable
without the prior written consent of Lender except and as required by generally
accepted accounting principles as required to present accurate financial
information on Borrower and its subsidiaries.
(p) Rights. Transfer or grant any right under, or enter into any
------
settlement regarding the breach or infringement of, any license, patent,
copyright, trademark, service mark, trade name, franchise, or similar right, or
modify any existing right relating to Borrower or any of its subsidiaries.
(q) Agreements. Terminate, amend or commit any material breach or
----------
default under the Loan Documents.
- 15 -
<PAGE>
(r) Subsidiaries. Create or acquire any subsidiary unless Lender
------------
shall have approved such action in advance and Borrower shall have taken all
actions required by Lender to grant Lender a first priority security interest in
all of the issued and outstanding stock or other equity interests of such
subsidiary and caused such subsidiary to execute and deliver to Lender a
guaranty and security agreement in substantially the form of the Guaranty and
Security Agreement. Borrower acknowledges and agrees that until such time as
such security interest is granted and perfected, Lender shall have an equitable
lien in the stock of any subsidiary created or acquired by Borrower.
Section 6.3 Reporting Requirements. So long as the Note shall remain
----------------------
unpaid and this Agreement shall not have been terminated, Borrower shall, unless
Lender shall otherwise consent in writing, furnish to Lender:
(a) Default Certificate. As soon as possible and in any event within
-------------------
five business days after the occurrence of each Event of Default (as defined in
Section 7.1) of which Borrower has knowledge, the statement of the President of
Borrower setting forth details of such Event of Default and the action which
Borrower proposes to take with respect thereto.
(b) Financial Statements. Monthly unaudited, unconsolidated financial
--------------------
statements for the Borrower, I-Link and FTI within thirty days after the end of
each month and quarterly unaudited consolidated and consolidating financial
statements of the Borrower within forty-five days after the end of each fiscal
quarter (or such longer period, not to exceed five calendar days, as shall be
permitted by the U.S. Securities and Exchange Commission ("SEC") for the timely
filing of the quarterly report on Form 10-Q pursuant to Rule 12b-25 of the SEC),
each such monthly and quarterly financial statement to be certified by the chief
financial officer of Borrower; within ninety days after the end of each fiscal
year of Borrower (or such longer period, not to exceed fifteen calendar days, as
shall be permitted by the SEC for the timely filing of the quarterly report on
Form 10-K pursuant to Rule 12b-25 of the SEC), a copy of the audited
consolidated financial statements for such year for Borrower and its
subsidiaries, including therein a consolidated balance sheet as of the end of
such fiscal year, consolidated statements of income and expense of Borrower for
such fiscal year, and a consolidated statement of cash flow of Borrower and its
subsidiaries for such fiscal year, in each case prepared by an independent
public accountant of recognized standing acceptable to Lender. Borrower shall
deliver to Lender with each set of monthly financial statements a calculation of
Adjusted Cash Flow (as that term is defined in Section 6.4(a) below) for such
month.
(c) Securities Filings. Copies of all reports and filings made by
------------------
Borrower or any of its subsidiaries with the Securities and Exchange Commission
or any securities
- 16 -
<PAGE>
exchange on which any of Borrower's or such subsidiary's securities are listed
or traded and of all mailing or distributions to Borrower's shareholders.
(d) Notice of Litigation. Promptly give written notice of all
--------------------
actions, suits and proceedings before any court or governmental agency, domestic
or foreign, which may be commenced or threatened against Borrower or any of its
subsidiaries in which the claim involved is $5,000 or more and of any other
matter of the type described in Section 5.7.
(e) Budget. An annual budget within thirty days before the beginning
------
of each fiscal year of Borrower. Such budget shall be satisfactory in form and
substance to Lender.
(f) Other Information. Such other information respecting the
-----------------
business, properties, operations or the condition, financial or otherwise, of
Borrower or any of its subsidiaries as Lender may from time to time reasonably
request.
Section 6.4 Financial Covenants.
-------------------
(a) Adjusted Cash Flow. Borrower shall not permit Adjusted Cash Flow,
------------------
as defined below, for any period listed in Column A below to be less than the
amount listed across from such period in Column B below:
<TABLE>
<CAPTION>
Column A Column B
- -------- -------------
<S> <C>
June 1, 1997, through June 30, 1997 ($1,500,000)
July 1, 1997, through July 31, 1997 ($1,000,000)
August 1, 1997, through August 31, 1997 ($900,000)
September 1, 1997, through September 30, ($500,000)
1997
October 1, 1997, though December 31, $ 0
1997
January 1, 1998, through March 31, 1998 $1,000,000
April 1, 1998, through June 30, 1998 $1,000,000
</TABLE>
- 17 -
<PAGE>
<TABLE>
<CAPTION>
Column A Column B
- -------- -------------
<S> <C>
July 1, 1998, through September 31, 1998 $1,000,000
</TABLE>
"Adjusted Cash Flow", for purposes of this Section 6.4(a), means for any period
total consolidated revenues of Borrower and its subsidiaries for such period
minus the sum of (i) all operating expenses (excluding depreciation and
amortization) incurred in such period, (ii) all capital expenditures made in
such period, (iii) all payments of principal made on any indebtedness (including
capital leases and financing leases) in such period, (iv) all cash interest
expense paid in such period and (v) all taxes paid or accrued in such period, in
each case as determined by generally accepted accounting principles,
consistently applied.
(b) Working Capital. Borrower shall not permit its consolidated
---------------
current liabilities (not including the liability arising hereunder and evidenced
by the Note) at any time to exceed its consolidated current assets by an amount
in excess of $1,000,000, in each case as determined by generally accepted
accounting principles, consistently applied.
ARTICLE VII. EVENTS OF DEFAULT
Section 7.1 Events of Default. Under this Agreement, an Event of
-----------------
Default shall be any of the following:
(a) Borrower shall fail to pay any installment of principal or
interest on the Note, or any other obligation to Lender when due whether at the
due date thereof or by acceleration or otherwise, and, in the case of any
installment of interest, such default shall remain unremedied for a period of
three days; or
(b) The security interest or lien of Lender in any material portion of
the collateral covered by the Security Agreement or Pledge Agreement or any
other Loan Document shall at any time cease to be a first priority, perfected
security interest or lien or shall not constitute a legal, valid and enforceable
security interest or lien; or
(c) Any representation or warranty made by Borrower, I-Link or FTI (or
any of their officers) herein, in the Pledge Agreement, the Warrant Agreement,
the Guaranty, the Security Agreement or any other Loan Document or in any
certificate, agreement, instrument or statement contemplated by or made or
delivered pursuant to or in connection with this Agreement or any other Loan
Document shall prove to have been incorrect in any material respect when made or
deemed made; or
(d) Borrower, I-Link or FTI shall fail to perform or observe any other
term, covenant or agreement contained in this Agreement, the Note, the Guaranty,
the Security Agreement, the Pledge Agreement, the Warrant Agreement or any other
Loan
- 18 -
<PAGE>
Document, and any such failure remains unremedied for thirty days after the
occurrence of such failure; or Borrower shall fail to amend its Articles of
Incorporation by no later than July 31, 1997, to increase its authorized capital
to cover the number of shares issuable upon the exercise of the warrants granted
pursuant to the Warrant Agreement or, shall fail to reserve the appropriate
number of shares of such capital stock for issuance upon exercise of such
warrants; or
(e) Borrower, I-Link or FTI shall fail to pay any indebtedness for
borrowed money owing by Borrower, I-Link or FTI or any interest or premium
thereon, when due, whether such indebtedness shall become due by scheduled
maturity, by required prepayment, by acceleration, by demand or otherwise, or
Borrower, I-Link or FTI shall fail to perform any term, covenant or agreement
under any agreement or instrument evidencing or securing or relating to any such
indebtedness owing by Borrower, I-Link or FTI if the effect of such failure is
to accelerate, or to permit the holder of such indebtedness to accelerate, the
maturity of such indebtedness; or
(f) Either (i) Borrower, I-Link or FTI shall fail to pay its debts as
they mature in the ordinary course of business; or (ii) Borrower, I-Link or FTI
shall file a petition commencing a voluntary case concerning it under any
Chapter of Title 11 of the United States Code entitled "Bankruptcy"; or (iii)
Borrower, I-Link or FTI shall apply for or consent to the appointment of any
receiver, trustee, custodian or similar officer for it or for all or any
substantial part of its property; or (iv) such receiver, trustee, custodian or
similar officer shall be appointed without the application or consent of
Borrower, I-Link or FTI and such appointment shall continue undischarged for a
period of thirty days; or (v) an involuntary case is commenced against Borrower,
I-Link or FTI under any Chapter of the aforementioned Title 11 and an order for
relief under such Title 11 is entered or the petition commencing the case is
controverted but is not dismissed within thirty days after the commencement of
the case; or (vi) Borrower, I-Link or FTI shall institute (by petition,
application, answer, consent or otherwise) any bankruptcy, insolvency,
reorganization, arrangement, readjustment of debt, dissolution, liquidation or
similar proceeding relating to it under the laws of any jurisdiction; or (vii)
any such proceeding shall be instituted against Borrower, I-Link or FTI and
shall remain undismissed for a period of thirty days; or (viii) Borrower, I-Link
or FTI shall take any action for the purpose of effectuating any of the
foregoing; or
(g) Any court, government, or government agency shall condemn, seize
or otherwise appropriate or take custody or control of all or a substantial
portion of the property or assets of Borrower, I-Link or FTI; or
- 19 -
<PAGE>
(h) Any money judgment, writ or warrant of attachment, or similar
process involving, either individually or in the aggregate, an amount in excess
of $25,000, and in either case not adequately covered by insurance as to which
the insurance company has acknowledged coverage, shall be entered or filed
against Borrower or any of its subsidiaries or its assets and shall remain
undischarged, unvacated, unbonded or unstayed for a period of thirty days or in
any event later than five days prior to the date of any proposed sale
thereunder; or
(i) Any person (or group of persons) is or becomes the "beneficial
owner" (within the meaning of Rules 13d-3 and 13d-5 under the federal Securities
Exchange Act of 1934, as amended), directly or indirectly, of a percentage of
the common voting stock of Borrower greater than 25%; or (ii) Borrower shall
cease or fail to own, directly or indirectly, beneficial and legal title to all
of the issued and outstanding capital stock of each of I-Link and FTI; or (iii)
John W. Edwards shall cease for any reason to be the President and Chief
Executive Officer of Borrower; or
(j) Any material adverse effect upon or change in (i) the properties,
assets, business, operations, financial condition, prospects, liabilities or
capitalization of Borrower or any of its subsidiaries or on the ability of
Borrower or any of its subsidiaries to conduct its business, (ii) the ability of
Borrower, I-Link, FTI or any other party to a Loan Document (other than Lender)
to perform its obligations hereunder or under any other Loan Document to which
it is a party, (iii) the validity or enforceability of this Agreement, the Note
or any other Loan Document, (iv) the rights or remedies of Lender under this
Agreement, the Note, any other Loan Document or at law or in equity or (v) the
value of any material collateral granted to Lender pursuant to any Loan Document
shall occur.
Section 7.2 Effect of Event of Default. Should any Event of Default
--------------------------
occur, Lender may at its option by written notice to Borrower declare the entire
unpaid principal amount of the Note, together with all unpaid interest and all
other amounts payable under this Agreement and every other obligation of
Borrower to Lender, immediately due and payable, whereupon the Note and all such
obligations shall become and be forthwith due and payable, without presentment,
demand, protest or other notice of any kind, all of which are hereby expressly
waived by Borrower, anything contained herein or in the Note or in such other
note or evidence of indebtedness to the contrary notwithstanding; provided,
--------
however, that in case of an Event of Default under Section 7.1(f), all the
- -------
obligations of Borrower under this Agreement and the Note shall become
immediately due and payable as of the date of any such Event of Default
regardless of the cause of such Event of Default and without any notice to
Borrower required from Lender. Lender shall have, in addition to all other
rights and remedies allowed by law, the rights and remedies of a secured party
under the Uniform Commercial Code and, without limiting the generality of the
foregoing, the rights and
- 20 -
<PAGE>
remedies provided for in the Guaranty, the Security Agreement, the Pledge
Agreement and any other Loan Document, which provisions are hereby incorporated
by reference.
ARTICLE VIII. MISCELLANEOUS
Section 8.1 No Waiver; Cumulative Remedies. No failure or delay on the
------------------------------
part of Lender in exercising any right, power or remedy hereunder shall operate
as a waiver, nor shall any single or partial exercise of any such right, power
or remedy hereunder operate as a waiver. The remedies herein provided are
cumulative and not exclusive of any remedies provided by law.
Section 8.2 Amendments. No amendment, modification, termination or
----------
waiver of any provision of this Agreement, the Note or any other Loan Document,
nor consent to any departure by Borrower, I-Link or FTI therefrom, shall in any
event be effective unless in writing, signed by Lender and then only in the
specific instance and for the specific purpose for which given. No notice to or
demand on Borrower, I-Link or FTI in any case shall entitle it to any other or
further notice or demand in similar or other circumstances except as expressly
provided herein or in another Loan Document.
Section 8.3 Address for Notices. All notices and other communications
-------------------
under this Agreement shall be in writing and shall be delivered in person or by
mailing a copy thereof by registered or certified U.S. mail, return receipt
requested, to the applicable party at the addresses indicated below:
If to Borrower: Medcross, Inc.
13751 South Wadsworth Park Drive
Suite 200
Draper, Utah 84020
Attention: John W. Edwards, President
If to Lender: Winter Harbor, L.L.C.
11400 Skipwith Lane
Potomac, Maryland 20854
Attention: Ralph W. Hardy, Jr.
or at such other address as may be designated by either party in a written
notice to the other complying as to delivery with the terms of this Section.
All such notices and other communications shall be effective when deposited in
the mails.
- 21 -
<PAGE>
Section 8.4 Expenses. Borrower agrees to pay on demand all costs and
--------
expenses incurred by Lender directly in the enforcement of this Agreement, the
Note, the Guaranty, the Security Agreement, the Pledge Agreement and other
instruments and documents to be delivered hereunder, including, without
limitation, the reasonable fees and expenses of any attorney to whom the Note is
referred for collection (whether or not litigation is commenced) or for
representation out of court, in trial, on appeal or in proceedings under any
bankruptcy or insolvency law or otherwise. In addition, Borrower shall pay any
and all taxes and fees payable or determined to be payable in connection with
the execution, delivery or recordation of any instruments and documents to be
delivered hereunder. In addition, Borrower agrees to pay (i) all the costs and
expenses of Lender in connection with the negotiation, preparation and execution
of the Loan Documents and all the costs of furnishing all opinions by counsel
for Borrower, and of Borrower's performance of and compliance with all
agreements and conditions contained herein and in the other Loan Documents on
its part to be performed or complied with, including, without limitation,
confirming compliance with environmental and insurance requirements; (ii) the
fees, expenses and disbursements of counsel to Lender in connection with the
negotiation, preparation, execution and administration of the Loan Documents and
the Loan and any consents, amendments, waivers or other modifications hereto or
thereto; and (iii) all the costs and expenses of creating and perfecting liens
in favor of Lender pursuant to any Loan Document.
Section 8.5 Binding Effect; Assignment. This Agreement shall become
--------------------------
effective when executed and thereafter shall be binding upon and inure to the
benefit of Borrower, Lender and their respective successors and assigns, except
that Borrower shall not have the right to assign any rights or obligations
hereunder without the prior written consent of Lender. Lender shall be
permitted to assign, without Borrower's consent, all or any portion of Lender's
rights and interests hereunder and under each other document executed in
connection with this Agreement.
Section 8.6 Governing Law. This Agreement, the Note, the Pledge
-------------
Agreement, the Guaranty, the Security Agreement and related documents shall be
governed by, and construed in accordance with, the laws of the State of Delaware
with the exception of its conflicts of laws provisions; provided that the effect
of any recordation shall be determined by the State thereof.
Section 8.7 Severability of Provisions. Any provision of this
--------------------------
Agreement, the Note, the Pledge Agreement, the Guaranty or the Security
Agreement that is prohibited or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions or affecting the
validity or enforceability of any provisions in any other jurisdiction.
- 22 -
<PAGE>
Section 8.8 Headings. Article and Section headings in this Agreement
--------
are included for convenience of reference only and shall not constitute a part
of this Agreement for any other purpose.
Section 8.9 Rights Affected by Extensions. The rights of Lender and its
-----------------------------
assigns shall not be impaired by any indulgence, release, renewal, extension or
modification which Lender may grant with respect to the indebtedness or any part
thereof, or with respect to the collateral or with respect to any endorser,
guarantor, or surety without notice or consent of Borrower or any endorser,
guarantee or surety.
Section 8.10 Survival of Representations and Warranties. All
------------------------------------------
representations and warranties made in this Agreement and in any agreements,
documents or certificates delivered pursuant hereto or thereto shall survive the
execution and delivery of this Agreement and the Note and the making of the Loan
hereunder and continue in full force and effect, as of the respective dates as
of which they were made, until all of the obligations of Borrower to Lender
hereunder have been paid in full.
Section 8.11 Further Assurances. From time to time, Borrower shall
------------------
execute and deliver, or cause to be executed and delivered, to Lender such
additional documents as Lender may reasonably require to carry out the purposes
of this Agreement or any of the documents entered into in connection herewith,
or to preserve and protect the rights of Lender hereunder or thereunder.
Section 8.12 Indemnification. Borrower hereby indemnifies and holds
---------------
harmless Lender and its partners, directors, officers, shareholders, employees,
agents, counsel, subsidiaries and affiliates (the "Indemnified Persons") from
and against any and all losses, liabilities, obligations, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind or
nature whatsoever which may be imposed on, incurred by, or asserted against any
Indemnified Person in any way relating to or arising out of this Agreement, the
other Loan Documents, the documents entered into in connection herewith or
therewith, or any of them or any of the transactions contemplated hereby or
thereby, the making of the Loan, the use of the proceeds of the Loan or the
ownership or operation of the business or assets of Borrower or any of its
subsidiaries; provided, however, that Borrower shall not be liable to any
-------- -------
Indemnified Person, if there is a judicial determination that such losses,
liabilities, obligations, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements resulting solely from the gross negligence or willful
misconduct of such Indemnified Person.
Section 8.13 Jury Trial Waiver. EACH OF LENDER AND BORROWER HEREBY
-----------------
AGREES TO WAIVE ITS RESPECTIVE RIGHT TO A JURY TRIAL OF ANY
- 23 -
<PAGE>
CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT, ANY OF THE
LOAN DOCUMENTS, OR ANY DEALINGS BETWEEN THEM RELATING TO THE SUBJECT MATTER OF
THIS LOAN TRANSACTION AND THE LENDER/BORROWER RELATIONSHIP THAT IS BEING
ESTABLISHED. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED
EITHER ORALLY OR IN WRITING, AND THE WAIVER SHALL APPLY TO ANY SUBSEQUENT
AMENDMENTS, RENEWALS, REPLACEMENTS, SUPPLEMENTS OR MODIFICATIONS TO THIS
AGREEMENT, THE LOAN DOCUMENTS OR TO ANY OTHER DOCUMENTS OR AGREEMENTS RELATING
TO THE LOAN.
Section 8.14 Maximum Interest. Lender and Borrower intend that this
----------------
Agreement and the other Loan Documents conform to all applicable usury laws.
Accordingly, no provisions of the Loan Documents shall require the payment or
permit the collection of interest in excess of the maximum rate permitted by
applicable law ("Maximum Rate"), or obligate Borrower to pay any taxes,
assessments, charges, insurance premiums or other amounts which are held to
constitute interest to the extent that such payments, when added to the other
obligations under the Loan Documents, would be held to constitute contracting
for, or the payment by Borrower of, interest at a rate greater than the Maximum
Rate. Lender and Borrower further agree that:
(i) if any excess of interest in such respect is herein
or in any such other instrument provided for, or shall be adjudicated to be so
provided for herein or in any such instrument, the provisions of this subsection
8.14 shall govern, and neither Borrower nor its successors or assigns shall be
obligated to pay the amount of such interest to the extent it is in excess of
the Maximum Rate;
(ii) if at any time the amount of interest under any of
the Loan Documents for a calendar year exceeds the Maximum Rate had the Maximum
Rate at all times been in effect, the interest chargeable under any such Loan
Document shall be limited to the amount of interest that could have been charged
if the Maximum Rate had at all times been in effect, but any subsequent
reductions in the interest due shall not reduce the rate of interest chargeable
under any such Loan Document below the Maximum Rate until the total amount of
interest accrued under any such Loan Document equals the amount of interest that
would have accrued if the interest provided for in any such Loan Document had at
all times been in effect and collectible;
(iii) if the maturity of any Loan Document is accelerated
for any reason, or in the event of any prepayment by Borrower, or in any other
event, earned interest may never include more than the Maximum Rate, computed
from the date of disbursement of the funds evidenced by such Loan Document until
payment, and any interest
- 24 -
<PAGE>
otherwise payable under such Loan Document that is in excess of the Maximum Rate
shall be canceled automatically as of such acceleration or such other event and
(if theretofore paid) shall be credited against principal;
(iv) if it should be held that any interest payable or
chargeable under any Loan Document is in excess of the Maximum Rate, the
interest payable or chargeable under such Loan Document shall be reduced to the
maximum amount permitted by applicable federal or state law, whichever shall
permit the higher lawful interest, as construed by courts having jurisdiction
thereof; and
(v) the spreading, prorating and amortizing of interest
over the Maturity Date of the Loan Documents shall be allowed to the fullest
extent permitted by applicable law.
- 25 -
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Loan Agreement
to be executed by their respective duly authorized officers as of the date first
above written.
MEDCROSS, INC.
By: /s/ John Edwards
----------------------------------
Name: John Edwards
--------------------------------
Title: President
-------------------------------
WINTER HARBOR, L.L.C.
By: First Media, L.P., its member
By: First Media Corporation, its
sole general partner
By: /s/ Ralph W. Hardy, Jr.
----------------------------------
Name: Ralph W. Hardy, Jr.
--------------------------------
Title: Secretary
-------------------------------
<PAGE>
EXHIBIT 1
FORM OF NOTE
PROMISSORY NOTE
---------------
$2,000,000 June , 1997
--
FOR VALUE RECEIVED, the undersigned, MEDCROSS, INC., a Florida corporation
(the "Maker"), promises to pay to the order of WINTER HARBOR, L.L.C., a Delaware
limited partnership (the "Payee"), on or before October 15, 1998 (the "Maturity
Date"), the principal sum of $2,000,000, together with interest thereon as
provided herein. All capitalized terms used herein and not otherwise defined
shall have the meanings ascribed to them in the Loan Agreement, as that term is
defined below.
ARTICLE IX. Interest. The unpaid principal balance of this Note shall bear
interest at the rates determined in accordance with the provisions of that
certain Loan Agreement dated as of June __, 1997, between the Maker and the
Payee (as the same may be amended, modified, extended or restated, the "Loan
Agreement"). Interest accrued hereunder shall be paid quarterly on the last
business day of each calendar quarter until all principal and interest hereunder
is paid in full at the repayment or maturity of the Loan.
ARTICLE X. Principal Repayment. The aggregate principal balance of this Note
shall be due and payable as provided in Section 1.4 of the Loan Agreement.
ARTICLE XI. Prepayments. This Note may be voluntarily prepaid in whole or in
part without premium or penalty at any time and from time to time; provided,
however, that each partial prepayment shall be in the aggregate principal amount
of not less than $100,000 or an integral multiple of $50,000 in excess thereof.
In making a prepayment in whole, the Maker shall pay all accrued interest
through the date of such prepayment. The Maker shall make a mandatory
prepayment of the outstanding principal amount of the Note together with all
accrued interest on and subject to the terms and conditions of the Loan
Agreement.
ARTICLE XII. Payment on Business Days. If any payment of principal or
interest on this Note shall become due on a Saturday, Sunday or public holiday,
such payment may be made on the next succeeding business day, and such extension
of time in such case shall be included in the computation of interest in
connection with such payment.
ARTICLE XIII. Form of Payment. All payments made pursuant to the terms of
this Note shall be made in lawful money of the United States of America and
shall be payable to the Payee at its
- 27 -
<PAGE>
principal office located at 11400 Skipwith Lane, Potomac, Maryland 20854 or at
such other place as the Payee shall have designated to the Maker in writing.
ARTICLE XIV. Choice of Law. This Note shall be governed by and construed in
accordance with the laws of the State of Delaware with the exception of its
conflicts of laws provisions thereof.
ARTICLE XV. Events of Default. Upon the occurrence of any Event of Default,
Lender may at its option by written notice to Borrower declare the entire unpaid
principal amount of the Note, together with all unpaid interest and all other
amounts payable hereunder, immediately due and payable.
ARTICLE XVI. Collection Expenses. If at any time the indebtedness evidenced
by this Note is collected through legal proceedings or this Note is placed in
the hands of attorneys for collection, the Maker and each endorser of this Note
hereby jointly and severally agree to pay all costs and expenses (including
reasonable attorneys' fees) incurred by the holder of this Note in collecting or
attempting to collect such indebtedness.
ARTICLE XVII. Waivers. To the extent permitted by law, except as otherwise
provided herein or in the Loan Agreement, the Maker and each endorser of this
Note, and their respective heirs, successors, legal representatives and assigns,
hereby severally waive presentment; protest and demand; notice of protest,
demand, dishonor and nonpayment; diligence in collection, and any relief
whatever from the valuation or appraisement laws of any state.
IN WITNESS WHEREOF, the Maker has executed this Note as of the date and
year first above written.
MEDCROSS, INC.
By:
-----------------------------
Name:
---------------------------
Title:
--------------------------
- 28 -
<PAGE>
SCHEDULE 5.4
MEDCROSS, INC. CAPITALIZATION
<TABLE>
<CAPTION>
Outstanding Shares & Unaffiliated Warrants/Options:
- --------------------------------------------------
<S> <C>
Common Shares Outstanding 11,607,609
Conversion of Class C Preferred 6,046,800
Wilkes & Radulovic Options (I-Link Acquisition) 2,000,000
Commonwealth Warrants 750,000
JW Charles Warrants 331,126
Warrants to Settle JW Charles Action 175,000
Conversion of Class B Preferred 183,542
Cook Option 100,000
E&M RP Trust Warrants 80,000
Mandarino Warrants 40,000
Edwards Warrants (from loan) 25,000
Flury Warrants (from loan) 5,000
----------
21,344,007
Management/Employee/Director Options:
- ------------------------------------
1996 John Edwards Options (Exec Mgmnt) 1,250,000
1996 Ryser, Hardy, Flury Options (Exec Mgmnt) 750,000
1996 I-Link Employee Options 408,000
1997 I-Link Exec Mgmnt & Employee Options 2,350,000
Campbell, Little, McKillip Options (MLM Mgmnt) 350,000
1997 Director Options 120,000
Medcross 1995 Director Plan Options 190,000
Medcross 1995 ESOP 75,000
Medcross 1995 Employee Stock Purchase Plan 7,711
Joseph Cohen (Director) 64,000
----------
5,564,711
Acquisition:
- -----------
Family Telecommunications, Inc. 400,000
----------
400,000
TOTAL 27,308,718
==========
</TABLE>
<PAGE>
SCHEDULE 5.10
TAXES
Tax returns (federal, state and local) not filed, and taxes not paid, including
interest and penalties include the following:
1. Sales taxes relating to long distance services provided from
inception of Family Telecommunications, Inc. to current date:
approximately $100,000;
2. Federal and state income tax returns for Medcross, Inc. for the year
ended December 31, 1996 (properly extended): no tax due.
<PAGE>
Exhibit 99(b)
PROMISSORY NOTE
---------------
$2,000,000 June 6, 1997
FOR VALUE RECEIVED, the undersigned, MEDCROSS, INC., a Florida corporation
(the "Maker"), promises to pay to the order of WINTER HARBOR, L.L.C., a Delaware
limited partnership (the "Payee"), on or before October 15, 1998 (the "Maturity
Date"), the principal sum of $2,000,000, together with interest thereon as
provided herein. All capitalized terms used herein and not otherwise defined
shall have the meanings ascribed to them in the Loan Agreement, as that term is
defined below.
1. Interest. The unpaid principal balance of this Note shall bear
--------
interest at the rates determined in accordance with the provisions of that
certain Loan Agreement dated as of June 6, 1997, between the Maker and the Payee
(as the same may be amended, modified, extended or restated, the "Loan
Agreement"). Interest accrued hereunder shall be paid quarterly on the last
business day of each calendar quarter until all principal and interest hereunder
is paid in full at the repayment or maturity of the Loan.
2. Principal Repayment. The aggregate principal balance of this Note
-------------------
shall be due and payable as provided in Section 1.4 of the Loan Agreement.
3. Prepayments. This Note may be voluntarily prepaid in whole or in part
-----------
without premium or penalty at any time and from time to time; provided, however,
that each partial prepayment shall be in the aggregate principal amount of not
less than $100,000 or an integral multiple of $50,000 in excess thereof. In
making a prepayment in whole, the Maker shall pay all accrued interest through
the date of such prepayment. The Maker shall make a mandatory prepayment of the
outstanding principal amount of the Note together with all accrued interest on
and subject to the terms and conditions of the Loan Agreement.
4. Payment on Business Days. If any payment of principal or interest on
------------------------
this Note shall become due on a Saturday, Sunday or public holiday, such payment
may be made on the next succeeding business day, and such extension of time in
such case shall be included in the computation of interest in connection with
such payment.
5. Form of Payment. All payments made pursuant to the terms of this Note
---------------
shall be made in lawful money of the United States of America and shall be
payable to the Payee at its principal office located at 11400 Skipwith Lane,
Potomac, Maryland 20854 or at such other place as the Payee shall have
designated to the Maker in writing.
6. Choice of Law. This Note shall be governed by and construed in
-------------
accordance with the laws of the State of Delaware with the exception of its
conflicts of laws provisions thereof.
<PAGE>
7. Events of Default. Upon the occurrence of any Event of Default, Lender
-----------------
may at its option by written notice to Borrower declare the entire unpaid
principal amount of the Note, together with all unpaid interest and all other
amounts payable hereunder, immediately due and payable.
8. Collection Expenses. If at any time the indebtedness evidenced by this
-------------------
Note is collected through legal proceedings or this Note is placed in the hands
of attorneys for collection, the Maker and each endorser of this Note hereby
jointly and severally agree to pay all costs and expenses (including reasonable
attorneys' fees) incurred by the holder of this Note in collecting or attempting
to collect such indebtedness.
9. Waivers. To the extent permitted by law, except as otherwise provided
-------
herein or in the Loan Agreement, the Maker and each endorser of this Note, and
their respective heirs, successors, legal representatives and assigns, hereby
severally waive presentment; protest and demand; notice of protest, demand,
dishonor and nonpayment; diligence in collection, and any relief whatever from
the valuation or appraisement laws of any state.
IN WITNESS WHEREOF, the Maker has executed this Note as of the date and
year first above written.
MEDCROSS, INC.
By: /s/ John Edwards
--------------------------
Name: John Edwards
------------------------
Title: President
-----------------------
<PAGE>
Exhibit 99(c)
--------------------------------
WINTER HARBOR, L.L.C.
AND
MEDCROSS, INC.
------------
WARRANT AGREEMENT
DATED AS OF JUNE 6, 1997
--------------------------------
<PAGE>
WARRANT AGREEMENT dated as of June 6, 1997, between WINTER HARBOR, L.L.C.,
a Delaware limited partnership (hereinafter referred to as the "Initial Holder")
and MEDCROSS, INC., a Florida corporation (the "Company").
W I T N E S E T H :
WHEREAS, the Company proposes to issue to the Initial Holder warrants
("Warrants") to purchase up to an aggregate of 500,000 shares of Common Stock
(as that term is defined in Section 8.5 below) of the Company; and
WHEREAS, the Initial Holder has committed, subject to the terms of the
commitment letter dated April 11, 1997 (the "Commitment Letter"), from the
Initial Holder to the Company and accepted by the Company, to make a loan of up
to $2,000,000 to the Company; and
WHEREAS, the Warrants to be issued pursuant to this Agreement will be
issued on the date of execution of the loan agreement contemplated by the
Commitment Letter (the "Closing Date") in consideration for, and as part of the
compensation in connection with, the Initial Holder'S commitment under the
Commitment Letter;
NOW, THEREFORE, in consideration of the premises, the agreements herein set
forth and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto agree as follows:
1. Grant. The Initial Holder is hereby granted the right to purchase, at
-----
any time from the date hereof until 5:30 P.M., Delaware time, on March 11, 2002
(the "Warrant Exercise Term"), up to an aggregate of 500,000 shares of the
Company'S Common Stock (the "Warrant Shares") at an initial exercise price
(subject to adjustment as provided in Section 8 hereof) of $4.97 per Share,
subject to the terms and conditions of this Agreement.
2. Warrant Certificates. The warrant certificates (the "Warrant
--------------------
Certificates") delivered and to be delivered pursuant to this Agreement shall be
in the form set forth in Exhibit A, attached hereto and made a part hereof, with
such appropriate insertions, omissions, substitutions, and other variations as
required or permitted by this Agreement.
3. Exercise of Warrant.
-------------------
3.1 The Warrants initially are exercisable at an aggregate initial
exercise price of $4.97 per share payable by certified or official bank check in
New York Clearing House
<PAGE>
funds, subject to adjustment as provided in Section 8 hereof. Upon surrender of
a Warrant Certificate with the annexed Form of Election to Purchase duly
executed, together with payment of the Purchase Price (as hereinafter defined)
for the Warrant Shares purchased at the Company'S principal offices, the
registered holder of a Warrant Certificate ("Holder" or "Holders") shall be
entitled to receive a certificate or certificates for the Warrant Shares so
purchased. The purchase rights represented by each Warrant Certificate are
exercisable at the option of the Holder thereof, in whole or in part (but not as
to fractional shares of the Common Stock underlying the Warrants). In the case
of the purchase of less than all the Warrant Shares purchasable under any
Warrant Certificate, the Company shall cancel said Warrant Certificate upon the
surrender thereof and shall execute and deliver a new Warrant Certificate of
like tenor for the balance of the Warrant Shares purchasable thereunder.
3.2 Cashless Exercise.
-----------------
(a) At any time during the Warrant Exercise Term, each Holder
may, at its option, exchange the Warrants represented by such Holder'S Warrant
Certificate, in whole or in part (a "Warrant Exchange"), into the number of
fully paid and non-assessable Warrant Shares determined in accordance with this
Section 3.2, by surrendering such Warrant Certificate at the principal office of
the Company or at the office of its transfer agent, accompanied by a notice
stating such Holder'S intent to effect such exchange, the number of Warrant
Shares to be exchanged and the date on which the Holder requests that such
Warrant Exchange occur (the "Notice of Exchange"). The Warrant Exchange shall
take place on the date specified in the Notice of Exchange, or, if later, the
date the Notice of Exchange is received by the Company (the "Exchange Date").
Certificates for the Warrant Shares issuable upon such Warrant Exchange and, if
applicable, a new Warrant of like tenor evidencing the balance of the Warrant
Shares remaining subject to the Holder'S Warrant Certificate, shall be issued as
of the Exchange Date and delivered to the Holder within three days following the
Exchange Date. In connection with any Warrant Exchange, the Holder'S Warrant
Certificate shall represent the right to subscribe for and acquire the number of
Warrant Shares (rounded to the next highest integer) equal to (A) the number of
Warrant Shares specified by the Holder in its Notice of Exchange (the "Total
Share Number") less (B) the number of Warrant Shares equal to the quotient
obtained by dividing (i) the product of the Total Share Number and the existing
Exercise Price (as hereinafter defined) per Share by (ii) the Market Price (as
hereafter defined) of a share of Common Stock.
(b) As used in this Agreement, the phrase "Market Price" at any
date shall be deemed to be the last reported sale price, or, in case no such
reported sale takes place on such day,
- 2 -
<PAGE>
the average of the last reported sale prices for the last three trading days, in
either case as officially reported by the principal securities exchange on which
the Common Stock is listed or admitted to trading or by the Nasdaq Stock Market,
National Market ("Nasdaq"), or, if the Common Stock is not listed or admitted to
trading on any national securities exchange or quoted by Nasdaq, the average
closing bid price as furnished by the National Association of Securities
Dealers, Inc. ("NASD") through Nasdaq or similar organization if Nasdaq is no
longer reporting such information, or if the Common Stock is not quoted on
Nasdaq, as determined in good faith by resolution of the Board of Directors of
the Company, based on the best information available to it for the two days
immediately preceding such issuance or sale and the day of such issuance or
sale.
4. Issuance of Certificates. Upon the exercise of the Warrants, the
------------------------
issuance of certificates for Warrant Shares or other securities, properties or
rights underlying such Warrants, shall be made forthwith (and in any event
within three business days thereafter) without charge to the Holder thereof,
including, without limitation, any tax which may be payable in respect of the
issuance thereof, and such certificates shall be issued in the name of, or in
such names as may be directed by, the Holder thereof; provided, however, that
-------- -------
the Company shall not be required to pay any tax which may be payable in respect
of any transfer involved in the issuance and delivery of any such certificates
in a name other than that of the Holder, and the Company shall not be required
to issue or deliver such certificates unless or until the person or persons
requesting the issuance thereof shall have paid to the Company the amount of
such tax or shall have established to the satisfaction of the Company that such
tax has been paid.
The Warrant Certificates and the certificates representing the Warrant
Shares (and/or other securities, property or rights issuable upon the exercise
of the Warrants) shall be executed on behalf of the Company by the manual or
facsimile signature of the then present Chairman or Vice Chairman of the Board
of Directors or President or Vice President of the Company under its corporate
seal reproduced thereon, attested to by the manual or facsimile signature of the
then present Secretary or Assistant Secretary of the Company. Warrant
Certificates shall be dated the date of execution by the Company upon initial
issuance, division, exchange, substitution or transfer.
5. Restriction on Transfer of Warrants.
-----------------------------------
Upon exercise, in part or in whole, of the Warrants, certificates
representing the Warrant Shares shall bear a legend substantially similar to the
legend set forth in Section 7.1. The Holder of a Warrant Certificate, by its
acceptance thereof,
- 3 -
<PAGE>
agrees that the Warrants are being acquired as an investment and not with a view
to the distribution thereof.
6. Exercise Price.
--------------
6.1 Initial and Adjusted Exercise Price. Except as otherwise
-----------------------------------
provided in Section 8 hereof, the initial exercise price of each Warrant shall
be $4.97. The adjusted exercise price shall be the price which shall result
from time to time from any and all adjustments of the initial exercise price in
accordance with the provisions of Section 8 hereof.
6.2 Exercise Price. The term "Exercise Price" herein shall mean the
--------------
initial exercise price or the adjusted exercise price, depending upon the
context.
7. Registration Rights.
-------------------
7.1 Registration Under the Securities Act of 1933. The Warrants, the
---------------------------------------------
Warrant Shares and any of the other securities issuable upon exercise of the
Warrants have not been registered under the Securities Act of 1933, as amended
(the "Act"). Upon exercise, in part or in whole, of the Warrants, certificates
representing the Warrant Shares and any of the other securities issuable upon
exercise of the Warrants (collectively, the "Warrant Securities") shall bear the
following legend:
The securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended ("Act"), and may not be
offered or sold except pursuant to (i) an effective registration statement under
the Act, (ii) to the extent applicable, Rule 144 under the Act (or any similar
rule under such Act relating to the disposition of securities), or (iii) an
opinion of counsel, if such opinion shall be reasonably satisfactory to counsel
to the issuer, that an exemption from registration under such Act is available.
7.2 Piggyback Registration. If at any time the Company proposes to
----------------------
register any of its securities under the Act (other than in connection with a
merger or pursuant to Form S-8), it will give written notice by registered mail,
at least thirty days prior to the filing of each such registration statement, to
each Holder of the Warrants and/or the Warrant Securities of its intention to do
so. If any Holder of the Warrants and/or Warrant Securities notifies the
Company within twenty days after receipt of any such notice of its or their
desire to include any such securities in such proposed registration statement,
the Company shall afford each such Holder of the Warrants and/or Warrant
Securities the opportunity to have any such Warrants and/or Warrant Securities
registered under such registration statement.
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<PAGE>
Notwithstanding the provisions of this Section 7.2, the Company shall
have the right at any time after it shall have given written notice pursuant to
this Section 7.2 (irrespective of whether a written request for inclusion of any
such securities shall have been made) to elect not to file any such proposed
registration statement, or to withdraw the same after the filing but prior to
the effective date thereof.
7.3 Demand Registration.
-------------------
(a) At any time from and after the date hereof, the Holders of
the Warrants and/or Warrant Securities representing a "Majority" (as hereinafter
defined) of such securities (assuming the exercise of all of the Warrants) shall
have the right (which right is in addition to the registration rights under
Section 7.2 hereof), exercisable by written notice to the Company, to have the
Company prepare and file with the Securities and Exchange Commission (the
"Commission"), on one occasion, a registration statement and such other
documents, including a prospectus, as may be necessary in the opinion of both
counsel for the Company and counsel for such Holders, in order to comply with
the provisions of the Act, so as to permit a public offering and sale of their
respective Warrant Securities for nine consecutive months by such Holders and
any other Holders of the Warrants and/or Warrant Securities who notify the
Company within ten days after receiving notice from the Company of such request.
(b) The Company agrees to give written notice of any registration
request under this Section 7.3 by any Holder or Holders to all other registered
Holders of the Warrants and the Warrant Securities within ten days from the date
of the receipt of any such registration request.
(c) Notwithstanding anything to the contrary contained herein, if
the Company shall not have complied with Section 7.4(a) hereof pursuant to the
written notice specified in Section 7.3(a) of a Majority of the Holders of the
Warrants and/or Warrant Securities, the Company agrees that upon twenty days
prior written notice of election of a Majority of the Holders of the Warrants
and/or Warrant Securities, and the failure of the Company to comply with Section
7.4(a) on or before the expiration of such twenty day period, it shall
repurchase (i) any and all Warrant Securities at the higher of the Market Price
(as defined in Section 3.2(b)) per share of Common Stock on (x) the date of the
notice sent pursuant to Section 7.3(a) or (y) the expiration of the period
specified in Section 7.4(a) and (ii) any and all Warrants at such Market Price
less the exercise prices of such Warrants. Such repurchase shall be in
immediately available funds and shall close within two days after the later of
(i) the expiration of the period specified in Section 7.4(a) or (ii) the
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<PAGE>
delivery of the written notice of election specified in this Section 7.3(c).
7.4 Covenants of the Company With Respect to Registration. In
-----------------------------------------------------
connection with any registration under Section 7.2 or 7.3 hereof, the Company
agrees as follows:
(a) The Company shall use its best efforts to file a registration
statement within ninety-five days of receipt of any demand therefor, shall use
its best efforts to have any registration statements declared effective at the
earliest possible time, and shall furnish each Holder desiring to sell Warrant
Securities such number of prospectuses as shall reasonably be requested. Best
efforts shall include the reasonable efforts to insure the availability of
financial statements and other matters necessary to effectuate the filing.
(b) The Company shall pay all costs (excluding fees and expenses
of Holder(S) counsel and any underwriting or selling commissions), fees and
expenses in connection with all registration statements filed pursuant to
Sections 7.2 and 7.3(a) hereof including, without limitation, the Company'S
legal and accounting fees, printing expenses, blue sky fees and expenses. If the
Company shall fail to comply with the provisions of Section 7.4(a), the Company
shall, in addition to any other equitable or other relief available to the
Holder(S), be liable for any and all incidental, special and consequential
damages and damages due to loss of profit sustained by the Holder(S) requesting
registration of their Warrant Securities. Notwithstanding anything herein to the
contrary, provided the Company complies with the provisions of Section 7.3(c),
the Company shall have no liability under the foregoing sentence of this Section
7.4(b).
(c) The Company will take all necessary action which may be
required in qualifying or registering the Warrant Securities included in a
registration statement for offering and sale under the securities or blue sky
laws of such states as reasonably are requested by the Holder(S), provided that
the Company shall not be obligated to execute or file any general consent to
service of process or to qualify as a foreign corporation to do business under
the laws of any such jurisdiction.
(d) The Company shall indemnify the Holder(S) of the Warrant
Securities to be sold pursuant to any registration statement and each person, if
any, who controls such Holders within the meaning of Section 15 of the Act or
Section 20(a) of the Securities Exchange Act of 1934, as amended ("Exchange
Act"), against all loss, claim, damage, expense or liability (including all
expenses reasonably incurred in investigating, preparing or defending against
any claim whatsoever) to which any of them may
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<PAGE>
become subject under the Act, the Exchange Act or otherwise, arising from such
registration statement.
(e) The Holder(S) of the Warrant Securities to be sold pursuant
to a registration statement, and their successors and assigns, shall severally,
and not jointly, indemnify the Company, its officers and directors and each
person, if any, who controls the Company within the meaning of Section 15 of the
Act or Section 20(a) of the Exchange Act, against all loss, claim, damage,
expense or liability (including all expenses reasonably incurred in
investigating, preparing or defending against any claim whatsoever) to which
they may become subject under the Act, the Exchange Act or otherwise, arising
from information furnished by or on behalf of such Holders, or their successors
or assigns, for specific inclusion in such registration statement.
(f) Nothing contained in this Agreement shall be construed as
requiring the Holder(S) to exercise their Warrants prior to the initial filing
of any registration statement or the effectiveness thereof.
(g) The Company shall use its best efforts not to permit the
inclusion of any securities other than the Warrants and Warrant Securities to be
included in any registration statement filed pursuant to Section 7.3 hereof or
permit any other registration statement to be or remain effective during the
effectiveness of a registration statement filed pursuant to Section 7.3 hereof
(except registration statements on Form S-8 or filed pursuant to contractual
commitments existing on the date hereof), without the prior written consent of
the Holders of the Warrants and Warrant Securities representing a majority of
such securities. In the event the Company is required to include securities
other than the Warrants and Warrant Securities in a registration statement filed
under Section 7.3, the Holders shall be entitled to one additional right to
demand the preparation and filing of a registration under Section 7.3.
(h) The Company shall furnish to each broker-dealer participating
as an underwriter, if any, a signed counterpart, addressed to such broker-dealer
or underwriter, of (i) an opinion of counsel to the Company, dated the effective
date of such registration statement (and, if such registration includes an
underwritten public offering, an opinion dated the date of the closing under the
underwriting agreement), and (ii) a "cold comfort" letter dated the effective
date of such registration statement (and, if such registration includes an
underwritten public offering, a letter dated the date of the closing under the
underwriting agreement) signed by the independent public accountants who have
issued a report on the Company'S financial statements included in such
registration statement, in each case covering substantially the same matters
with respect to such registration statement (and the prospectus
- 7 -
<PAGE>
included therein) and, in the case of such accountants' letter, with respect to
events subsequent to the date of such financial statements, as are customarily
covered in opinions of issuer'S counsel and in accountants' letters delivered to
underwriters in underwritten public offerings of securities.
(i) The Company, as soon as practicable, but in any event not
later than forty-five days after the end of the twelve-month period beginning on
the day after the end of the fiscal quarter of the Company during which the
effective date of the Registration Statement occurs (ninety days in the event
that the end of such fiscal quarter is the end of the Company'S fiscal year),
shall make generally available to its security holders, in the manner specified
in Rule 158(b) of the Rules and Regulations of the Commission, an earnings
statement which will be in the detail required by, and will otherwise comply
with, the provisions of Section 11(a) of the Act and Rule 158(a) of the Rules
and Regulations of the Commission, which statement need not be audited unless
required by the Act, covering a period of at least twelve consecutive months
after the effective date of the Registration Statement.
(j) The Company shall deliver promptly to each Holder
participating in the offering and to the managing underwriters, if any, copies
of all correspondence between the Commission and the Company, its counsel or
auditors and all memoranda relating to discussions with the Commission or its
staff with respect to the registration statement and permit each Holder and
underwriter to do such investigation, upon reasonable advance notice, with
respect to information contained in or omitted from the registration statement
as it deems reasonably necessary to comply with applicable securities laws or
rules of the NASD. Such investigation shall include access to books, records and
properties and opportunities to discuss the business of the Company with its
officers and independent auditors, all to such reasonable extent and at such
reasonable times and as often as any such Holder shall reasonably request.
(k) The Company shall enter into an underwriting agreement with
the managing underwriters selected for such underwriting by Holders holding a
Majority of the Warrant Securities requested to be included in such
underwriting. Such agreement shall be satisfactory in form and substance to the
Company, each Holder and such managing underwriters, and shall contain such
representations, warranties and covenants by the Company and such other terms as
are customarily contained in agreements of that type used by the managing
underwriter.
The Holders shall be parties to any underwriting agreement relating to
an underwritten sale of their Warrant Securities and may, at their option,
require that any or all the representations, warranties and covenants of the
Company to or
- 8 -
<PAGE>
for the benefit of such underwriters shall also be made to and for the benefit
of such Holders. Such Holders shall not be required to make any representations
or warranties to or agreements with the Company or the underwriters except as
they may relate to such Holders and their intended methods of distribution.
(1) For purposes of this Agreement, the term "Majority" in
reference to the Holders of Warrants or Warrant Securities, shall mean Holders
who hold in excess of fifty percent of the then outstanding Warrants or Warrant
Securities that (i) are not held by the Company, an affiliate (other than a
Holder), officer, employee or agent thereof or any of their respective
affiliates, members of their family, persons acting as nominees or in
conjunction therewith and (ii) have not been resold to the public pursuant to a
registration statement filed with the Commission under the Act.
8. Adjustments to Exercise Price and Number of Securities.
------------------------------------------------------
8.1 Computation of Adjusted Exercise Price.
--------------------------------------
(a) Except as hereinafter provided, in case the Company shall at
any time after the date hereof issue or sell any shares of Common Stock (other
than the issuances or sales referred to in Section 8.7 hereof), including (x)
shares held in the Company'S treasury, (y) shares of Common Stock issued upon
the exercise of any options, rights or warrants to subscribe for shares of
Common Stock and (z) shares of Common Stock issued upon the direct or indirect
conversion or exchange of securities for shares of Common Stock, for a
consideration per share less than the lower of the Exercise Price in effect
immediately prior to the issuance or sale of such shares or the Market Price (as
defined in Section 3.2(b)) per share of Common Stock on the date immediately
prior to the issuance or sale of such shares or without consideration, then
forthwith upon such issuance or sale, the Exercise Price shall (until another
such issuance or sale) be reduced to the price (calculated to the nearest full
cent) equal to the quotient derived by dividing (A) an amount equal to the sum
of (X) the product of (a) the lower of (i) the Exercise Price in effect
immediately prior to such issuance or sale and (ii) the Market Price per share
of Common Stock on the date immediately prior to the issuance or sale of such
shares, in either event, reduced, but not below the par value of the Common
Stock, by the positive difference between the (u) Market Price per share of
Common Stock on the date immediately prior to the issuance or sale and (v) the
amount per share received in connection with such issuance or sale, multiplied
by (b) the total number of shares of Common Stock outstanding immediately prior
to such issuance or sale plus, (Y) the aggregate of the amount of all
consideration, if any, received by the Company upon such issuance or sale, by
(B) the total number of shares of Common Stock
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<PAGE>
outstanding immediately after such issuance or sale; provided, however, that in
-------- -------
no event shall the Exercise Price be adjusted pursuant to this computation to an
amount in excess of the Exercise Price in effect immediately prior to such
computation, except in the case of a combination of outstanding shares of Common
Stock, as provided by Section 8.3 hereof.
(b) In addition to the foregoing, in the event the closing bid
price of the Company'S Common Stock is less than $4.97 at any time during the
period commencing on the date hereof and ending on March 11, 2002 (the
"Adjustment Period") the Exercise Price shall be adjusted as herein provided. In
the event the closing bid price of the Common Stock is less than $4.97 for five
consecutive trading days during the Adjustment Period, the Exercise Price shall
be reduced to the lower of the then current Exercise Price or the lowest of the
average closing bid price of the Common Stock for five consecutive trading days
during the Adjustment Period. In no event shall the Exercise Price be adjusted
below $1.25 on account of this adjustment in this subparagraph 8(b).
(c) For the purposes of this Section 8 the term "Exercise Price"
shall mean the Exercise Price per share of Common Stock set forth in Section 6
hereof, as adjusted from time to time pursuant to the provisions of this Section
8.
(d) For the purposes of any computation to be made in accordance
with this Section 8.1, the following provisions shall be applicable:
(i) In case of the issuance or sale of shares of Common Stock for
a consideration part or all of which shall be cash, the amount of the cash
consideration therefor shall be deemed to be the amount of cash received by the
Company for such shares (or, if shares of Common Stock are offered by the
Company for subscription, the subscription price, or, if shares of Common Stock
shall be sold to underwriters or dealers for public offering without a
subscription offering, the initial public offering price) before deducting
therefrom any compensation paid or discount allowed in the sale, underwriting or
purchase thereof by underwriters or dealers or others performing similar
services, or any expenses incurred in connection therewith.
(ii) In case of the issuance or sale (otherwise than as a
dividend or other distribution on any stock of the Company) of shares of Common
Stock for a consideration part or all of which shall be other than cash, the
amount of the consideration therefor other than cash shall be deemed to be the
value of such consideration as determined in good faith by the Board of
Directors of the Company.
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<PAGE>
(iii) Shares of Common Stock issuable by way of dividend or other
distribution on any stock of the Company shall be deemed to have been issued
immediately after the opening of business on the day following the record date
for the determination of stockholders entitled to receive such dividend or other
distribution and shall be deemed to have been issued without consideration.
(iv) The reclassification of securities of the Company other than
shares of Common Stock into securities including shares of Common Stock shall be
deemed to involve the issuance of such shares of Common Stock for a
consideration other than cash immediately prior to the close of business on the
date fixed for the determination of security holders entitled to receive such
shares, and the value of the consideration allocable to such shares of Common
Stock shall be determined as provided in subsection (d)(ii) of this Section 8.1.
(v) The number of shares of Common Stock at any one time
outstanding shall include the aggregate number of shares issued or issuable
(subject to readjustment upon the actual issuance thereof) upon the exercise of
options, rights, warrants and upon the conversion or exchange of convertible or
exchangeable securities.
8.2 Options, Rights, Warrants and Convertible and Exchangeable
----------------------------------------------------------
Securities. In case the Company shall at any time after the date hereof issue
- ----------
options, rights or warrants to subscribe for shares of Common Stock, or issue
any securities convertible into or exchangeable for shares of Common Stock, for
a consideration per share less than the Exercise Price in effect or the Market
Price immediately prior to the issuance of such options, rights or warrants, or
such convertible or exchangeable securities, or without consideration, the
Purchase Price in effect immediately prior to the issuance of such options,
rights or warrants, or such convertible or exchangeable securities, as the case
may be, shall be reduced to a price determined by making a computation in
accordance with the provisions of Section 8.1 hereof, provided that:
(a) The aggregate maximum number of shares of Common Stock, as
the case may be, issuable under such options, rights or warrants shall be deemed
to be issued and outstanding at the time such options, rights or warrants were
issued, and for a consideration equal to the minimum purchase price per share
provided for in such options, rights or warrants at the time of issuance, plus
the consideration (determined in the same manner as consideration received on
the issue or sale of shares in accordance with the terms of the Warrants), if
any, received by the Company for such options, rights or warrants.
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<PAGE>
(b) The aggregate maximum number of shares of Common Stock
issuable upon conversion or exchange of any convertible or exchangeable
securities shall be deemed to be issued and outstanding at the time of issuance
of such securities, and for a consideration equal to the consideration
(determined in the same manner as consideration received on the issue or sale of
shares of Common Stock in accordance with the terms of the Warrants) received by
the Company for such securities, plus the minimum consideration, if any,
receivable by the Company upon the conversion or exchange thereof.
(c) If any change shall occur in the price per share provided for
in any of the options rights or warrants referred to in subsection (a) of this
Section 8.2, or in the price per share at which the securities referred to in
subsection (b) of this Section 8.2 are convertible or exchangeable, such
options, rights or warrants or conversion or exchange rights, as the case may
be, shall be deemed to have expired or terminated on the date when such price
change became effective in respect of shares not theretofore issued pursuant to
the exercise or conversion or exchange thereof, and the Company shall be deemed
to have issued upon such date new options, rights or warrants or convertible or
exchangeable securities at the new price in respect of the number of shares
issuable upon the exercise of such options, rights or warrants or the conversion
or exchange of such convertible or exchangeable securities.
(d) Notwithstanding the foregoing, the Exercise Price shall not
be adjusted to a price less than $2.00 per share as adjusted from time to time
in accordance with paragraph 8.3 (the "Base Price") on account of this paragraph
8.2 unless the "consideration per share" referred to above for any such issuance
or sale is less than the Base Price.
8.3 Subdivision and Combination. In case the Company shall at any
---------------------------
time subdivide or combine the outstanding shares of Common Stock, the Exercise
Price shall forthwith be proportionately decreased in the case of subdivision or
increased in the case of combination.
8.4 Adjustment in Number of Securities. Upon each adjustment of the
----------------------------------
Exercise Price pursuant to the provisions of this Section 8, the number of
Warrant Securities issuable upon the exercise of each Warrant shall be adjusted
to the nearest full amount by multiplying a number equal to the Exercise Price
in effect immediately prior to such adjustment by the number of Warrant
Securities issuable upon exercise of the Warrants immediately prior to such
adjustment and dividing the product so obtained by the adjusted Exercise Price.
8.5 Definition of Common Stock. For the purpose of this Agreement,
--------------------------
the term "Common Stock" shall mean (i) the class
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<PAGE>
of stock designated as Common Stock in the Articles of Incorporation of the
Company as may be amended as of the date hereof, or (ii) any other class of
stock resulting from successive changes or reclassifications of such Common
Stock, consisting solely of changes in par value, or from par value to no par
value, or from no par value to par value. In the event that the Company shall
after the date hereof issue securities with greater or superior voting rights
than the shares of Common Stock outstanding as of the date hereof, the Holder,
at its option, may receive upon exercise of any Warrant either shares of Common
Stock or a like number of such securities with greater or superior voting
rights.
8.6 Merger or Consolidation. In case of any consolidation of the
-----------------------
Company with, or merger of the Company with, or merger of the Company into,
another corporation (other than a consolidation or merger which does not result
in any reclassification or change of the outstanding Common Stock), the
corporation formed by such consolidation or merger shall execute and deliver to
the Holder a supplemental warrant agreement providing that the holder of each
Warrant then outstanding or to be outstanding shall have the right thereafter
(until the expiration of such Warrant) to receive, upon exercise of such
Warrant, the kind and amount of shares of stock and other securities and
property receivable upon such consolidation or merger, by a holder of the number
of shares of Common Stock of the Company for which such warrant might have been
exercised immediately prior to such consolidation, merger, sale or transfer.
Such supplemental warrant agreement shall provide for adjustments which shall be
identical to the adjustments provided in Section 8. The above provisions of
this subsection shall similarly apply to successive consolidations or mergers.
8.7 No Adjustment of Exercise Price in Certain Cases. No adjustment
------------------------------------------------
of the Exercise Price shall be made:
(a) Upon the conversion or exercise of securities outstanding on
the date hereof; or
(b) If the amount of said adjustment shall be less than two cents
($.02) per Warrant; provided, however, that in such case any adjustment that
-------- -------
would otherwise be required then to be made shall be carried forward and shall
be made at the time of and together with the next subsequent adjustment which,
together with any adjustment so carried forward, shall amount to at least two
cents ($.02) per Warrant.
8.9 Dividends and Other Distributions. In the event that the
---------------------------------
Company shall at any time prior to the exercise of all Warrants declare a
dividend (other than a dividend consisting solely of shares of Common Stock) or
otherwise distribute to its stockholders any assets, property, rights, evidences
of
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<PAGE>
indebtedness, securities (other than shares of Common Stock), whether issued
by the Company or by another, or any other thing of value, the Holders of the
unexercised Warrants shall thereafter be entitled, in addition to the shares of
Common Stock or other securities and property receivable upon the exercise
thereof, to receive, upon the exercise of such Warrants, the same property,
assets, rights, evidences of indebtedness, securities or any other thing of
value that they would have been entitled to receive at the time of such dividend
or distribution as if the Warrants had been exercised immediately prior to such
dividend or distribution. At the time of any such dividend or distribution, the
Company shall make appropriate reserves to ensure the timely performance of the
provisions of this subsection 8.9.
9. Exchange and Replacement of Warrant Certificates. Each Warrant
------------------------------------------------
Certificate is exchangeable without expense, upon the surrender thereof by the
registered Holder at the principal executive office of the Company, for a new
Warrant Certificate of like tenor and date representing in the aggregate the
right to purchase the same number of Warrant Securities in such denominations as
shall be designated by the Holder thereof at the time of such surrender.
Upon receipt by the Company of evidence reasonably satisfactory to it
of the loss, theft, destruction or mutilation of any Warrant Certificate, and,
in case of loss, theft or destruction, of indemnity or security reasonably
satisfactory to it, and reimbursement to the Company of all reasonable expenses
incidental thereto, and upon surrender and cancellation of the Warrants, if
mutilated, the Company will make and deliver a new Warrant Certificate of like
tenor, in lieu thereof.
10. Elimination of Fractional Interests. The Company shall not be
-----------------------------------
required to issue certificates representing fractions of shares of Common Stock
upon the exercise of the Warrants, nor shall it be required to issue scrip or
pay cash in lieu of fractional interests, it being the intent of the parties
that all fractional interests shall be eliminated by rounding any fraction up to
the nearest whole number of shares of Common Stock or other securities,
properties or rights.
11. Reservation and Listing of Securities. The Company shall at all times
-------------------------------------
after July 31, 1997, reserve and keep available out of its authorized shares of
Common Stock, solely for the purpose of issuance upon the exercise of the
Warrants, such number of shares of Common Stock or other securities, properties
or rights as shall be issuable upon the exercise thereof. The Company agrees
that, upon exercise of the Warrants and payment of the Exercise Price therefor,
all shares of Common Stock and other securities issuable upon such exercise
shall be duly and validly issued, fully paid, non-assessable and not subject to
the preemptive rights of any stockholder. As long as
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<PAGE>
the Warrants shall be outstanding, the Company shall use its best efforts to
cause all shares of Common Stock issuable upon the exercise of the Warrants to
be listed (subject to official notice of issuance) on all securities exchanges
on which the Common Stock may then be listed and/or quoted.
12. Notices to Warrant Holders. Nothing contained in this Agreement shall
--------------------------
be construed as conferring upon the Holders the right to vote or to consent or
to receive notice as a stockholder in respect of any meetings of stockholders
for the election of directors or any other matter, or as having any rights
whatsoever as a stockholder of the Company. If, however, at any time prior to
the expiration of the Warrants and their exercise, any of the following events
shall occur:
(a) the Company shall take a record of the holders of its shares of
Common Stock for the purpose of entitling them to receive a dividend or
distribution payable otherwise than in cash, or a cash dividend or distribution
payable otherwise than out of current or retained earnings, as indicated by the
accounting treatment of such dividend or distribution on the books of the
Company; or
(b) the Company shall offer to all the holders of its Common Stock
any additional shares of capital stock of the Company or securities convertible
into or exchangeable for shares of capital stock of the Company, or any option,
right or warrant to subscribe therefor; or
(c) a dissolution, liquidation or winding up of the Company (other
than in connection with a consolidation or merger) or a sale of all or
substantially all of its property assets and business as an entirety shall be
proposed;
then, in any one or more of said events the Company shall give written notice of
such event at least fifteen days prior to the date fixed as a record date or the
date of closing the transfer books for the determination of the stockholders
entitled to such dividend, distribution, convertible or exchangeable securities
or subscription rights, or entitled to vote on such proposed dissolution,
liquidation, winding up or sale. Such notice shall specify such record date or
the date of closing the transfer books, as the case may be. Failure to give
such notice or any defect therein shall not affect the validity of any action
taken in connection with the declaration or payment of any such dividend, or the
issuance of any convertible or exchangeable securities, or subscription rights,
options or warrants, or any proposed dissolution, liquidation, winding up or
sale.
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<PAGE>
13. Notices.
-------
All notices requests, consents and other communications hereunder
shall be in writing and shall be deemed to have been duly made when delivered,
or mailed by registered or certified mail, return receipt requested:
(a) If to the registered Holder of the Warrants, to the address
of such Holder as shown on the books of the Company; or
(b) If to the Company, to 13751 South Wadsworth Park Drive, Suite
200, Draper, Utah 84020 or to such other address as the Company may designate by
notice to the Holders.
14. Successors. All the covenants and provisions of this Agreement shall
----------
be binding upon and inure to the benefit of the Company, the Holders and their
respective successors and assigns hereunder.
15. Termination. This Agreement shall terminate at the close of business
-----------
on March 11, 2002. Notwithstanding the foregoing, the indemnification
provisions contained herein shall survive such termination.
16. Governing Law; Submission to Jurisdiction. This Agreement and each
-----------------------------------------
Warrant Certificate issued hereunder shall be deemed to be a contract made under
the laws of the State of Delaware and for all purposes shall be construed in
accordance with the laws of said State without giving effect to the rules of
said State governing the conflicts of laws.
The Company and each Holder hereby agree that any action, proceeding or
claim against it arising out of, or relating in any way to, this Agreement shall
be brought and enforced in the State or Federal courts located in the State of
Delaware, and irrevocably submits to such jurisdiction, which jurisdiction shall
be exclusive. The Company and each Holder hereby irrevocably waive any
objection to such exclusive jurisdiction or inconvenient forum. Any such
process or summons to be served upon the Company or any Holder (at the option of
the party bringing such action, proceeding or claim) may be served by
transmitting a copy thereof, by registered or certified mail, return receipt
requested, postage prepaid, addressed to it at the address set forth in Section
13 hereof. Such mailing shall be deemed personal service and shall be legal and
binding upon the party so served in any action, proceeding or claim. The
Company and each Holder agree that the prevailing party in any such action or
proceeding shall be entitled to recover from the other party all of its
reasonable legal costs and expenses relating to such action or proceeding and/or
incurred in connection with the preparation therefor.
- 16 -
<PAGE>
17. Entire Agreement; Modification. This Agreement contains the entire
------------------------------
understanding between the parties hereto with respect to the subject matter
hereof and may not be modified or amended except by a writing duly signed by the
party against whom enforcement of the modification or amendment is sought.
18. Severability. If any provision of this Agreement shall be held to be
------------
invalid or unenforceable, such invalidity or unenforceability shall not affect
any other provision of this Agreement.
19. Captions. The caption headings of the Sections of this Agreement are
--------
for convenience of reference only and are not intended, nor should they be
construed as, a part of this Agreement and shall be given no substantive effect.
20. Benefits of this Agreement. Nothing in this Agreement shall be
--------------------------
construed to give to any person or corporation other than the Company and the
Initial Holder and any other registered Holder(s) of the Warrant Certificates or
Warrant Securities any legal or equitable right, remedy or claim under this
Agreement; and this Agreement shall be for the sole and exclusive benefit of the
Company and the Initial Holder and any other Holder(s) of the Warrant
Certificates or Warrant Securities.
21. Counterparts. This Agreement may be executed in any number of
------------
counterparts and each of such counterparts shall for all purposes be deemed to
be an original, and such counterparts shall together constitute but one and the
same instrument.
- 17 -
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, as of the day and year first above written.
MEDCROSS, INC.
By: /s/ John Edwards
------------------------------
Name: John Edwards
----------------------------
Title: President
---------------------------
Winter Harbor, L.L.C.
By First Media Corporation, its general partner
By: /s/ Ralph W. Hardy, Jr.
------------------------------
Name: Ralph W. Hardy, Jr.
----------------------------
Title: Secretary
---------------------------
- 18 -
<PAGE>
THE WARRANTS REPRESENTED BY THIS CERTIFICATE AND THE OTHER SECURITIES ISSUABLE
UPON EXERCISE THEREOF MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO (i) AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, (ii) TO THE
EXTENT APPLICABLE, RULE 144 UNDER SUCH ACT (OR ANY SIMILAR RULE UNDER SUCH ACT
RELATING TO THE DISPOSITION OF SECURITIES), OR (iii) AN OPINION OF COUNSEL, IF
SUCH OPINION SHALL BE REASONABLY SATISFACTORY TO COUNSEL FOR THE ISSUER, THAT AN
EXEMPTION FROM REGISTRATION UNDER SUCH ACT IS AVAILABLE.
EXERCISABLE ON OR BEFORE
5:30 P.M., DELAWARE TIME, March 11, 2002
No. ________
500,000 Warrants
WARRANT CERTIFICATE
This Warrant Certificate certifies that Winter Harbor, L.L.C., or
registered assigns, is the registered holder of 500,000 Warrants to purchase
initially, at any time from the date hereof until 5:30 p.m. Delaware time on
March 11, 2002 ("Expiration Date"), up to 500,000 fully-paid and non-assessable
shares of common stock, par value $.007 per share ("Common Stock") of Medcross,
Inc., a Florida corporation (the "Company"), at the initial exercise price,
subject to adjustment in certain events (the "Exercise Price"), of $4.97 per
share of Common Stock upon surrender of this Warrant Certificate and payment of
the Exercise Price at an office or agency of the Company, but subject to the
conditions set forth herein and in the Warrant Agreement dated as of June 6,
1997 between the Company and Winter Harbor, L.L.C. (the "Warrant Agreement").
Except as otherwise provided in Section 3.2 of the Warrant Agreement, payment of
the Exercise Price shall be made by certified or official bank check in New York
Clearing House funds payable to the order of the Company.
No Warrant may be exercised after 5:30 p.m., Delaware time, on the
Expiration Date, at which time all Warrants evidenced hereby, unless exercised
prior thereto, shall thereafter be void.
The Warrants evidenced by this Warrant Certificate are part of a duly
authorized issue of Warrants pursuant to the Warrant Agreement, which Warrant
Agreement is hereby incorporated by reference in and made a part of this
instrument and is hereby referred to for a description of the rights, limitation
of rights, obligations, duties and immunities thereunder of the Company and the
holders (the words "holders" or "holder" meaning the registered holders or
registered holder) of the Warrants.
The Warrant Agreement provides that upon the occurrence of certain events
the Exercise Price and/or number of the Company's
<PAGE>
securities issuable thereupon may, subject to certain conditions, be adjusted.
In such event, the Company will, at the request of the holder, issue a new
Warrant Certificate evidencing the adjustment in the Exercise Price and the
number and/or type of securities issuable upon the exercise of the Warrants;
provided, however, that the failure of the Company to issue such new Warrant
- -------- -------
Certificates shall not in any way change, alter or otherwise impair, the rights
of the holder as set forth in the Warrant Agreement.
Upon due presentment for registration of transfer of this Warrant
Certificate at an office or agency of the Company, a new Warrant Certificate or
Warrant Certificates of like tenor and evidencing in the aggregate a like number
of Warrants shall be issued to the transferee(s) in exchange for this Warrant
Certificate, subject to the limitations provided herein and in the Warrant
Agreement, without any charge except for any tax or other governmental charge
imposed in connection with such transfer.
Upon the exercise of less than all of the Warrants evidenced by this
Warrant Certificate, the Company shall forthwith issue to the holder hereof a
new Warrant Certificate representing such number of unexercised Warrants.
The Company may deem and treat the registered holder(s) hereof as the
absolute owner(s) of this Warrant Certificate (notwithstanding any notation of
ownership or other writing hereon made by anyone), for the purpose of any
exercise hereof, and of any distribution to the holder(s) hereof, and for all
other purposes, and the Company shall not be affected by any notice to the
contrary.
All terms used in this Warrant Certificate which are defined in the Warrant
Agreement shall have the meanings assigned to them in the Warrant Agreement.
IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to be
duly executed under its corporate seal.
Dated as of June 6, 1997
MEDCROSS, INC.
By /s/ John Edwards
-------------------------
Name: John Edwards
---------------------
Title: President
--------------------
[SEAL]
<PAGE>
[FORM OF ELECTION TO PURCHASE]
The undersigned hereby irrevocably elects to exercise the right,
represented by this Warrant Certificate, to purchase __________ shares of Common
Stock and herewith tenders in payment for such securities a certified or
official bank check payable in New York Clearing House Funds to the order of
Medcross Inc. in the amount of $____________, all in accordance with the terms
hereof. The undersigned requests that a certificate for such securities be
registered in the name of _________________________ whose address is
_____________________________________________ and that such Certificate be
delivered to _______________________ whose address is
___________________________________________.
Dated:
Signature _____________________
(Signature must conform in all
respects to name of holder as
specified on the face of the
Warrant Certificate.)
_______________________________
Insert Social Security or Other
Identifying Number of Holder
<PAGE>
ASSIGNMENT FORM
---------------
The Holder hereby assigns and transfers unto
Name ______________________________________________________________
(Please typewrite or print in block letters)
Address ___________________________________________________________
___________________________________________________________
the right to purchase Common Stock of _____________ represented by this Warrant
to the extent of _______________ shares of Common Stock as to which such right
is exercisable and does hereby irrevocably constitute and appoint
_____________________________ Attorney, to transfer the same on the books of
_____________ with full power of substitution in the premises.
Date: ___________________, 199_
______________________________
Name of Registered Holder
______________________________
Signature
______________________________
Signature, if held jointly
<PAGE>
Exhibit 99(d)
PLEDGE AGREEMENT
----------------
THIS PLEDGE AGREEMENT is made and entered into as of June 6, 1997, by and
between MEDCROSS, INC., a Florida corporation (the "Pledgor"), and Winter
Harbor, L.L.C., a Delaware limited partnership (the "Pledgee").
RECITALS
--------
The Pledgor and the Pledgee have entered into that certain Loan Agreement
of even date herewith (as the same may be amended, modified, extended or
restated, the "Agreement"), pursuant to which the Pledgee has agreed to make a
Loan to the Pledgee in the aggregate principal amount of $2,000,000.
Capitalized terms used herein and not otherwise defined shall have the meanings
assigned to them in the Agreement. As security for the Loan, the Pledgor has
agreed to enter into this Pledge Agreement.
AGREEMENTS
----------
In consideration of loans, credit or other financial accommodation extended
or continued from time to time to the Pledgor by the Pledgee, the Pledgor does
hereby agree as follows:
1. Pledge.
------
(a) The Pledgor hereby grants to the Pledgee a first priority
security interest in, and pledges, assigns and delivers to the Pledgee, all the
issued and outstanding shares of stock of each of I-Link Communications, Inc.
("I-Link") and Family Telecommunications, Incorporated ("FTI"), each a Utah
corporation and a wholly owned subsidiary of the Pledgor (the "Stock"), and
shall deliver to Pledgee simultaneously with the execution and delivery hereof,
the stock certificates described in Exhibit A annexed hereto evidencing the
Stock and stock powers relating thereto, duly executed in blank.
(b) The Pledgor and the Pledgee agree that the Stock shall be held on
the terms and conditions hereinafter set forth as collateral security for the
obligations of the Pledgor to the Pledgee under the Agreement.
2. Representations and Warranties. The Pledgor represents and warrants
------------------------------
to the Pledgee as follows:
(a) the Stock constitutes all of the issued and outstanding capital
stock of each of I-Link and FTI;
(b) the Stock is validly issued, fully paid and nonassessable and is
not subject to any liens, charges or encumbrances whatsoever;
(c) there are no existing options, warrants or other rights to
purchase any of the Stock;
<PAGE>
(d) the execution, delivery and performance of this Pledge Agreement
will not conflict with, result in a breach of or constitute a default under any
indenture or agreement to which the Pledgor, I-Link or FTI is a party or by
which any of them is bound, or result in the creation or imposition of any lien,
charge or encumbrance of any nature whatsoever on any of their respective
property or assets;
(e) this Pledge Agreement constitutes the legal, valid and binding
obligation of the Pledgor, enforceable in accordance with its terms;
(f) the Pledgor has all requisite power and authority to enter into
this Pledge Agreement and to carry out the transactions contemplated hereby; and
(g) no consent or approval of any person or entity is or will be
required in connection with the execution, delivery and performance of this
Pledge Agreement.
3. Term. The Pledgee shall hold the Stock as security for the
----
performance by the Pledgor of its obligations and liabilities under the
Agreement, and the Stock shall be held by the Pledgee until the principal and
interest due on the Note are paid in full and the Agreement shall have
terminated, at which time the Pledgee shall deliver the Stock (to the extent not
otherwise disposed of pursuant hereto) to the Pledgor free and clear of this
Pledge Agreement, and this Pledge Agreement shall thereupon terminate.
4. Voting. While the certificates representing the Stock continue to be
------
held by the Pledgee, such certificates shall remain in the name of the Pledgor,
and the Pledgor shall have and exercise all rights of ownership, including the
right to vote the Stock; provided, however, that the Pledgor shall not vote the
-------- -------
Stock in any manner that is inconsistent with the provisions of the Agreement or
this Pledge Agreement. If an Event of Default shall occur, the Pledgee shall be
entitled to the remedies set forth in Section 6 hereof.
5. Stock Adjustments. The Pledgor agrees that in the event that during
-----------------
the term of this Pledge Agreement any stock dividend, reclassification,
readjustment or other change is declared or made with respect to the Stock, or
any subscription, warrant or other option is exercisable with respect to the
Stock, it shall cause all new, substituted or additional shares or other
securities issued by reason of any such change or option to be delivered to the
Pledgee and to be held by the Pledgee under the terms of this Pledge Agreement
in the same manner as the shares of Stock originally pledged hereunder. There
likewise shall be deposited with the Pledgee, to be added to the pledged
property and subject to the pledge, any and all additional issued shares of I-
Link or FTI to the Pledgor by way of stock dividend, stock splits, stock rights,
new securities or otherwise, to the end that the Pledgee will at all times hold,
subject to the pledge, all the issued and outstanding stock of I-Link and FTI.
-2-
<PAGE>
6. Remedies. If an Event of Default shall occur, the Pledgee may, after
---------
fifteen days prior notice to the Pledgor, sell, assign and deliver the whole or,
from time to time, any part of the Stock or any interest or part thereof, at any
private sale or at public auction, for cash, or credit or for other property,
for immediate or future delivery, and for such price or prices and on such terms
as the Pledgee reasonably may determine to be commercially reasonable. The
Pledgee shall give the Pledgor reasonable notice of the time and place of any
public sale of the Stock or the time after which any private sale or other
intended disposition thereof is to be made. The requirement of reasonable
notice shall be met if notice of such sale or other intended disposition is
mailed, by certified or registered mail, return receipt requested, to the
Pledgor at the address set forth in Section 9 at least fifteen days prior to the
time of such sale or other intended disposition. The Pledgor hereby waives and
releases any and all right or equity of redemption whether before or after sale
hereunder. At any such sale the Pledgee may bid for and purchase for its own
account the whole or any part of the Stock so sold, free from any such right or
equity of redemption. Upon completion of the sale, Pledgee shall deliver the
Stock, or any portion thereof, to the purchaser or purchasers thereof. The net
proceeds of any such sale shall be applied as follows:
(i) First, to the expenses of the sale and enforcement of this Pledge
-----
Agreement, including but not limited to, attorneys' fees and expenses, including
attorneys' fees out of court, in trial, on appeal, in bankruptcy proceedings, or
otherwise;
(ii) Second, to the payment of the Pledgor's obligations under the
------
Agreement, including, without limitation, the payment of interest and principal
under the Note; and
(iii) Third, only after payment in full of the above, to the payment
-----
to the Pledgor of any excess proceeds, along with any shares of the Stock
remaining unsold, subject to the receipt of notice of and the provisions of any
other agreement between the parties with respect to the disposition of said
excess proceeds or unsold shares. Notwithstanding the sale or other disposition
of the Stock by the Pledgee hereunder, the Pledgor shall remain liable for any
deficiency.
7. Encumbrances. During the term of this Pledge Agreement specified in
------------
Section 3, the Pledgor shall not sell, assign, transfer or otherwise dispose of,
grant any option to any individual or entity other than the Pledgee with respect
to, or mortgage, pledge or otherwise encumber any of the Stock.
8. Miscellaneous.
-------------
8.1 Transfer taxes, if any, applicable to any transfer of shares of
Stock upon the occurrence of an Event of Default or upon termination of this
Pledge Agreement shall be payable by the person or persons to whom the shares
are being transferred; provided,
--------
-3-
<PAGE>
however, that the Pledgor agrees to reimburse the Pledgee promptly for all such
- -------
transfer taxes which the Pledgee may be required to pay.
8.2 No single or partial exercise of any power hereunder shall
preclude other or future exercise thereof or the exercise of any other power.
The holder of the Note may proceed against any portion of the security held
therefor in such order and in such manner as the holder may see fit, without
waiver of any rights with respect to any other security.
8.3 The Pledgee may deal in any manner with the Note, the Agreement
or any other agreement required thereby without notice to or the consent of the
Pledgor, including, without limitation, in the following manner:
(a) to modify, supplement or otherwise change any terms of the Note,
the Agreement or any such other agreement (subject to any right of the Pledgor
to consent to any modification of or supplement or change to any such terms); to
grant any extension or renewal of the Note, the Agreement or such other
agreement; to grant any other waiver or indulgence with respect to the Note, the
Agreement or such other agreement; and to effect any release, compromise or
settlement with respect to the Note, the Agreement or such other agreement; and
(b) to consent to the substitution, exchange or release of all or any
part of any other security (other than the Stock) at any time held by the
Pledgee as security or surety for the obligations secured hereby.
9. Notices. All notices required to be sent hereunder shall be in
-------
writing and shall be sent by registered mail, return receipt requested, to the
parties as follows:
To the Pledgor:
Medcross, Inc.
13751 South Wadsworth Park Drive
Suite 200
Draper, Utah 84020
Attention: John W. Edwards, President
To the Pledgee:
Winter Harbor, L.L.C.
11400 Skipwith Lane
Potomac, Maryland 20854
Attention: Ralph W. Hardy, Jr.
-4-
<PAGE>
Addresses may be changed by notice in writing to the other parties.
10. Choice of Law, etc. This Pledge Agreement shall be construed and
-------------------
enforced under and governed by the laws of the State of Delaware, other than the
conflicts of law provisions thereof. This Pledge Agreement embodies the entire
agreement and understanding between the parties and supersedes all prior
agreements and understandings relating to the subject matter hereof, and this
Pledge Agreement may not be modified or amended or any term or provision hereof
waived or discharged except in writing signed by the party against whom such
amendment, modification, waiver or discharge is sought to be enforced. This
Pledge Agreement shall be binding on the successors, assigns, and legal
representatives of the parties hereto and shall inure to the benefit of and be
enforceable by their successors, assigns, and legal representatives; provided,
--------
however, that neither the Stock nor this Pledge Agreement may be assigned or
- -------
transferred in whole or in part, voluntarily or involuntarily, by the Pledgor
without the prior written consent of the Pledgee, and the Pledgee may assign
this Pledge Agreement and all of its rights hereunder without any consent of the
Pledgor. The headings of this Pledge Agreement are for the purpose of reference
only and shall not limit or otherwise affect the meaning hereof. The Pledgor
shall take such further actions as may be reasonably requested by the Pledgee
from time to time in order to perfect the security interest of the Pledgee
hereunder and to assure and confirm onto the Pledgee its rights, powers and
remedies hereunder.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
-5-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Pledge
Agreement to be executed on their behalf all as of the day and year first above
mentioned.
MEDCROSS, INC.
By: /s/ John Edwards
---------------------------------
Name: John Edwards
-------------------------------
Title: President
------------------------------
WINTER HARBOR, L.L.C.
By: First Media L.P. its member
By: First Media Corporation, its
sole general partner
By: /s/ Ralph W. Hardy, Jr.
---------------------------------
Name: Ralph W. Hardy, Jr.
-------------------------------
Title: Secretary
------------------------------
-6-
<PAGE>
EXHIBIT A
TO PLEDGE AGREEMENT
DESCRIPTION OF PLEDGED SHARES
The following are the shares pledged pursuant to the Pledge Agreement:
100 shares of the Common Stock of I-Link
Communications, Inc. (formerly I-Link Worldwide,
Inc.) represented by Certificate No. 2 and
standing in the name of Medcross, Inc., on the
books of I-Link Communications, Inc.
2,000 shares of the Common Stock of Family
Telecommunications, Incorporated represented
by Certificate No. 3 and standing in the name
of Medcross, Inc., on the books of Family
Telecommunications Incorporated
<PAGE>
Exhibit 99(e)
SECURITY AGREEMENT
------------------
THIS SECURITY AGREEMENT is made and entered into as of June 6, 1997, by and
among FAMILY TELECOMMUNICATIONS, INCORPORATED, a Utah corporation with its
principal place of business at 13751 South Wadsworth Park Drive, Suite 200,
Draper, UT 84020 ("FTI"), I-LINK COMMUNICATIONS, INC., a Utah corporation, with
its principal place of business at 13751 South Wadsworth Park Drive, Suite 200,
Draper, UT 84020 ("I-LINK" and together with FTI, collectively, the "Debtors"
and individually, a "Debtor"), and WINTER HARBOR, L.L.C., a Delaware limited
partnership with its principal place of business at 11400 Skipwith Lane,
Potomac, Maryland 20854 (the "Secured Party").
RECITALS
--------
A. Medcross, Inc., a Florida corporation (the "Company"), owns all of the
issued and outstanding shares of the capital stock of each of the Debtors. The
Company and the Secured Party have entered into a Loan Agreement dated as of
even date herewith (as the same may be extended, amended, restated or modified
from time to time, the "Loan Agreement"), which is hereby incorporated herein by
this reference, pursuant to which the Secured Party has agreed to loan to the
Company up to $2,000,000 on a term loan basis. All capitalized terms used herein
and not otherwise defined herein shall have the meanings ascribed to such terms
in the Loan Agreement. The proceeds of the Loan will be provided to the Debtors
for the acquisition of assets, for capital expenditures and for working capital
purposes.
B. The Debtors have guaranteed the obligations of the Company under the
Loan Agreement and the Note pursuant to the terms of a Subsidiary Guaranty of
even date herewith (the "Guaranty"). It is a condition precedent to the
extensions of credit to the Company under the Loan Agreement that the Debtors,
among other things, shall have executed and delivered this Security Agreement.
C. The Company and the Debtors share an identity of interests as members
of a consolidated group of companies engaged in substantially similar
businesses. The Company provides certain centralized financial, accounting and
management services to the Debtors. and the making of the Loan will facilitate
the expansion and enhance the overall financial strength and stability of the
Company's corporate group, including the Debtors. Accordingly, the Debtors will
derive substantial benefits as a result of the extensions of credit to the
Company under the Loan Agreement, which benefits are hereby acknowledged by the
Debtors, and the Debtors, therefore, desire to enter into this Security
Agreement in order to satisfy the condition precedent described in the preceding
paragraph.
AGREEMENTS
----------
In consideration of the foregoing Recitals, and of the Loan to be made by
the Secured Party to the Company under the Loan Agreement, which will be of
material economic benefit to the Debtors, the Debtors and the Secured Party
agree as follows:
<PAGE>
1. GRANT OF SECURITY INTEREST. In order to secure the payment and
--------------------------
performance of all of the obligations of FTI and I-Link under the Guaranty and
the payment and performance of all of the obligations of the Company to the
Secured Party under the Loan Agreement and the Note, plus interest accrued
thereon (being hereinafter collectively referred to as the "Obligations"), FTI
and I-Link hereby grant to the Secured Party a first priority perfected security
interest in all of their respective right, title and interest in and to all of
their personal property, both tangible and intangible and of every kind and
description, whether now or hereafter existing, or now owned or hereafter
acquired, and wherever located, and all proceeds, products, replacements,
additions, accessions and/or substitutes therefor, including, without
limitation, all goods, machinery, equipment, furniture, furnishings, fixtures,
inventory, accounts, chattel paper, instruments and general intangibles, as such
terms, may be defined in the Uniform Commercial Code in the jurisdiction in
which such assets are located (other than equipment leased to I-Link or FTI and
any leases which by their terms prohibit the grant of security interests in, or
assignments of, I-Link's or FTI's leasehold interest therein), and the proceeds
and products of any and all of the foregoing assets and properties described in
this Section 1, including proceeds of insurance policies relating to any and all
of the foregoing assets and properties. All of the foregoing shall be
hereinafter referred to as the "Collateral."
2. WARRANTIES AND COVENANTS OF FTI AND I-LINK. Each of FTI and I-
------------------------------------------
Link represents, warrants and covenants that:
(a) the Collateral (and all records pertaining thereto) will at all
times be kept in their current locations and neither FTI nor I-Link will change
the location at which any of the Collateral is usually kept or the location of
any of their respective chief executive offices or principal places of business
without giving thirty days prior written notice to the Secured Party;
(b) FTI and I-Link own and have possession of the Collateral;
(c) all the Collateral is genuine and enforceable and, except as
permitted in the Loan Agreement, free from liens, adverse claims, charges,
encumbrances, taxes or assessments, other than the liens created hereby, and FTI
and I-Link shall defend the same against all claims and demands of all persons
at any time claiming against the same or any interests therein adverse to the
Secured Party;
(d) all items of the Collateral comply with applicable laws,
including, where applicable, Federal Reserve Regulations and any state consumer
credit and usury laws;
(e) no financing statement covering any of the Collateral, and naming
any secured party other than the Secured Party, is on file in any public office;
-2-
<PAGE>
(f) FTI and I-Link will, at their sole cost and expense, maintain,
replace, repair, service and take other action as may be necessary from time to
time to keep and preserve their inventory, machinery and equipment in general
repair and good working order and any inventory, machinery or equipment which
wears out or is destroyed will be replaced or restored if necessary for the
operation of the businesses of FTI or I-Link in the ordinary course. FTI and I-
Link will within 10 days notify the Secured Party of any event comprising
significant loss or decrease in the value of the Collateral in excess of $5,000;
(g) FTI and I-Link will comply with all laws, rules and regulations
relating to, and shall pay prior to delinquency, all license fees, registration
fees, taxes and assessments and all other charges, which may be levied upon or
assessed against, or which may become security interests, liens or other
encumbrances upon the ownership, operation, possession or maintenance of the
Collateral; provided that neither FTI nor I-Link shall be required to comply
with any such law, rule or regulation or to pay any such tax or assessment or
other such charge, the validity of which is being contested by FTI or I-Link in
good faith by appropriate proceedings commenced and prosecuted with due
diligence and with respect to which adequate reserves have been established and
are being maintained in accordance with generally accepted accounting
principles;
(h) FTI and I-Link will execute and at their expense file and refile
such financing statements, continuation statements and other documents in such
offices as the Secured Party may deem necessary or appropriate in order to
protect or preserve the Secured Party's security interest in the Collateral;
(i) Neither FTI nor I-Link will sell, offer to sell, hypothecate or
otherwise dispose of any material part of the Collateral (including proceeds)
subject hereto, or any part thereof or interest therein at any time other than
in the ordinary course of business and in exchange for Collateral of like value
in which the Secured Party shall have a security interest;
(j) FTI and I-Link will at all times keep accurate records with
respect to the Collateral which are as complete and comprehensive as those which
are customarily maintained by those engaged in similar businesses, and the
Secured Party will have the right to inspect such records at such times and from
time to time as the Secured Party may reasonably request;
(k) FTI and I-Link will provide any service and do any other acts or
things necessary to keep the Collateral free and clear of all defenses, rights
of offset and counterclaims; the Secured Party may, at any time prior to
termination hereof, require FTI and I-Link from time to time to deliver to the
Secured Party (i) schedules describing all the Collateral subject hereto and
(ii) instruments and chattel paper included in the Collateral, appropriately
assigned and endorsed to the Secured Party;
-3-
<PAGE>
(l) FTI and I-Link will maintain insurance on the Collateral as
required under Section 6.1(e) of the Loan Agreement. In the event of failure to
provide and maintain insurance as herein provided, the Secured Party may, at its
option, provide such insurance and FTI and I-Link hereby promise to pay the
Secured Party on demand the amount of any disbursements made by the Secured
Party for such purpose. Risk of loss or damage shall accrue to FTI and I-Link
to the extent of any deficiency in any effective insurance. FTI and I-Link
shall furnish to the Secured Party certificates or other evidence satisfactory
to the Secured Party of compliance with the foregoing insurance provisions. FTI
and I-Link shall give immediate written notice to the Secured Party and to the
insurers of any loss or damage to the Collateral or any part thereof in excess
of $5,000 and shall promptly file all necessary or appropriate proof of loss
with the insurers. Any amounts collected or received under any such insurance
policies may be applied by FTI and I-Link either to the replacement or
restoration of the Collateral or to any of the Obligations secured hereby in the
manner provided in Section 8 hereof; and
(m) FTI and I-Link shall not change their respective names, identity
or corporate structure, voluntarily or involuntarily.
3. AUTHORITY TO COLLECT. Except as otherwise hereinafter set forth,
--------------------
unless and until the occurrence of an event which constitutes an Event of
Default hereunder or which upon the giving (or receiving) of notice or the lapse
of time or both would constitute such an Event of Default, FTI and I-Link shall
continue to collect, and upon the occurrence of such an event, FTI and I-Link
may, at the direction of the Lender, continue to collect, at their own expense,
all amounts due and to become due under any accounts, chattel paper, instruments
or general intangibles and in connection therewith may take such action as they
may deem necessary, advisable, convenient or proper for the enforcement,
collection, adjustment, settlement or compromise thereof.
4. EVENTS OF DEFAULT. The term "Event of Default" shall have the
-----------------
meaning assigned to it in the Loan Agreement.
5. REMEDIES. Upon the occurrence of an Event of Default, the
--------
Secured Party shall have the right to declare immediately due and payable all of
the Obligations, as provided in the Loan Agreement, without other notice or
demand, and to terminate any commitments to make loans or otherwise extend
credit to the Company. The Secured Party shall have all the rights and remedies
of a secured party under the Uniform Commercial Code and all other rights,
privileges, powers and remedies provided by law or equity.
Without limiting the generality of the foregoing, after the occurrence
of an Event of Default:
-4-
<PAGE>
(a) the Secured Party shall have the power to notify the account
debtor or debtors obligated under any accounts, chattel paper, instruments and
general intangibles of the assignment of such accounts, chattel paper, and
general intangibles to the Secured Party and of its security interest therein
and to direct such account debtor or debtors to make payment of all amounts due
or to become due to FTI or I-Link thereunder directly to the Secured Party and,
upon such notification to the account debtor or debtors, to enforce collection
of any thereof in the same manner and to the same extent as FTI or I-Link might
have done. The funds so collected shall be held as security for the payment of
the Obligations secured hereby and applied in the manner provided in Section 8
hereof.
FTI and I-Link hereby constitute and appoint the Secured Party as
their true and lawful attorney, in the place and stead of FTI and I-Link and
with full power of substitution, either in the Secured Party's own name or in
the name of FTI or I-Link, to ask for, demand, collect, receive and give
acquittance for any and all monies due or to become due under and by virtue of
any account, chattel paper, instruments and general intangibles, to endorse
checks, drafts, orders and other instruments for the repayment of monies payable
to FTI or I-Link on account thereof, and to settle, compromise, prosecute or
defend any action, claim or proceeding with respect thereto and to sell, assign,
pledge, transfer and make any agreement respecting, or otherwise deal with, the
same; provided, however, that nothing herein contained shall be construed as
requiring or obligating the Secured Party to make any demand, or to make any
inquiry as to the nature or sufficiency of any payment received by it, or to
present or file any claim or notice or to take any action with respect to any
account, chattel paper, instruments or general intangible or the monies due or
to become due thereunder or the property covered thereby, and no action taken or
omitted to be taken by the Secured Party with respect to any account, chattel
paper, instruments or general intangible shall give rise to any defense,
counterclaim or set off in favor of FTI or I-Link or to any claim or action
against the Secured Party;
(b) FTI and I-Link will deliver to the Secured Party from time to
time, as requested by the Secured Party, current lists of the Collateral;
(c) Neither FTI nor I-Link will dispose of the Collateral, except on
terms approved in writing by the Secured Party;
(d) FTI and I-Link will collect, assemble and deliver all of the
Collateral and books and records pertaining thereto, to the Secured Party at a
reasonably convenient place designated by the Secured Party; and
(e) the Secured Party may, to the extent permitted by law, enter onto
FTI's or I-Link's premises and take possession of the Collateral, and assign,
sell, lease or otherwise dispose of FTI's or I-Link's interests in the
Collateral for the account of FTI or I-Link and FTI and I-Link shall then be
liable for the difference between the payments and other
-5-
<PAGE>
amounts due under the Loan Agreement and amounts received pursuant to such
assignment or contract of sale or lease or other disposition of FTI's or I-
Link's interests in the Collateral and the amount of such difference shall then
be immediately due and payable. The Secured Party may, in its sole discretion,
designate a custodian or agent to take physical possession of the Collateral.
The Secured Party shall give FTI and I-Link reasonable notice of the time and
place of any public sale of the Collateral or the time after which any private
sale or other intended disposition thereof is to be made. The requirement of
reasonable notice shall be met if notice of the sale or other intended
disposition is mailed, by first class mail, postage prepaid, to FTI or I-Link at
their respective addresses set forth in Section 16 hereof or such other address
as FTI or I-Link may by notice have furnished the Secured Party in writing for
such purpose, at least fifteen days prior to the time of such sale or other
intended disposition.
Each purchaser at any such sale shall hold the property sold
absolutely free from any claim or right on the part of FTI or I-Link, and FTI
and I-Link hereby waive (to the extent permitted by law) all rights of
redemption, stay and/or appraisal which they now have or may at any time in the
future have under any rule of law or statute now existing or hereafter enacted.
6. POWERS OF THE SECURED PARTY. FTI and I-Link appoint the Secured
---------------------------
Party their true attorney in fact to perform any of the following powers, which
are coupled with an interest, and are irrevocable until termination of this
Security Agreement and may be exercised by the Secured Party's officers and
employees, or any of them, upon the occurrence of an Event of Default hereunder:
(a) to perform any obligation of FTI or I-Link hereunder in FTI's or
I-Link's respective names or otherwise;
(b) to give notice of the Secured Party's rights in the Collateral,
to enforce the same, and make extension agreements with respect thereto;
(c) to release persons liable on the Collateral and to give receipts
and acquittance and compromise disputes in connection therewith;
(d) to release security;
(e) to resort to security in any order;
(f) to prepare, execute, file, record or deliver notes, assignments,
schedules, designation statements, financing statements, continuation
statements, termination statements, statements of assignment and applications or
registration or like papers to perfect, preserve or release the Secured Party's
interest in the Collateral;
-6-
<PAGE>
(g) to verify facts concerning the Collateral by inquiry of obligors
thereon, or otherwise;
(h) to endorse, collect, deliver and receive payment under
instruments for the payment of money constituting or relating to Collateral;
(i) to prepare, adjust, execute, deliver and receive payment under
insurance claims;
(j) to exercise all rights, powers and remedies which FTI or I-Link
would have, but for this Security Agreement, under all of the Collateral subject
to this Security Agreement; and
(k) to do all acts and things and execute all documents in the names
of FTI or I-Link or otherwise, deemed by the Secured Party as necessary, proper
and convenient in connection with the preservation, perfection or enforcement of
its rights hereunder.
7. REMITTANCES. FTI and I-Link agree that upon the occurrence and
-----------
during the continuance of an Event of Default or a Potential Default all cash or
proceeds received by FTI or I-Link as a result of the sale, lease or other
disposition of any Collateral, whether received by FTI or I-Link in the exercise
of their collection rights hereunder or otherwise, shall be, at Secured Party's
discretion, remitted to the Secured Party or deposited to an account for the
benefit of the Secured Party (according to its instructions) in the form
received (properly endorsed to the order of the Secured Party or for collection
in accordance with the Secured Party's instructions) not later than the banking
business day following the day of receipt, to be held as security for the
payment of the Obligations secured hereby and applied by the Secured Party as
provided in Section 8 hereof. FTI and I-Link agree not to commingle any such
collections or proceeds with any of its other funds or property and agree to
hold the same upon an express trust for the Secured Party until remitted to the
Secured Party.
8. APPLICATION OF PROCEEDS. Except as expressly provided elsewhere
-----------------------
in this Security Agreement, all proceeds of the sale of the Collateral by the
Secured Party hereunder, and all other monies received by the Secured Party
pursuant to the terms of this Security Agreement (whether through the exercise
by the Secured Party of its rights of collection or otherwise), including, but
not limited to, any awards or other amounts payable upon any condemnation or
taking by eminent domain, shall be applied, as promptly as is practicable after
the receipt thereof by the Secured Party as follows:
FIRST: to the payment of all fees and expenses incurred by the Secured
-----
Party or any custodian appointed hereunder, if not previously paid by FTI or I-
Link, and all expenses incurred by the Secured Party in connection with any sale
of the Collateral, including, but
-7-
<PAGE>
not limited to, the expenses of taking, advertising, processing, preparing and
storing the Collateral to be sold, all court costs and fees and expenses of
counsel to the Secured Party in connection therewith, to the payment of all
expenses to be paid by FTI or I-Link pursuant to Section 17 of this Security
Agreement, and to the payment of all amounts for which the Secured Party is
entitled to indemnification hereunder and all advances made by the Secured Party
hereunder to the account of FTI or I-Link and the payment of all costs and
expenses paid or incurred by the Secured Party in connection with the exercise
of any right or remedy hereunder, to the extent that such advances, costs and
expenses shall not theretofore have been reimbursed to the Secured Party by FTI
or I-Link;
SECOND: to the payment to the Secured Party of the interest then due and
------
payable on the Note;
THIRD: to the payment to the Secured Party of the principal then due and
-----
payable on the Note;
FOURTH: to the payment to the Secured Party of any other amount owing to
------
the Secured Party under the Loan Agreement and any other documents related
thereto or under any other agreement of the Company, FTI or I-Link with the
Secured Party; and
FIFTH: only if all of the foregoing have been paid in full, to FTI and I-
-----
Link.
Notwithstanding the sale or other disposition of any Collateral by the
Secured Party hereunder, FTI and I-Link shall remain liable for any deficiency.
9. RIGHTS CUMULATIVE. The rights, privileges, powers and remedies
-----------------
of the Secured Party shall be cumulative and no single or partial exercise of
any of them shall preclude the further or other exercise of the same or any
other of them. No delay or failure of the Secured Party in exercising any
right, power, privilege or remedy hereunder shall affect such right, power,
privilege or remedy. No single or partial exercise of any right, power,
privilege or remedy or any abandonment or discontinuance of steps to enforce
such right, power, privilege or remedy shall affect such right, power, privilege
or remedy. Any waiver, permit, consent or approval of any kind by the Secured
Party of any default hereunder, or any such waiver of any provisions or
conditions hereof, must be in writing and shall be effective only to the extent
set forth in writing and shall not constitute a waiver of any subsequent or
other default. Failure of the Secured Party to insist upon strict performance
or compliance by FTI or I-Link of any covenants, warranties or agreements in
this Security Agreement shall not constitute a waiver of any subsequent or other
failure to perform or comply with any covenants, warranties or agreements.
10. CONTINUING AGREEMENT. This is a continuing agreement and shall
--------------------
remain in full force and effect and be binding upon FTI and I-Link and the
successors
-8-
<PAGE>
and assigns of FTI and I-Link until all of the Obligations shall have
been fully satisfied and discharged.
11. REINSTATEMENT OF AGREEMENT. If the Secured Party shall have
--------------------------
proceeded to enforce its rights under this Security Agreement and such
proceedings shall have been discontinued or abandoned for any reason prior to
the issuance of any judgment or award, then FTI and I-Link and the Secured Party
shall be restored respectively to their positions and rights hereunder, and all
rights, remedies and powers of FTI and I-Link and the Secured Party shall
continue as though no such proceeding had been initiated. In the event of
litigation arising under this Security Agreement, the prevailing party shall be
entitled to, in addition to all other damages and remedies, reasonable
attorneys' fees.
12. ASSIGNMENT. The Secured Party may assign and transfer any of the
----------
Obligations of FTI or I-Link and may deliver the Collateral, or any part
thereof, to the assignee or transferee of any such obligation, who shall become
vested with all the rights, remedies, powers, security interests and liens
herein granted to the Secured Party in respect thereto; and the Secured Party
shall thereafter be relieved and fully discharged from any liability or
obligation under this Security Agreement. Neither FTI nor I-Link shall have the
right to assign this Security Agreement without the prior written consent of the
Secured Party.
13. DUTIES WITH RESPECT TO COLLATERAL. With respect to the
---------------------------------
Collateral, the Secured Party shall be under no duty to send notices, perform
services, pay for insurance, taxes or other charges or take any action of any
kind in connection with the management thereof and its only duty with respect
thereto shall be to use reasonable care in its custody and preservation while in
its possession, which shall not include any steps necessary to preserve rights
against prior parties.
14. PERFORMANCE OF OBLIGATIONS BY THE SECURED PARTY. If FTI or I-Link
-----------------------------------------------
shall fail to do any act or thing which they have covenanted to do hereunder, or
if any representation or warranty of FTI or I-Link shall be breached, the
Secured Party may (but shall not be obligated to) perform such act or thing on
behalf of FTI or I-Link or cause it to be done or remedy any such breach, and
there shall be added to the liabilities of FTI or I-Link hereunder the cost or
expense incurred by the Secured Party in so doing, and any and all amounts
expended by the Secured Party in taking any such action shall be repayable to it
upon demand being made to FTI or I-Link therefore and shall bear interest at the
rate provided for in the Note, from and including the date advanced to the date
of repayment.
15. MISCELLANEOUS. After due consideration and consultation with
-------------
their attorneys, FTI and I-Link voluntarily and knowingly, to the extent
permitted by law, agree as follows: (a) FTI and I-Link waive, except as
expressly provided in the Loan
-9-
<PAGE>
Agreement, presentment, protest, notice of protest, notice of dishonor and
notice of nonpayment with respect to the Collateral to which the Secured Party
is entitled hereunder; (b) FTI and I-Link waive any right to direct the
application of payments or security for the Obligations of FTI or I-Link
hereunder, or the indebtedness of customers of FTI or I-Link, and any right to
require proceedings against others or to require exhaustion of the security; (c)
FTI and I-Link consent to the extension or forbearance of the terms of the
Obligations or indebtedness of customers, the release or substitution of
security, and the release of guarantors, if any; and (d) FTI and I-Link waive
notice or a judicial hearing prior to the exercise by the Secured Party of any
right or remedy provided by this Security Agreement and also waive their rights,
if any, to set aside or invalidate any sale duly consummated in accordance with
the provisions of this Security Agreement on the grounds that the sale was
consummated without a prior judicial hearing.
16. NOTICES. All notices or demands of any kind which may be
-------
required or which the Secured Party desires to serve upon FTI or I-Link under
the terms of this Security Agreement shall be served upon FTI or I-Link by
personal service or by mailing a copy thereof by first class mail, postage
prepaid, addressed to FTI or I-Link, at the respective addresses set forth in
Section 8.3 of the Loan Agreement with the respective addresses of FTI and I-
Link being the address of the Company in the Loan Agreement. Service by mail
shall be determined to be effective when deposited in the mails.
17. EXPENSES. FTI and I-Link agree to pay on demand all fees, costs
--------
and expenses of the Secured Party, or of any custodian or agent designated by
the Secured Party, including the fees and out-of-pocket expenses of legal
counsel, independent public accountants and other outside experts retained by
the Secured Party in connection with the negotiation, administration or
enforcement of this Security Agreement or any other instrument or document
delivered pursuant hereto.
18. LAW APPLICABLE. This Security Agreement shall be governed by and
--------------
construed in accordance with the laws of the State of Delaware other than the
conflicts of law provisions thereof.
19. SEVERABILITY OF PROVISIONS. If any provision of this Security
--------------------------
Agreement shall be held to be prohibited by or invalid under applicable law,
such provision shall be ineffective only to the extent of such prohibition or
invalidity, without invalidating the remainder of such provision or any
remaining provisions of this Security Agreement.
-10-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Security
Agreement to be duly executed as of the day and year first written above.
WINTER HARBOR, L.L.C.
By: First Media, L.P., its member
By: First Media Corporation, its
sole general partner
By: /s/ Ralph W. Hardy, Jr.
---------------------------------
Name: Ralph W. Hardy, Jr.
-------------------------------
Title: Secretary
------------------------------
I-LINK COMMUNICATIONS, INC.
By: /s/ John Edwards
---------------------------------
Name: John Edwards
-------------------------------
Title: President
------------------------------
FAMILY TELECOMMUNICATIONS, INCORPORATED
By: /s/ John Edwards
---------------------------------
Name: John Edwards
-------------------------------
Title: President
------------------------------
-11-
<PAGE>
Exhibit 99(f)
SUBSIDIARY GUARANTY
-------------------
THIS SUBSIDIARY GUARANTY is made and entered into as of June 6, 1997, by I-
LINK COMMUNICATIONS, INC., a Utah corporation ("I-Link"), and FAMILY
TELECOMMUNICATIONS, INCORPORATED, a Utah corporation ("FTI" and, together with
I-Link, collectively the "Guarantors" and individually, a "Guarantor"), in favor
of WINTER HARBOR, L.L.C., a Delaware limited partnership (the "Lender").
RECITALS
--------
A. Medcross, Inc., a Florida corporation (the "Borrower"), owns all of
the issued and outstanding shares of the capital stock of each of the
Guarantors. The Borrower and the Lender have entered into a Loan Agreement
dated as of even date herewith (as the same may be extended, amended, restated
or modified from time to time, the "Loan Agreement"), which is hereby
incorporated herein by this reference, pursuant to which the Lender has agreed
to loan to the Borrower up to $2,000,000 on a term loan basis. All capitalized
terms used herein and not otherwise defined herein shall have the meanings
ascribed to such terms in the Loan Agreement. The proceeds of the Loans will be
provided to the Guarantors for the acquisition of assets, for capital
expenditures and for working capital purposes.
B. It is a condition precedent to the extensions of credit to the
Borrower under the Loan Agreement that the Guarantors, among other things, shall
have executed and delivered this Guaranty.
C. The Borrower and the Guarantors share an identity of interests as
members of a consolidated group of companies engaged in substantially similar
businesses. The Borrower provides certain centralized financial, accounting and
management services to the Guarantors, and the making of the Loan will
facilitate the expansion and enhance the overall financial strength and
stability of the Borrower's corporate group, including the Guarantors.
Accordingly, the Guarantors will derive substantial benefits as a result of the
extensions of credit to the Borrower under the Loan Agreement, which benefits
are hereby acknowledged by the Guarantors, and the Guarantors, therefore, desire
to enter into this Guaranty in order to satisfy the condition precedent
described in the preceding paragraph.
AGREEMENTS
----------
In consideration of the foregoing Recitals, and of the Loan to be made by
the Lender to the Borrower under the Loan Agreement, which will be of material
economic benefit to the
<PAGE>
Guarantors, the Guarantors agree as follows in favor of
the Lender:
1. Guaranty of Payment. The Guarantors, jointly and severally,
-------------------
hereby absolutely, unconditionally and irrevocably guarantee as primary
obligors, and not merely as sureties, the prompt performance and payment in full
when due, whether at stated maturity, by acceleration or otherwise (including,
without limitation, obligations that would become due but for the operation of
the automatic stay under Section 362(a) of Title 11 of the United States Code,
and including interest, fees and other charges whether or not a claim is allowed
for such obligations in any such bankruptcy proceeding), of (i) all
indebtedness, Obligations and liabilities of the Borrower arising at any time,
now or in the future, pursuant to the Loan Agreement, the Note or any Loan
Document; (ii) all reasonable costs and expenses incurred by the Lender,
including, without limitation, reasonable attorneys fees and legal expenses, in
the exercise, preservation or enforcement of any of the rights, powers or
remedies of the Lender, or in the enforcement of the obligations of the
Guarantors, hereunder and under any other Loan Document to which either
Guarantor is a party; and (iii) any renewals, continuations or extensions of any
of the foregoing (all of which are referred to herein as the "Guaranteed
Obligations").
2. Fraudulent Transfer Laws. Anything contained in this Guaranty to
------------------------
the contrary notwithstanding, the obligations of each Guarantor hereunder shall
be limited to a maximum aggregate amount equal to the largest amount that would
not render its obligations hereunder subject to avoidance as a fraudulent
transfer or conveyance under Section 548 of Title 11 of the United States Code
or any applicable provisions of comparable state law (collectively, the
"Fraudulent Transfer Laws"), in each case after giving effect to all other
liabilities of such Guarantor, contingent or otherwise, that are relevant under
the Fraudulent Transfer Laws (specifically excluding, however, any liabilities
of such Guarantor in respect of intercompany indebtedness to the Borrower or
other affiliates of the Borrower to the extent that such indebtedness would be
discharged in an amount equal to the amount paid by such Guarantor hereunder)
and after giving effect as assets to the value (as determined under the
applicable provisions of the Fraudulent Transfer Laws) of any rights to
subrogation or contribution of such Guarantor pursuant to applicable law, this
Guaranty or any other agreement providing for an equitable allocation among such
Guarantor and other affiliates of the Borrower of obligations arising under
guaranties by such parties. This Section 2 shall be construed with the goal of
maximizing the amount payable by each Guarantor hereunder without rendering it
insolvent, leaving it with an unreasonably small amount of capital with which to
conduct its business or leaving it unable to pay its debts as they mature, and
in determining the solvency or net worth of a Guarantor, its
- 2 -
<PAGE>
right of contribution from the other Guarantors shall be taken into account to
the fullest extent permitted by law.
3. Contribution.
------------
(a) The Guarantors desire to allocate among themselves in a fair and
equitable manner their obligations arising under this Guaranty. Accordingly, in
the event any payment or distribution is made by a Guarantor under this Guaranty
(a "Funding Guarantor") that exceeds its Fair Share (as defined below), that
Funding Guarantor shall be entitled to a contribution from each of the other
Guarantors in the amount of such other Guarantor's Fair Share Shortfall (as
defined below), with the result that all such contributions will cause each
Guarantor's Aggregate Payments (as defined below) to equal its Fair Share. The
amounts payable as contributions hereunder shall be determined as of the date on
which the related payment or distribution is made by the applicable Funding
Guarantor. The allocation among Guarantors of their obligations as set forth in
this Section 3 shall not be construed in any way to limit the liability of
either Guarantor hereunder. Any right of contribution which a Guarantor may
have against any other Guarantor of the Guaranteed Obligations as a result of a
payment pursuant to this Section 3 shall only be exercisable at such time and
shall be subordinated as set forth in Section 13.
(b) "Fair Share" means, with respect to a Guarantor as of any date of
----------
determination, an amount equal to (i) the ratio of (x) the Adjusted Maximum
Amount (as defined below) with respect to such Guarantor to (y) the aggregate of
the Adjusted Maximum Amounts with respect to both Guarantors, multiplied by (ii)
the aggregate amount paid or distributed on or before such date by all Funding
Guarantors under this Guaranty in respect of the Guaranteed Obligations.
(c) "Fair Share Shortfall" means, with respect to a Guarantor as of
--------------------
any date of determination, the excess, if any, of the Fair Share of such
Guarantor over the Aggregate Payments of such Guarantor.
(d) "Adjusted Maximum Amount" means, with respect to a Guarantor, the
-----------------------
maximum aggregate amount of the obligations of such Guarantor under this
Guaranty, determined in accordance with Section 2.
(e) "Aggregate Payments" means, with respect to a Guarantor as of any
------------------
date of determination, the aggregate amount of all payments and distributions
made on or before such date by such Guarantor in respect of this Guaranty
(including, without limitation, in respect of this Section 3).
- 3 -
<PAGE>
4. Extension or Renewal of Guaranteed Obligations; Waiver. Each
------------------------------------------------------
Guarantor agrees that the Guaranteed Obligations may be extended or renewed, in
whole or in part, without notice or further assent from it, that such Guarantor
will remain bound upon this Guaranty notwithstanding any extension, renewal or
other alteration of any Guaranteed Obligation and the guaranty herein made shall
apply to the Guaranteed Obligations as so amended, renewed or altered. Each
Guarantor waives diligence, presentment, demand of payment, filing of claims
with a court in the event of insolvency or bankruptcy of the Borrower, any right
to require a proceeding first against the Borrower, protest, notice and all
demands whatsoever and covenants that its guaranty of the Borrower's Obligations
under this Guaranty will not be discharged except by complete performance by the
Borrower or another Guarantor of such Obligations.
5. Nature of Guaranty: Continuing, Absolute and Unconditional.
-----------------------------------------------------------
(a) This Guaranty is and is intended to be a continuing guaranty of
payment when due of the Guaranteed Obligations, and not of collection, and is
independent of and in addition to any other guaranty, indorsement, collateral or
other agreement held by the Lender therefor or with respect thereto, whether or
not furnished by either Guarantor. Each Guarantor waives any right to require
that any resort be had by the Lender to the other Guarantor or to any of the
security held for payment of any of the Guaranteed Obligations or to any balance
of any deposit account or credit on the books of the Lender in favor of the
Borrower or any other Person. Upon the occurrence and during the continuance of
any Event of Default, the Lender may, at its sole election, proceed directly and
at once, without notice, against either or both of the Guarantors to collect and
recover the full amount or any portion of the Guaranteed Obligations, without
first proceeding against the Borrower, the other Guarantor or any other Person,
or against any security or collateral for the Guaranteed Obligations. All
Guaranteed Obligations shall be conclusively presumed to have been created in
reliance hereon.
(b) This Guaranty shall not be changed or affected by any
representation, oral agreement, act or thing whatsoever, except as herein
provided. This Guaranty is intended by the Guarantors to be the final, complete
and exclusive expression of the agreement among the Guarantors and the Lender
with respect to the subject matter hereof.
(c) The obligations of the Guarantors under this Guaranty are absolute
and unconditional and shall not be impaired or discharged by:
- 4 -
<PAGE>
(i) the failure of the Lender to assert any claim or demand or to
enforce any right or remedy against the Borrower, any other guarantor or any
other party to a Loan Document under the provisions of the Loan Agreement, the
Note, any Loan Document or any other agreement or otherwise;
(ii) any extension, renewal or other alteration of any provision of
the Loan Agreement, the Note, any Loan Document or any other agreement or
otherwise;
(iii) any rescission, waiver, amendment or modification of any of the
terms or provisions of the Loan Agreement, the Note, any Loan Document or any
other agreement or otherwise;
(iv) the failure of the Lender to assert any claim or demand or to
exercise or enforce any right or remedy under the Loan Agreement, any Loan
Document or any other agreement or otherwise, or against any other guarantor of,
or any other party which has provided security for, any of the Guaranteed
Obligations;
(v) the sale, exchange, release, surrender, realization of or upon
or the failure to perfect with respect to or otherwise deal with in any manner
and in any order any property by whomsoever at any time pledged or mortgaged to
secure, or howsoever securing, the Guaranteed Obligations;
(vi) the settlement or compromise of any of the Guaranteed
Obligations, any security therefor or any liability (including any of those
hereunder) incurred directly or indirectly in respect thereof or hereof, or any
subordination of the payment of all or any part thereof to the payment of any
liability (whether due or not) of the Borrower to creditors of the Borrower
other than the Lender and the Guarantors;
(vii) application of any sums by whomsoever paid or howsoever
realized to any liability or liabilities of the Borrower to the Lender
regardless of what liability or liabilities of the Borrower remain unpaid;
(viii) the act or failure to act in any manner referred to in this
Guaranty which may deprive either Guarantor of its right to subrogation or
contribution against the Borrower or any other guarantor to recover any payments
made pursuant to this Guaranty; or
(ix) or any other act, agreement, thing, omission or delay to do any
other act or thing that may or might in any manner or to any extent vary the
risk of either Guarantor or that would otherwise operate as a discharge of a
guarantor as a matter of law or equity.
- 5 -
<PAGE>
(d) Each Guarantor's obligation hereunder is to pay the Guaranteed
Obligations in full when due according to the Loan Agreement to the extent
provided herein, and such obligation shall not be affected by any stay or
extension of time for payment by the Borrower resulting from any proceeding
under Title 11 of the United States Code, as now constituted or hereafter
amended or replaced, or any similar federal or state law.
6. No Discharge or Diminishment of Guaranty. The obligations of the
----------------------------------------
Guarantors under this Guaranty shall not be subject to any reduction,
limitation, impairment or termination for any reason (other than if the
Guaranteed Obligations have been indefeasibly paid in full in cash), including,
without limitation, any claim of waiver, release, surrender, alteration or
compromise of any of the Guaranteed Obligations, and shall not be subject to any
defense or setoff, counterclaim, recoupment or termination whatsoever by reason
of the invalidity, illegality or unenforceability of any of the Guaranteed
Obligations or any discharge of the Borrower from any of the Guaranteed
Obligations in a bankruptcy or similar proceeding or otherwise.
7. Representations and Warranties. Each Guarantor hereby
------------------------------
represents, warrants and agrees as follows:
(a) Such Guarantor (i) is a duly organized and validly existing
corporation, in good standing under the laws of its state of incorporation, (ii)
has the corporate power and authority to own its property and assets and to
transact the business in which it is engaged and (iii) is duly qualified as a
foreign corporation and in good standing in each jurisdiction where the
ownership, leasing or operation of property or the conduct of its business
requires such qualification, except where the failure to so qualify could not
reasonably be expected to have a Material Adverse Effect.
(b) Such Guarantor has the corporate power and authority to execute,
deliver and perform the terms and provisions of this Guaranty, the Subsidiary
Security Agreement and the other Loan Documents to which it is a party
(collectively, the "Subsidiary Agreements") and has taken all necessary action
to authorize the execution, delivery and performance by it of this Guaranty and
the Subsidiary Agreements. Such Guarantor has duly executed and delivered this
Guaranty and the Subsidiary Agreements, and this Guaranty and the Subsidiary
Agreements constitute its legal, valid and binding obligations enforceable in
accordance with their respective terms, except as such enforceability may be
limited by applicable bankruptcy, insolvency, reorganization or other similar
laws affecting the enforcement of creditors' rights generally and by general
principles of equity.
- 6 -
<PAGE>
(c) Neither the execution, delivery or performance by such Guarantor
of this Guaranty and the Subsidiary Agreements, nor compliance by it with the
terms and provisions hereof and thereof, (i) will contravene any provision of
any law, statute, rule or regulation or any order, writ, injunction or decree of
any court or governmental instrumentality, (ii) will conflict or be inconsistent
with or result in any breach of any of the terms, covenants, conditions or
provisions of, or constitute a default under, or result in the creation or
imposition of (or the obligation to create or impose) any lien, security
interest or encumbrance (other than pursuant to the Loan Documents) upon any of
the property or assets of such Guarantor pursuant to the terms of any indenture,
mortgage, deed of trust, loan agreement or any other agreement, contract or
instrument to which such Guarantor is a party or by which it or any of its
property or assets is bound or to which it may be subject or (iii) will violate
any provision of the organizational documents of such Guarantor.
(d) No order, consent, approval, license, authorization or validation
of, or filing, recording or registration with, or exemption by, any governmental
or public body or authority, or any subdivision thereof, is required to
authorize, or is required in connection with, the execution, delivery,
performance, legality, validity, binding effect or enforceability of this
Guaranty and the Subsidiary Agreements by or against such Guarantor.
(e) There are no actions, suits or proceedings pending or, to the best
knowledge of such Guarantor, threatened against or affecting such Guarantor. No
judgment or order for the payment of money has been entered against such
Guarantor which remains outstanding and unpaid.
(f) There have been no changes in the business, properties, operations
or condition, financial or otherwise, or prospects of such Guarantor since
December 31, 1996, which could reasonably be expected to have a Material Adverse
Effect.
(g) Such Guarantor has received, or has the right hereunder to receive
(including rights to contribution and subrogation), consideration which is the
reasonably equivalent value of the obligations and liabilities that such
Guarantor has incurred to the Lender. Such Guarantor is not insolvent as
defined in Section 101 of Title 11 of the United States Code or any applicable
state insolvency statute, nor, after giving effect to the consummation of the
transactions contemplated herein, will such Guarantor be rendered insolvent by
the execution and delivery of this Guaranty or any other Loan Document to which
it is a party. Such Guarantor is neither engaged nor about to engage in any
business or transaction for which the assets retained by it shall be an
unreasonably small capital, taking into consideration the obligations to the
Lender incurred
- 7 -
<PAGE>
hereunder. Such Guarantor does not intend to, nor does it
believe that it will, incur debts beyond its ability to pay them as they mature.
(h) The representations and warranties contained in the Loan Agreement
as they pertain to such Guarantor are true and correct in all material respects.
8. Covenants.
---------
(a) Except as permitted in the Loan Agreement, each Guarantor will at
all times preserve and keep in full force and effect its existence as a
corporation, organized in its state of incorporation, and shall at all times
preserve and keep in full force and effect all rights and franchises material to
its business.
(b) Each Guarantor shall comply in all material respects with all
applicable material laws, rules, regulations and orders, such compliance to
include, without limitation, paying when due all material taxes, assessments and
governmental charges imposed upon it or upon any of its properties or assets or
in respect of any of its franchises, businesses, income or property before any
penalty or interest accrues thereon unless such taxes, assessments or
governmental charges are being diligently contested by such Guarantor in good
faith.
(c) Each Guarantor shall keep and maintain books, records and accounts
with respect to its operations sufficient to enable it to prepare its financial
statements in accordance with generally accepted accounting principles,
consistently applied, and shall permit the Lender and its officers, employees
and authorized agents to examine, copy and make excerpts from such books and
records and to inspect the properties of such Guarantor both real and personal
at any reasonable time.
(d) No Guarantor shall, directly or indirectly, incur, create, assume,
guaranty or otherwise become or remain directly or indirectly liable with
respect to, any indebtedness, except pursuant hereto or as expressly permitted
in the Loan Agreement.
(e) Each Guarantor shall comply with all of the covenants, agreements,
terms and conditions set forth in the Loan Agreement and the other Loan
Documents to the extent applicable to it.
9. Security. To secure timely payment of the Guaranteed Obligations
--------
and performance in full of the obligations related thereto, each Guarantor is
concurrently herewith entering into a Subsidiary Security Agreement pursuant to
which such Guarantor is granting to the Lender a security interest in
substantially all of such Guarantor's personal property.
- 8 -
<PAGE>
10. Information. Each Guarantor assumes all responsibility for being
-----------
and keeping itself informed of the financial condition and assets of the
Borrower and its subsidiaries and of all other circumstances bearing upon the
risk of nonpayment of the Guaranteed Obligations and the nature, scope and
extent of the risks which such Guarantor assumes and incurs hereunder, and
agrees that the Lender shall not have any duty to advise such Guarantor of
information known to it regarding such circumstances or risks.
11. Reinstatement. Each Guarantor agrees that this Guaranty shall
-------------
continue to be effective or be reinstated, as the case may be, if at any time
any payment, or any part thereof, of principal of, interest on or any other
amount with respect to the Guaranteed Obligations is rescinded or must otherwise
be restored by the Lender upon the bankruptcy, insolvency or reorganization of
the Borrower, either Guarantor or any other Person.
12. Use of Proceeds. Each Guarantor further agrees, in furtherance
---------------
of the foregoing and not in limitation of any other right that the Lender may
have at law or in equity against either Guarantor by virtue hereof, upon the
failure of the Borrower to pay any of the Guaranteed Obligations when and as the
same shall become due, whether at stated maturity, by acceleration or otherwise
(including, without limitation, amounts that would have become due but for the
operation of the automatic stay under Section 362(a) of Title 11 of the United
States Code), the Guarantors shall jointly and severally forthwith pay, or cause
to be paid, in cash, to the Lender an amount equal to the sum of the unpaid
principal amount of such Guaranteed Obligations then due as aforesaid, accrued
and unpaid interest on such Guaranteed Obligations (including, without
limitation, interest, fees and other charges that, but for the filing of a
petition in bankruptcy with respect to the Borrower, would have accrued on such
Guaranteed Obligations, whether or not a claim is allowed against the Borrower
for such interest, fees or other charges in any such bankruptcy proceeding) and
all other Guaranteed Obligations then owed to the Lender as aforesaid. All such
payments shall be applied promptly, from time to time, by the Lender:
First, to the payment of the costs and expenses of any collection or other
-----
realization under this Guaranty, and all expenses, liabilities and advances made
or incurred by the Lender in connection therewith;
Second, after payment in full of the amounts specified in the preceding
------
subparagraph, to the payment in full of all other Guaranteed Obligations; and
- 9 -
<PAGE>
Third, after payment in full of all Guaranteed Obligations, to the
-----
Guarantors or to whomsoever may be lawfully entitled to receive the same or as a
court of competent jurisdiction may direct, of any surplus then remaining from
such payments.
13. Subrogation and Subordination. Until the indefeasible payment in
-----------------------------
full in cash of the Guaranteed Obligations, each Guarantor hereby waives any
claim, right or remedy, direct or indirect, that such Guarantor now has or may
hereafter have against the Borrower or its assets in connection with this
Guaranty or the performance by such Guarantor of its obligations hereunder, in
each case whether such claim, right or remedy arises in equity, under contract,
by statute, under common law or otherwise, including, without limitation (a) any
right of subrogation, reimbursement or indemnification that such Guarantor now
has or may hereafter have against the Borrower, (b) any right to enforce, or to
participate in, any claim, right or remedy that the Lender now has or may
hereafter have against the Borrower or any other guarantor, and (c) any benefit
of, and any right to participate in, any collateral or security now or hereafter
held by the Lender. In addition, until the Guaranteed Obligations shall have
been indefeasibly paid in full in cash, each Guarantor shall withhold exercise
of any right of contribution that such Guarantor may have against the other
Guarantor or any other guarantor of the Guaranteed Obligations under Section 3
hereof or at law or in equity or otherwise. Each Guarantor further agrees that,
to the extent the waiver of its rights of subrogation, reimbursement,
indemnification and contribution as set forth herein is found by a court of
competent jurisdiction to be void or voidable for any reason, such rights of
subrogation, reimbursement or indemnification that such Guarantor may have
against the Borrower or against any collateral or security, and any rights of
contribution that such Guarantor may have against any such other guarantor,
shall be junior and subordinate to any rights that the Lender may have against
the Borrower, to all right, title and interest the Lender may have in any such
collateral or security, and to any right the Lender may have against such other
guarantor. The Lender may use, sell or dispose of any items of collateral or
security as it sees fit without regard to any subrogation rights arising out of
this Guaranty that either Guarantor may have and, upon any such disposition or
sale, any rights of subrogation that either Guarantor may have shall, with
respect to the collateral disposed of, terminate. If any amount shall be paid
to either Guarantor on account of subrogation rights at any time when all
Guaranteed Obligations shall not have been paid in full in cash, such amount
shall be held in trust for the Lender and shall forthwith be paid over to the
Lender to be credited and applied against the Guaranteed Obligations, whether
matured or unmatured, in accordance with the terms of the Loan Agreement, the
Note or any applicable Loan Document.
- 10 -
<PAGE>
14. Delays; Omissions. No delay or omission by the Lender in the
-----------------
exercise of any right under this Guaranty shall impair any such right, nor shall
it be construed to be a waiver thereof; nor shall any single or partial exercise
of any right hereunder preclude any other or further exercise of any other
right.
15. Modification. Any term of this Guaranty may be amended and the
------------
observance of any term of this Guaranty may be waived (either generally or in a
particular instance and either retroactively or prospectively) only with the
written consent of the affected Guarantor and the Lender. No waiver of any
single breach or default under this Guaranty shall be deemed a waiver of any
other breach or default.
16. Successors and Assigns. This Guaranty is a continuing guaranty
----------------------
and shall be binding upon the Guarantors and their successors and assigns;
provided, however, that neither Guarantor may assign or transfer any of its
- -------- -------
rights or obligations hereunder without the prior written consent of the Lender.
This Guaranty shall inure to the benefit of the successors and assigns of the
Lender.
17. GOVERNING LAW. THIS GUARANTY SHALL BE CONSTRUED IN ACCORDANCE
-------------
WITH, AND GOVERNED BY, THE LAWS OF THE STATE OF DELAWARE WITHOUT REGARD TO THE
CONFLICTS OF LAW PROVISIONS THEREOF.
18. ENFORCEMENT. EACH GUARANTOR (A) HEREBY IRREVOCABLY SUBMITS TO THE
-----------
JURISDICTION OF THE FEDERAL AND STATE COURTS IN THE STATE OF DELAWARE FOR THE
PURPOSE OF ANY SUIT, ACTION OR OTHER PROCEEDING ARISING OUT OF OR BASED UPON
THIS GUARANTY OR THE SUBJECT MATTER HEREOF BROUGHT BY THE LENDER OR ITS
SUCCESSORS OR ASSIGNS AND (B) HEREBY WAIVES, AND AGREES NOT TO ASSERT, BY WAY OF
MOTION, AS A DEFENSE, OR OTHERWISE, IN ANY SUCH SUIT, ACTION OR PROCEEDING, ANY
CLAIM THAT IT IS NOT SUBJECT PERSONALLY TO THE JURISDICTION OF THE ABOVE-NAMED
COURTS, THAT ITS PROPERTY IS EXEMPT OR IMMUNE FROM ATTACHMENT OR EXECUTION, THAT
THE SUIT, ACTION OR PROCEEDING IS BROUGHT IN AN INCONVENIENT FORUM, THAT THE
VENUE OF THE SUIT, ACTION OR PROCEEDING IS IMPROPER OR THAT THIS GUARANTY OR THE
SUBJECT MATTER HEREOF MAY NOT BE ENFORCED IN OR BY SUCH COURT, AND (C) HEREBY
WAIVES AND AGREES NOT TO SEEK ANY REVIEW BY ANY COURT OF ANY OTHER JURISDICTION
WHICH MAY BE CALLED UPON TO GRANT AN ENFORCEMENT OF THE JUDGMENT OF ANY SUCH
DELAWARE STATE OR FEDERAL COURT. EACH GUARANTOR HEREBY CONSENTS TO SERVICE OF
PROCESS BY REGISTERED MAIL AT THE ADDRESS TO WHICH NOTICES ARE TO BE GIVEN.
EACH GUARANTOR AGREES THAT ITS SUBMISSION TO JURISDICTION AND ITS CONSENT TO
SERVICE OF PROCESS BY MAIL IS MADE FOR THE EXPRESS BENEFIT OF THE LENDER. FINAL
JUDGMENT AGAINST EACH GUARANTOR IN ANY SUCH ACTION, SUIT OR PROCEEDING MAY BE
ENFORCED IN OTHER JURISDICTIONS BY SUIT, ACTION OR PROCEEDING ON THE JUDGMENT,
OR IN ANY OTHER MANNER PROVIDED BY
- 11 -
<PAGE>
OR PURSUANT TO THE LAWS OF SUCH OTHER JURISDICTION; PROVIDED, HOWEVER, THAT THE
-------- -------
LENDER MAY AT ITS OPTION BRING SUIT, OR INSTITUTE OTHER JUDICIAL PROCEEDINGS,
AGAINST EACH GUARANTOR OR ANY OF ITS ASSETS IN ANY STATE OR FEDERAL COURT OF THE
UNITED STATES OR OF ANY COUNTRY OR PLACE WHERE SUCH GUARANTOR, OR SUCH ASSETS,
MAY BE FOUND.
19. JURY TRIAL WAIVER. EACH GUARANTOR WAIVES IRREVOCABLY, TO THE
-----------------
EXTENT PERMITTED BY LAW, ALL RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY
DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE, BETWEEN THE LENDER AND
SUCH GUARANTOR ARISING OUT OF, IN CONNECTION WITH, RELATED TO, OR INCIDENTAL TO
THE RELATIONSHIP ESTABLISHED BETWEEN THEM IN CONNECTION WITH THIS GUARANTY OR
THE NOTE OR OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN
CONNECTION HEREWITH OR THE TRANSACTIONS RELATED HERETO.
20. Notices. All notices, demands and requests required or permitted
-------
to be given under the provisions of this Guaranty shall be in writing and shall
be deemed to have been duly delivered and received if given in accordance with
the provisions of the Loan Agreement with the address of the Guarantors being
the address of the Borrower in the Loan Agreement.
21. Separability. If any one or more of the provisions contained in
------------
this Guaranty should be invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of all remaining provisions shall not in
any way be affected or impaired. Any provision of this Guaranty which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof or affecting the validity or
enforceability of such provision in any other jurisdiction.
22. Section Headings. The section headings contained herein are for
----------------
reference purposes only and shall not in any way affect the meaning and
interpretation of this Guaranty.
23. Counterparts. This Guaranty may be executed in any number of
------------
counterparts or duplicate originals, each of which shall be deemed to be an
original, but all of which together shall constitute one and the same
instrument.
- 12 -
<PAGE>
IN WITNESS WHEREOF, the Guarantors have caused this Subsidiary Guaranty to
be duly executed as of the day and year first written above.
GUARANTORS:
I-LINK COMMUNICATIONS, INC.
By: /s/ John Edwards
---------------------------
Name: John Edwards
-------------------------
Its : President
------------------------
FAMILY TELECOMMUNICATIONS, INCORPORATED
By: /s/ John Edwards
---------------------------
Name: John Edwards
-------------------------
Its : President
------------------------
- 13 -
<PAGE>
Exhibit 99(g)
ASSIGNMENT FOR SECURITY
-----------------------
THIS ASSIGNMENT FOR SECURITY (the "Assignment") is made and entered
into as of June 6, 1997, by and between I-LINK COMMUNICATIONS, INC., a Utah
corporation (the "Debtor"), and WINTER HARBOR, L.L.C., a Delaware limited
partnership (the "Secured Party").
RECITALS
--------
A. Medcross, Inc., a Florida corporation ("Medcross"), owns all of
the issued and outstanding shares of the capital stock of the Debtor. Medcross
and the Secured Party have entered into a Loan Agreement, of even date herewith
(as the same may be extended, amended, restated or modified from time to time,
the "Loan Agreement"), which is hereby incorporated herein by this reference,
pursuant to which the Secured Party has agreed to loan to Medcross up to
$2,000,000 on a term loan basis. All capitalized terms used herein and not
otherwise defined shall have the meanings assigned to them in the Loan
Agreement. The proceeds of the Loan will be provided to the Debtor for the
acquisition of assets, for capital expenditures and for working capital
purposes.
B. The Debtor owns the Patents listed on Schedule A attached hereto.
----------
C. The Debtor and FAMILY TELECOMMUNICATIONS, INCORPORATED ("FTI"),
each a Utah corporation and a wholly owned subsidiary of Medcross, have
guaranteed the obligations of Medcross under the Loan Agreement and the Note
pursuant to the terms of a Subsidiary Guaranty of even date herewith (the
"Guaranty").
D. The Debtor and FTI have entered into a separate security
agreement with the Secured Party of even date herewith (the "Security
Agreement"), which is hereby incorporated herein by this reference, pursuant to
which the Debtor and FTI have granted to the Secured Party a first priority
perfected security interest in the Collateral (as such term is defined in the
Security Agreement), including all of the Debtor's right, title and interest in
all Patents and all proceeds thereof, including, without limitation, any and all
causes of action which may exist by reason of infringement thereof (the
"Intellectual Property"), to secure the payment, performance and observance of
the Debtor's obligations under the Guaranty and Medcross' obligations under the
Loan Agreement and under the Note. It is a condition precedent to the
extensions of credit to Medcross under the Loan Agreement that the Debtor, among
other things, shall have executed and delivered this Assignment.
E. Medcross and the Debtor share an identity of interests as members
of a consolidated group of companies engaged in substantially similar
businesses. Medcross provides certain centralized financial, accounting and
management services to the Debtor and the making of the Loan will facilitate the
expansion and enhance the overall financial strength and stability of Medcross'
corporate group, including the Debtor. Accordingly, the Debtor
<PAGE>
will derive substantial benefits as a result of the extensions of credit to
Medcross under the Loan Agreement, which benefits are hereby acknowledged by the
Debtor, and the Debtor, therefore, desires to enter into this Assignment in
order to satisfy the condition precedent described in the preceding paragraph.
AGREEMENTS
----------
In consideration of the foregoing Recitals, and of the agreements made
herein, and of the Loan to be made by the Secured Party to the Debtor, the
Debtor and the Secured Party agree as follows:
1. DEFINITION OF PATENT. The term "Patent" means (i) all pending
--------------------
and registered patents and patent applications currently owned by the Debtor
whether or not listed on Schedule A and all future patents that are filed by and
----------
issued under the ownership of the Debtor; (ii) all reissues, continuations,
continuations in part, re-examinations, extensions and renewals of the Patents
and all licenses of the Patents; and (iii) the right to sue for past, present
and future infringements thereof.
2. GRANT OF ASSIGNMENT. The Debtor hereby grants to the Secured
-------------------
Party a security interest in, and mortgage on the Patent to secure the prompt
payment, performance and observance of the Obligations (as such term is defined
in the Security Agreement).
3. SPECIAL REPRESENTATIONS AND COVENANTS OF THE DEBTOR. The Debtor,
---------------------------------------------------
in addition to the representations, warranties and covenants contained in the
Security Agreement, hereby represents to and covenants with the Secured Party as
follows:
(a) The Debtor has the full and clear ownership of the Patents, in
each case, free and clear of any security interest, pledge, mortgage, charge or
encumbrance, including, without limitation, any assignments, licenses or
covenants not to sue third parties, except for Permitted Liens and the security
interest granted hereby, and such registrations are valid and subsisting and in
full force and effect.
(b) Except to the extent that the Secured Party shall consent in
writing, the Debtor will not do any act or knowingly omit to do any act whereby
the Patents may become invalidated or subject to any claim of abandonment for
non-use.
(c) As of the date of this Assignment, the Debtor owns no Patent and
has no Patent registered in, or the subject of pending applications in, the
United States Patent and Trademark Office, the United States Copyright Office,
or any similar office or agency in any state or country, any political
subdivision thereof, other than those Patents described in Schedule A.
----------
-2-
<PAGE>
(d) The Debtor has not granted any license, sublicense or other right
whatsoever to any third party for the use by such party of the Patents on any
product or in any other manner.
(e) The Debtor agrees that until the Obligations (as such term is
defined in the Security Agreement) are fully satisfied, the Debtor will not
enter into any agreement which is inconsistent with the Debtor's obligations
under this Assignment without the Secured Party's prior written consent.
4. ATTORNEY-IN-FACT. The Debtor hereby appoints the Secured Party
----------------
as its attorney-in-fact, with full power of substitution, for the purpose of
carrying out the provisions of this Assignment and taking any action and
executing any instruments with respect to the Patents (including, without
limitation, filings, renewals, conveyances, assignments, and transfers) which
the Secured Party may deem necessary or advisable to accomplish the purposes
hereof, which appointment as attorney-in-fact is coupled with an interest and is
irrevocable. The Debtor shall indemnify and hold harmless the Secured Party
from and against any liability or damage which it may incur in the exercise and
performance, in good faith, of the Secured Party's powers and duties under this
Assignment.
5. SECURITY AGREEMENT. Notwithstanding any other provision of this
------------------
Assignment, the rights and responsibilities of the parties hereunder are subject
to the provisions of the Security Agreement.
-3-
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this Assignment for
Security on the day and year first above written.
SECURED PARTY:
WINTER HARBOR, L.L.C.
By: First Media, L.P., its member
By: First Media Corporation, its sole
general partner
By: /s/ Ralph W. Hardy, Jr.
---------------------------------
Name: Ralph W. Hardy, Jr.
-------------------------------
Title: Secretary
-------------------------------
Washington )
) ss:
District of Columbia )
Subscribed to and sworn before me
this 9th day of June, 1997
--- ----
/s/ Laurel Starkey
-------------------------------------
Laurel Starkey
NOTARY PUBLIC
My Commission Expires: March 31, 2001
--------------
DEBTOR:
I-LINK COMMUNICATIONS, INC.
By: /s/ John Edwards
----------------------------------
Name: John Edwards
--------------------------------
Title: President
-------------------------------
State of Utah )
------------- ) ss:
County of Salt Lake )
------------
Subscribed to and sworn before me
this 5th day of June, 1997
--- ----
/s/ Lynne Lybbert
--------------------------------------
Lynne Lybbert
NOTARY PUBLIC
My Commission Expires: April 26, 1999
--------------
-4-
<PAGE>
SCHEDULE A
----------
PATENTS
-------
All patent applications the Debtor has filed with the United States Patent and
Trademark Office, including without limitation, Patent Application No.
08/599,238 filed February 9, 1996 and entitled "Voice Internet Transmission
System" and Patent Application No. 08/585,628 filed January 16, 1996, and
entitled "Facsimile Internet Transmission System".
<PAGE>
Exhibit 99(h)
WINTER HARBOR, LLC
11400 SKIPWITH LANE TELEPHONE: (301) 983-2424
POTOMAC, MARYLAND 20854 FACSIMILE: (301) 983-2425
June 6, 1997
Medcross, Inc.
13751 South Wadsworth Park Drive
Suite 200
Draper, Utah 84020
Attention: John W. Edwards, President
- ---------
Re: Proposed Purchase of Series M Preferred Stock
---------------------------------------------
Ladies and Gentlemen:
This letter is intended to set forth the basic terms of a purchase by
Winter Harbor, L.L.C., a Delaware limited liability company, or an affiliate
thereof ("Purchaser"), of Series M Preferred Stock (the "Stock") of Medcross,
Inc., a Florida corporation ("Medcross"). This letter expresses only the
interest of Purchaser in exploring a purchase of the Stock on terms
substantially as described in the Term Sheet, of even date, attached hereto as
Exhibit A, and shall not be construed to create any legally binding obligation
on the part of Purchaser or Medcross; provided, however, that the provisions of
-------- -------
the second to last paragraph of this letter shall be binding upon Medcross and
shall survive the execution of this letter and the execution of any definitive
documentation pursuant hereto.
The parties will undertake to negotiate a definitive securities purchase
agreement, setting forth the terms and conditions of the purchase, which would
supersede all prior agreements, if any, between Purchaser and Medcross relating
to the contemplated acquisition of the Stock. Neither party would have any
obligation or liability to the other prior to the execution of such a securities
purchase agreement (except for the obligations of Medcross pursuant to the
second to last paragraph of this letter), nor would either party have any
obligation or liability to the other party for failure of such securities
purchase agreement to be executed for any reason whatsoever.
<PAGE>
Medcross, Inc.
June 6, 1997
Page 2
For a period of ninety (90) days after the date hereof, Medcross agrees, in
consideration of the expenses to be incurred by Purchaser in pursuing the
purchase of the Stock, that it will not discuss or negotiate with any other
person or entity or entertain or consider any proposals relating to the possible
financing of Medcross or the sale or issuance of any material portion of its
capital stock.
If the foregoing is acceptable, please countersign below to confirm your
intent to proceed with negotiations consistent with the terms of this letter.
Very truly yours,
WINTER HARBOR, L.L.C.
By: First Media, L.P., its General
Manager/Member
By: First Media Corporation,
its sole general partner
By: /s/ Ralph W. Hardy, Jr.
-------------------------
Ralph W. Hardy, Jr.
Secretary
The foregoing is hereby ACCEPTED and AGREED to:
MEDCROSS, INC.
By: /s/ John Edwards
-------------------------
Name: John Edwards
-----------------------
Title: President
----------------------
- 2 -
<PAGE>
Exhibit 99(i)
MEDCROSS, INC. (I-LINK)
-----------------------
June 6, 1997
Term Sheet for Proposed Equity Investment
by Winter Harbor, L.L.C.
Issuer.............................. Medcross, Inc. (to be renamed "I-Link
Communications, Inc."), a Florida
corporation ("I-Link").
Investor............................ Winter Harbor, L.L.C., a Delaware
limited liability company, or an
affiliate of First Media, L.P., its
sole member, controlled by the
controlling stockholder of First
Media's sole general partner ("Winter
Harbor")
Debt Investment..................... Winter Harbor will extend to I-Link a
$2,000,000 Senior Secured Term Loan
(the "Loan"), and in connection
therewith I-Link will issue to Winter
Harbor warrants to acquire 500,000
shares of the common stock of I-Link
at an exercise price of $4.97 per
share, subject to adjustment, all on
the terms and subject to the
conditions specified in the April 11,
1997 commitment letter (including
Exhibit A thereto) between Winter
Harbor and I-Link, as the same may be
modified from time to time.
Equity Investment................... Winter Harbor will invest $12,100,000
in a new series of I-Link
convertible, participating preferred
stock to be created (the "Series M
Preferred Stock").
Price per Share of Series M
Preferred Stock.................... $ 2.75.
Number of Shares of Series M
Preferred Stock to be Issued....... 4,400,000.
Dividends........................... The Series M Preferred Stock will be
entitled to receive cumulative
dividends in the amount of 10% per
<PAGE>
annum before any other class of
preferred or common stock receives any
dividends. Thereafter, the Series M
Preferred Stock will participate with
the common stock in the issuance of any
dividends on a per share basis.
Liquidation Preference.............. Upon any liquidation, dissolution or
winding up of I-Link, Winter Harbor
shall be entitled to receive from
assets available for distribution to
shareholders, before any payment or
distribution to any other class of
the capital stock of I-Link, an
amount in cash (and, to the extent
sufficient cash is not available for
such payment, property at its fair
market value), equal to such amount
as, when combined with the aggregate
of all other distributions made by
I-Link to Winter Harbor, is
sufficient to effect a return to
Winter Harbor of its purchase price
for the Series M Preferred Stock
plus a cumulative preferred return
of 10% per annum compounded annually
from the closing date on its
purchase of the Series M Preferred
Stock. Thereafter, any remaining
cash or assets available for
distribution to the shareholders of
I-Link would be distributed first to
the holders of any other preferred
stock of I-Link in accordance with
the terms of I-Link's Articles of
Incorporation, and then to the
holders of the Series M Preferred
Stock and the holders of the Common
Stock on a per share basis. A
merger or consolidation of I-Link as
a result of which the shareholders
of I-Link do not continue to hold
more than a 50% interest in the
successor entity or a transaction or
series of related transactions in
which I-Link's shareholders transfer
more than 50% of the voting power of
I-Link, or a sale of all or
substantially all of its assets
shall be deemed to be a
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<PAGE>
"liquidation, dissolution or winding up
of I-Link" for purposes of the
liquidation preference.
Voluntary Conversion................ Each share of the Series M Preferred
Stock will be convertible at any time
prior to the fifth anniversary of the
issuance thereof at the sole option
of Winter Harbor into one share of
I-Link common stock at any time at no
cost. The one-to-one conversion
factor will be appropriately adjusted
upon the happening of certain events,
such as, but not limited to, the
issuance of stock dividends, the
recapitalization of I-Link, and the
issuance of stock at less than the
fair market value thereof.
Automatic Conversion................ The Series M Preferred Stock will be
automatically converted on the fifth
anniversary of the issuance thereof
into I-Link common stock at no cost.
The conversion price shall be equal
to the lower of $2.75 per share or
50% of the average closing bid price
of the Common Stock for the ten
trading days immediately preceding
the fifth anniversary of such
issuance. The conversion price will
be appropriately adjusted upon the
happening of certain events, such as,
but not limited to, the issuance of
stock dividends, the recapitalization
of I-Link, and the issuance of stock
at less than the fair market value
thereof.
Voting Rights....................... The Series M Preferred Stock will
vote with the Common Stock on an
as-converted basis on all matters
which are submitted to a vote of the
stockholders, except those matters as
to which, by law or by the Articles
of Incorporation or By-Laws of
I-Link, the Series M Preferred Stock
is to vote as a separate class.
Appointment of Directors............ The Series M Preferred Stock will
have the right to appoint two
-3-
<PAGE>
directors to the I-Link Board of
Directors.
Consummation of Equity Upon the closing of the issuance of
Offering............................ the Series M Preferred Stock, Winter
Harbor shall be entitled to a credit
against the purchase price of the
Series M Preferred Stock in the
amount of principal and accrued
interest under the Loan; and the
notes evidencing the Loan shall be
cancelled.
Additional Warrants................. As additional consideration for its
equity financing commitments, Winter
Harbor will be issued additional
warrants by I-Link to acquire (a)
2,500,000 shares of the common stock
of I-Link at an exercise price of
$2.75 per share, subject to
adjustment (the "Series A
Warrants"), (b) 2,500,000 shares of
the common stock of I-Link at an
exercise price of $4.00 per share,
subject to adjustment (the "Series B
Warrants") and (c) 5,000,000 shares
of the common stock of I-Link at an
exercise price of $9.31, subject to
adjustment (the "Series C Warrants"
and, together with the Series A
Warrants and the Series B Warrants,
collectively, the "Warrants"). The
Series A Warrants will be
exercisable at any time during the
thirty month period following the
date of issuance, and the Series B
Warrants and the Series C Warrants
will be exercisable at any time
during the five-year period
following the date of issuance. All
of the Warrants (i) will have
registration rights and
anti-dilution protection as
summarized below, and (ii) will
contain a standard cashless exercise
provision.
Antidilution The exercise price of the Warrants
Provisions.......................... and the number of shares of I-Link
common stock to be issued upon
conversion of the Series M
Preferred
-4-
<PAGE>
Stock and upon exercise of
the Warrants shall be subject to
adjustment to prevent dilution (i)
in the event that I-Link issues
additional shares of common stock
(except for the issuance of common
stock upon the conversion of
existing shares of I-Link Class B or
Class C preferred stock, and except
for the issuance of shares pursuant
to existing warrants or employee
stock benefit programs); (ii) in the
event that I-Link issues other
securities convertible into or
exchangeable for shares of I-Link's
common stock; and (iii) upon stock
splits, stock dividends,
combinations, recapitalizations,
reclassifications or other similar
events; provided, however, that if
I-Link issues common stock in
connection with an acquisition or
other transaction, in either case
approved in writing by Winter
Harbor, then the adjustment required
by this paragraph shall not be made
unless I-Link agrees to such
adjustment in connection with
obtaining Winter Harbor's consent to
such acquisition or other
transaction. The exercise price for
each of the Warrants shall be
adjusted on a "full ratchet" basis
in the cases of (i) and (ii) above
when the issuance of the securities
described therein occurs at a price
per share that is less than the
exercise price of such Warrant (as
such exercise price amount may be
further adjusted). In addition, if,
as of the time of exercise of any
Series B Warrant or Series C
Warrant, the average closing bid
price of the I-Link common stock for
the five trading days immediately
preceding the date of exercise is
less than the stated exercise price
of such Warrant, then the exercise
price of such Warrant shall be
reduced to such average closing bid
price; provided, however, that in no
event will the
-5-
<PAGE>
exercise price of the Series B
Warrants or the Series C Warrants
fall below $2.75 as a result of the
application of this sentence.
Covenants........................... The purchase agreement for the Series M
Preferred Stock, or the designation of
the terms of the Series M Preferred
Stock or other documents or instruments
acceptable to Winter Harbor, shall
provide that neither I-Link nor any of
its subsidiaries shall take any of the
following actions without the prior
written consent of Winter Harbor:
(i) the creation, authorization,
designation or issuance of any class or
series of equity securities;
(ii) any merger, recapitalization or
consolidation with or into any other
entity, or the sale, lease or other
disposition of all or substantially all
of its assets;
(iii) any liquidation or dissolution;
(iv) any sale, lease or other
disposition of assets with a value in
excess of $250,000;
(v) any acquisition of assets with a
value in excess of $250,000;
(vi) the incurrence or prepayment of
any indebtedness (or the entry into any
guarantee arrangement);
(vii) the making of any dividend,
distribution or redemption payment with
respect to any of its equity interests;
(viii) the creation of any subsidiary
or any investment in equity of another
entity;
-6-
<PAGE>
(ix) the entry into or amendment of
any contract or other arrangement or
transaction with any affiliate of I-Link
or of any of its shareholders;
(x) the entry into any business other
than the business as presently proposed
to be conducted by I-Link and its
subsidiaries;
(xi) the adoption or amendment of the
annual budget for I-Link and its
subsidiaries;
(xii) the hiring of executive
officers, managers and key employees;
(xiii) the initiation or settlement of
litigation involving amounts in
controversy in excess of $250,000;
(xiv) the engagement or change of
independent certified public
accountants;
(xv) the adoption or amendment of any
employee benefit plan or program;
(xvi) the making of any assignment for
the benefit of creditors or the
application for the appointment of a
receiver or the filing of any petition
initiating (or consenting to the
initiation of) any bankruptcy or
insolvency proceeding or the taking of
any similar action; and
(xvii) the entry into any commitment
or series of related commitments
involving a payment or payments by I-
Link or any of its subsidiaries of an
aggregate amount in excess of $500,000.
Tag-Along Rights.................... If certain stockholders or group of
such stockholders to be specified
(which shall include the key I-Link
management group)(the "Selling
Stockholders") propose to effect a
transfer to a third party (a "third
-7-
<PAGE>
party") of their interests in I-Link,
Winter Harbor shall have the option
to require such Selling Stockholders
to provide, as part of such
transfer, that the third party shall
grant Winter Harbor the right to
participate in such transaction on
the same terms and conditions as the
Selling Stockholders and transfer to
such third party the same proportion
of Winter Harbor's common stock
interest in I-Link (determined on an
"as converted" basis with respect to
its equity interest in I-Link and
its Warrants relating to I-Link
common stock), in accordance with
customary "tag-along" terms and
conditions and, if such option is
exercised by Winter Harbor, the Selling
Stockholders shall not proceed with such
transaction unless Winter Harbor is
given the right to so participate. The
foregoing tag-along rights shall not
apply to (a) pledges of stock to
financial institutions by any officer of
I-Link to secure personal borrowings,
(b) the foreclosure by any such
financial institution on any such
pledged stock, (c) transfers from an
officer of I-Link to a person who is
currently an executive officer of I-Link
or (d) other transfers or series of
related transfers of fewer than 250,000
shares in the aggregate of I-Link stock
not involving a change of control of
management of I-Link.
Registration Rights................... Winter Harbor shall be entitled to
request that I-Link file a
registration statement with respect
to any shares of I-Link held by
Winter Harbor, and I-Link will use
its best efforts to cause such
shares to be registered. Winter
Harbor shall be permitted to effect
three registrations under the
foregoing demand right provisions.
In addition, Winter Harbor shall be
entitled to "piggyback"
registration
-8-
<PAGE>
rights on all registrations (other than
registrations on Form S-8 with respect
to employee stock plans or registrations
on Form S-4 with respect to Rule 145
transactions), subject to the right of
I-Link's managing underwriters to reduce
or exclude shares proposed to be
registered based on market conditions.
Winter Harbor also shall be entitled to
unlimited registrations on Form S-3
(assuming I-Link qualifies for Form S-
3), provided aggregate proceeds exceed
$500,000 and subject to certain delay
provisions. I-Link shall pay for the
fees and expenses associated with all
such registrations (including, without
limitation, the fees and expenses of one
special counsel, if any, for Winter
Harbor), exclusive of underwriting
discounts and commissions. Winter Harbor
(and its affiliates and underwriters)
shall be entitled to indemnification by
I-Link pursuant to customary cross-
indemnification provisions, with the
indemnification obligations of any
selling stockholder to be limited to the
net proceeds received by such selling
stockholder pursuant to such
registration and public offering.
Preemptive Rights..................... Winter Harbor shall have preemptive
rights with respect to future
issuances of equity interests or
securities convertible into or
exchangeable for equity interests of
I-Link in order that Winter Harbor
may purchase a number of such shares
(or other securities) sufficient to
permit Winter Harbor to maintain its
proportional economic interest in
I-Link.
Reports............................... I-Link shall deliver to Winter Harbor:
(i) monthly unaudited financial
reports;
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<PAGE>
(ii) monthly operating reports;
(iii) an annual audited financial
report; and
(iv) its annual financial plan and
budget and such other information
concerning the business and
operations of I-Link or its financial
condition as Winter Harbor may
reasonably request.
In addition, I-Link will permit
Winter Harbor to visit and inspect
I-Link's and its subsidiaries'
properties, to examine its books of
account and records and to discuss
its affairs with management and its
independent accountants, all at such
reasonable times as shall be
requested by Winter Harbor.
Put Right........................... At any time beginning on or after a
Change of Control (as shall be
defined), Winter Harbor shall have
the right (the "Put Right") to cause
I-Link to purchase all, but not less
than all, of the equity interests
then held by Winter Harbor in I-Link
at a price equal to the fair market
value of such equity interests (the
"Put Price"), as determined in
accordance with procedures to be
mutually agreed upon by Winter Harbor
and I-Link and incorporated in the
definitive documents for this
transaction. Such procedures shall
include provisions for an independent
appraisal of the value of Winter
Harbor's equity interests, with no
discount for a minority position or
illiquidity (i.e., treated as on the
same basis as selling I-Link as a
going concern).
After the Put Price is established in
accordance with such procedures,
I-Link shall purchase the equity
interests then held by Winter Harbor
in I-Link, in accordance with
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<PAGE>
procedures to be mutually agreed upon by
Winter Harbor and I-Link. If the
purchase of such equity interests
pursuant to the exercise of the Put
Right would result in a breach or a
default under any material credit
agreement or other contractual
obligation of I-Link, or if I-Link would
thereby be rendered insolvent, I-Link
will take all reasonable and lawful
actions to avoid or cure such breach or
default and enable I-Link to make such
purchase to the fullest extent possible
without thereby being rendered
insolvent, including without limitation
(i) the sale of additional equity
securities, (ii) any necessary action
under applicable law to reduce I-Link's
stated capital or otherwise increase I-
Link's surplus or other funds legally
available, (iii) additional borrowings
by, or a refinancing of, I-Link, and
(iv) asset sales.
Additional Closing Condition........ As a condition to Winter Harbor's
obligation to purchase the Series M
Preferred Stock, holders of warrants to
acquire an aggregate of 1,000,000 shares
of I-Link common stock, which warrants
have an exercise price of not to exceed
$2.00 per share, shall have entered into
agreements with Winter Harbor to sell
such warrants to Winter Harbor for an
aggregate purchase price of $1,000,000,
and the acquisition of such warrants
shall be consummated simultaneously with
the acquisition of the Series M
Preferred Stock.
Employment Agreements............... Winter Harbor will review the
existing employment, non-competition and
consulting agreements of I-Link's key
executives. As a condition to Winter
Harbor's investment in I-Link, the
substance of all such agreements shall
be satisfactory to Winter Harbor and not
otherwise inconsistent with the terms
set forth herein.
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<PAGE>
Key Person Insurance................ I-Link shall have made arrangements
for key-man life insurance with respect
to such executive officers as may be
designated by Winter Harbor, and in such
amount and upon such terms as otherwise
shall be reasonably satisfactory to
Winter Harbor.
Expenses............................ I-Link shall pay all reasonable
expenses of Winter Harbor incurred by it
in connection with the equity financing
described herein (including but not
limited to attorney and other
professional fees and expenses), without
regard to whether or not the investment
is consummated.
Other Terms and Conditions.......... The Securities Purchase Agreement
giving effect to the terms set forth
herein shall contain such other
representations, warranties, covenants
and conditions as are customary for an
investment of this nature and otherwise
as may be required to give effect to the
terms set forth herein. The agreements
shall be governed by Delaware law,
without regard to its provisions as to
conflicts of law.
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<PAGE>
Exhibit 99(j)
June 5, 1997
Mr. Dror Nahumi
MIBridge, Inc.
1 Main Street, Suite 510
Eatontown, New Jersey 07724
Re: Letter of Intent
Dear Mr. Nahumi:
This letter shall express and confirm the intent of MEDCROSS, INC. (to be
renamed I-Link Incorporated) ("I-Link"), MIBRIDGE, INC. ("MIBridge"), and DROR
NAHUMI ("Nahumi") regarding the proposed acquisition of MIBridge by I-Link (the
"Acquisition"). Other than the stand-still and confidentiality agreements set
forth in the next to last paragraph of this letter, this letter of itself shall
create no legally binding or enforceable agreement between the parties, but is
intended to create a framework within which the parties can work together in
good faith to bring about the Acquisition.
The parties shall negotiate in good faith to finalize a written agreement
(the "Agreement") of Acquisition. The Agreement shall include, in addition to
general terms and conditions that are standard and customary in such
transactions, the following terms and conditions:
1. I-Link shall acquire 100% of the issued and outstanding capital stock of
MIBridge from Nahumi and any MIBridge employees who shall own any MIBridge
shares (the "MIBridge Employees") in exchange for a purchase price consisting of
the following:
(a) A cash payment equal to $2,000,000 payable to Nahumi/MIBridge Employees
in equal quarterly installments over a period of three years;
(b) 1,000 shares of Series D Preferred Stock (the "Preferred Shares"). The
Preferred Shares shall be convertible at the option of Nahumi/MIBridge
Employees at any time during the nine months following the closing of the
Acquisition ("Closing") into such number of Common Shares (the "Conversion
Shares") as shall equal the sum of $6,250,000 divided by today's closing
bid price of the Company's publicly-traded shares (the "Conversion Price").
The Preferred Shares shall automatically convert on the nine-month
anniversary of the Closing, unless earlier converted by you. The
<PAGE>
Mr. Dror Nahumi
June 5, 1997
Page 2
Preferred Shares shall be converted at the lower of (a) the Conversion
Price, or (b) the average closing bid price for the five trading days
immediately preceding the date of the Company received notice of conversion
from you, or the date of automatic conversion, whichever the case may be.
The Preferred Shares shall be entitled to receive dividends if and when
dividends are declared on the Common Shares, and in an amount proportionate
to the underlying Conversion Shares. The Conversion Shares shall carry
piggyback registration rights permitting the holder(s) to include the
Conversion Shares in any registration of securities with the U.S.
Securities and Exchange Commission that I-Link shall undertake after the
first anniversary of the Closing (excluding S-8 registration of employee
stock options). Conversion into Common Shares is subject to Medcross
shareholders increasing the authorized capital stock from 20,000,000 Common
Shares to 50,000,000 Common Shares at annual shareholders meeting scheduled
to take place in July 1997.
2. I-Link shall enter into an employment contract with Nahumi providing
terms, conditions and benefits similar to those provided for in employment
contracts existing with members of I-Link management, except that the Preferred
Shares provided for under Section 1(b) above shall take the place of the stock
option grant provided in other I-Link management employment agreements. Any
future employee stock option grants to you or MIBridge employees shall be at the
discretion of the Company's board of directors. Nahumi shall be appointed to
manage the operations of MIBridge under the direction of I-Link, and shall
devote his full-time to the operations of MIBridge. Nahumi shall have a title at
least equal to the most senior executives reporting directly to the President of
the Company. Nahumi's annual salary shall be at least $100,000. The employment
contract shall contain standard confidentiality, non-competition and assignment
of invention provisions similar to those contained in other I-Link employment
contracts.
3. Until such time as the cash payment provided for in Section 1(a) above
is paid in full, Nahumi shall have a perfected security interest in the MIBridge
shares and/or assets.
4. There shall be no brokerage or finder fees payable to any party
resulting from the Acquisition.
For a period of thirty (30) days from the date of this letter, MIBridge and
Nahumi shall not engage in discussions or negotiations with other parties for
the acquisition of any portion of MIBridge or its assets without the consent of
I-Link, which consent shall not be unreasonably withheld. The parties agree to
keep both the existence and terms of this Letter of Intent confidential, and not
to make any public announcement of the same without the prior written consent of
the other; provided, however, the parties acknowledge that it is their intent to
make a public announcement of this Letter of Intent as soon as is practicable.
2
<PAGE>
Mr. Dror Nahumi
June 5, 1997
Page 3
We look forward to working together to accomplish the Acquisition and
greatly enhancing the values of our two companies. If you are in agreement with
the provisions of this Letter of Intent, please sign where indicated below.
Sincerely,
MEDCROSS, INC.
By: /s/ John W. Edwards
--------------------------
John W. Edwards, President
MIBRIDGE, INC.
By: /s/ Dror Nahumi
--------------------------
Dror Nahumi, President
/s/ Dror Nahumi
--------------------------
Dror Nahumi
3
