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): January 15, 1999
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I-LINK INCORPORATED
(Exact name of registrant as specified in its charter)
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Florida 0-17973 59-2291344
(State or other (Commission (I.R.S. Employer
jurisdiction of File Number) Identification No.)
incorporation)
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 November 23, 1998 I-Link reached an agreement in principal for a new
financing arrangement with Winter Harbor, LLC. ("Winter Harbor"), as reported
by the Company in its Current Report of the same date, filed with the
Securities Commission on December 18, 1998 (the "Prior Form 8-K"). On
January 15, 1999, definitive agreements relating to such financing
arrangement were executed by and among the Company, certain of its
subsidiaries and Winter Harbor. Further, on March 4, 1999, certain terms of
the basic operative document, the Loan Agreement, were amended.
Substantive terms as set forth in the Prior Form 8-K remain the same
except that, as amended, the date by which the Company must determine whether
to repay its obligations under the transactions, or in the alternative issue
additional warrants to Winter Harbor, was amended from February 1, 1999 to
April 26, 1999. The Company has scheduled a Special Meeting of Stockholders
on April 14, 1999 for consideration and approval of the transactions. To
date, the Company has drawn approximately $8,042,000 under the Loan
Agreement.
As undertaken in the Prior Form 8-K, the Company hereby files this
Current Report on Form 8-K to enter into the record, as exhibits hereto, the
definitive agreements relating to the subject transactions.
Item 7. Financial Statements and Exhibits
(c) Exhibits
4.10 Amended and Restated Registration Rights Agreement dated as of January
15, 1999 by and between the Company and Winter Harbor, amending
Registration Rights Agreement dated October 10, 1997.
10.38 Loan Agreement dated as of January 15, 1999 by and between the Company
and Winter Harbor.
10.39 First Amendment to Loan Agreement dated March 4, 1999 by and between
the Company and Winter Harbor.
10.40 Promissory Note dated November 10, 1998, in principal amount of
$8,000,000 executed the by Company in favor of Winter Harbor.
10.41 Series K Warrant Agreement dated as of January 15, 1999 by and between
the Company and Winter Harbor and form of Series K Warrant.
10.42 Subsidiary Guaranty dated as of January 15, 1999 executed by five of
the Company's wholly-owned subsidiaries in favor of Winter Harbor.
10.43 Agreement dated as of January 15, 1999 by and between the Company and
Winter Harbor.
10.44 First Amendment to Security Agreement dated as of January 15, 1999, by
and among the Company, five of its wholly-owned subsidiaries and Winter
Harbor, amending Security Agreement dated April 14, 1997.
10.45 First Amendment to Pledge Agreement dated as of January 15, 1999, by
and among the Company and Winter Harbor, amending Pledge Agreement
dated April 14, 1997.
10.46 Series D, E, F, G, H, I and J Warrant Agreement dated as of January 15,
1999 by and between the Company and Winter Harbor, and related forms
of warrant certificates.
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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.
I-LINK INCORPORATED
(Registrant)
Dated: March 23, 1999 By: /s John W. Edwards
John W. Edwards, President and
Chief Executive Officer
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Exhibit 4.10
AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT
THIS AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT (this
"Agreement") is entered into as of January 15, 1999, by and between I-LINK
INCORPORATED, a Florida corporation (the "Company"), and WINTER HARBOR,
L.L.C., a Delaware limited liability company (the "Investor").
WHEREAS, the Company and the Investor entered into a Registration Rights
Agreement dated as of October 10, 1997 (the "Original Agreement") pursuant to
which the Company granted certain rights with respect to shares of the
Company's Series M Participating Convertible Preferred Stock (the "Series M
Preferred") and the Common Stock issuable upon conversion thereof and shares
of Common Stock issuable upon exercise of the warrants issued to the Investor
pursuant to a Securities Purchase Agreement (the "Securities Purchase
Agreement"), dated as of September 30, 1997; and
WHEREAS, the Company has entered into a Series D, E, F, G, H, I and J
Warrant Agreement and a Series K Warrant Agreement with Investor; and
WHEREAS, the Company has entered into an Agreement (the "Additional
Agreement"), dated as of the date hereof, with Investor providing, in
relevant part, for the conversion of certain loans between the Company and
the Investor into Series M Preferred and for the issuance to Investor of
certain warrants to acquire 11,740,000 shares of the Common Stock of the
Company (the "Additional Warrants" and, together with the Series D, E, F, G,
H, I, J and K Warrants, the "Warrants"); and
WHEREAS, the Company has agreed to enter into this Agreement and to
amend and restate the Original Agreement to grant the same rights with
respect to shares of Common Stock issuable upon (i) exercise of the Warrants,
(ii) conversion of the additional shares of Series M Preferred issuable
pursuant to the Additional Agreement and (iii) any other shares of Common
Stock of the Company which the Investor holds or may obtain in any manner at
any time hereafter (the "Additional Shares");
NOW, THEREFORE, in consideration of the foregoing and of the mutual
promises and covenants contained herein, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties hereto, intending legally to be bound, hereby agree as follows:
ARTICLE 1
DEFINITIONS
As used herein, the following terms shall have the following respective
meanings:
1.1 "Commission" shall mean the Securities and Exchange Commission
or any other federal agency at the time administering the Securities Act.
1.2 The terms "register," "registered" and "registration" refer to
a registration effected by preparing and filing a registration statement in
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compliance with the Securities Act, and the Commission's declaration or
ordering of the effectiveness of such registration statement.
1.3 "Registrable Securities" shall mean (i) all shares of Series
M Preferred at any time held by the Investor, whether issued to the Investor
pursuant to the Securities Purchase Agreement, the Additional Agreement or
otherwise, (ii) all shares which haven't been previously registered of the
Company's Series N Convertible Preferred Stock (the "Series N Preferred") at
any time held by the Investor, whether issued to the Investor pursuant to the
Loan Agreement dated as of the date hereof between the Investor and the
Company, the Rights Offering required pursuant to such Loan Agreement or
otherwise, (iii) any other shares of preferred stock of the Company at any
time held by the Investor, (iv) any and all shares of Common Stock of the
Company issued or issuable upon the exercise of the Warrants, the exercise of
any other warrants issued at any time by the Company to the Investor or the
conversion of the Series M Preferred, the Series N Preferred or any other
preferred stock of the Company held by the Investor (iv) all Additional
Shares, and (v) all securities of the Company issued or issuable with respect
to any securities referred to in clauses (i), (ii), (iii) and (iv) above,
upon any stock split, stock dividend, reclassification, recapitalization or
similar event, but excluding from the foregoing clauses (i), (ii), (iii) and
(iv) shares that (y) have been sold to or through a broker, dealer or
underwriter in a public distribution or a public securities transaction, or
(z) are then eligible to be sold without limitation, pursuant to Rule 144(k)
promulgated under the Securities Act (or any similar successor provision
thereto), and the holder of such shares is not then an "affiliate" of the
Company within the meaning of such Rule 144(k) (and has not been such an
affiliate for the preceding three months); to the extent that such holder is
an "affiliate" of the Company within the meaning of Rule 144, such that such
holder's shares of underlying Common Stock are not eligible to be sold
pursuant to Rule 144(k) without limitation, such shares of underlying Common
Stock shall remain Registrable Securities.
1.4 "Registration Expenses" shall mean all expenses, except
Selling Expenses, incurred by the Company in complying with Articles 2, 3 and
4 hereof and in effecting any registration described therein, including,
without limitation, all registration, qualification and filing fees, printing
expenses, escrow fees, fees and disbursements of legal counsel and
accountants for the Company, fees and disbursements of one legal counsel for
the selling shareholders, blue sky fees and expenses, and the expense of any
special audits incident to or required by any such registration (but
excluding the compensation of regular employees of the Company which shall be
paid in any event by the Company).
1.5 "Securities Act" shall mean the Securities Act of 1933, as
amended, or any similar federal statute and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at the time.
1.6 "Selling Expenses" shall mean all underwriting fees,
discounts, selling commissions and stock transfer taxes applicable to the
Registrable Securities registered by the Investor.
ARTICLE 2
REQUESTED REGISTRATION
2.1 Request for Registration. The Investor may request, in
writing, that the Company effect a registration or qualification with respect
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to all or part of the Registrable Securities. In the event the Company shall
receive from the Investor such a written request, the Company will:
(a) use its best efforts to effect such registration or
qualification as soon as practicable (including, without limitation,
undertaking to file post-effective amendments, appropriate qualifications
under applicable blue sky or other state securities laws, and undertaking to
effect appropriate compliance with applicable regulations issued under the
Securities Act, and any other governmental requirements or regulations) as
may be so requested and as would permit or facilitate the sale and
distribution of all or such portion of such Registrable Securities as are
specified in such request; provided, however, that the Company shall not be
obligated to take any action to effect any such registration, qualification
or compliance pursuant to this Article 2:
(i) In any particular jurisdiction in which the Company
would be required to execute a general consent to service of process in
effecting such registration, qualification or compliance, unless the Company
is already subject to service in such jurisdiction and except as may be
required by the Securities Act;
(ii) After the Company has effected four such requested
registrations pursuant to this Article 2 (not including registrations on Form
S-3), each such registration has been declared or ordered effective, and the
securities offered pursuant to each such registration have been sold; or
(iii) If the Company then meets the eligibility
requirements applicable to the use of Form S-3 in connection with such
registration and is able to effect such requested registration pursuant to
Article 4 hereof.
(b) Subject to the foregoing clauses (i) through (iii), the
Company shall file a registration statement covering the Registrable
Securities so requested to be registered as soon as practicable after receipt
of the request of the Investor; provided, however, that if the Company shall
furnish to the Investor a certificate signed by the chief executive officer
of the Company stating that in the good faith judgment of the Board of
Directors of the Company, it would be seriously detrimental to the Company
and its shareholders for such registration statement to be filed as a result
of a pending corporate transaction, the Company shall have the right to defer
such filing for a period of not more than 90 days after receipt of the
request of the Investor, provided, however, that the Company shall not be
permitted to exercise such deferral right under this Section 2.1(b) or
Section 4.1(c) hereof more than once in any 365-day period.
2.2 Underwriting.
(a) The distribution of the Registrable Securities covered by
the request of the Investor may, at the option of the Investor, be effected
by means of an underwritten offering.
(b) If the Investor elects to sell Registrable Securities
pursuant to an underwritten offering, the Company and the Investor shall
enter into an underwriting agreement in customary form with a managing
underwriter of nationally recognized standing selected for such underwriting
by the Investor, subject to the approval of the Company, which will not be
unreasonably withheld or delayed. Notwithstanding any other provision of
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this Article 2, if the managing underwriter advises the Investor in writing
that marketing factors require a limitation of the number of shares to be
underwritten, then the underwriters may exclude shares requested to be
included in such registration; provided, however, that the Investor shall
have first claim on the number of shares of Registrable Securities that may
be included in the registration. No Registrable Securities excluded from the
underwriting by reason of the managing underwriter's marketing limitation
shall be included in such registration.
(c) If the Investor disapproves of the terms of the
underwriting, the Investor may elect to withdraw therefrom by written notice
to the Company and the managing underwriter. The Registrable Securities so
withdrawn shall also be withdrawn from registration.
2.3 Inclusion of Shares by Company. If the managing underwriter
for an underwritten offering has not limited the number of Registrable
Securities to be underwritten, the Company may include securities for its own
account or for the account of others in such registration if the managing
underwriter so agrees and if the number of Registrable Securities held by the
Investor which would otherwise have been included in such registration and
underwriting will not thereby be limited. The inclusion of such shares shall
be on the same terms as the registration of shares held by the Investor. In
the event that the underwriters exclude some of the securities to be
registered, the securities to be sold for the account of the Company and any
other holders shall be excluded in their entirety prior to the exclusion of
any Registrable Securities held by the Investor.
ARTICLE 3
COMPANY REGISTRATION
3.1 Notice of Registration to the Investor. If at any time or
from time to time the Company shall determine to register any of its
securities, either for its own account or the account of a security holder or
holders, other than (i) a registration relating solely to employee benefit
plans on Form S-8 (or any successor form), (ii) a registration relating
solely to a Commission Rule 145 transaction on Form S-4 (or any successor
form) or (iii) a registration on Form S-3 relating to a "Rights Offering" of
the Company's Series N Preferred Stock, the Company will:
(a) promptly give to the Investor written notice thereof; and
(b) include in such registration (and any related
qualification under blue sky laws or other compliance), and in any
underwriting involved therein, all the Registrable Securities specified in a
written request or requests, made within 15 days after receipt by the
Investor of such written notice from the Company described in Section 3.1(a).
3.2 Underwriting. If the registration of which the Company gives
notice is for a registered public offering involving an underwriting, the
Company shall so advise the Investor as a part of the written notice given
pursuant to Section 3.1(a). In such event, the right of the Investor to
registration pursuant to this Article 3 shall be conditioned upon the
Investor's participation in such underwriting and the inclusion of the
Investor's Registrable Securities in the underwriting to the extent provided
herein. If the Investor proposes to distribute its securities through such
underwriting, it shall (together with the Company) enter into an underwriting
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agreement in customary form with the managing underwriter selected for such
underwriting by the Company.
(a) Notwithstanding any other provision of this Article 3, if
the managing underwriter determines that marketing factors require a
limitation of the number of shares to be underwritten, the underwriter may
exclude some or all Registrable Securities from such registration and
underwriting. The Company shall so advise the Investor, and the number of
shares of Common Stock to be included in such registration shall be allocated
as follows: first, for the account of the Company, all shares of Common Stock
proposed to be sold by the Company; second, for the account of the Investor
participating in such registration, the number of shares of Common Stock
requested to be included in the registration by the Investor at the time of
filing the registration statement, and third, for the account of any other
shareholders of the Company participating in such registration, the number of
shares of Common Stock requested to be included in the registration by such
other shareholders in proportion, as nearly as practicable, to the respective
amounts of Common Stock that are proposed to be offered and sold by such
other shareholders of Common Stock at the time of filing the registration
statement. No Registrable Securities excluded from the underwriting by
reason of the underwriters' marketing limitation shall be included in such
registration.
(b) The Company shall advise the Investor of any such
limitation and of the number of shares of Registrable Securities held by the
Investor that may be included in the registration and underwriting at the
time of filing the registration statement. If the Investor disapproves of
the terms of any such underwriting, the Investor may elect to withdraw
therefrom by written notice to the Company and the managing underwriter. Any
securities excluded or withdrawn from such underwriting shall be withdrawn
from such registration.
(c) The Company shall have the right to terminate or withdraw
any registration initiated by it under this Article 3 prior to the
effectiveness of such registration, whether or not the Investor has elected
to include securities in such registration.
ARTICLE 4
REGISTRATION ON FORM S-3
4.1 Request for Registration.
(a) In addition to the rights set forth in Articles 2 and 3
hereof, if the Investor requests that the Company file a registration
statement on Form S-3 (or any successor to Form S-3) for a public offering of
shares of Registrable Securities in which the reasonably anticipated
aggregate price to the public, net of underwriting discounts and fees, would
exceed $500,000 and the Company is a registrant entitled to use Form S-3 (or
any successor form to Form S-3) to register such shares for such an offering,
the Company shall use its best efforts to cause such shares to be registered
for the offering as soon as practicable on Form S-3 (or any such successor
form to Form S-3).
(b) Notwithstanding the foregoing, the Company shall not be
obligated to take any action pursuant to this Article 4:
(i) in any particular jurisdiction in which the Company
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would be required to execute a general consent to service of process in
effecting such registration, qualification or compliance, unless the Company
is already subject to service in such jurisdiction and except as may be
required by the Securities Act;
(ii) more than once in any twelve-month period.
(c) Subject to the foregoing clauses (i) and (ii), the
Company shall file a registration statement on Form S-3 covering the
Registrable Securities so requested to be registered as soon as practicable
after receipt of the request of the Investor; provided, however, that if the
Company shall furnish to the Investor a certificate signed by the chief
executive officer of the Company stating that in the good faith judgment of
the Board of Directors of the Company, it would be seriously detrimental to
the Company and its shareholders, as the result of a pending corporate
transaction, for such registration statement to be filed on or before the
date filing would be required, and it is therefore essential to defer the
filing of such registration statement, the Company shall have the right to
defer such filing for a period of not more than 90 days after receipt of the
request of the Investor (provided, however, that the Company shall not be
permitted to exercise such deferral right under this Section 4.1(c) or
Section 2.1(b) hereof more than once in any 365-day period).
4.2 Underwriting.
(a) The distribution of the Registrable Securities covered by
the registration on Form S-3 shall be effected by means of the method of
distribution selected by the Investor. If such distribution is effected by
means of an underwriting, the right of the Investor to registration pursuant
to this Article 4 shall be conditioned upon the Investor's participation in
such underwriting, if any, and the inclusion of the Investor's Registrable
Securities in such underwriting.
(b) If the distribution of the Registrable Securities
pursuant to this Section 4.2 is effected by means of an underwriting, the
Company and the Investor shall enter into an underwriting agreement in
customary form with a managing underwriter of nationally recognized standing
selected for such underwriting by the Investor. Notwithstanding any other
provision of this Article 4, if the managing underwriter advises the Investor
in writing that marketing factors require a limitation of the number of
shares to be underwritten, then the underwriters may exclude some or all of
the shares requested to be included in such registration, provided, however,
that the Investor shall have first claim on the number of shares of
Registrable Securities that may be included in the registration. No
Registrable Securities excluded from the underwriting by reason of the
managing underwriter's marketing limitation shall be included in such
registration.
(c) If the distribution of the Registrable Securities
pursuant to this Section 4.2 is effected by means of an underwriting and if
the Investor disapproves of the terms of the underwriting, the Investor may
elect to withdraw therefrom by written notice to the Company and the managing
underwriter. The Registrable Securities and/or other securities so withdrawn
shall also be withdrawn from registration.
4.3 Inclusion of Shares by Company. If the distribution of the
Registrable Securities pursuant to this Article 4 is effected by means of an
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underwriting and if the managing underwriter has not limited the number of
Registrable Securities to be underwritten, the Company may include securities
for its own account or for the account of others in such registration if the
managing underwriter so agrees and if the number of Registrable Securities
held by the Investor requesting registration on Form S-3 which would
otherwise have been included in such registration and underwriting will not
thereby be limited. The inclusion of such shares shall be on the same terms
as the registration of shares held by the Investor requesting such
registration. In the event that the underwriters exclude some of the
securities to be registered on Form S-3, the securities to be sold for the
account of the Company and any other holders shall be excluded in their
entirety prior to the exclusion of any Registrable Securities held by the
Investor.
ARTICLE 5
EXPENSES OF REGISTRATION
All Registration Expenses incurred in connection with any registration,
qualification or compliance pursuant to Articles 2, 3 or 4 shall be borne by
the Company. Selling Expenses attributable to the sale of Registrable
Securities by the Investor shall be borne by the Investor.
ARTICLE 6
REGISTRATION PROCEDURES
In the case of each registration or qualification effected by the
Company pursuant to this Agreement, the Company will keep the Investor
advised in writing as to the initiation of each registration and
qualification and as to the completion thereof. At its expense, the Company
will:
(a) Keep such registration or qualification effective and
current for a period of 180 days (or such longer period as may be necessary
to accommodate the filing of amendments or supplements necessary to comply
with the Securities Act) or until the Investor has completed the distribution
described in the registration statement relating thereto, whichever first
occurs;
(b) Furnish such number of prospectuses and other documents
incident thereto as the Investor from time to time may reasonably request;
(c) Use its best efforts to register and qualify the securities
covered by such registration statement under such other securities or blue
sky laws of such jurisdictions as shall be reasonably requested by the
Investor or any managing underwriter for the distribution of the
Registrable Securities covered by the registration statement; provided that
the Company shall not be required in connection therewith or as a condition
thereto to qualify to do business or to file a general consent to service of
process in any such states or jurisdiction;
(d) Use its best efforts to cause all Registrable Securities
covered by the registration statement to be listed or accepted for quotation
on a national securities exchange or automated quotation system;
(e) In the event of any underwritten public offering, enter
into and perform its obligations under an underwriting agreement, in usual
and customary form, with the managing underwriter of such offering. The
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Investor participating in such underwriting shall also enter into and perform
its obligations under such an agreement;
(f) Subject to receiving reasonable assurances of confidentiality,
for a reasonable period after the filing of such registration statement, and
throughout each period during which the Company is required to keep a
registration effective, make available for inspection by the Investor, and
any underwriters, and their respective counsel, such financial and other
information and books and records of the Company, and cause the officers,
directors, employees, counsel and independent certified public accountants of
the Company to respond to such inquiries as shall be reasonably necessary, in
the judgment of such counsel, to conduct a reasonable investigation within the
meaning of Section 11 of the Securities Act;
(g) Notify the Investor, at any time when a prospectus
relating thereto covered by such registration statement is required to be
delivered under the Securities Act, of the occurrence of any event as a
result of which the prospectus included in such registration statement, as
then in effect, includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances then
existing; and
(h) Promptly notify the Investor and any underwriters, and
confirm such advice in writing, (i) when such registration statement or the
prospectus included therein or any prospectus amendment or supplement or
post-effective amendment has been filed, and, with respect to such
registration statement or any post-effective amendment, when the same has
become effective, (ii) of any comments by the Commission, by the National
Association of Securities Dealers Inc. ("NASD"), and by the blue sky or
securities commissioner or regulator of any state with respect thereto or
any request by any such entity for amendments or supplements to such
registration statement or prospectus or for additional information, (iii) of
the issuance by the Commission of any stop order suspending the effectiveness
of such registration statement or the initiation or threatening of any
proceedings for that purpose, (iv) if at any time the representations and
warranties of the Company cease to be true and correct in all material
respects, and (v) of the receipt by the Company of any notification with
respect to the suspension of the qualification of the Registrable Securities
covered by the registration statement for sale in any jurisdiction or the
initiation or threatening of any proceeding for such purpose.
ARTICLE 7
INDEMNIFICATION
7.1 The Company will indemnify the Investor, each of its officers,
directors, members, partners, shareholders, employees and agents, and each
person controlling any such persons within the meaning of Section 15 of the
Securities Act, with respect to which registration or qualification has been
effected pursuant to this Agreement, and each underwriter, if any, and each
person who controls any underwriter within the meaning of Section 15 of the
Securities Act, against all expenses, claims, losses, damages and liabilities
(or actions in respect thereof), including any of the foregoing incurred in
settlement of any litigation, commenced or threatened, arising out of or
based on (i) any untrue statement (or alleged untrue statement) of a material
fact contained in any registration statement, prospectus, offering circular
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or other document, or any amendment or supplement thereof, incident to any
such registration or qualification, or (ii) any omission (or alleged
omission) to state therein, a material fact required to be stated therein or
necessary to make the statements therein, not misleading, or (iii) any
violation (or alleged violation) by the Company of any rule or regulation
promulgated under the Securities Act or any state securities laws applicable
to the Company and relating to action or inaction by the Company in
connection with any such registration or qualification, and will reimburse
the Investor, each of its officers, directors, members, partners,
shareholders, employees and agents, and each person controlling any such
persons, each such underwriter and each person who controls any such
underwriter, for any legal and any other expenses reasonably incurred in
connection with investigating, preparing or defending any such claim, loss,
damage, liability or action; provided, however, that the Company will not be
liable in any such case to the extent that any such claim, loss, damage,
liability or expense arises out of or is based on any untrue statement or
omission or alleged untrue statement or omission, made in reliance upon and
in conformity with written information furnished to the Company by the
Investor or underwriter and expressly intended for use in such registration
statement, prospectus, offering circular or other document, or any amendment
or supplement thereof. Expenses (including attorneys' and accountants' fees)
incurred in defending a civil or criminal claim, action, suit, or proceeding
shall be paid by the Company in advance of the final disposition of the
matter upon receipt of an undertaking satisfactory to the Company by or on
behalf of any person or entity entitled to indemnification pursuant to this
Section 7.1 to repay such amount if such person or entity is ultimately
determined not to be entitled to indemnity.
7.2 The Investor will, if Registrable Securities held by the
Investor are included in the securities as to which such registration or
qualification is being effected, indemnify the Company, each of its directors
and officers, each underwriter, if any, of the Company's securities covered
by such a registration statement, and each person who controls the Company or
such underwriter within the meaning of Section 15 of the Securities Act,
against all expenses, claims, losses, damages and liabilities (or actions in
respect thereof), including any of the foregoing incurred in settlement of
any litigation, commenced or threatened, arising out of or based on (i) any
untrue statement (or alleged untrue statement) of a material fact contained
in any such registration statement, prospectus, offering circular or other
document, or any amendment or supplement thereto, incident to any such
registration, qualification or compliance or (ii) any omission (or alleged
omission) to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and will reimburse
the Company, such directors, officers, underwriters or control persons for
any legal or any other expenses reasonably incurred in connection with
investigating, preparing or defending any such claim, loss, damage, liability
or action, in each case to the extent, but only to the extent, that such
untrue statement (or alleged untrue statement) or omission (or alleged
omission) is made in such registration statement, prospectus, offering
circular, other document or amendment or supplement in reliance upon and in
conformity with written information furnished to the Company by the Investor
and expressly intended for use in such registration statement, prospectus,
offering circular or other document, or any amendment or supplement thereof;
provided, however, that the obligations of the Investor hereunder shall be
limited to an amount equal to the net proceeds to the Investor from the sale
of Registrable Securities sold pursuant to registration as contemplated
herein.
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7.3 Each party entitled to indemnification under this Section 7
(the "Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified
Party has actual knowledge of any claim as to which indemnity may be sought,
and shall permit the Indemnifying Party to assume the defense of any such
claim or any litigation resulting therefrom, provided that counsel for the
Indemnifying Party, who shall conduct the defense of such claim or
litigation, shall be approved by the Indemnified Party, whose approval shall
not unreasonably be withheld. The Indemnified Party may participate in such
defense at such party's expense; provided, however, that the Indemnifying
Party shall bear the expense of such defense of the Indemnified Party if
representation of both parties by the same counsel would be inappropriate due
to actual or potential conflicts of interest. The failure of any Indemnified
Party to give notice as provided herein shall not relieve the Indemnifying
Party of its obligations under this Agreement, unless such failure is
materially prejudicial to the ability of the Indemnifying Party to defend the
action. No Indemnifying Party, in the defense of any such claim or
litigation, shall, except with the consent of each Indemnified Party, consent
to entry of any judgment or enter into any settlement which does not include
as an unconditional term thereof the giving by the claimant or plaintiff to
such Indemnified Party of a release from all liability in respect of such
claim or litigation.
7.4 If the indemnification provided for in Section 7.1 or 7.2 is
unavailable or insufficient to hold harmless an Indemnified Party, then each
Indemnifying Party shall contribute to the amount paid or payable by such
Indemnified Party as a result of the expenses, claims, losses, damages or
liabilities (or actions or proceedings in respect thereof) referred to in
Section 7.1 or 7.2, in such proportion as is appropriate to reflect the
relative fault of the Company on the one hand and the sellers of Registrable
Securities on the other hand in connection with statements or omissions which
resulted in such losses, claims, damages or liabilities (or actions or
proceedings in respect thereof) or expenses, as well as any other relevant
equitable considerations. The relative fault shall be determined by
reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission or alleged omission to state a
material fact relates to information supplied by the Company or the sellers
of Registrable Securities and the parties' relative intent, knowledge, access
to information and opportunity to correct or prevent such untrue statement or
omission. The Company and the Investor agree that it would not be just and
equitable if contributions pursuant to this Section 7.4 were to be determined
by pro rata allocation (even if all sellers of Registrable Securities were
treated as one entity for such purpose) or by any other method of allocation
which does not take account of the equitable considerations referred to in
the first sentence of this Section 7.4. The amount paid by an Indemnified
Party as a result of the expenses, claims, losses, damages or liabilities (or
actions or proceedings in respect thereof) referred to in the first sentence
of this Section 7.4 shall be deemed to include any legal or other expenses
reasonably incurred by such Indemnified Party in connection with
investigating or defending any claim, action or proceeding which is the
subject of this Section 7.4. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be entitled
to contribution from any person who was not guilty of such fraudulent
misrepresentation. The obligations of sellers of Registrable Securities to
contribute pursuant to this Section 7.4 shall be several in proportion to the
respective amount of Registrable Securities sold by them pursuant to a
registration statement.
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ARTICLE 8
INFORMATION BY INVESTOR
The Investor holding Registrable Securities included in any registration
shall furnish in writing to the Company such information regarding the
Investor and the distribution proposed by the Investor as the Company may
reasonably request in writing and as shall be reasonably required in
connection with any registration or qualification referred to in this
Agreement.
ARTICLE 9
RULE 144 REPORTING
With a view to making available the benefits of certain rules and
regulations of the Commission which may at any time permit the sale of
securities of the Company to the public without registration, at such time as
a public market exists for the Common Stock of the Company, the Company
agrees to:
9.1 Make and keep public information available as those terms are
understood and defined in Rule 144 under the Securities Act, at all times;
and
9.2 Use its best efforts to file with the Commission in a timely
manner all reports and other documents required of the Company under the
Securities Act and the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), at any time that it is subject to such reporting
requirements; and
9.3 So long as the Investor owns any Registrable Securities,
furnish to the Investor forthwith upon request a written statement by the
Company as to its compliance with the reporting requirements of said Rule
144, and of the Securities Act and the Exchange Act, a copy of the most
recent annual or quarterly report of the Company, and such other reports and
documents of the Company as the Investor may reasonably request in availing
itself of any rule or regulation of the Commission allowing the Investor to
sell any such securities without registration.
ARTICLE 10
TRANSFER OF REGISTRATION RIGHTS
The rights to cause the Company to register securities granted to the
Investor under Articles 2, 3 and 4 hereof may be assigned in connection with
any permitted transfer or assignment of the Investor's Registrable
Securities. All transferees and assignees of the rights to cause the Company
to register securities granted to the Investor under Articles 2, 3 and 4
hereof, as a condition to the transfer of such rights, shall agree in writing
to be bound by the agreements set forth herein.
ARTICLE 11
LIMITATIONS ON REGISTRATION RIGHTS
GRANTED TO OTHER SECURITIES
11.1 Existing Registration Rights. The Company covenants, warrants
and represents that:
(a) The registration rights of the Company's Class B
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Preferred Stock ("Class B"), Class C Preferred Stock ("Class C") and Series
D Preferred Stock ("Series D") are subordinated in all respects to the rights
of holders of the Series M Preferred in any offering made under Articles 2,
3 or 4 herein. The registration rights of holders of the Company's capital
stock acquired after the date hereof shall be subordinated in all respects to
the rights of holders of the other Registrable Securities in any offering
made under Articles 2, 3 or 4 herein.
(b) If holders of Class B, Class C and/or Series D shares
request registration under circumstances similar to those in Articles 2, 3 or
4 hereof (a "Requested Registration"), the Company shall:
(i) promptly give to the Investor written notice thereof;
(ii) include in any Requested Registration (and any
qualification under blue sky laws or other compliance), and in any
underwriting involved therein, all the Registrable Securities specified in a
written request or requests, made within 15 days after receipt of such
written notice from the Company described in Section 11.1(b)(i) by the
Investor;
(iii) pay any Registration Expenses related to the Registrable
Securities included in the Requested Registration; and
(iv) upon expiration of the 15-day period prescribed in
Section 11.1(b)(ii), promptly give each holder of Class B, Class C and/or
Series D written notice of the number of Registrable Securities to be
included in the Requested Registration and that if the underwriters exclude
some of the securities to be registered, the securities to be sold for any
Class B, Class C or Series D holder shall be excluded in their entirety prior
to the exclusion of any Registrable Securities.
11.2 Additional Registration Rights. The parties hereto agree that
additional holders of capital stock of the Company providing new financing to
the Company may, in connection with the Company's obtaining such new
financing, be granted registration rights subordinate to those granted
herein, with respect to any or all securities of the Company held by them;
provided, however, that from and after the date of this Agreement, the
Company shall not without the prior written consent of the Investor, enter
into any agreement with any holder or prospective holder of any securities of
the Company providing for the grant to such holder of registration rights
superior to those granted herein.
ARTICLE 12
MISCELLANEOUS
12.1 Aggregation. Shares of capital stock of the Company owned by
partnerships and corporations having substantially common ownership interests
or managed by the same principals and owned by individual investors
affiliated with one another may be aggregated for the purposes of calculating
the aggregate percentage of capital stock of the Company owned by the
Investor and any permitted transferee hereunder.
12.2 Waivers and Amendments. With the written consent of the
Company and the Investor, the obligations and rights of the Company and the
Investor under this Agreement may be waived (either generally or in a
particular instance, either retroactively or prospectively, and either for a
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specified period of time or indefinitely) or amended. This Agreement or any
provision hereof may be amended, waived, discharged or terminated only by a
statement in writing signed by the party against which enforcement of the
amendment, waiver, discharge or termination is sought, except to the extent
provided in this Section 12.2.
12.3 Damages. The Company recognizes and agrees that the Investor
will not have an adequate remedy if the Company fails to comply with the
provisions of this Registration Rights Agreement regarding registration and
that damages will not be readily ascertainable, and the Company expressly
agrees that, in the event of such failure, the Company shall not oppose an
application by the Investor, or any other person entitled to the benefits of
these provisions, requiring specific performance of any provisions hereof or
enjoining the Company from continuing to commit any such breach of such
provisions.
12.4 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware applicable to
contracts made and to be performed entirely within the state without regard
to principles of conflicts of law.
12.5 Successors and Assigns. Except as otherwise expressly
provided herein, the provisions hereof shall inure to the benefit of, and be
binding upon, the successors, assigns, heirs, executors and administrators of
the parties hereto.
12.6 Entire Agreement. This Agreement constitutes the full and
entire understanding and agreement between the parties with regard to the
subject matter hereof.
12.7 Notices. All notices, requests, consents, and other
communications hereunder shall be in writing and shall be deemed effectively
given and received upon delivery in person, or one business day after
delivery by national overnight courier service or by telecopier transmission
with acknowledgment of transmission receipt, or three business days after
deposit via certified or registered mail, return receipt requested, in each
case addressed as follows:
if to the Company:
I-Link Incorporated
13751 South Wadsworth Park Drive
Suite 200
Draper, Utah 84020
Attention: John W. Edwards, President
Telecopier: 801-576-5075
with a copy to:
David E. Hardy, Esq.
60 E. South Temple
Suite 2200
Salt Lake City, Utah 84111
Telecopier: (801) 364-6664
if to the Investor, at the address shown in the records of the
Company.
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or, in any such case, at such other address or addresses as shall have been
furnished in writing by such party to the others.
12.8 Severability. In case any provision of this Agreement shall
be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions of this Agreement shall not in any
way be affected or impaired thereby.
12.9 Titles and Subtitles. The titles of the sections and
subsections of this Agreement are for convenience of reference only and are
not to be considered in construing this Agreement.
12.10 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
constitute one instrument.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
I-LINK INCORPORATED
By: /s John Edwards
John Edwards, President
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
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Exhibit 10.38
LOAN AGREEMENT
THIS LOAN AGREEMENT is made and entered into as of January 15, 1999,
by and between I-LINK INCORPORATED, a Florida corporation (the
"Borrower"), and WINTER HARBOR, L.L.C., a Delaware limited liability
company (the "Lender").
RECITALS:
Borrower desires to borrow from Lender from time to time up to $8,000,000
on a term loan basis, the proceeds of which will be used for capital
expenditures and working capital purposes in the operations of the Borrower and
its subsidiaries.
AGREEMENTS:
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 from time to time, upon the terms and
conditions hereinafter set forth, to make a loan or loans to Borrower in an
aggregate principal amount not to exceed at any one time outstanding up to
$8,000,000 (the "Loan"), $5,158,288 of which remains available for borrowing
from the date hereof. As of the date hereof, the Lender has lent to the
Borrower and the Borrower has borrowed from the Lender the principal amount of
$4,841,712 in the amounts and on the dates set forth on Exhibit 2, attached
hereto. $600,000 of such amount represents (a) accrued and unpaid interest and
(b) accrued and unpaid expenses (the loans made as of the date hereof and such
interest and expenses may be referred to hereinafter collectively as the
"Preexisting Loans"), which amounts have not been paid and remain outstanding.
The Borrower hereby acknowledges receipt of such funds and such debt and agrees
that the Preexisting Loans shall be governed by the terms and conditions of this
Agreement and the Loan Documents. The Preexisting Loan and the Loans shall be
referred to herein collectively as the "Loan" or "Loans". The Loans shall be
junior in right of payment to the loans in the aggregate principal amount of
$7,768,000 made by Lender to Borrower prior to the date hereof (the "Prior
Loans") and shall be pari passu with all other debt and liabilities of Borrower.
Section 1.2 The Note. The outstanding principal amount of the Loan 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 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
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 (a)
from November 10, 1998 through and including February 9, 1999, 4% per annum; (b)
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from February 10, 1999 through and including May 8, 1999, 5% per annum; (c) from
May 10, 1999 through and including August 9, 1999, 6% per
annum; (d) and thereafter, 7% per annum (the "Interest Rate"). 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 monthly on the last business day of each calendar month
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) 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
applicable Interest Rate plus 2% per annum, which shall be payable upon demand.
Section 1.4 Principal Repayment. The outstanding principal balance of the
Loan plus any accrued and unpaid interest thereon shall be due and payable on
October 31, 1999 (the "Maturity Date"). The Loans shall be converted into
Series N Preferred Stock upon consummation of the Rights Offering (as those
terms are defined in Section 1.6(b)(iii)) in accordance with the provisions of
Section 1.6(b)(iii).
Section 1.5 Use of Proceeds and Advancement of Funds. Each borrowing
hereunder shall be made by Lender in such amount as Borrower shall request in
writing five business days prior to the date of the requested borrowing,
provided that each borrowing shall be no more than $1,000,000. Borrower shall
not be permitted to make more than five additional borrowings hereunder. The
obligation of Lender to make any portion of the Loan is
conditioned upon the fact that (i) 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; (ii) all of the Loan Documents (as that
term is defined in Section 4.2) shall still be in full force and effect; (iii)
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; and (iv) the
Borrower's actual results of operations shall equal or exceed its monthly budget
projections delivered to, and approved by, the Lender.
Section 1.6 Prepayments.
(a) Voluntary Prepayments. By written notice to Lender no later than
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
shall be in the aggregate
principal amount of not less than $100,000 or an integral multiple of
$50,000 in excess thereof.
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(b) Mandatory Prepayments.
(i) Proceeds of Asset Sales. Borrower shall make a
mandatory 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 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 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) Rights Offering. Borrower shall make a rights
offering (the "Rights Offering") to all of its existing shareholders for
$20,000,000 of a newly created class of Series N Convertible Preferred
Stock (the "Series N Stock") having the terms and conditions set forth on
Schedule I attached hereto and such other terms and conditions as may be
reasonably acceptable to Borrower and Lender. Borrower shall file the
documents relating to the Rights Offering with the Securities and Exchange
Commission (the "SEC") no later than January 15, 1999. If Borrower mails
the Rights Offering materials to its shareholders by the earlier of March
10, 1999 and that business day which is three business days following the
receipt of clearance from the SEC (the "Mailing Date"), and consummates the
Rights Offering by the earlier of April 16, 1999 and that business day
which is the first business day following the 35th calendar day from the
Mailing Date (the "Consummation Date"), then, so long as Borrower shall
have notified Lender of such conversion on or prior to March 15, 1999,
Borrower shall cause the outstanding principal amount of the Loans,
together with all accrued interest to be converted into Series N Stock.
Lender shall have the right, but not the obligation, to subscribe for any
Series N Stock not otherwise subscribed for as part of the Rights Offering.
(c) Application of Prepayments. All voluntary and mandatory
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 made
hereunder or under the Note shall be due on a Saturday, Sunday or public
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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
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 Standby Letters of Credit. The Lender shall assist the
Borrower in acquiring $3,000,000 aggregate stated amount of standby letters of
credit (the "Standby Letter of Credit") to guaranty the Borrower's obligations
under $3,000,000 of equipment capitalized leases. The Lender shall act as the
account party, guarantying the Borrower's obligation to repay the Standby Letter
of Credit. The amount of Lender's commitment in Section 1 shall be reduced by
the aggregate stated amount of all Standby Letters of Credit issued pursuant to
this Section. Borrower shall bear all costs and expenses of issuance of the
Standby Letters of Credit, including any application or issuance fees, any
annual fees and all attorneys fees. In addition, Borrower shall pay, at the
beginning of each annual period, to the Lender a fee of 1.0% per annum on the
stated amount of all Standby Letters of Credit. Upon any draw on a Standby
Letter of Credit, Lender shall be deemed to have made a Loan to Borrower which
shall bear interest in accordance with the provisions of Section 1.3 hereof.
Section 1.10 Warrants.
(a) As further consideration for Lender's commitment to make
available the Loans and to arrange the Standby Letter of Credit, Borrower
will grant to Lender warrants ("Warrants") to purchase a certain number of
shares of the Borrower's common stock pursuant to the terms of a Warrant
Agreement (the "Warrant Agreement"). Such Warrant Agreement shall have an
exercise period of 7.5 years from the date hereof and shall grant the
Lender the right to acquire (i) one Warrant for (A) every $10 in Loan
proceeds made available to the Borrower hereunder and (B) every $10 of the
aggregate stated amount of the Standby Letters of Credit and (ii) an
additional nine Warrants for (A) every $10 in Loan proceeds made available
to the Borrower hereunder upon the occurrence of an Event of Default or if
the Loan is not paid in full on or before March 15, 1999 and (B) every $10
of the aggregate stated amount of the Standby Letters of Credit upon the
occurrence of an Event of Default or if the Loan is not paid in full on or
before March 15, 1999 or if there is a draw on any Standby Letter of
Credit; provided, however, in the event that a Equity Transaction (as
defined below) occurs on or after February 1, 1999 and prior to March 15,
1999, then the Borrower shall issue to the Lender the additional Warrants
referenced in subclauses (ii) (A) and (B) of this Section 1.10 prior to
such Equity Transaction. As used herein, "Equity Transaction" shall mean
(pursuant to a single transaction or a series of related transactions by a
single party or related parties (other than the Lender)) (i) the
acquisition of 20% or more of the Borrower's capital stock; (ii) the sale
of all or substantially all of the assets of the Borrower; or (iii)
repayment, directly or indirectly, of all or any portion of the Loan in
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connection with the sale of the Borrower's capital stock or the sale or
license of the Borrower's technology.
(b) The Warrants shall have a strike price of $2.78 (the "Strike
Price"), which Strike Price shall reset (the "Reset Price") to the lower of
(i) $2.78; (ii) the average trading price for any 20 day period subsequent
to the issuance of such Warrants; (iii) the price at which common stock or
common stock equivalents of the Borrower is issued (whether by conversion,
exercise or otherwise and whether any such security is outstanding on the
date hereof); and (iv) the exercise price or conversion rate of any new
options, warrants, preferred stock or other convertible security; provided,
however the Reset Price shall not be below $1.25.
ARTICLE II. CLOSING
Section 2.1 Closing and Closing Date. The making of each 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.
ARTICLE III. SECURITY
Section 3.1 Guaranty. As partial security for the Loan, Borrower shall
cause each of its subsidiaries listed on Schedule 3.1 hereto (the
"Subsidiaries"), 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 the Subsidiaries shall guarantee the obligations of
Borrower to Lender hereunder and under the Note.
Section 3.2 Security Interest. As further security for the Loan, Borrower
shall, and shall cause its Subsidiaries to, execute and deliver to Lender, on or
before the date hereof, an amendment to the security agreement, dated April 14,
1998 (as amended, the "Security Agreement"), in form and substance satisfactory
to Lender, pursuant to which Borrower and its Subsidiaries grant to Lender a
security interest in substantially
all of their personal property (other than equipment leased to Borrower and its
Subsidiaries and any leases which by their terms prohibit the grant of security
interests in, or assignments of, Borrower or the Subsidiaries' leasehold
interest therein) as collateral security for their obligations under the
Guaranty and for Borrower's obligations hereunder and under the Note. The
Security Interests granted pursuant to this amendment shall be
subordinate to the security interest securing the Prior Loans. 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."
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Section 3.3 Pledge Agreement. As further security for the Loan, on or
before the Closing Date, Borrower shall execute and deliver to Lender an
amendment to the pledge agreement, dated April 14, 1998 (as amended, the
"Pledge Agreement"), in form and substance satisfactory to Lender, pursuant to
which Borrower grants to Lender a security interest in all of the issued and
outstanding equity interests of the Subsidiaries 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
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:
(i) The Note, duly executed and delivered by Borrower;
(ii) The Guaranty, duly executed and delivered by the
Subsidiaries;
(iii) The Security Agreement, together with appropriate
UCC-1 financing statements duly executed and delivered by the Subsidiaries,
and the Patent Assignment;
(iv) The Pledge Agreement, duly executed and delivered by
Borrower, together with stock certificates and blank stock powers, as
applicable;
(v) Certified copies of the resolutions of the Board of
Directors of each of Borrower and the Subsidiaries evidencing approval of
the execution, delivery and performance of this Agreement, the Note, the
Guaranty, the Security Agreement, the Patent Assignment, the Pledge
Agreement and other matters contemplated hereby;
(vi) Certificates of Good Standing for each of Borrower and
its Subsidiaries from the jurisdiction of their organization and from each
other jurisdiction in which any 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 the Subsidiaries 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
Borrower and the Subsidiaries in this Agreement, the Guaranty, the Security
Agreement, the Pledge Agreement, the Patent Assignment, 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
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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, 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.
(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 Subsidiary is duly organized, validly existing and in good
standing under the laws of its jurisdiction of organization, 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, delivery
and performance by each of Borrower and its Subsidiaries 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 or any of its Subsidiaries
or (B) any provision of the Certificate of Incorporation, By-laws or other
organizational documents of Borrower or any of its Subsidiaries; or (ii) result
in a breach of or constitute a default under any agreement or instrument to
which Borrower or its Subsidiaries is a party or by which any of their
properties may be affected; or (iii) result
in the creation of a lien, charge or encumbrance of any nature upon
Borrower's or any of its Subsidiaries' 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
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Borrower for the fiscal years ended December 31, 1997, December 31, 1996, and
December 31, 1995, and (b) the unaudited consolidated financial statements of
Borrower as of September 30, 1998, 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 equity interests of the
Subsidiaries have been duly and validly issued, and is fully paid and
nonassessable and is free and clear of any liens (except for the lien of Mr.
Drore Nahumi on the capital stock of MiBridge, Inc.), 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 or any of its Subsidiaries 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 and its Subsidiaries 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 and its
Subsidiaries pursuant to this Agreement have been executed and delivered by a
duly authorized officer of Borrower and its Subsidiaries and constitute legal,
valid and binding obligations of Borrower and its Subsidiaries, 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 or its Subsidiaries 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 or any of its Subsidiaries.
Section 5.8 No Default. Neither Borrower nor any of its Subsidiaries 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
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arbitration board.
Section 5.9 Compliance with Laws. Each of Borrower and each of its
Subsidiaries has complied and is in compliance in all material respects with all
applicable federal, state and local laws. Each of Borrower and each of its
Subsidiaries 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 and each of its Subsidiaries 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 and its Subsidiaries, as
appropriate, in conformity with
generally accepted accounting principles).
Section 5.11 Title to Properties. Each of Borrower, and each of its
Subsidiaries 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 and each of its Subsidiaries
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, 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 any of its Subsidiaries has any material liabilities or obligations of any
nature, whether accrued, absolute, contingent or otherwise.
Section 5.13 Solvency. Each of Borrower and each of its Subsidiaries
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 any of its Subsidiaries 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 or
its Subsidiaries be rendered insolvent by the execution and delivery of this
Agreement, the Note or the other Loan Documents to Lender. Neither Borrower,
nor any of its Subsidiaries is engaged, and is not about to engage, in any
business or transaction for which the assets retained by it shall be an
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unreasonably small capital, taking into consideration the
obligations to Lender incurred hereunder and under the Loan Documents. Neither
Borrower, nor any of its Subsidiaries 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 or
its Subsidiaries 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.
Section 5.15 Absence of Material Adverse Effect. No material adverse
effect upon or change in (a) the properties, assets, business, operations or
condition (financial or otherwise) of the Borrower and its Subsidiaries taken as
a whole or on the ability of the Borrower and its Subsidiaries to conduct their
businesses, or (b) the ability of the Borrower or any of its Subsidiaries to
perform its obligations hereunder or under any other Loan
Document to which it is a party has occurred since September 30, 1998.
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 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
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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 and second 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 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.
(k) Rights Offering. The Borrower shall (i) mail the Rights Offering
to its shareholders as soon as practicable, but in no event later than the
Mailing Date and (ii) consummate the Rights Offering as soon as practicable, but
in no event later than the Consummation Date.
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 or pursuant to an agreement to which the
Lender is a party:
(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. Except as disclosed herein, create, assume or suffer to
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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;
(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.
(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 any of its Subsidiaries to remove any of
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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. Other than with respect to the Rights
Offering, 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,
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;
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(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.
(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.
(s) Operating Budget. The Borrower shall not materially divert from
its Budget without the prior consent of the Lender.
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 and its subsidiaries 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
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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 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 ("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 to be less than $1,000,000.
"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.
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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 second priority (second only
to the Lender's first priority security interest securing the Prior Loans),
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 or any of its
Subsidiaries (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 or any of its Subsidiaries 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 Document, and any such failure remains
unremedied for ten days after the occurrence of such failure; or
(e) Borrower or any of its subsidiaries shall fail to pay any
indebtedness for borrowed money owing by Borrower or any of its subsidiaries 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 or any of
its subsidiaries 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 or any of its subsidiaries 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 or any of its subsidiaries shall fail to pay
its debts as they mature in the ordinary course of business; or (ii) Borrower or
any of its subsidiaries 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 or any of its subsidiaries 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 or any of its subsidiaries and
such appointment shall continue undischarged for a period of thirty days; or (v)
an involuntary case is commenced against Borrower or any of its subsidiaries
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)
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Borrower or any of its subsidiaries 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 or any of its
subsidiaries and shall remain undismissed for a period of thirty days; or (viii)
Borrower or any of its subsidiaries 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 or any of its subsidiaries; or
(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 (other than the Lender) 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 equity interests
in any of its subsidiaries; 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 or any of its Subsidiaries 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.
(k) Borrower shall fall short of its monthly budget by greater than
10% as set forth in the Budget delivered to the Lender.
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
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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 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 or any of its Subsidiaries 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 or any of its Subsidiaries 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: I-LINK INCORPORATED
13751 South Wadsworth Park Drive
Suite 200
Draper, Utah 84020
Attention: John W. Edwards, President
Telecopier: 801-576-5075
with a copy (which shall not constitute notice) to:
David E. Hardy, Esq.
60 E. South Temple
Suite 2200
Salt Lake City, Utah 84111
Telecopier: (801) 364-6664
If to Lender: Winter Harbor, L.L.C.
c/o First Media, L.P.
11400 Skipwith Lane
Potomac, Maryland 20854
Attention: Ralph W. Hardy, Jr.
Telecopier: (301) 983-2425
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with a copy (which shall not constitute notice) to:
Ralph W. Hardy, Jr., Esq.
Dow, Lohnes & Albertson, PLLC
1200 New Hampshire Avenue, N.W.
Washington, D.C. 20036
Telecopier: (202) 776-2222
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.
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 and consultants to the Lender in connection with the
negotiation, preparation, execution and administration of the Rights Offering,
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
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invalidating the remaining provisions or affecting the validity or
enforceability of any provisions in any other jurisdiction.
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 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.
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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 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.
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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.
I-LINK INCORPORATED
By: /s John Edwards
John Edwards, 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.
Ralph W. Hardy Jr., Secretary
22
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Exhibit 1
FORM OF PROMISSORY NOTE
$8,000,000 November 10, 1998
FOR VALUE RECEIVED, the undersigned, I-LINK INCORPORATED, a Florida
corporation (the "Maker"), promises to pay to the order of WINTER HARBOR,
L.L.C., a Delaware limited liability company (the "Payee"), on or before
October 31, 1999 (the "Maturity Date"), the principal sum of $8,000,000, or
if less, the outstanding principal balance of the Loans made by Payee to
Maker pursuant to the Loan Agreement, as that term is defined below,
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.
9. 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 January 15, 1999, 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 monthly on the last business day of
each calendar month until all principal and interest hereunder is paid in full
at the repayment or maturity of the Loan.
10. Principal Repayment. The aggregate principal balance of this
Note shall be due and payable as provided in Section 1.4 of the Loan
Agreement.
11. 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.
12. 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.
13. 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.
14. 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 the
conflicts of laws provisions thereof.
15. 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.
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16. 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.
17. 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.
I-LINK INCORPORATED,
a Florida corporation
By:_______________________________
John Edwards, President
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Exhibit 2
Date Borrowed Amount Borrowed
November 11, 1998 $600,000*
November 11, 1998 $1,041,712
November 24, 1998 $1,200,000
December 1, 1998 $1,000,000
January 4, 1999 $1,000,000
Total as of the date hereof: $4,841,712
* Represents certain accrued and unpaid interest and accrued and unpaid
expenses owed to the Lender.
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Schedule 3.1
a. I-Link Communications, Inc. (f/k/a Family Telecommunication
Incorporated);
b. I-Link Worldwide LLC;
c. MiBridge, Inc. (f/k/a I-Link Mergerco, Inc.);
d. I-Link Systems, Inc. (f/k/a I-Link Worldwide, Inc.)
e. Vianet Technologies, Ltd.
26
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Exhibit 10.39
FIRST AMENDMENT TO LOAN AGREEMENT
THIS FIRST AMENDMENT TO LOAN AGREEMENT (this "Amendment") is made and
entered into as of March 4, 1999, by and between I-LINK INCORPORATED, a
Florida corporation (the "Borrower"), and WINTER HARBOR, L.L.C., a
Delaware limited liability company (the "Lender").
RECITALS:
A. The Borrower and Lender entered into a Loan Agreement, dated as
of January 15, 1999, pursuant to which Lender agreed to make available to
the Borrower up to $8,000,000 (the "Original Agreement").
B. The Borrower has requested and the Lender has agreed to amend
certain provisions of the Original Agreement as provided herein. The
Original Agreement, as amended hereby, shall be referred to as the "Loan
Agreement." Capitalized terms used herein and not otherwise defined shall
have the meanings assigned to them in the Loan Agreement.
AGREEMENTS
In consideration of the foregoing Recitals and of the covenants
and representations contained herein, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the Borrower and the Bank, intending to be legally bound,
hereby agree as follows:
1. Amendments.
(a) Section 1.6(b)(iii) of the Original Agreement shall be amended in
its entirety to read as follows:
(iii) Rights Offering. Borrower shall make a rights
offering (the "Rights Offering") to all of its existing
shareholders for $20,000,000 of a newly created class of Series N
Convertible Preferred Stock (the "Series N Stock") having the
terms and conditions set forth on Schedule I attached hereto and
such other terms and conditions as may be reasonably acceptable
to Borrower and Lender. Borrower shall file the documents
relating to the Rights Offering with the Securities and Exchange
Commission (the "SEC") no later than January 15, 1999. If
Borrower mails the Rights Offering materials to its shareholders
by the earlier of April 22, 1999 and that business day which is
three business days following the receipt of clearance from the
SEC (the "Mailing Date"), and consummates the Rights Offering by
the earlier of May 29, 1999 and that business day which is the
first business day following the 35th calendar day from the
Mailing Date (the "Consummation Date"), then, so long as Borrower
shall have notified Lender of such conversion on or prior to
April 26, 1999, Borrower shall cause the outstanding principal
amount of the Loans, together with all accrued interest to be
converted into Series N Stock. Lender shall have the right, but
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<PAGE>
not the obligation, to subscribe for any Series N Stock not
otherwise subscribed for as part of the Rights Offering.
(b) The third sentence of Section 1.9 of the Original Agreement shall
be amended in its entirety and replaced with the following:
At the Lender's option, the amount of Lender's commitment in
Section 1 shall be reduced by the aggregate stated amount of any
Standby Letters of Credit issued pursuant to this Section.
(c) Section 1.10(a) of the Original Agreement shall be amended in its
entirety to read as follows:
Section 1.10 Warrants.
(a) As further consideration for Lender's commitment to
make available the Loans and to arrange the Standby Letter of
Credit, Borrower will grant to Lender warrants ("Warrants") to
purchase a certain number of shares of the Borrower's common
stock pursuant to the terms of a Warrant Agreement (the "Warrant
Agreement"). Such Warrant Agreement shall have an exercise
period of 7.5 years from the date hereof and shall grant the
Lender the right to acquire (i) one Warrant for (A) every $10 in
Loan proceeds made available to the Borrower hereunder and (B)
every $10 of the aggregate stated amount of the Standby Letters
of Credit and (ii) an additional nine Warrants for (A) every $10
in Loan proceeds made available to the Borrower hereunder upon
the occurrence of an Event of Default or if the Loan is not paid
in full on or before April 26, 1999 and (B) every $10 of the
aggregate stated amount of the Standby Letters of Credit upon the
occurrence of an Event of Default or if the Loan is not paid in
full on or before April 26, 1999 or if there is a draw on any
Standby Letter of Credit; provided, however, in the event that a
Equity Transaction (as defined below) occurs on or after February
1, 1999 and on or before April 26, 1999, then the Borrower shall
issue to the Lender the additional Warrants referenced in
subclauses (ii) (A) and (B) of this Section 1.10 prior to such
Equity Transaction. As used herein, "Equity Transaction" shall
mean (pursuant to a single transaction or a series of related
transactions by a single party or related parties (other than the
Lender)) (i) the acquisition of 20% or more of the Borrower's
capital stock; (ii) the sale of all or substantially all of the
assets of the Borrower; (iii) repayment, directly or indirectly,
of all or any portion of the Loan in connection with the sale of
the Borrower's capital stock or the sale or license of the
Borrower's technology or (iv) repayment, directly or indirectly,
of all or any portion of the Loan in connection with the Rights
Offering.
2. Additional Amendment to Warrant Agreement. The Borrower and the
Lender are parties to that certain Series K Warrant Agreement, dated as of
January 15, 1999 (the "Series K Warrant Agreement"). The Borrower and Lender
hereby agree that each reference to "March 15, 1999" contained in the Series K
Warrant Agreement shall be deleted and replaced in lieu thereof with "April 26,
1999".
3. Issuance of New Promissory Note. In the event that the
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Borrower is deemed to have borrowed more than $8,000,000 pursuant to Section 1.9
of the Loan Agreement upon the draw of any Standby Letter of Credit, the
Borrower agrees to immediately deliver a new note (the "New Note") to the Lender
in the amount deemed borrowed pursuant to the Loan Agreement. The New Note
shall be in substantially the same form as the Note, dated as of November 10,
1998, executed in connection with the Original Agreement.
4. Representations and Warranties. Each and every
representation and warranty set forth in the Original Agreement is hereby
confirmed and ratified, in all material respects, by the Borrower, and such
representations and warranties as so confirmed and ratified shall be deemed
to have been made and undertaken as of the date of this Amendment as well
as at the time they were made and undertaken.
5. Counterparts. This Amendment may be executed in as many
counterparts as may be convenient and shall become binding when the Lender
and the Borrower have each executed at least one counterpart. This
Amendment may be delivered to such other party via fax. Any party's faxed
signature shall be deemed an original and binding signature as of the date
set forth above.
6. Governing Law. This Amendment 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.
7. Binding Effect. This Amendment shall be binding upon and
shall inure to the benefit of the Lender and the Borrower and their
respective successors and assigns.
8. Reference to Original Agreement. Except as amended hereby,
the Original Agreement shall remain in full force and effect and is hereby
ratified and confirmed in all respects. On and after the effectiveness of
the Amendment to the Original Agreement accomplished hereby, each reference
in the Original Agreement to "this Agreement", "hereunder", "hereof",
"herein" or words of like import, and each reference to the Original
Agreement in the other agreements, documents or instruments executed and
delivered pursuant to the Loan Agreement, shall be deemed a reference to
the Original Agreement, as amended hereby.
9. No Other Modifications. Except as expressly provided in this
Amendment, all of the terms and conditions of the Original Agreement shall
remain unchanged and in full force and effect.
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be executed by their respective duly authorized officers as of the date first
above written.
I-LINK INCORPORATED
By: /s John Edwards
John Edwards, 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.
Ralph W. Hardy Jr., Secretary
4
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Exhibit 10.40
PROMISSORY NOTE
$8,000,000 November 10, 1998
FOR VALUE RECEIVED, the undersigned, I-LINK INCORPORATED, a Florida
corporation (the "Maker"), promises to pay to the order of WINTER HARBOR,
L.L.C., a Delaware limited liability company (the "Payee"), on or before
October 31, 1999 (the "Maturity Date"), the principal sum of $8,000,000, or
if less, the outstanding principal balance of the Loans made by Payee to
Maker pursuant to the Loan Agreement, as that term is defined below,
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.
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 January 15, 1999, 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 monthly on the last
business day of each calendar month 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 the conflicts of laws provisions thereof.
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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.
I-LINK INCORPORATED,
a Florida corporation
By: /s John Edwards
John Edwards, President
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Exhibit 10.41
SERIES K WARRANT AGREEMENT
by and between
I-LINK INCORPORATED
and
WINTER HARBOR, L.L.C.
Dated as of January 15, 1999
<PAGE>
SERIES K WARRANT AGREEMENT
THIS SERIES K WARRANT AGREEMENT (this "Agreement"), dated as of January 15,
1999, by and between I-LINK INCORPORATED, a Florida corporation (the "Company"),
and WINTER HARBOR, L.L.C., a Delaware limited liability company (the "Lender").
R E C I T A L S:
A. The Lender and the Company have entered into a Loan Agreement dated as
of the date hereof (the "Loan Agreement"), pursuant to which the Lender agrees
to loan to the Company up to $8,000,000 (the "Loan") and to assist the Company
to obtain $3,000,000 aggregate stated amount of standby letters of credit (the
"Standby Letters of Credit");
B. As consideration for the Loan and the Standby Letters of Credit, the
Company agrees to issue warrants to purchase common stock of the Company, $.007
par value per share (the "Common Stock"), (the "Series K Warrants" or the
"Warrants"); and
C. The Company wishes to define the terms and provisions of the Series K
Warrants and the respective rights and obligations thereunder of the Company and
the holders of the Series K Warrants (the "Warrantholders");
NOW, THEREFORE, in consideration of the foregoing recitals and the
mutual agreements herein set forth, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
SECTION 1.1 Certain Definitions. As used in this Agreement, the
following terms have the meanings specified below:
"Board of Directors" means the Board of Directors of the Company.
"Business Day" means any day other than Saturday, Sunday or any other
day on which banking institutions in the City of New York, New York are
permitted or required to close.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated thereunder.
"GAAP" means generally accepted accounting principles set forth in
opinions and pronouncements of the Accounting Principles Board of the
American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as may be approved by a significant segment
of the accounting profession, in each case as the same are applicable to the
circumstances as of the date of the determination.
"Person" means an individual, partnership, corporation (including a
business trust), limited liability company, joint stock company, trust,
unincorporated association, joint venture or other entity.
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"SEC" means the Securities and Exchange Commission or any successor
thereto.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.
"Securities Purchase Agreement" means that certain Securities Purchase
Agreement by and between the Company and the Lender, dated as of September
30, 1997.
"Series M Preferred Stock" means the Series M Participating Convertible
Preferred Stock issued to the Lender.
ARTICLE 2
ISSUANCE, FORM AND EXECUTION OF WARRANT CERTIFICATES
SECTION 2.1 Issuance of Warrants. The Series K Warrants shall be
originally issued by the Company in the following amounts: (i) one Series K
Warrant for the purchase of one share of Common Stock for (A) every $10 in Loan
proceeds made available to the Company pursuant to the Loan Agreement and (B)
every $10 of the aggregate stated amount of the Standby Letters of Credit and
(ii) an additional nine Series K Warrants for the purchase of nine shares of
Common Stock for (A) every $10 in Loan proceeds made available to the Company
under the Loan Agreement upon the occurrence of an Event of Default (as defined
in the Loan Agreement) or if the Loan is not paid in full on or before March 15,
1999 and (B) every $10 of the aggregate stated amount of the Standby Letters of
Credit upon the occurrence of an Event of Default or if the Loan is not paid in
full on or before March 15, 1999 or if there is a draw on any Standby Letters of
Credit; provided, however, in the event that a Equity Transaction (as such term
is defined in the Loan Agreement) occurs on or after February 1, 1999 and prior
to March 15, 1999, then the Company shall issue to Lender the additional
Warrants referenced in subclauses (ii) (A) and (B) of this Section 2.1. The
Series K Warrants shall be evidenced by Warrant Certificates, and each Warrant
Certificate shall represent the right, subject to the provisions contained
herein, to purchase from the Company (and the Company shall issue and sell to
the registered holder of such Warrants) the number of shares of Common Stock (as
may be adjusted pursuant to Article 7hereof) issuable to the Warrantholder upon
exercise of such Series K Warrants, at the price specified herein.
SECTION 2.2 Form of Warrant Certificates. The certificates evidencing
the Series K Warrants (the "Warrant Certificates") shall be in registered form
only and shall be substantially in the form set forth in Exhibit A attached
hereto, shall be dated the date on which signed by the Company and may have such
letters, numbers or other marks of identification or designation printed,
lithographed, engraved or otherwise affixed thereon as the Company may deem
appropriate and as are not inconsistent with the provisions of this Agreement,
or as may be required to comply with any law or with any rule or regulation made
pursuant thereto.
SECTION 2.3 Execution of Warrant Certificates. Warrant Certificates
shall be executed on behalf of the Company by the president, any vice president
or the treasurer of the Company and signed by the secretary or any assistant
secretary of the Company and have affixed thereon the seal of the Company. Each
such signature and seal may be manual or facsimile.
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In case any officer of the Company who shall have signed any of the
Warrant Certificates shall cease to be such officer before countersignature
and delivery by the Company, such Warrant Certificates, nevertheless, may be
countersigned, issued and delivered with the same force and effect as though
such person had not ceased to be such officer; and any Warrant Certificate may
be signed on behalf of the Company by any person who, at the actual date of the
execution of such Warrant Certificate, shall be a proper officer of the Company
to sign such Warrant Certificate, although at the date of the execution of this
Agreement such person was not such an officer of the Company. Upon
countersignature on behalf of the Company and delivery, the Warrant Certificate
shall be valid and binding upon the Company, and the Warrantholder thereof shall
be entitled to all of the benefits of this Agreement.
ARTICLE 3
REGISTRATION
SECTION 3.1 Registration. The Company shall number and register the
Warrant Certificates in a register (the "Warrant Register") maintained at 13751
South Wadsworth Park Drive, Suite 200, Draper, Utah 84020 (the "Office") as they
are issued by the Company (or such other location as the Company may establish
after giving notice thereof to the Warrantholders). The Company shall keep
copies of this Agreement available for inspection by the Warrantholders during
normal business hours at the Office.
ARTICLE 4
TRANSFER, EXCHANGE OR REPLACEMENT OF WARRANT CERTIFICATES
SECTION 4.1 Registration of Transfers. The Company shall from time to
time register the transfer of any outstanding Warrant Certificate on the
Warrant Register maintained at the Office, upon surrender thereof accompanied by
a written instrument or instruments of transfer in form reasonably satisfactory
to the Company, duly endorsed by the registered holder thereof or by such
Warrantholder's appointed legal representative or attorney-in-fact, or
accompanied by proper evidence of succession, assignment or authority to
transfer. In all cases of transfer by an attorney, the original power of
attorney, duly approved, or an official copy thereof, duly certified, shall be
deposited and remain with the Company. Upon any such registration or transfer
in such name or names as may be directed in writing by the Warrantholder, the
Company shall execute and deliver (or cause to be delivered) a new Warrant
Certificate(s) without charge to such Warrantholder, or to the Person or Persons
entitled to receive the same, and the surrendered Warrant Certificate shall be
canceled by the Company.
SECTION 4.2 Exchanges of Warrant Certificates. Each Warrant Certificate
may be exchanged at the option of the Warrantholder without charge to such
Warrantholder when surrendered to the Company at the Office properly endorsed in
the manner described in Section 4.1 hereof for another Warrant Certificate(s) of
like tenor and representing in the aggregate a like number of shares of Common
Stock, as may be adjusted pursuant to Article 7 hereof. Thereupon, the Company
shall execute and deliver to the Person(s) entitled thereto a new Warrant
Certificate(s) as so requested. Warrant Certificates surrendered for exchange
shall be canceled by the Company.
SECTION 4.3 Mutilated or Missing Warrant Certificates. In the event
that any Warrant Certificate shall be mutilated, lost, stolen or destroyed, the
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Company shall execute and deliver in exchange and substitution for and upon
cancellation of the mutilated Warrant Certificate, or in lieu of and
substitution for the Warrant Certificate lost, stolen or destroyed, a new
Warrant Certificate of like tenor and representing Warrants for a like amount of
Warrant Shares, but only, in case of a lost, stolen or destroyed Warrant
Certificate, upon receipt of evidence satisfactory to the Company of such loss,
theft or destruction and the absence of actual notice to the Company that such
Warrant Certificate has been acquired by a bona fide purchaser or holder in due
course. Every substitute Warrant Certificate executed and delivered pursuant to
this Section 4.3 in lieu of any lost, stolen or destroyed Warrant Certificate
shall constitute an additional contractual obligation of the Company, whether or
not the lost, stolen or destroyed Warrant Certificate shall be at any time
enforceable by anyone, and shall be entitled to the benefits of (but shall be
subject to all the limitations of rights set forth in) this Agreement equally
and proportionately with any and all other Warrant Certificates duly executed
and delivered hereunder. The provisions of this Section 4.3 are exclusive with
respect to the replacement of mutilated, lost, stolen or destroyed Warrant
Certificates.
ARTICLE 5
EXERCISE OF WARRANTS; EXERCISE PRICE; EXERCISE PERIOD
SECTION 5.1 Exercise of Series K Warrants. Subject to the provisions of
this Agreement, each Warrantholder shall have the right to purchase from the
Company the number of shares of Common Stock that the Warrantholder may at the
time be entitled to purchase on exercise of the Series K Warrants and payment of
the Exercise Price (as defined below) for such Warrant Shares.
SECTION 5.2 Mechanics of Exercise.
(a) Subject to the provisions of this Agreement, Series K Warrants
may be exercised by the Warrantholder in whole or in part upon surrender at the
Office to the Company of the Warrant Certificate(s) evidencing the Series K
Warrants, together with the form of election to purchase (the "Election to
Purchase"), in the form set forth as Exhibit B hereto, duly completed and signed
by such Warrantholder or by such Warrantholder's appointed legal representative
or attorney-in-fact and upon payment in full of the Exercise Price for each
Warrant exercised. Payment of the aggregate Exercise Price shall be made by
certified or official bank check payable to the order of the Company.
(b) Upon due exercise of the Series K Warrants and surrender of the
Warrant Certificate, duly completed and signed, and payment of the Exercise
Price as aforesaid, the Company shall cause to be issued to or upon the
written order of the Warrantholder and in such name or names as the
Warrantholder may designate in the Election to Purchase, the Warrant Shares
so purchased. If all of the items referred to in the first sentence of the
preceding paragraph are received by the Company at or prior to 1:00 p.m.,
Delaware time, on a Business Day, the exercise of the Warrants to which
such items relate will be effective on such Business Day. If all of such items
are received after 1:00 p.m., Delaware time, on a Business Day, the exercise of
the Series K Warrants to which such items relate will be effective on the next
Business Day.
(c) The number and kind of Warrant Shares for which Series K Warrants
may be exercised shall be subject to adjustment from time to time as set
forth in Article 7 hereof.
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(d) The Series K Warrants shall be exercisable as provided herein at
the election of the Warrantholder in whole or in part. In the event that the
holder of a Warrant Certificate shall exercise Series K Warrants with respect to
fewer than all the Warrant Shares evidenced thereby, a new Warrant
Certificate(s) evidencing the remaining unexercised Warrant Shares shall be
issued to such Warrantholder, and the Company is hereby irrevocably authorized
to execute and deliver the required new Warrant Certificate(s) pursuant to
provisions of Article 2 and Article 3 of this Agreement.
(e) All Warrant Certificates surrendered upon exercise of Series K
Warrants shall be canceled and disposed of by the Company.
SECTION 5.3 Exercise Price. The price at which the Warrants shall be
exercisable in exchange for Warrant Shares shall be $2.78 per Warrant Share, as
such price may be adjusted pursuant to Article 7 hereof(the "Exercise Price").
SECTION 5.4 Exercise Period. The right to exercise the Series K
Warrants shall terminate on June 15, 2006 (the "Expiration Date"). A
Warrantholder may exercise any Series K Warrant from the date of issuance up to
and including the Expiration Date. The Company shall record the Expiration Date
of each Warrant in the Warrant Register.
SECTION 5.5 Cashless Exercise.
(a) At any time prior to the Expiration Date of any Series K, the
Warrantholder may, at its option, exchange such Series K Warrants, 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 5.5, by
surrendering the Warrant Certificate relating to such Series K Warrants at the
Office, accompanied by a notice stating such Warrantholder's intent to effect
such exchange, the number of Warrant Shares to be exchanged and the date on
which the Warrantholder 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
Certificate of like tenor evidencing the balance of the Warrant Shares remaining
subject to the Warrantholder's Warrant Certificate, shall be issued as of the
Exchange Date and delivered to the Warrantholder within three days following the
Exchange Date. In connection with any Warrant Exchange, the Warrantholder'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 Warrantholder 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 per Warrant Share by (ii) the
Market Price (as hereafter defined) of a share of Common Stock.
(b) As used in this Section 5.5, 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, 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
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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.
ARTICLE 6
RESERVATION AND REGISTRATION RIGHTS OF WARRANT SHARES
SECTION 6.1 Reservation. The Company shall at all times keep reserved,
free from preemptive rights, out of its authorized Common Stock, or other
securities of the Company issuable upon the exercise of the Series K Warrants, a
number of shares of Common Stock, or such other securities, sufficient to
provide for the exercise of the right of purchase represented by all outstanding
and unexpired Series K Warrants.
SECTION 6.2 Covenant. The Company covenants that any Warrant Shares
will, upon issuance, be validly issued and upon payment of the exercise price
therefor, fully paid and free from all taxes payable by the Company, liens,
charges and security interests (except any liens, charges or security interests
created or suffered to be created by any of the Warrantholders), and will not be
subject to any restrictions on voting or transfer thereof that are created by
the Company, except for such restrictions on transfer under the Securities Act
or applicable state securities laws.
SECTION 6.3 Registration Rights. The Warrant Shares shall be subject to
certain demand and incidental registration rights as provided in that certain
Registration Rights Agreement entered into by and between the parties hereto as
of the date hereof.
ARTICLE 7
ADJUSTMENTS AFFECTING THE EXERCISE OF WARRANTS
SECTION 7.1 Special Definitions. For purposes of this Article 7, the
following definitions shall apply:
(a) "Additional Shares of Common Stock" shall mean all shares of
Common Stock issued (or, pursuant to Section 7.2 below, deemed to be issued) by
the Company after the Original Issue Date, other than shares of Common Stock
issued or issuable:
(i) upon conversion of shares of the Company's Class B Preferred
Stock, Class C Preferred Stock, Series D Preferred Stock, Series F Preferred
Stock or Series M Preferred Stock outstanding on the Original Issue Date;
(ii) upon the exercise of Warrants issued under the Securities
Purchase Agreement;
(iii) as a dividend or distribution on the Company's Class B
Preferred Stock, Class C Preferred Stock, Series D Preferred Stock, Series M
Preferred Stock or Warrants;
(iv) in connection with an acquisition or other transaction by
the Company, in either case approved by the Lender, unless the Company agrees to
include such issuance in the definition of Additional Shares of Common Stock in
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connection with obtaining the approval of the Lender to such acquisition or
other transaction;
(v) by reason of a dividend, stock split, split-up or other
distribution on shares of Common Stock excluded from the definition of
Additional Shares of Common Stock by the foregoing clauses (i), (ii), (iii), and
(iv) or this clause (v); or
(vi) upon the exercise of options excluded from the definition of
"Option" in Section 7.1(c).
(b) "Convertible Securities" shall mean any evidences of
indebtedness, shares or other securities directly or indirectly convertible into
or exchangeable for Common Stock.
(c) "Option" shall mean rights, options or warrants to subscribe for,
purchase or otherwise acquire Common Stock or Convertible Securities,
excluding (i) options granted to employees or issued to consultants of the
Company or warrants which, in each such case, are outstanding as of the date of
this Agreement, (ii) any Series K Warrants issued under this Agreement or as a
direct result of the issuance of Series M Preferred Stock pursuant to the
Securities Purchase Agreement, (iii) options granted to employees or
consultants pursuant to stock option plans adopted by the Board of Directors and
approved by the Compensation Committee of the Board of Directors and by the
Lender after the date hereof, (iv) options granted to employees, directors or
consultants pursuant to the Company's Director Stock Option Plan, Employee
Qualified Stock Purchase Plan, 1995 Director Stock Option Plan, 1995 Employee
Stock Option Plan and 1997 Recruitment Stock Option Plan, previously approved by
the Lender or (v) options issued pursuant to the Series N Rights Offering (the
"Rights Offering").
(d) "Original Issue Date" shall mean the date on which a Series K
Warrant was first issued.
SECTION 7.2 Issue of Securities Deemed Issue of Additional Shares of
Common Stock. If the Company at any time or from time to time after the
Original Issue Date shall issue any Options or Convertible Securities or
shall fix a record date for the determination of holders of any class of
securities entitled to receive any such Options or Convertible Securities,
then the maximum number of shares of Common Stock (as set forth in the
instrument relating thereto without regard to any provision contained therein
for a subsequent adjustment of such number) issuable upon the exercise of such
Options or, in the case of Convertible Securities and Options therefor, the
conversion or exchange of such Convertible Securities and the exercise of such
Options therefor, shall be deemed to be Additional Shares of Common Stock issued
as of the time of such issuance or, in case such a record date shall have been
fixed, as of the close of business on such record date, provided that Additional
Shares of Common Stock shall not be deemed to have been issued unless the
consideration per share (determined pursuant to Section 7.4 hereof) of such
Additional Shares of Common Stock would be less than the applicable Exercise
Price in effect on the date of and immediately prior to such issuance, or such
record date, as the case may be, and provided further that in any such case in
which Additional Shares of Common Stock are deemed to be issued:
(a) No further adjustment in the Exercise Price shall be made upon
the subsequent issuance of Convertible Securities or shares of Common Stock upon
the exercise of such Options or conversion or exchange of such Convertible
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Securities;
(b) If such Options or Convertible Securities by their terms provide,
with the passage of time or otherwise, for any increase in the consideration
payable to the Company, or decrease in the number of shares of Common Stock
issuable, upon the exercise, conversion or exchange thereof, the Exercise Price
computed upon the original issuance thereof (or upon the occurrence of a record
date with respect thereto), and any subsequent adjustments based thereon, shall,
upon any such increase or decrease becoming effective, be recomputed to reflect
such increase or decrease insofar as it affects such Options or the rights of
conversion or exchange under such Convertible Securities;
(c) No readjustment pursuant to clause (b) above shall have the
effect of increasing the Exercise Price to an amount which exceeds the Exercise
Price on the original adjustment date; and
(d) In the event of any change in the number of shares of Common
Stock issuable upon the exercise, conversion or exchange of any Option or
Convertible Security, including, but not limited to, a change resulting from the
anti-dilution provisions thereof, the Exercise Price then in effect shall
forthwith be readjusted to such Exercise Price as would have obtained had the
adjustment which was made upon the issuance of such Option or Convertible
Security not exercised or converted prior to such change been made upon the
basis of such change, but no further adjustment shall be made for the actual
issuance of Common Stock upon the exercise or conversion of any such Option or
Convertible Security.
SECTION 7.3 Adjustment of Exercise Price Upon Issuance of Additional
Shares of Common Stock. In the event the Company shall (A) at any time after
the Original Issue Date issue Additional Shares of Common Stock (including
Additional Shares of Common Stock deemed to be issued pursuant to Section 7.2,
but excluding shares issued as a dividend or distribution as provided in Section
7.6 or upon a stock split or combination as provided in Section 7.5), without
consideration or for a consideration per share (determined pursuant to Section
7.4 hereof) less than the applicable Exercise Price in effect on the date of and
immediately prior to such issuance or (B) if at any time the "Conversion Price"
for which the Series F Convertible Preferred Stock may be converted into the
Company's Common Stock is less than the applicable Exercise Price then in
effect, then and in any such event, the Exercise Price shall be reduced to
such lower price per share at which such Additional Shares of Common Stock are
being issued or may be issued or deemed issued.
SECTION 7.4 Determination of Consideration. For purposes of this
Section 7.4, the consideration received by the Company for the issuance of any
Additional Shares of Common Stock shall be computed as follows:
(a) Cash and Property. Such consideration shall:
(i) insofar as it consists of cash, be computed at the aggregate
of cash received by the Company, excluding amounts paid or payable for
accrued interest or accrued dividends;
(ii) insofar as it consists of property other than cash, be
computed at the fair market value thereof at the time of such issuance, as
determined in good faith by the Board of Directors; and
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(iii) in the event Additional Shares of Common Stock are issued
together with other shares of securities or other assets of the Company for
consideration which covers both, be the proportion of such consideration so
received, computed as provided in clauses (i) and (ii) above, as determined
in good faith by the Board of Directors.
(b) Options and Convertible Securities. The consideration per share
received by the Company for Additional Shares of Common Stock deemed to have
been issued pursuant to Section 7.2, relating to Options and Convertible
Securities, shall be determined by dividing:
(i) the total amount, if any, received or receivable by the
Company as consideration for the issuance of such Options or Convertible
Securities, plus the minimum aggregate amount of additional consideration (as
set forth in the instruments relating thereto, without regard to any
provision contained therein for a subsequent adjustment of such
consideration) payable to the Company upon the exercise of such Options or
the conversion or exchange of such Convertible Securities, or in the case of
Options for Convertible Securities, the exercise of such Options for
Convertible Securities and the conversion or exchange of such Convertible
Securities, by
(ii) the maximum number of shares of Common Stock (as set forth
in the instruments relating thereto, without regard to any provision
contained therein for a subsequent adjustment of such number) issuable upon
the exercise of such Options or the conversion or exchange of such
Convertible Securities.
SECTION 7.5 Adjustment for Stock Splits and Combinations. If the
Company shall at any time or from time to time after the Original Issue Date for
the Series K Warrants effect a subdivision of the outstanding Common Stock, the
Exercise Price of each Series K Warrant then in effect immediately before that
subdivision shall be proportionately decreased and the number of shares of
Common Stock issuable upon exercise of such Series K Warrant shall be
proportionately increased. If the Company shall at any time or from time to
time after the Original Issue Date for the Series K Warrants combine the
outstanding shares of Common Stock, the Exercise Price of each Series K Warrant
then in effect immediately before the combination shall be proportionately
increased and the number of shares of Common Stock issuable upon exercise of
such Series K Warrant shall be proportionately
decreased. Any adjustment under this Section 7.5 shall become effective at the
close of business on the date the subdivision or combination becomes effective.
SECTION 7.6 Adjustment for Certain Dividends and Distributions. In the
event the Company at any time or from time to time after the Original Issue Date
for the Series K Warrants shall make or issue, or fix a record date for the
determination of holders of Common Stock entitled to receive, a dividend or
other distribution payable in additional shares of Common Stock, then and in
each such event the Exercise Price for the Series K Warrants then in effect
shall be decreased as of the time of such issuance or, in the event such a
record date shall have been fixed, as of the close of business on such record
date, by multiplying the Exercise Price for the Warrants then in effect by a
fraction:
(a) the numerator of which shall be the total number of shares of
Common Stock issued and outstanding immediately prior to the time of such
issuance or the close of business on such record date, and
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(b) the denominator of which shall be the total number of shares of
Common Stock issued and outstanding immediately prior to the time of such
issuance or the close of business on such record date plus the number of shares
of Common Stock issuable in payment of such dividend or distribution; provided,
however, if such record date shall have been fixed and such dividend is not
fully paid or if such distribution is not fully made on the date fixed therefor,
the Exercise Price for the Series K Warrants shall be recomputed accordingly as
of the close of business on such record date and thereafter the Exercise Price
for the Warrants shall be adjusted pursuant to this paragraph as of the time of
actual payment of such dividends or distributions.
SECTION 7.7 Adjustments for Other Dividends and Distributions. In the
event the Company at any time or from time to time after the Original Issue Date
for the Series K Warrants shall make or issue, or fix a record date for the
determination of holders of Common Stock entitled to receive, a dividend or
other distribution payable in securities of the Company other than shares of
Common Stock, then and in each such event provision shall be made so that the
holders of the Series K Warrants shall receive upon exercise thereof in addition
to the number of shares of Common Stock receivable thereupon, the amount of
securities of the Company that they would have received had their Series K
Warrants been exercised on the date of such event and had thereafter, during the
period from the date of such event to and including the conversion date,
retained such securities receivable by them as aforesaid during such period
giving application to all adjustments called for during such period, under this
paragraph with respect to the rights of the holders of the Series K Warrants.
SECTION 7.8 Adjustment for Reclassification, Exchange, or Substitution.
If the Common Stock issuable upon the exercise of the Series K Warrants shall be
changed into the same or a different number of shares of any class or classes of
stock, whether by capital reorganization, reclassification or otherwise (other
than a subdivision or combination of shares or stock dividend provided for
above, or a reorganization, merger, consolidation, or sale of assets provided
for below), then and in each such event the holder of the Series K Warrants
shall have the right thereafter to convert each such share of Common Stock
issuable upon the exercise of the Series K Warrants into the kind and amount of
shares of stock and other securities and property receivable upon such
reorganization, reclassification, or other change, by holders of the number of
shares of Common Stock for which such Series K Warrants might have been
exercised immediately prior to such reorganization, reclassification, or change,
all subject to further adjustment as provided herein.
SECTION 7.9 Adjustment for Merger or Reorganization. In case of any
consolidation or merger of the Company with or into another Company, each Series
K Warrant shall thereafter be exercisable for the kind and amount of shares of
stock or other securities or property to which a holder of the number of shares
of Common Stock of the Company deliverable upon exercise of such Warrant would
have been entitled upon such consolidation or merger; and, in such case,
appropriate adjustment (as determined in good faith by the Board of Directors)
shall be made in the application of the provisions in this Article 7 set forth
with respect to the rights and interest thereafter of the holders of the Series
K Warrants, to the end that the provisions set forth in this Article 7
(including provisions with respect to changes in and other adjustments of the
Exercise Price) shall thereafter be applicable, as nearly as reasonably may be,
in relation to any shares of stock or other property thereafter deliverable upon
the exercise of the Series K Warrants.
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SECTION 7.10 Adjustment of Exercise Price for Series K Warrants. The
Exercise Price shall further be adjusted to the lowest of: (i) $2.78; (ii)
the lowest average closing bid price of the Common Stock for any twenty
trading days after the date hereof; (iii) the price at which any Common Stock or
common stock equivalent is issued, whether such issue is public or private and
whether by conversion, exercise or otherwise and whether any such security is
outstanding as of the date hereof; and (iv) the exercise price or conversion
rate of any new options, warrants, preferred stock or other convertible
security; provided, however, that if any adjustment pursuant to the preceding
clause would result in the setting of the Exercise Price at less than $1.25,
then the Exercise Price shall be $1.25.
SECTION 7.11 Notice of Adjustment to Exercise Price. Whenever the
Exercise Price is required to be adjusted as provided in this Article 7, the
Company shall forthwith compute the adjusted Exercise Price and shall prepare a
certificate setting forth such adjusted Exercise Price and showing in reasonable
detail the facts upon which such adjustment is based. Whenever the Exercise
Price is adjusted, the Company shall promptly mail, or cause to be mailed, to
the Warrantholders a statement setting forth the adjustment and the reasons for
such adjustment.
SECTION 7.12 Form of Warrant Certificate. Irrespective of any
adjustments in the Exercise Price or the kind of Warrant Shares purchasable
upon the exercise of the Warrants, Warrant Certificates evidencing such Warrants
theretofore or thereafter issued may continue to express the same number and
kind of Warrant Shares as are stated in the Warrant Certificates initially
issuable pursuant to this Agreement.
SECTION 7.13 No Impairment. Without limiting the generality of the
foregoing, the Company shall take all such action as may be necessary or
appropriate in order that the Warrant Shares to be issued upon the exercise
of the Warrants from time to time outstanding will, when issued, be fully
paid and non-assessable. In addition, without limiting the generality of
Section 6.1, the Company shall take all such action as shall be necessary so
that, after any adjustment to the Exercise Price required hereunder, the
total number of shares of Common Stock or other capital stock of the Company
then authorized by the articles of incorporation of the Company as then in
effect and available for the purpose of issuance upon such exercise shall exceed
the total number of shares of Common Stock issuable upon the exercise of all of
the outstanding Warrants. The Company will not, by amendment of its Articles of
Incorporation or through any reorganization, transfer of assets, consolidation,
merger, dissolution, issue or sale of securities or any other voluntary action,
avoid or seek to avoid the observance or performance of any of the terms to be
observed or performed hereunder by the Company, but will at all times in good
faith assist in the carrying out of all the provisions of this Section 7 and in
the taking of all such action as may be necessary or appropriate in order to
protect the rights of the Warrantholders against impairment.
ARTICLE 8
NOTICES TO WARRANTHOLDERS
SECTION 8.1 Notices to Warrantholders.
(a) Notices to holders of Series K Warrants shall be mailed to such
holders at the addresses of such holders as they appear in the Warrant
Register. Any such notice shall be sufficiently given if sent by first-class
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certified or registered mail, postage prepaid, facsimile or overnight
courier.
(b) In the event (i) of any consolidation or merger or binding
exchange of interests to which the Company is a party and for which approval of
the Lender or any holders of equity interests of the Company is required, or of
the conveyance or sale of all or substantially all of the assets of the Company,
or of any change of the Common Stock or other securities issuable upon exercise
of the Series K Warrants (other than the Rights Offering for which no notice
shall be required); or (ii) the Company shall make any distribution in respect
of the Common Stock; or (iii) of the voluntary or involuntary dissolution,
liquidation or winding up of the Company; then the Company shall send to each
Warrantholder at least thirty days prior to the applicable date hereinafter
specified, a written notice stating (A) the date for the determination of the
holders of Common Stock (or other securities issuable upon the exercise of the
Series K Warrants) entitled to receive any such distribution, (B) the initial
expiration date set forth in any offer for exchange of interests, or (C) the
date on which any such consolidation, merger, exchange of interests, conveyance,
transfer, reclassification, dissolution, liquidation or winding up is expected
to become effective or consummated, and the date as of which it is expected that
holders of record of Common Stock (or other securities issuable upon the
exercise of the Warrants) shall be entitled to exchange such Common Stock for
securities or other property, if any, deliverable upon such reclassification,
consolidation, merger, exchange of interests, conveyance, transfer, dissolution,
liquidation or winding up.
SECTION 8.2 Notices to Company. Any notice or demand authorized by this
Agreement to be given to or on the Company shall be delivered in person or by
facsimile transmission, by courier guaranteeing overnight delivery or mailed by
first-class United States certified or registered mail, postage prepaid, to the
Company as follows:
I-Link Incorporated
13751 South Wadsworth Park Drive
Suite 200
Draper, Utah 84020
Attention: John W. Edwards, President
Telecopier: 801-576-5075
with copy to:
David E. Hardy, Esq.
60 E. South Temple
Suite 2200
Salt Lake City, Utah 84111
Telecopier: (801) 364-6664
SECTION 8.3 Receipt of Notice. Any notice hereunder shall be in writing
and shall be deemed to have been duly given if personally delivered, sent by
overnight courier or sent by United States mail, or by telex or facsimile
transmission, and will be deemed received (a) if sent by certified or registered
mail, return receipt requested, when actually received, (b) if sent by overnight
courier, when actually received, (c) if sent by telex or facsimile transmission,
on the date sent provided confirmatory notice is sent by overnight courier or by
first-class mail, postage prepaid, and (d) if delivered by hand, on the date of
receipt.
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ARTICLE 9
MISCELLANEOUS
SECTION 9.1 Arbitration.
(a) To the fullest extent not prohibited by law, any controversy,
claim or dispute arising out of or relating to this Agreement, including the
determination of the scope or applicability of this Agreement to arbitrate,
shall be settled by final and binding arbitration in accordance with the rules
then in effect of the American Arbitration Association ("AAA"), as modified or
supplemented under this section, and subject to the Federal Arbitration Act, 9
U.S.C. sectionsection 1-16. The decision of the arbitrators shall be final and
binding; provided, however, that where a remedy for breach is prescribed
hereunder or limitations on remedies are prescribed, the arbitrators shall be
bound by such restrictions, and judgment upon the award rendered by the
arbitrators may be entered in any court having jurisdiction thereof.
(b) If any series of claims arising out of the same or related
transactions shall involve claims which are arbitrable under the preceding
paragraph and claims which are not, the arbitrable claims shall first be
finally determined before suit may be instituted upon the others and the
parties will take such actio as may be necessary to toll any statutes of
limitations, or defenses based upon the passage of time, that are applicable to
such non-arbitrable claims during the period in which the arbitrable claims are
being determined.
(c) In the event of any controversy, claim or dispute that is
subject to arbitration under this Section 9.1, any party thereto may commence
arbitration hereunder by delivering notice to the other party or parties
thereto. Within five business days of delivery of a list of
qualified potential arbitrators from AAA, such parties shall attempt to agree on
one arbitrator; provided that if such parties cannot agree on one arbitrator
within such time period, each party to the controversy, claim or dispute shall
within five business days thereafter appoint one arbitrator, and the two
arbitrators so appointed shall within five business days of their appointment
mutually agree upon and appoint one additional arbitrator (or, if such
arbitrators cannot agree on an additional arbitrator, the additional arbitrator
shall be appointed by the AAA as provided under its rules); provided that
persons eligible to be selected as arbitrators shall be limited to attorneys at
law who (i) are on the AAA's Large, Complex Case Panel and (ii) have practiced
law for at least fifteen years as an attorney specializing in either general
commercial litigation or general corporate and commercial matters and.
(d) The arbitration hearing shall commence no later than thirty
business days after the completion of the selection of the arbitrators or at
such other time as the parties shall reasonably agree. Consistent with the
intent of the parties hereto that the arbitration be conducted as
expeditiously as possible, the parties agree that (i) discovery shall be
limited to the production of such documents and the taking of such
depositions as the arbitrator(s) determine are reasonably necessary to the
resolution of the controversy, claim or dispute and (ii) the arbitrator(s)
shall limit the presentation of evidence by each side in such arbitration to not
more than ten full days (or the equivalent thereof) or such shorter
period as the arbitrator(s) shall determine to be necessary in order to
resolve the controversy, claim or dispute. The arbitrator(s) shall be
instructed to render a decision within thirty calendar days of the close of
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the arbitration hearing. If arbitration has not been completed within one
hundred and twenty days of the commencement of such arbitration hearing, any
party to the arbitration may initiate litigation upon ten days written notice to
the other party(ies); provided, however, that if one party has requested the
other to participate in an arbitration and the other has failed to participate,
the requesting party may initiate litigation before the expiration of such one
hundred twenty-day period; and provided, further, that if any party to the
arbitration fails to meet any of the time limits set forth in this Section 9.1
or set by the arbitrators in the arbitration, any other party may provide ten
days written notice of its intent to institute litigation with respect to the
controversy, claim or dispute without the need to continue or complete the
arbitration and without awaiting the expiration of such one hundred twenty-day
period. The parties hereto further agree that if any of the rules of the AAA
are contrary to or conflict with any of the time periods provided for hereunder,
or with any other aspect of the matters set forth in this Section 9.1, that such
rules shall be modified in all respects necessary to accord with the provisions
of this Section 9.1 (and the arbitrators shall be so instructed by the parties).
(e) The arbitrators shall base their decision on the terms of this
Agreement and the law of the State of Delaware, regardless of the law that might
be applicable under conflicts of law principles, and shall render their decision
in writing and include in such decision a statement of the findings of fact and
conclusions of law upon which the decision is based. Each party agrees to
cooperate fully with the arbitrator(s) to resolve any controversy, claim or
dispute. The arbitrator(s) shall not be empowered to award punitive damages or
damages in excess of actual damages. The venue for all arbitration proceedings
shall be Washington, D.C.
SECTION 9.2 Payment of Taxes. The Company covenants and agrees that it
will pay when due and payable all documentary, stamp and other taxes
attributable to the issuance or delivery of the Warrant Certificates or of the
Warrant Shares purchasable upon the exercise of Warrants; provided, however, the
Company shall not be required to pay any tax or taxes that may be payable in
respect of any transfer involving the issue of any Warrant Certificate(s) or any
certificate(s) for Warrant Shares in a name other than that of the Warrantholder
of such exercised Warrant Certificate(s).
SECTION 9.3 Amendment.
(a) The Company may modify this Agreement and the terms of the
Warrants only with the consent of the Warrantholders representing at least a
majority of the Warrant Shares for the purpose of adding any provision to or
changing in any manner or eliminating any of the provisions of this Agreement or
modifying in any manner the rights of the holders of the outstanding Series K
Warrants; provided, however, that no such modification that (i) materially and
adversely affects the exercise rights of the holders of the Series K Warrants,
or (ii) reduces the percentage required for modification, may be made without
the consent of the holder of all outstanding Warrants.
(b) Any such modification or amendment will be conclusive and binding
on all present and future holders of Warrant Certificates whether or not they
have consented to such modification or amendment or waiver and whether or not
notation of such modification or amendment is made upon such Warrant
Certificates. Any instrument given by or on behalf of any holder of a Warrant
Certificate in connection with any consent to any modification or amendment will
be conclusive and binding on all subsequent holders of such Warrant Certificate.
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SECTION 9.4 Termination. This Agreement shall terminate on or upon (a)
the repurchase by the Company of all Series K Warrants, (b) the fifteenth day
following the date on which all of the Warrant Shares have been issued upon the
exercise of all Series K Warrants issued pursuant hereto, or (c) upon expiration
of the Exercise Period.
SECTION 9.5 Reports to Warrantholders. The Company will cause to be
delivered, by first-class mail, postage prepaid, facsimile or overnight
courier, to each Warrantholder at such Warrantholder's address appearing on
the Warrant Register, a copy of any reports delivered by the Company to any
of the holders of Preferred Stock or to holders of the Common Stock.
SECTION 9.6 GOVERNING LAW. THE LAWS OF THE STATE OF DELAWARE SHALL
GOVERN THIS AGREEMENT AND THE WARRANT CERTIFICATES WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAW.
SECTION 9.7 Benefits of this Agreement. Nothing in this Agreement shall
be construed to give to any Person other than the Company, the Warrantholders
and the holders of Warrant Shares any legal or equitable right, remedy or claim
under this Agreement; this Agreement shall be for the sole and exclusive benefit
of the Company, the Warrantholders and the holders of Warrant Shares.
SECTION 9.8 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 all such counterparts shall together
constitute but one and the same instrument.
SECTION 9.9 Severability of Provisions. Any provision of this 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 hereof or
affecting the validity or enforceability of such provision in any other
jurisdiction.
SECTION 9.10 Headings. The headings of the sections of this Agreement
are inserted for convenience only and shall not constitute a part of this
Agreement.
SECTION 9.11 Access to Company Records. So long as Series K Warrants
remain outstanding, the Lender shall be entitled to review the financial and
corporate books and records of the Company and to meet with the executive
officers and independent accountants of the Company for purposes reasonably
related to the Lender's ownership of the Series K Warrants, which review and/or
meetings shall take place at reasonable times during the normal business hours
of the Company and in such a manner as to not unduly interfere with the conduct
of the Company's business.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties hereto have caused this Warrant
Agreement to be duly executed, as of the date first above written.
I-LINK INCORPORATED
By: /s John Edwards
John Edwards, 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.
Ralph W. Hardy, Jr., Secretary
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EXHIBIT A
I-Link Incorporated
Common Stock Purchase Warrant
Number ____
Series K Warrant Certificate Evidencing Right to Purchase
1,100,000 Shares of Common Stock
This is to certify that WINTER HARBOR, L.L.C., a Delaware limited
liability company, or assigns, is entitled to purchase at any time or from
time to time up to the above-referenced number of shares of Common Stock
("Common Stock"), of I-Link Incorporated, a Florida corporation (the
"Company"), for the Exercise Price for the Series K Warrants specified in t the
Warrant Agreement, dated as of January 15, 1999, among the Company and Winter
Harbor, L.L.C. (the "Warrant Agreement"), pursuant to which this Warrant
Certificate is issued. All rights of the holder of this Warrant Certificate are
subject to the terms and provisions of the Warrant Agreement, copies of which
are available for inspection the Company's office located at 13751 South
Wadsworth Park Drive, Suite 200, Draper, Utah 84020 (the "Office"). The
Expiration Date (as defined in the Warrant Agreement) of the right to purchase
Common Stock pursuant to this Certificate is June 15, 2006.
NEITHER THE WARRANTS REPRESENTED BY THIS CERTIFICATE NOR THE SHARES OF
COMMON STOCK THAT MAY BE PURCHASED UPON EXERCISE HEREOF HAVE BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER ANY APPLICABLE STATE LAW.
SUCH WARRANTS AND SHARES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR
PLEDGED WITHOUT (1) REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
AND ANY APPLICABLE STATE LAW, OR (2) AN EXEMPTION FROM SUCH REGISTRATION IS
AVAILABLE.
Subject to the provisions of the Act, applicable state laws and such
Warrant Agreement, this Warrant Certificate and all rights hereunder are
transferable, in whole or in part, at the Office by the holder hereof in
person or by a duly authorized attorney, upon surrender of this Warrant
Certificate, together with the assignment hereof duly endorsed. Until
transfer of this Warrant Certificate on the books of the Company, the Company
may treat the registered holder hereof as the owner hereof for all purposes.
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IN WITNESS WHEREOF, the Company has caused this Series K Warrant
Certificate to be executed on January 15, 1999, in Draper, Utah by its proper
corporate officers thereunto duly authorized.
I-LINK INCORPORATED,
a Florida corporation
By:_______________________________
John Edwards, President
Attest:_______________________
Name:_________________________
Title:________________________
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EXHIBIT B
ELECTION TO PURCHASE
(To be executed by the registered holder if
such holder desires to exercise any Warrant Certificate)
The undersigned, the registered holder of the attached Series Warrant
Certificate, hereby irrevocably elects to exercise Series K Warrants
represented by such Series K Warrant Certificate and acquire an aggregate of
______________ shares of Common Stock of I-Link Incorporated, a Florida
corporation, and herewith tenders payment for such Common Stock in the amount of
$__________ (by certified check or official bank check) in accordance with the
terms hereof. The undersigned requests that the aforementioned Common Stock be
registered in the name of _______________, whose address is
________________________ _________________________.
Dated:___________________
Name of registered holder of Series K Warrant Certificate:
___________________________________________________________________________
(please print)
Address of registered holder:____________________________________
Signature:_____________________________
(Note: the signature to the foregoing Election must correspond to the name
as written upon the face of the Series K Warrant Certificate in every
particular, without alteration or any change whatsoever.)
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I-Link Incorporated
Common Stock Purchase Warrant Number____
Series K Warrant Certificate Evidencing Right to Purchase
1,100,000 Shares of Common Stock
This is to certify that WINTER HARBOR, L.L.C., a Delaware limited
liability company, or assigns, is entitled to purchase at any time or from
time to time up to the above-referenced number of shares of Common Stock
("Common Stock"), of I-Link Incorporated, a Florida corporation (the
"Company"), for the Exercise Price for the Series K Warrants specified in
the Warrant Agreement, dated as of January 15, 1999, among the Company and
Winter Harbor, L.L.C. (the "Warrant Agreement"), pursuant to which this
Warrant Certificate is issued. All rights of the holder of this Warrant
Certificate are subject to the terms and provisions of the Warrant
Agreement, copies of which are available for inspection the Company's
office located at 13751 South Wadsworth Park Drive, Suite 200, Draper,
Utah 84020 (the "Office"). The Expiration Date (as defined in the Warrant
Agreement) of the right to purchase Common Stock pursuant to this
Certificate is June 15, 2006.
NEITHER THE WARRANTS REPRESENTED BY THIS CERTIFICATE NOR THE SHARES
OF COMMON STOCK THAT MAY BE PURCHASED UPON EXERCISE HEREOF HAVE BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER ANY
APPLICABLE STATE LAW. SUCH WARRANTS AND SHARES MAY NOT BE OFFERED FOR
SALE, SOLD, TRANSFERRED OR PLEDGED WITHOUT (1) REGISTRATION UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND ANY APPLICABLE STATE LAW, OR
(2) AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE.
Subject to the provisions of the Act, applicable state laws and such
Warrant Agreement, this Warrant Certificate and all rights hereunder are
transferable, in whole or in part, at the Office by the holder hereof in
person or by a duly authorized attorney, upon surrender of this Warrant
Certificate, together with the assignment hereof duly endorsed. Until
transfer of this Warrant Certificate on the books of the Company, the
Company may treat the registered holder hereof as the owner hereof for
all purposes.
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IN WITNESS WHEREOF, the Company has caused this Series K Warrant
Certificate to be executed on January 15, 1999, in Draper, Utah by its proper
corporate officers thereunto duly authorized.
I-LINK INCORPORATED,
a Florida corporation
By: s/ John Edwards
John Edwards, President
Attest: s/ David E. Hardy
Name: David E. Hardy
Title: Secretary
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Exhibit 10.42
SUBSIDIARY GUARANTY
THIS SUBSIDIARY GUARANTY is made and entered into as of January 15, 1999,
by and among I-LINK SYSTEMS, INC., a Utah corporation ("Systems"), I-LINK
COMMUNICATIONS, INC., a Utah corporation ("Communications"), MIBRIDGE, INC., a
Utah corporation ("MiBridge"), and I-LINK WORLDWIDE, L.L.C., a Delaware limited
liability company ("Worldwide") and VIANET
TECHNOLOGIES, LTD., an Israeli corporation ("Vianet" and, together with Systems,
Communications, MiBridge and Worldwide, collectively, the "Guarantors" and
individually, a "Guarantor"), in favor of WINTER HARBOR, L.L.C., a Delaware
limited liability company (the "Lender").
RECITALS
A. I-Link Incorporated, a Florida corporation (the "Borrower"), owns all
of the issued and outstanding shares of the capital stock and membership
interests of each of the Guarantors. The Lender has lent to the Borrower
$7,768,000 in seven installments on a demand loan basis, which
installments were made on January 26, 1998, February 23, 1998, March 3, 1998,
March 24, 1998, May 13, 1998, May 29, 1998, and June 8, 1998 (collectively the
"Prior Loans"). The Lender has made available for borrowing up to $8,000,000,
pursuant to a Loan Agreement dated as of January 13, 1999 (the "Loan
Agreement"). The Prior Loans and the Loans made or to be made pursuant to the
Loan Agreement may be referred to hereinafter as the "Loans". Each of the Loans
is evidenced by certain promissory notes (the "Notes"). 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 have been 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 Lender's entering into the Loan
Agreement that, among other things, the Guarantors 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 Lender's
extensions of credit to the Borrower have facilitated the expansion and will
enhance the overall financial strength and stability of the Borrower's
consolidated group, including the Guarantors. Accordingly, the Guarantors will
derive substantial benefits as a result of the Lender's extensions of credit to
the Borrower, 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 for other good and
valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties, intending to be legally bound,
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agree as follows:
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 Loans or the Notes; (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 any 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 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
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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 any 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 all 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).
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 a Guarantor. Each Guarantor waives any right to require that
any resort be had by the Lender to the other Guarantors 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 any or all of the Guarantors to collect and
recover the full amount or any portion of the Guaranteed Obligations, without
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first proceeding against the Borrower, the other Guarantors 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:
(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 under the provisions of the Loan Agreement, the Loans, the Notes
or any other agreement or otherwise;
(ii) any extension, renewal or other alteration of any
provision of the Loan Agreement, the Loans, any Notes 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 Loans, any Note 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, the
Loans, any Note 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 any 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 any Guarantor or that would otherwise operate as a discharge of
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a guarantor as a matter of law or equity.
(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 or limited liability company, in good standing under the laws of its
state of incorporation or formation, (ii) has the corporate or limited liability
company 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 or limited liability company
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 or limited liability company
power and authority to execute, deliver and perform the terms and provisions of
this Guaranty, the Security Agreement and the other 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.
(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
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or impose) any lien, security interest or encumbrance (other than pursuant to
the Subsidiary Agreements) 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 September 30, 1998, 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 Subsidiary Agreement 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 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) Each Guarantor will at all times preserve and keep in full
force and effect its existence as a corporation or limited liability
company, organized in its state of incorporation or formation, 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
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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.
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 Security Agreement pursuant to which such
Guarantor is granting to the Lender a security interest in substantially all of
such Guarantor's personal property.
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, any 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 any 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
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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 Guarantors 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 any Guarantor
may have and, upon any such disposition or sale, any rights of subrogation that
any Guarantor may have shall, with respect to the collateral disposed of,
terminate. If any amount shall be paid to any 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, whethermatured or unmatured, in accordance with the
terms of the Loan Agreement, the Loans or the Notes.
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.
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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 no 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 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 LOANS 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
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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.
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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 SYSTEMS, INC.
By: /s John Edwards
John Edwards, President
I-LINK COMMUNICATIONS, INC.
By: /s John Edwards
John Edwards, President
MIBRIDGE, INC.
By: /s John Edwards
John Edwards, President
I-LINK WORLDWIDE, L.L.C.
By: I-Link Incorporated, its sole member
By: /s John Edwards
John Edwards, President
VIANET TECHNOLOGIES, LTD.
By: /s John Edwards
John Edwards, President
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Exhibit 10.43
AGREEMENT
THIS AGREEMENT is made and entered into as of January 15, 1999, by
and between I-LINK, INCORPORATED, a Florida corporation (the "Borrower"),
and WINTER HARBOR, L.L.C., a Delaware limited liability company (the
"Lender").
RECITALS
A. The Lender and the Borrower entered into an Agreement (the
"Original Agreement") on April 14, 1998, pursuant to which the Lender
agreed to withhold from demanding repayment of certain loans evidenced
by demand promissory notes (the "Original Notes"), which loans were
made on January 26, 1998, February 23, 1998, March 3, 1998, and March
24, 1998, for an aggregate principal amount of $5,768,000 (collectively,
the "Original Loans") until May 15, 1998 (the "Original Demand Date").
The Borrower did not repay the Original Loans on the Original Demand
Date and has not repaid the Original Loans as of the date of this
Agreement.
B. Since the date of the Original Agreement, the Borrower has requested,
and the Lender has made, additional demand loans in the amounts of $700,000 on
May 13, 1998, $546,000 on May 29, 1998, and $754,000 on June 8, 1998, totaling
$2,000,000 (collectively the "New Loans"), each of which is evidenced by a
demand note (collectively, the "New Notes").
C. The Borrower and the Lender desire to reflect in this Agreement
their agreement that made in connection with each of the New Loans that (i) each
New Loan would be secured by the same collateral and to the same extent as the
Original Loans, (ii) each New Loan would be convertible to Series M Preferred
Stock of the Borrower to the same extent as the Original Loans and (iii) the
Borrower would issue to the Lender in connection with each New Loan warrants to
acquire common stock of the Borrower.
AGREEMENTS
IN CONSIDERATION of the foregoing recitals, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties, intending to be legally bound, agree as follows:
1. Demand. Pursuant to the Original Agreement, the Original Notes
automatically came due upon the Original Demand Date since the Borrower did not
make payment in full of the Original Loans by that date. The Lender hereby
revokes such demand; however, the parties acknowledge and agree that the
forbearance period specified in the Original Agreement has expired and that the
Lender may make demand on any or all of the Original Notes as well as the New
Notes at any time.
2. Security. The New Loans and the New Notes shall be secured to the same
extent and by the same collateral as the Existing Loans and the
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Existing Notes. The Borrower shall execute and deliver, and cause its
subsidiaries to execute and deliver, such amendments to the existing security
documents and such additional agreements, documents and instruments as the
Lender may request to provide for such security.
3. Conversion. Pursuant to Section 5(a)(ii) of the Original Agreement,
since the Original Notes and the Original Loans were not paid by the Original
Demand Date, the Lender is entitled to convert the Original Notes into a
specified number of shares of the Borrower's Series M Preferred Stock and to
receive warrants to acquire 10,000,000 shares of the Borrower's common stock.
The parties agree that the Lender shall also be permitted at any time to convert
the New Loans and all accrued interest thereon into shares of the Borrower's
Series M Preferred Stock at the same conversion rate as provided in Section
5(a)(ii) of the Original Agreement. The Lender may convert the Original Loans
without converting the New Loans and may convert the New Loans without
converting the Original Loans, in its sole discretion. Any such conversion may
be referred to hereinafter as a
"Conversion."
4. Warrants.
(a) The Borrower has not yet issued to the Lender any of the warrants
described in either Section 4 or Section 5 of the Original Agreement, nor has
the Borrower issued any of the warrants which it agreed to issue in connection
with the making of the New Loans. Immediately upon its execution of this
Agreement, the Borrower shall execute a warrant agreement in substantially the
form attached hereto as Exhibit A, pursuant to which the Borrower shall grant to
the Lender (i) the 1998 Warrants, as that term is defined in the Original
Agreement, and (ii) warrants to buy 1,740,000 shares of common stock of the
Borrower for an exercise period extending until October 15, 2005. The exercise
price for 609,000 of such shares shall be $6.67 per share; the exercise price
for 475,020 of such shares shall be $6.37 per share; and the exercise price for
655,980 of such shares shall be $6.12 per share.
(b) The parties acknowledge and agree that pursuant to Section
5(a)(ii) of the Original Agreement, since the Original Notes and the Original
Loans were not paid by the Original Demand Date, the Lender is entitled to
effect the Conversion of the Original Loans and also to receive warrants to
acquire 10,000,000 shares of the Borrower's common stock for an exercise price
of $2.50 per share for an exercise period extending until October 15, 2005 (the
"Conversion Warrants"). The warrants issued pursuant to Section 4(a)(i) above
shall be deemed to be included in the Conversion Warrants so that upon
Conversion of the Original Loans, the Borrower shall only be required to issue
to the Lender warrants for 5,000,000 shares of the Borrower's common stock.
(c) Upon Conversion of the Original Loans, the exercise price for the
warrants granted pursuant to Section 4(a)(i) above shall be reduced
automatically without any further action by the Borrower or the Lender to $2.50
per share, and upon Conversion of the New Loans, the exercise price for the
warrants granted pursuant to Section 4(a)(ii) above shall be reduced
automatically without any further action by the Borrower or the Lender to $2.50
per share.
5. Encore Transaction. The Borrower agrees, for purposes of (a) Section
4(f)(i)(D)(IV) of the Articles of Amendment to the Amended and
Restated Articles of Incorporation of the Borrower establishing the Borrower's
Series M Participating Convertible Preferred Stock and (b) each Warrant
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Agreement between the Borrower and the Lender, that any shares of common stock
of the Borrower issued to JNC Opportunity Fund Ltd. or its successors or assigns
("Encore") pursuant to the Convertible Preferred Stock Purchase Agreement dated
as of June 30, 1998, between the Borrower and Encore, any warrant issued
pursuant thereto or any other document, agreement or instrument entered into in
connection therewith, shall be deemed to be "Additional Shares of Common Stock"
for all purposes of such Articles of Amendment and such Warrant Agreements.
6. Representations and Warranties. The Borrower hereby represents and
warrants to the Lender as follows:
(a) Organization, Qualifications and Corporate Power.
(i) The Borrower is a corporation duly incorporated,
validly existing and in good standing under the laws of the State of Florida.
The Borrower has the requisite corporate power and authority to own and hold its
properties, to carry on its business as conducted or presently proposed to be
conducted, to execute, deliver and perform this Agreement, to issue and deliver
to the Lender the warrants required to be issued pursuant hereto (the "New
Warrants"), and to issue and deliver to the Lender the shares of capital stock
issuable upon any Conversion and the shares of capital stock upon exercise of
the New Warrants (collectively, the "Underlying Shares", and, together with the
New Warrants, the "Securities"). The Borrower is duly qualified to conduct
business as a foreign corporation in good standing under the laws of the State
of Utah and each other jurisdiction where the failure to so qualify could have a
material adverse effect on the financial condition, results of operations,
properties, assets, prospects or business of the Borrower or any of its
subsidiaries (a "Material Adverse Effect").
(ii) The Borrower does not own, directly or indirectly, any
shares of capital stock, partnership interests or other participation rights or
other interests in the nature of an equity interest in any corporation,
partnership, company, trust or other entity, or any option, warrant or other
security convertible into or exchangeable for any of the foregoing, other than
(a) the shares of capital stock of I-Link Systems, Inc., a Utah corporation
("I-Link Systems"), (b) the shares of capital stock of I-Link Communications,
Inc., a Utah corporation ("I-Link Communications"), (c) the shares of capital
stock of MiBridge, Inc., a Utah corporation ("MiBridge"), and (d) the membership
interests of I-Link Worldwide, L.L.C., a Delaware limited liability company
("Worldwide"). Each of I-Link Systems, I-Link Communications and MiBridge is a
corporation duly incorporated, validly existing and in good standing under the
laws of the State of Utah, and Worldwide is a limited liability company duly
organized, validly existing and in good standing under the laws of the State of
Delaware. Each of I-Link Systems, I-Link Communications, MiBridge and Worldwide
has the requisite corporate or limited liability company (as appropriate) power
and authority to own and hold its properties and to carry on its business as
conducted or presently proposed to be conducted. Each of I-Link Systems, I-Link
Communications, MiBridge and Worldwide is duly qualified to conduct business as
a foreign corporation or limited liability company (as appropriate) in good
standing under the laws of each jurisdiction where the failure to so qualify
could have a Material Adverse Effect.
(b) Authorization of Agreements.
(i) The execution, delivery and performance by the Borrower and
its subsidiaries of this Agreement and the agreements, documents and instruments
to be executed and delivered pursuant hereto (collectively, the "Transaction
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Documents") and the issuance, sale and delivery of the Securities to the Lender
have been duly authorized by all requisite corporate or limited liability
company action of the Borrower and its subsidiaries, including, but not limited
to, the requisite action by the Board of Directors of the Borrower and the
requisite approval or consent of the Borrower's shareholders, and will not (with
due notice or lapse of time or both) violate, be in conflict with or constitute
a default under any provision of law, rule or regulation, any order of any court
or other governmental agency, the Articles of Incorporation or Bylaws or other
organizational documents of the Borrower or any of its subsidiaries, or any
provision of any indenture, mortgage, note, deed of trust, agreement or other
instrument to which the Borrower, any of its subsidiaries or any of their
respective properties or assets is bound, or conflict with, result in a breach
of or constitute (with due notice or lapse of time or both) a default under any
such indenture, mortgage, note, deed of trust, agreement or other instrument, or
result in the creation or imposition of any lien, charge, restriction, claim or
encumbrance of any nature whatsoever upon any of the properties or assets of the
Borrower or any of its subsidiaries.
(ii) The Underlying Shares have been duly and validly reserved
for issuance and, upon issuance in accordance with the terms of the Borrower's
Articles of Incorporation, as amended, this Agreement and the New Warrants, will
be duly and validly issued, fully paid and non-assessable, and will be free of
restrictions on transfer other than restrictions on transfer under applicable
state and federal securities laws. The issuance, sale and delivery of the
Securities are not subject to any preemptive right of any shareholder of the
Borrower or to any right of first refusal or other right in favor of any person.
(c) Validity. This Agreement has been duly executed and delivered by
the Borrower and constitutes the legal, valid and binding
obligation of the Borrower, enforceable in accordance with its terms,
subject to the effect of bankruptcy, insolvency, moratorium or other similar
laws affecting the enforcement of creditors' rights generally and except as the
availability of equitable remedies may be limited by general principles of
equity. The other Transaction Documents, when executed in accordance with the
terms of this Agreement, will be duly executed and delivered by the Borrower and
its subsidiaries and will constitute the legal, valid and binding obligation of
the Borrower and its subsidiaries, enforceable in accordance with their
respective terms, subject to the effect of bankruptcy, insolvency, moratorium or
other similar laws affecting the enforcement of creditors' rights generally and
except as the availability of equitable remedies may be limited by general
principles of equity.
(d) Litigation; Claims; Investigations. Except as set forth on
Schedule I attached hereto, there is no action, suit, proceeding or
investigation pending or threatened against the Borrower or any of its
subsidiaries and there are no suits, actions or claims, or any investigations or
inquiries by any administrative agency or governmental body, or legal,
administrative or arbitration proceedings pending against or threatened against
the Borrower or any of its subsidiaries or affecting any of the Borrower's or
any of its subsidiaries' properties, rights, assets or business, or to which the
Borrower or any of its subsidiaries is a party or, in the case of threatened
proceedings, is reasonably likely to become a party. There is no outstanding
order, writ, judgment, injunction or decree of any court, administrative agency,
governmental body or arbitration tribunal against or affecting the Borrower, any
of its subsidiaries or any of the properties, rights, assets or business of the
Borrower or any of its subsidiaries.
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(e) Compliance. Neither the Borrower nor any of its subsidiaries is
in violation of or default under any provision of its Articles of Incorporation
or Bylaws or other organizational document. Neither the Borrower nor any of its
subsidiaries is in material violation of or default under (i) any provision of
any instrument, mortgage, deed of trust, loan, contract, commitment, judgment,
decree, order or obligation to which it is a party or by which it or any of its
properties or assets are bound or (ii) any provision of any federal, state or
local law, statute, rule, order or governmental regulation.
(f) Governmental Consents. No consent, approval, order or
authorization of, or registration, qualification, designation, declaration or
filing with, any federal or state governmental authority on the part of the
Borrower or any of its subsidiaries is required in connection with the
execution, delivery and performance of this Agreement and the offer, sale or
issuance of the Securities.
(g) Disclosure. No representation or warranty made by the Borrower
contained in this Agreement or in any other Transaction Document or in any
certificate or instrument furnished or to be furnished pursuant hereto contains
or will contain any untrue statement of a material fact, or omits or will omit
to state any material fact known to the Borrower required to make the statements
herein or therein contained not misleading. The Borrower is not aware of any
impending or contemplated event or occurrence that would cause any of the
foregoing representations not to be true and complete on the date of such event
or occurrence as if made on
that date.
7. Arbitration. To the fullest extent not prohibited by law, any
controversy, claim or dispute arising out of or relating to this Agreement,
including the determination of the scope or applicability of this agreement to
arbitrate, shall be settled by final and binding arbitration in accordance with
the terms and conditions of the arbitration provisions of the Shareholders
Agreement by and among the Borrower, the Lender and certain other shareholders
of the Borrower, dated as of October 10, 1997.
8. Expenses. The Borrower shall pay all expenses of the Lender, including
but not limited to travel, legal and accounting fees and expenses, incurred in
connection with the transactions contemplated under this Agreement.
9. Survival of Agreements. All covenants, agreements, representations,
and warranties made herein shall survive the execution and delivery hereof and
remain in full force and effect, notwithstanding any investigation made at any
time by or on behalf of either party hereto.
10. Parties in Interest. All representations, covenants, and agreements
contained in this Agreement by or on behalf of any of the parties hereto shall
bind and inure to the benefit of the respective successors and permitted assigns
of the parties hereto, whether so expressed or not.
11. Notices. All notices, requests, consents, and other communications
hereunder shall be in writing and shall be deemed effectively given and received
upon delivery in person, or one business day after delivery by national
overnight courier service, or by telecopier transmission with acknowledgment of
transmission receipt, or three business days after deposit via certified or
registered mail, return receipt requested, in each case addressed as follows:
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(a) if to the Company, at
I-LINK INCORPORATED
13751 South Wadsworth Park Drive
Suite 200
Draper, Utah 84020
Attention: John W. Edwards, President
Telecopier: 801-576-5075
with a copy (which shall not constitute notice) to:
David E. Hardy, Esq.
60 E. South Temple
Suite 2200
Salt Lake City, Utah 84111
Telecopier: (801) 364-6664
(b) if to the Lender, at
Winter Harbor, L.L.C.
c/o First Media, L.P.
11400 Skipwith Lane
Potomac, Maryland 20854
Attention: Ralph W. Hardy, Jr.
Telecopier: (301) 983-2425
with a copy (which shall not constitute notice) to:
Ralph W. Hardy, Jr., Esq.
Dow, Lohnes & Albertson, PLLC
1200 New Hampshire Avenue, N.W.
Washington, D.C. 20036
Telecopier: (202) 776-2222
or, in any such case, at such other address or addresses as shall have
been furnished in writing by such party to the other.
12. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE APPLICABLE TO CONTRACTS MADE
AND TO BE PERFORMED ENTIRELY WITHIN THE STATE OF DELAWARE WITHOUT REGARD TO ITS
PRINCIPLES OF CONFLICTS OF LAW.
13. Entire Agreement. This Agreement constitutes the sole and entire
agreement of the parties with respect to the subject matter hereof.
14. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
15. No Waivers; Amendments. No failure or delay on the part of any party
in exercising any right, power or remedy hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right, power or
remedy preclude any other or further exercise thereof or the exercise of any
other right, power or remedy. The remedies provided for herein are cumulative
and are not exclusive of any remedies that may be available to any party at law
or in equity or otherwise. Any provision of this Agreement may be amended or
waived if, but only if, such amendment or waiver is in writing and is signed by
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the Borrower and the Lender.
16. Severability. If any provision of this Agreement shall be
declared void or unenforceable by a judicial or administrative authority,
the validity of any other provision and of the entire Agreement shall
not be affected thereby.
17. Headings. The Section headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
18. Tax Reporting. The parties agree that, for tax purposes, the New
Warrants granted pursuant to this Agreement had a fair market value of $0.00 on
the dates on which they were issued. Each party shall file its tax returns in a
manner that is consistent with this valuation.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first set forth above.
I-LINK INCORPORATED
By: /s John Edwards
John Edwards, President
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
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SCHEDULE I
Proceedings
9
<PAGE>
Exhibit 10.44
FIRST AMENDMENT TO SECURITY AGREEMENT
THIS FIRST AMENDMENT TO SECURITY AGREEMENT is made and entered into
as of January 15, 1999, by and among I-LINK INCORPORATED, a Florida
corporation (the "Company"), I-LINK SYSTEMS, INC., a Utah corporation
with its principal place of business at 13751 South Wadsworth Park Drive,
Suite 200, Draper, UT 84020 ("Systems"), I-LINK COMMUNICATIONS, INC., a
Utah corporation, with its principal place of business at 13751 South
Wadsworth Park Drive, Suite 200, Draper, UT 84020 ("Communications"),
MIBRIDGE, INC., a Utah corporation, with its principal place of business
at 13751 South Wadsworth Park Drive, Suite 200, Draper, UT 84020
("MiBridge"), I-LINK WORLDWIDE, L.L.C., a Delaware limited liability
company, with its principal place of business at 13751 South Wadsworth
Park Drive, Suite 200, Draper, UT 84020 ("Worldwide"), VIANET TECHNOLOGIES,
LTD., an Israeli corporation, headquartered in Ramat Hasharon, Israel
("Vianet" and together with the Company, Systems, Communications, MiBridge and
Worldwide, collectively, the "Debtors" and individually, a "Debtor"), and WINTER
HARBOR, L.L.C., a Delaware limited liability company with its principal place of
business at 11400 Skipwith Lane, Potomac, Maryland 20854 (the "Secured Party").
RECITALS
A. The Company owns all of the capital stock and the limited
liability company interests of Systems, Communications, MiBridge, Worldwide and
Vianet.
B. The Secured Party has lent to the Company (i) $5,768,000 in
four installments on a demand loan basis, which installments were made
on January 26, 1998, February 23, 1998, March 3, 1998, and March 24, 1998
(collectively, the "Original Loans"). The obligations of the Company under the
Original Loans and under the notes and other documents and instruments entered
into in connection therewith are secured by a Security Agreement, dated as of
April 14, 1997 (the "Original Security Agreement"), entered into pursuant to the
Original Agreement, dated April 14, 1998 (the "Original Agreement"), by and
between the Secured Party and the Debtors, other than Vianet. All capitalized
terms used herein and not otherwise defined herein shall have the meanings
ascribed to such terms in the Original Agreement.
C. The Secured Party has further lent to the Company $2,000,000 in three
installments on a demand loan basis, which installments were made on May 13,
1998, May 29, 1998, and June 8, 1998 (collectively the "Second Loans"), and has
made available for borrowing $8,000,000 pursuant to a Bridge Loan Agreement,
dated January 15, 1999 (the "Loan Agreement" and together with the Original Loan
and the Second Loan, the "Loans"). Each of the Loans are evidenced by certain
promissory notes (the "Notes").
D. In order to induce the Secured Party to enter into the Loan
Agreement and to secure the Loans made pursuant to the Second Loans and Loan
Agreement, the Company and the Debtors have agreed to enter into this
Amendment, the Original Security Agreement as amended hereby shall be referred
to as the "Security Agreement".
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AGREEMENTS
In consideration of the foregoing Recitals, and of the agreements
made herein, and of the Loans made or to be made by the Secured Party to the
Company, the Debtors, the Company and the Secured Party agree as follows:
1. Amendments.
1.1 The First Recital of the Original Security Agreement is hereby
amended in its entirety to read as follows:
I-Link Incorporated, a Florida corporation (the "Company"), owns all
of the capital stock and membership interests, as applicable, of I-Link
Systems, Inc., I-Link Communications, Inc., MiBridge, Inc., I-Link
Worldwide, L.L.C. and Vianet Technologies, Ltd. (collectively, including
the Company, the "Debtors" and individually, a "Debtor"). The Secured
Party has lent to the Company (i) $5,768,000 in four installments on a
demand loan basis, which installments were made on January 26, 1998,
February 23, 1998, March 3, 1998, and March 24, 1998 (collectively, the
"Original Loans"). The Secured Party has further lent to the Company
$2,000,000 in three installments on a demand loan basis, which installments
were made on May 13, 1998, May 29, 1998, and June 8, 1998 (collectively the
"Second Loans"), and has made available for borrowing $8,000,000 pursuant
to a Loan Agreement, dated January 15, 1999 (the "Loan Agreement" and
together with the Original Loan and the Second Loan, the "Loans"). The
Loans are evidenced by certain promissory notes (the "Notes"). The Company
requested that the Secured Party not demand payment on the Original
Loans before May 15, 1998 (the "Demand Date"). Pursuant to the Agreement,
dated April 14, 1998 (the "Original Agreement"), the Original Loans
automatically came due upon the Demand Date since the Company did not make
payment in full of the Original Loans by that date. The Lender has revoked
such demand pursuant to the terms of an Agreement, dated January 15, 1999
(the "Amended Agreement"). Capitalized terms used herein and not
otherwise defined herein shall have the meanings assigned to them in the
Original Agreement. Unless otherwise set forth herein, references in this
Security Agreement to the "Agreement" shall mean the Original Agreement,
the Amended Agreement and the Loan Agreement. As security for the Loans
and the Agreement, the Debtors and the Company have agreed to enter into
this Security Agreement.
1.2 The Second Recital of the Original Security Agreement is
hereby amended in its entirety to read as follows:
The Debtors, other than the Company, have guaranteed the
Loans and the obligations of the Company under the Notes and the
Loan Agreement pursuant to the terms of a Subsidiary Guaranty dated
as of January 15, 1999 (the "Guaranty").
1.4 Section 1 of the Original Security Agreement is hereby amended by
deleting it in its entirety and inserting the following in place thereof:
GRANT OF SECURITY INTEREST. In order to secure the payment and
performance of all of the obligations of the Company under the Notes and the
Loan Agreement and of the other Debtors under the Guaranty and the payment and
performance of the Loans, plus interest accrued thereon (being hereinafter
collectively referred to as the "Obligations"), the Debtors hereby (i) reaffirm
and acknowledge the first priority security interest granted pursuant to the
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Original Agreement, and (ii) grant to the Secured Party, a second 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
the Company or any Debtor and any leases which by their terms prohibit the grant
of security interests in, or assignments of, the Company's or such Debtor'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. Representations and Warranties. Each and every representation
and warranty set forth in the Original Security Agreement is hereby
confirmed and ratified, in all material respects, by the Debtors and the
Company, and such representations and warranties as so confirmed and ratified
shall be deemed to have been made and undertaken as of the date of this
Amendment as well as at the time they were made and undertaken except to the
extent such representations and warranties have been affected by events
contemplated by or permitted pursuant to the Agreement.
3. Counterparts. This Amendment may be executed in as many counterparts
as may be convenient and shall become binding when the Company, the Debtors and
the Secured Party have each executed at least one counterpart.
4. Governing Law. This Amendment shall be a contract made under and
governed by the laws of the State of Delaware, without regard to the conflicts
of law provisions thereof.
5. Binding Effect. This Amendment shall be binding upon and shall
inure to the benefit of the Company, the Debtors and the Secured Party
and their respective successors and assigns, and in particular, any holder of
the Notes.
6. Reference to Original Security Agreement. Except as amended
hereby, the Original Security Agreement shall remain in full force and
effect and is hereby ratified and confirmed in all respects. On and after the
effectiveness of the amendment to the Original Security Agreement accomplished
hereby, each reference in the Original Security Agreement to "this Agreement",
"hereunder", "hereof", "herein" or words of like import, and each reference to
the Original Security Agreement in the Agreement or other agreement, document or
instrument executed and delivered pursuant to the Agreement, shall be deemed a
reference to the Original Security Agreement, as amended hereby.
7. No Other Modifications. Except as expressly provided in this
Amendment, all of the terms and conditions of the Original Security Agreement
shall remain unchanged and in full force and effect.
[Signature Page Follows]
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<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this First Amendment
to Security Agreement on the day and year first above written.
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
Ralph W. Hardy Jr., Secretary
I-LINK INCORPORATED
By: /s John Edwards
John Edwards, President
I-LINK WORLDWIDE, L.L.C.
I-LINK SYSTEMS, INC.
By: I-Link Incorporated, its sole member
By: /s John Edwards
John Edwards, President By: s/ John Edwards
John Edwards, President
I-LINK COMMUNICATIONS, INC. VIANET TECHNOLOGIES, LTD.
By: /s John Edwards By: /s John Edwards
John Edwards, President John Edwards, President
MIBRIDGE, INC.
By: /s John Edwards
John Edwards, President
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<PAGE>
Exhibit 10.45
FIRST AMENDMENT TO PLEDGE AGREEMENT
THIS FIRST AMENDMENT TO PLEDGE AGREEMENT is made and entered into
as of January 15, 1999, by and between I-LINK INCORPORATED, a Florida
corporation (the "Pledgor"), and Winter Harbor, L.L.C., a Delaware
limited liability company (the "Pledgee").
RECITALS
A. The Pledgor owns all of the capital stock of I-Link Systems,
Inc., I-Link Communications, Inc., Vianet Technologies, Ltd. and MiBridge,
Inc. and the limited liability company interests of I-Link Worldwide,
L.L.C. (collectively, the "Companies" and individually, a "Company").
B. The Pledgee has lent to the Pledgor (i) $5,768,000 in four
installments on a demand loan basis, which installments were made on
January 26, 1998, February 23, 1998, March 3, 1998, and March 24, 1998
(collectively, the "Original Loans"). The obligations of the Pledgor
under the Original Loans and under the notes and other documents and
instruments entered into in connection therewith are secured by a Pledge
Agreement, dated as of April 14, 1997 (the "Original Pledge Agreement"), entered
into pursuant to the Agreement, dated April 14, 1998 (the "Original Agreement"),
by and between the Pledgee and the Pledgor. All capitalized terms used herein
and not otherwise defined herein shall have the meanings ascribed to such terms
in the Original Agreement.
C. The Pledgee has further lent to the Pledgor $2,000,000 in three
installments on a demand loan basis, which installments were made on May 13,
1998, May 29, 1998, and June 8, 1998, totaling $2,000,000 (collectively the
"Second Loans") and has made available for borrowing $8,000,000 pursuant to a
Loan Agreement, dated January 15, 1999 (the "Loan Agreement"). The loans made
pursuant to the Loan Agreement, together with the Original Loan and the Second
Loan, may be referred to hereinafter as the "Loans". Each of the Loans is
evidenced by certain promissory notes (the "Notes").
D. In order to induce the Pledgee to enter into the Loan Agreement and to
secure the Second Loans and the Loans made pursuant to the Loan Agreement, the
Pledgor has agreed to enter into this Amendment. The Original Pledge Agreement
as amended hereby shall be referred to as the "Pledge Agreement".
AGREEMENTS
In consideration of the foregoing Recitals, and of the agreements
made herein, and of the Loans made or to be made by the Pledgee to the
Pledgor, the Pledgor and the Pledgee agree as follows:
1. Amendments.
1.1 The Recital of the Original Pledge Agreement is hereby amended
in its entirety to read as follows:
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The Pledgee has lent to the Pledgor (i) $5,768,000 in four
installments on a demand loan basis, which installments were made on
January 26, 1998, February 23, 1998, March 3, 1998, and March 24, 1998
(collectively, the "Original Loans"). The Pledgee has further lent to the
Pledgor $2,000,000 in three installments on a demand loan basis, which
installments were made on May 13, 1998, May 29, 1998, and June 8, 1998,
totaling $2,000,000 (collectively the "Second Loans"), and has made
available for borrowing $8,000,000 pursuant to a Loan Agreement, dated
January 15, 1999 (the "Loan Agreement"). The loans made pursuant to the
Loan Agreement, together with the Original Loan and the Second Loan, may be
referred to hereinafter as the "Loans". Each of the Loans is evidenced by
certain promissory notes (the "Notes"). The Pledgor requested that the
Pledgee not demand payment on the Original Loans before May 15, 1998 (the
"Demand Date"). Pursuant to the Agreement, dated April 14, 1998 (the
"Original Agreement"), the Original Loans automatically came due upon the
Demand Date since the Borrower did not make payment in full of the Original
Loans by that date. The Lender has revoked such demand pursuant to the
terms of an Agreement, dated January 15, 1999 (the "Amended Agreement").
Capitalized terms used herein and not otherwise defined herein shall have
the meanings assigned to them in the Original Agreement. Unless otherwise
set forth herein, references in this Pledge Agreement to the "Agreement"
shall mean the Original Agreement, the Amended Agreement and the Loan
Agreement. As security for the Loans and the Agreement, the Pledgor has
agreed to enter into this Pledge Agreement.
1.2 Section 1(a) of the Original Pledge Agreement is hereby amended
in its entirety to read as follows:
(a) The Pledgor hereby grants to the Pledgee, as security for
the Loans and the obligations of the Pledgor (i) under the
Original Agreement, a first priority perfected security interest
in, and (ii) under the Amended Agreement and the Loan Agreement,
second priority perfected security interest in, and pledges, assigns,
hypothecates and transfers to the Pledgee, all of the Pledgor's
interests in and right and title to, all of the issued and outstanding
shares of capital stock of each of I-Link Systems, Inc., I-Link
Communications, Inc., Vianet Technologies, Ltd. and MiBridge, Inc.
and all of the issued and outstanding limited liability company
interests of I-Link Worldwide, L.L.C. (together, the "Collateral").
1.3 Section 2(a) of the Original Pledge Agreement is hereby
amended in its entirety to read as follows:
(a) the Collateral constitutes all of the capital stock
of each of I-Link Systems, Inc. ("Systems"), I-Link
Communications, Inc. ("Communications"), Vianet Technologies,
Ltd. ("Vianet") and MiBridge, Inc. ("MiBridge") and the limited
liability company interests of I-Link Worldwide, L.L.C.
("Worldwide");
1.4 Section 2(b) of the Original Pledge Agreement is hereby
amended in its entirety to read as follows:
(b) the Collateral is validly issued, fully paid and
nonassessable and is not subject to any liens (except for the
lien of Mr. Drore Nahumi on the capital stock of MiBridge, Inc.),
charges or encumbrances whatsoever, except for the security
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interest granted pursuant hereto;
1.5 Section 2(d) of the Original Pledge Agreement is hereby
amended in its entirety to read as follows:
(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, Systems, Communications, Vianet, MiBridge
or Worldwide 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;
1.6 The last sentence of Section 5 of the Original Pledge
Agreement is hereby amended in its entirety to read as follows:
There likewise shall be pledged to the Pledgee, to be added
to the pledged property and subject to the pledge, any and all
additional issued shares of Systems, Communications, Vianet
and MiBridge and limited liability company interests of
Worldwide to the Pledgor by way of dividend, splits, rights,
new securities or otherwise, to the end that all the issued
and outstanding shares of Systems, Communications, Vianet and
MiBridge and limited liability company interests of Worldwide
will be pledged to Pledgee.
2. Representations and Warranties. Each and every representation
and warranty set forth in the Original Pledge Agreement is hereby confirmed and
ratified, in all material respects, by the Pledgor, and such representations and
warranties as so confirmed and ratified shall be deemed to have been made and
undertaken as of the date of this Amendment as well as at the time they were
made and undertaken except to the extent such representations and warranties
have been affected by events contemplated by or permitted pursuant to the
Agreement.
3. Counterparts. This Amendment may be executed in as many counterparts
as may be convenient and shall become binding when the Pledgor and the Pledgee
have each executed at least one counterpart.
4. Governing Law. This Amendment shall be a contract made under
and governed by the laws of the State of Delaware, without regard to the
conflicts of law provisions thereof.
5. Binding Effect. This Amendment shall be binding upon and shall
inure to the benefit of the Pledgor and the Pledgee and their respective
successors and assigns, and in particular, any holder of the Notes.
6. Reference to Original Pledge Agreement. Except as amended hereby, the
Original Pledge Agreement shall remain in full force and effect and is hereby
ratified and confirmed in all respects. On and after the effectiveness of the
amendment to the Original Pledge Agreement accomplished hereby, each reference
in the Original Pledge Agreement to "this Agreement", "hereunder", "hereof",
"herein" or words of like import, and each reference to the Original Pledge
Agreement in the Agreement or other agreement, document or instrument executed
and delivered pursuant to the Agreement, shall be deemed a reference to the
Original Pledge Agreement, as amended hereby.
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7. No Other Modifications. Except as expressly provided in this
Amendment, all of the terms and conditions of the Original Pledge
Agreement shall remain unchanged and in full force and effect.
[Signature Page Follows]
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IN WITNESS WHEREOF, the undersigned have executed this First
Amendment to Pledge Agreement on the day and year first above written.
PLEDGOR:
I-LINK INCORPORATED
By: /s John Edwards
John Edwards, President
PLEDGEE:
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.
Ralph W. Hardy Jr., Secretary
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Exhibit 10.46
SERIES D, E, F, G, H, I AND J WARRANT AGREEMENT
by and between
I-LINK INCORPORATED
and
WINTER HARBOR, L.L.C.
Dated as of January 15, 1999
<PAGE>
WARRANT AGREEMENT
THIS WARRANT AGREEMENT (this "Agreement"), dated as of January 15,
1999, by and between I-LINK INCORPORATED, a Florida corporation (the
"Company"), and WINTER HARBOR, L.L.C., a Delaware limited liability company (the
"Lender").
R E C I T A L S:
A. The Lender and the Company entered into an agreement (the "Original
Agreement") on April 14, 1998, pursuant to which the Lender agreed to withhold
from demanding repayment of certain loans evidenced by demand promissory notes
(the "Original Notes"), which loans were made on January 26, 1998, February 23,
1998, March 3, 1998, and March 24, 1998, for an aggregate principal amount of
$5,768,000 (collectively, the "Original Loans") until May 15, 1998. In
connection with the Original Loans, the Lender promised to issue warrants to
acquire, in the aggregate, 5,000,000 shares of common stock of the Company at an
exercise price of 110% of the closing price of such stock on the day each
installment was made (the "1998 Warrants"). The Company has not repaid the
Original Loans.
B. Subsequent to the Original Agreement, the Company requested, and the
Lender has made, additional demand loans in the amounts of $700,000 on May 13,
1998, $546,000 on May 29, 1998, and $754,000 on June 8, 1998, totaling
$2,000,000 (the "Additional Loans" and, collectively with the Original Loans,
the "Loans"), each of which is evidenced by a demand note (collectively, the
"Additional Notes"). In connection with the Additional Loans, the Company
agreed to issue warrants to buy 1,740,000 shares of common stock of the Company
(the exercise price for 609,000 of such shares shall be $6.67 per share; the
exercise price for 475,020 of such shares shall be $6.37 per share; and the
exercise price for 655,980 of such shares shall be $6.12 per share (the
"Additional Warrants")). The Company's agreement to issue the Additional
Warrants is evidenced in the Agreement (the "Additional Agreement") dated as of
January 15, 1999, between the Company and the Lender.
C. In order to satisfy the Company's obligations to deliver the 1998
Warrants and the Additional Warrants, the Company, concurrently with the
execution and delivery of this Agreement, is issuing and selling to the Lender
Series D Warrants, Series E Warrants, Series F Warrants, Series G Warrants,
Series H Warrants, Series I Warrants and Series J Warrants of the Company (being
referred to herein as the "Warrants"), such Warrants initially entitling the
holders thereof to purchase shares of Common Stock of the Company (the "Common
Stock"), subject to adjustment as hereinafter provided (the Common Stock and,
pursuant to Article 7 hereof, such other securities as may be issuable upon
exercise of the Warrants being referred to herein as the "Warrant Shares"); and
D. The Company wishes to define the terms and provisions of the Warrants
and the respective rights and obligations thereunder of the Company and the
holders of the Warrants (the "Warrantholders");
NOW, THEREFORE, in consideration of the foregoing recitals and the mutual
agreements herein set forth, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
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ARTICLE 1
DEFINITIONS
SECTION 1.1 Certain Definitions. As used in this Agreement, the
following terms have the meanings specified below:
"Board of Directors" means the Board of Directors of the Company.
"Business Day" means any day other than Saturday, Sunday or any other day
on which banking institutions in the City of New York, New York are permitted or
required to close.
"Exchange Act" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations promulgated thereunder.
"GAAP" means generally accepted accounting principles set forth in
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as may be approved by a significant segment of the accounting
profession, in each case as the same are applicable to the circumstances as of
the date of the determination.
"Person" means an individual, partnership, corporation (including
a business trust), limited liability company, joint stock company, trust,
unincorporated association, joint venture or other entity.
"Rights Offering" shall have the meaning set forth in Section 7.1(c)
hereof.
"SEC" means the Securities and Exchange Commission or any successor
thereto.
"Securities Act" means the Securities Act of 1933, as amended,
and the rules and regulations promulgated thereunder.
"Securities Purchase Agreement" means that certain Securities Purchase
Agreement by and between the Company and the Lender, dated as of September 30,
1997.
"Series M Preferred Stock" means the Series M Participating Convertible
Preferred Stock issued to the Lender.
"Winter Harbor Agreement" means collectively the Original Agreement
and the Additional Agreement.
ARTICLE 2
ISSUANCE, FORM AND EXECUTION OF WARRANT CERTIFICATES
SECTION 2.1 Issuance of Warrants. The Warrants shall be originally
issued by the Company in connection with the Loans pursuant to the Winter Harbor
Agreement. The Warrants shall be evidenced by Warrant Certificates, and each
Warrant Certificate shall represent the right, subject to the provisions
contained herein and therein, to purchase from the Company (and the Company
shall issue and sell to the registered holder of such Warrants)
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the number of shares of Common Stock (as may be adjusted pursuant to Article 7
hereof) issuable to the Warrantholder upon exercise of such Warrants, at the
price specified herein and therein.
SECTION 2.2 Form of Warrant Certificates. The certificates evidencing
the Warrants (the "Warrant Certificates") shall be in registered form only and
shall be substantially in the form set forth in Exhibit A attached hereto, shall
be dated the date on which signed by the Company and may have such letters,
numbers or other marks of identification or designation printed, lithographed,
engraved or otherwise affixed thereon as the Company may deem appropriate and as
are not inconsistent with the provisions of this Agreement, or as may be
required to comply with any law or with any rule or regulation made pursuant
thereto.
SECTION 2.3 Execution of Warrant Certificates. Warrant Certificates
shall be executed on behalf of the Company by the president, any vice president
or the treasurer of the Company and signed by the secretary or any assistant
secretary of the Company and have affixed thereon the seal of the Company. Each
such signature and seal may be manual or facsimile.
In case any officer of the Company who shall have signed any of the Warrant
Certificates shall cease to be such officer before countersignature and delivery
by the Company, such Warrant Certificates, nevertheless, may be countersigned,
issued and delivered with the same force and effect as though such person had
not ceased to be such officer; and any Warrant Certificate may be signed on
behalf of the Company by any person who, at the actual date of the execution of
such Warrant Certificate, shall be a proper officer of the Company to sign such
Warrant Certificate, although at the date of the execution of this Agreement
such person was not such an officer of the Company. Upon countersignature on
behalf of the Company and delivery, the Warrant Certificate shall be valid and
binding upon the Company, and the Warrantholder thereof shall be entitled to all
of the benefits of this Agreement.
ARTICLE 3
REGISTRATION
SECTION 3.1 Registration. The Company shall number and register
the Warrant Certificates in a register (the "Warrant Register") maintained
at 13751 South Wadsworth Park Drive, Suite 200, Draper, Utah 84020 (the
"Office") as they are issued by the Company (or such other location as the
Company may establish after giving notice thereof to the Warrantholders). The
Company shall keep copies of this Agreement available for inspection by
the Warrantholders during normal business hours at the Office.
ARTICLE 4
TRANSFER, EXCHANGE OR REPLACEMENT OF WARRANT CERTIFICATES
SECTION 4.1 Registration of Transfers. The Company shall from time to
time register the transfer of any outstanding Warrant Certificate on the Warrant
Register maintained at the Office, upon surrender thereof accompanied by a
written instrument or instruments of transfer in form reasonably satisfactory to
the Company, duly endorsed by the registered holder thereof or by such
Warrantholder's appointed legal representative or attorney-in-fact, or
accompanied by proper evidence of succession, assignment or authority to
transfer. In all cases of transfer by an attorney, the original power of
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attorney, duly approved, or an official copy thereof, duly certified, shall be
deposited and remain with the Company. Upon any such registration or
transfer in such name or names as may be directed in writing by the
Warrantholder, the Company shall execute and deliver (or cause to be delivered)
a new Warrant Certificate(s) without charge to such Warrantholder, or to the
Person or Persons entitled to receive the same, and the surrendered Warrant
Certificate shall be canceled by the Company.
SECTION 4.2 Exchanges of Warrant Certificates. Each Warrant Certificate
may be exchanged at the option of the Warrantholder without
charge to such Warrantholder when surrendered to the Company at the Office
properly endorsed in the manner described in Section 4.1 hereof for another
Warrant Certificate(s) of like tenor and representing in the aggregate a like
number of shares of Common Stock, as may be adjusted pursuant to Article 7
hereof. Thereupon, the Company shall execute and deliver to the Person(s)
entitled thereto a new Warrant Certificate(s) as so requested. Warrant
Certificates surrendered for exchange shall be canceled by the Company.
SECTION 4.3 Mutilated or Missing Warrant Certificates. In the
event that any Warrant Certificate shall be mutilated, lost, stolen or
destroyed, the Company shall execute and deliver in exchange and substitution
for and upon cancellation of the mutilated Warrant Certificate, or in lieu of
and substitution for the Warrant Certificate lost, stolen or destroyed, a new
Warrant Certificate of like tenor and
representing Warrants for a like amount of Warrant Shares, but only, in case of
a lost, stolen or destroyed Warrant Certificate, upon receipt
of evidence satisfactory to the Company of such loss, theft or destruction
and the absence of actual notice to the Company that such Warrant Certificate
has been acquired by a bona fide purchaser or holder in due
course. Every substitute Warrant Certificate executed and delivered
pursuant to this Section 4.3 in lieu of any lost, stolen or destroyed
Warrant Certificate shall constitute an additional contractual
obligation of the Company, whether or not the lost, stolen or destroyed
Warrant Certificate shall be at any time enforceable by anyone, and
shall be entitled to the benefits of (but shall be subject to all the
limitations of rights set forth in) this Agreement equally and
proportionately with any and all other Warrant Certificates duly
executed and delivered hereunder. The provisions of this Section 4.3 are
exclusive with respect to the replacement of mutilated, lost, stolen or
destroyed Warrant Certificates.
ARTICLE 5
EXERCISE OF WARRANTS; EXERCISE PRICE; EXERCISE PERIOD
SECTION 5.1 Exercise of Warrants. Subject to the provisions of this
Agreement, each Warrantholder shall have the right to purchase from the Company
the number of shares of Common Stock that the Warrantholder may at the time be
entitled to purchase on exercise of the Warrants and payment of the Exercise
Price (as defined below) for such Warrant Shares.
SECTION 5.2 Mechanics of Exercise.
(a) Subject to the provisions of this Agreement, Warrants may be
exercised by the Warrantholder in whole or in part upon surrender at the Office
to the Company of the Warrant Certificate(s) evidencing the Warrants, together
with the form of election to purchase (the "Election to Purchase"), in the form
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set forth as Exhibit B hereto, duly completed and signed by such Warrantholder
or by such Warrantholder's appointed legal representative or attorney-in-fact
and upon payment in full of the Exercise Price for each Warrant exercised.
Payment of the aggregate Exercise Price shall be made by certified or official
bank check payable to the order of the Company.
(b) Upon due exercise of the Warrants and surrender of the Warrant
Certificate, duly completed and signed, and payment of the Exercise Price as
aforesaid, the Company shall cause to be issued to or upon the written order of
the Warrantholder and in such name or names as the Warrantholder may designate
in the Election to Purchase, the Warrant Shares so purchased. If all of the
items referred to in the first sentence of the preceding paragraph are received
by the Company at or prior to 1:00 p.m., Delaware time, on a Business Day, the
exercise of the Warrants to which such items relate will be effective on such
Business Day. If all of such items are received after 1:00 p.m., Delaware time,
on a Business Day, the exercise of the Warrants to which such items relate will
be effective on the next Business Day.
(c) The number and kind of Warrant Shares for which Warrants
may be exercised shall be subject to adjustment from time to time as set
forth in Article 7 hereof.
(d) The Warrants shall be exercisable as provided herein at the
election of the Warrantholder in whole or in part. In the event that the holder
of a Warrant Certificate shall exercise Warrants with respect to fewer than all
the Warrant Shares evidenced thereby, a new Warrant Certificate(s) evidencing
the remaining unexercised Warrant Shares shall be issued to such Warrantholder,
and the Company is hereby irrevocably authorized to execute and deliver the
required new Warrant Certificate(s) pursuant to provisions of Article 2 and
Article 3 of this Agreement.
(e) All Warrant Certificates surrendered upon exercise of Warrants
shall be canceled and disposed of by the Company.
SECTION 5.3 Exercise Price. The price at which each of the Series D
Warrants, Series E Warrants, Series F Warrants, Series G Warrants, Series H
Warrants, Series I Warrants and Series J Warrants shall be exercisable in
exchange for Warrant Shares shall be the price as set forth below (as such price
may be adjusted pursuant to Article 7 hereof and Section 4(c) of the Additional
Agreement) (being referred to herein as the "Exercise Price"):
(a) $5.50 per Warrant Share for Series D Warrants;
(b) $5.95 per Warrant Share for Series E Warrants;
(c) $5.98 per Warrant Share for Series F Warrants;
(d) $7.22 per Warrant Share for Series G Warrants;
(e) $6.67 per Warrant Share for Series H Warrants;
(f) $6.37 per Warrant Share for Series I Warrants; and
(g) $6.12 per Warrant Share for Series J Warrants.
SECTION 5.4 Exercise Period. The right to exercise the Series D
Warrants, Series E Warrants, Series F Warrants, Series G Warrants, Series H
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Warrants, Series I Warrants and Series J Warrants shall terminate on October 15,
2005 (the "Expiration Date"). A Warrantholder may exercise any Warrant from the
date of issuance up to and including the Expiration Date. The Company shall
record the Expiration Date of each Warrant in the Warrant Register.
SECTION 5.5 Cashless Exercise.
(a) At any time prior to the Expiration Date of any Warrants, the
Warrantholder may, at its option, exchange such Warrants, 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 5.5, by surrendering the
Warrant Certificate relating to such Warrants at the Office, accompanied by a
notice stating such Warrantholder's intent to effect such exchange, the number
of Warrant Shares to be exchanged and the date on which the Warrantholder
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 Certificate of like
tenor evidencing the balance of the Warrant Shares remaining subject to the
Warrantholder's Warrant Certificate, shall be issued as of the Exchange Date and
delivered to the Warrantholder within three days following the Exchange Date.
In connection with any Warrant Exchange, the Warrantholder'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 Warrantholder 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 per Warrant Share by (ii) the Market Price (as hereafter defined)
of a share of Common Stock.
(b) As used in this Section 5.5, 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, 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.
ARTICLE 6
RESERVATION OF WARRANT SHARES
SECTION 6.1 Reservation. The Company shall at all times keep reserved,
free from preemptive rights, out of its authorized Common Stock, or other
securities of the Company issuable upon the exercise of the Warrants, a number
of shares of Common Stock, or such other securities, sufficient to provide for
the exercise of the right of purchase represented by all outstanding and
unexpired Warrants.
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SECTION 6.2 Covenant. The Company covenants that any Warrant Shares will,
upon issuance, be validly issued and upon payment of the exercise price
therefor, fully paid and free from all taxes payable by the Company, liens,
charges and security interests (except any liens, charges or security interests
created or suffered to be created by any of the Warrantholders), and will not be
subject to any restrictions on voting or transfer thereof that are created by
the Company, except for such restrictions on transfer under the Securities Act
or applicable state securities laws.
ARTICLE 7
ADJUSTMENTS AFFECTING THE EXERCISE OF WARRANTS
SECTION 7.1 Special Definitions. For purposes of this Article 7,
the following definitions shall apply:
(a) "Additional Shares of Common Stock" shall mean all shares
of Common Stock issued (or, pursuant to Section 7.2 below, deemed to be
issued) by the Company after the Original Issue Date, other than shares
of Common Stock issued or issuable:
(i) upon conversion of shares of the Company's Class B
Preferred Stock, Class C Preferred Stock, Series D Preferred Stock or Series M
Preferred Stock outstanding on the Original Issue Date;
(ii) upon the exercise of Warrants issued under the
Securities Purchase Agreement;
(iii) as a dividend or distribution on the Company's
Class B Preferred Stock, Class C Preferred Stock, Series D Preferred Stock,
Series M Preferred Stock or Warrants;
(iv) in connection with an acquisition or other transaction by
the Company, in either case approved by the Lender, unless the Company agrees to
include such issuance in the definition of Additional Shares of Common Stock in
connection with obtaining the approval of the Lender to such acquisition or
other transaction;
(v) by reason of a dividend, stock split, split-up or other
distribution on shares of Common Stock excluded from the definition of
Additional Shares of Common Stock by the foregoing clauses (i), (ii), (iii), and
(iv) or this clause (v); or
(vi) upon the exercise of options excluded from the
definition of "Option" in Section 7.1(c).
(b) "Convertible Securities" shall mean any evidences of
indebtedness, shares or other securities directly or indirectly convertible into
or exchangeable for Common Stock.
(c) "Option" shall mean rights, options or warrants to subscribe
for, purchase or otherwise acquire Common Stock or Convertible Securities,
excluding (i) options granted to employees or issued to consultants of the
Company or warrants which, in each such case, are outstanding as of the date of
this Agreement, (ii) any Warrants issued under this Agreement or as a direct
result of the issuance of Series M Preferred Stock pursuant to the Securities
Purchase Agreement, (iii) options granted to employees or consultants pursuant
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to stock option plans adopted by the Board of Directors and approved by the
Compensation Committee of the Board of Directors and by the Lender after the
date hereof, (iv) options granted to employees, directors or consultants
pursuant to the Company's Director Stock Option Plan, Employee Qualified Stock
Purchase Plan, 1995 Director Stock Option Plan, 1995 Employee Stock Option Plan
and 1997 Recruitment Stock Option Plan, previously approved by the Lender or (v)
options issued pursuant to the Series N Rights Offering (the "Rights Offering").
(d) "Original Issue Date" shall mean the date on which a Warrant was
first issued.
SECTION 7.2 Issue of Securities Deemed Issue of Additional Shares
of Common Stock. If the Company at any time or from time to time after
the Original Issue Date shall issue any Options or Convertible Securities
or shall fix a record date for the determination of holders of any class
of securities entitled to receive any such Options or Convertible
Securities, then the maximum number of shares of Common Stock (as set
forth in the instrument relating thereto without regard to any provision
contained therein for a subsequent adjustment of such number) issuable
upon the exercise of such Options or, in the case of Convertible Securities
and Options therefor, the conversion or exchange of such Convertible
Securities and the exercise of such Options therefor, shall be deemed to be
Additional Shares of Common Stock issued as of the time of such issuance or, in
case such a record date shall have been fixed, as of the close of business on
such record date, provided that Additional Shares of Common Stock shall not be
deemed to have been issued unless the consideration per share (determined
pursuant to Section 7.4 hereof) of such Additional Shares of Common Stock would
be less than the applicable Exercise Price in effect on the date of and
immediately prior to such issuance, or such record date, as the case may be, and
provided further that in any such case in which Additional Shares of Common
Stock are deemed to be issued:
(a) No further adjustment in the Exercise Price shall be made upon
the subsequent issuance of Convertible Securities or shares of Common Stock upon
the exercise of such Options or conversion or exchange of such Convertible
Securities;
(b) If such Options or Convertible Securities by their terms
provide, with the passage of time or otherwise, for any increase in the
consideration payable to the Company, or decrease in the number of shares of
Common Stock issuable, upon the exercise, conversion or exchange thereof, the
Exercise Price computed upon the original issuance thereof (or
upon the occurrence of a record date with respect thereto), and any subsequent
adjustments based thereon, shall, upon any such increase or decrease becoming
effective, be recomputed to reflect such increase or decrease insofar as it
affects such Options or the rights of conversion or exchange under such
Convertible Securities;
(c) No readjustment pursuant to clause (b) above shall have the
effect of increasing the Exercise Price to an amount which exceeds the Exercise
Price on the original adjustment date; and
(d) In the event of any change in the number of shares of
Common Stock issuable upon the exercise, conversion or exchange of any
Option or Convertible Security, including, but not limited to, a change
resulting from the anti-dilution provisions thereof, the Exercise Price
then in effectshall forthwith be readjusted to such Exercise Price as would have
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obtained had the adjustment which was made upon the issuance of such Option or
Convertible Security not exercised or converted prior to such change been made
upon the basis of such change, but no further adjustment shall be made for the
actual issuance of Common Stock upon the exercise or conversion of any such
Option or Convertible Security.
SECTION 7.3 Adjustment of Exercise Price Upon Issuance of Additional
Shares of Common Stock. In the event (A) the Company shall at any time after
the Original Issue Date issue Additional Shares of Common Stock (including
Additional Shares of Common Stock deemed to be issued pursuant to Section 7.2,
but excluding shares issued as a dividend or distribution as provided in Section
7.6 or upon a stock split or combination as provided in Section 7.5), without
consideration or for a consideration per share (determined pursuant to Section
7.4 hereof) less than the applicable Exercise Price in effect on the date of and
immediately prior to such issuance or (B) if at any time the "Conversion Price"
for which the Series F Convertible Preferred Stock may be converted into the
Company's Common Stock is less than the applicable Exercise Price then in
effect, then and in any such event, the Exercise Price shall be reduced to such
lower price per share at which such Additional Shares of Common Stock are being
issued or may be issued or deemed issued.
SECTION 7.4 Determination of Consideration. For purposes of this Section
7.4, the consideration received by the Company for the issuance of any
Additional Shares of Common Stock shall be computed as follows:
(a) Cash and Property. Such consideration shall:
(i) insofar as it consists of cash, be computed at the
aggregate of cash received by the Company, excluding amounts paid or
payable for accrued interest or accrued dividends;
(ii) insofar as it consists of property other than cash,
be computed at the fair market value thereof at the time of such issuance,
as determined in good faith by the Board of Directors; and
(iii) in the event Additional Shares of Common Stock are
issued together with other shares of securities or other assets of the
Company for consideration which covers both, be the proportion of such
consideration so received, computed as provided in clauses (i) and (ii)
above, as determined in good faith by the Board of Directors.
(b) Options and Convertible Securities. The consideration
per share received by the Company for Additional Shares of Common Stock
deemed to have been issued pursuant to Section 7.2, relating to Options
and Convertible Securities, shall be determined by dividing:
(i) the total amount, if any, received or receivable by
the Company as consideration for the issuance of such Options or Convertible
Securities, plus the minimum aggregate amount of additional
consideration (as set forth in the instruments relating thereto, without
regard to any provision contained therein for a subsequent adjustment of
such consideration) payable to the Company upon the exercise of such
Options or the conversion or exchange of such Convertible Securities, or
in the case of Options for Convertible Securities, the exercise of such
Options for Convertible Securities and the conversion or exchange of such
Convertible Securities, by
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(ii) the maximum number of shares of Common Stock (as set forth
in the instruments relating thereto, without regard to any provision contained
therein for a subsequent adjustment of such number) issuable upon the exercise
of such Options or the conversion or exchange of such Convertible Securities.
SECTION 7.5 Adjustment for Stock Splits and Combinations. If the Company
shall at any time or from time to time after the Original Issue Date for the
Warrants effect a subdivision of the outstanding Common Stock, the Exercise
Price of each Warrant then in effect immediately before that subdivision shall
be proportionately decreased and the number of shares of Common Stock issuable
upon exercise of such Warrant shall be proportionately increased. If the
Company shall at any time or from time to time after the Original Issue Date for
the Warrants combine the outstanding shares of Common Stock, the Exercise Price
of each Warrant then in effect immediately before the combination shall be
proportionately increased and the number of shares of Common Stock issuable upon
exercise of such Warrant shall be proportionately decreased. Any adjustment
under this Section 7.5 shall become effective at the close of business on the
date the subdivision or combination becomes effective.
SECTION 7.6 Adjustment for Certain Dividends and Distributions. In the
event the Company at any time or from time to time after the Original Issue Date
for the Warrants shall make or issue, or fix a record date for the determination
of holders of Common Stock entitled to receive, a dividend or other distribution
payable in additional shares of Common Stock, then and in each such event the
Exercise Price for the Warrants then in effect shall be decreased as of the time
of such issuance or, in the event such a record date shall have been fixed, as
of the close of business on such record date, by multiplying the Exercise Price
for the Warrants then in effect by a fraction:
(a) the numerator of which shall be the total number of shares of
Common Stock issued and outstanding immediately prior to the time of such
issuance or the close of business on such record date, and
(b) the denominator of which shall be the total number of shares
of Common Stock issued and outstanding immediately prior to the time of
such issuance or the close of business on such record date plus the number
of shares of Common Stock issuable in payment of such dividend or
distribution; provided, however, if such record date shall have been fixed
and such dividend is not fully paid or if such distribution is not fully
made on the date fixed therefor, the Exercise Price for the Warrants shall
be recomputed accordingly as of the close of business on such record date
and thereafter the Exercise Price for the Warrants shall be adjusted
pursuant to this paragraph as of the time of actual payment of such
dividends or distributions.
SECTION 7.7 Adjustments for Other Dividends and Distributions. In
the event the Company at any time or from time to time after the Original
Issue Date for the Warrants shall make or issue, or fix a record date for
the determination of holders of Common Stock entitled to receive, a dividend or
other distribution payable in securities of the Company other
than shares of Common Stock, then and in each such event provision shall
be made so that the holders of the Warrants shall receive upon exercise
thereof in addition to the number of shares of Common Stock receivable
thereupon, the amount of securities of the Company that they would have received
had their Warrants been exercised on the date of such event and had thereafter,
during the period from the date of such event to and including the conversion
date, retained such securities receivable by them as aforesaid during such
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period giving application to all adjustments called for during such period,
under this paragraph with respect to the
rights of the holders of the Warrants.
SECTION 7.8 Adjustment for Reclassification, Exchange, or Substitution.
If the Common Stock issuable upon the exercise of the Warrants shall be changed
into the same or a different number of shares of any class or classes of stock,
whether by capital reorganization, reclassification or otherwise (other than a
subdivision or combination of shares or stock dividend provided for above, or a
reorganization, merger, consolidation, or sale of assets provided for below),
then and in each such event the holder of the Warrants shall have the right
thereafter to convert each such share of Common Stock issuable upon the exercise
of the Warrants into the kind and amount of shares of stock and other securities
and property receivable upon such reorganization, reclassification, or other
change, by holders of the number of shares of Common Stock for which such
Warrants might have been exercised immediately prior to such reorganization,
reclassification, or change, all subject to further adjustment as provided
herein.
SECTION 7.9 Adjustment for Merger or Reorganization. In case of any
consolidation or merger of the Company with or into another Company, each
Warrant shall thereafter be exercisable for the kind and amount of shares of
stock or other securities or property to which a holder of the number of shares
of Common Stock of the Company deliverable upon exercise of such Warrant would
have been entitled upon such consolidation or merger; and, in such case,
appropriate adjustment (as determined in good faith by the Board of Directors)
shall be made in the application of the provisions in this Article 7 set forth
with respect to the rights and interest thereafter of the holders of the
Warrants, to the end that the provisions set forth in this Article 7 (including
provisions with respect to changes in and other adjustments of the Exercise
Price) shall thereafter be applicable, as nearly as reasonably may be, in
relation to any shares of stock or other property thereafter deliverable upon
the exercise of the Warrants.
SECTION 7.10 Adjustment of Exercise Price for Warrants. In addition to
any other adjustment to the Exercise Price provided hereunder, in the event
that, as of the time of exercise of any of the Warrants, the average
closing bid price of the Common Stock for the five trading days immediately
preceding the date of such exercise (the "Average Bid Price") is less than the
Exercise Price then in effect for the Warrants, then such Exercise Price shall
be decreased to equal the Average Bid Price; provided, however, that
notwithstanding the foregoing, if the Average Bid Price is less than $2.50, the
Exercise Price for the Warrants shall be deemed to be equal to $2.50. Any
adjustment under this Section 7.10 shall become effective immediately.
SECTION 7.11 Notice of Adjustment to Exercise Price. Whenever the
Exercise Price is required to be adjusted as provided in this Article 7,
the Company shall forthwith compute the adjusted Exercise Price and shall
prepare a certificate setting forth such adjusted Exercise Price and
showing in reasonable detail the facts upon which such adjustment is based.
Whenever the Exercise Price is adjusted, the Company shall promptly mail,
or cause to be mailed, to the Warrantholders a statement setting forth the
adjustment and the reasons for such adjustment.
SECTION 7.12 Form of Warrant Certificate. Irrespective of any
adjustments in the Exercise Price or the kind of Warrant Shares
purchasable upon the exercise of the Warrants, Warrant Certificates
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evidencing such Warrants theretofore or thereafter issued may continue to
express the same number and kind of Warrant Shares as are stated in the Warrant
Certificates initially issuable pursuant to this Agreement.
SECTION 7.13 No Impairment. Without limiting the generality of
the foregoing, the Company shall take all such action as may be necessary
or appropriate in order that the Warrant Shares to be issued upon the
exercise of the Warrants from time to time outstanding will, when issued,
be fully paid and non-assessable. In addition, without limiting the
generality of Section 6.1, the Company shall take all such action as
shall be necessary so that, after any adjustment to the Exercise Price
required hereunder, the total number of shares of Common Stock or other
capital stock of the Company then authorized by the articles of
incorporation of the Company as then in effect and available for the
purpose of issuance upon such exercise shall exceed the total number of
shares of Common Stock issuable upon the exercise of all of the outstanding
Warrants. The Company will not, by amendment of its Articles of
Incorporation or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities or any
other voluntary action, avoid or seek to avoid the observance or
performance of any of the terms to be observed or performed hereunder by
the Company, but will at all times in good faith assist in the carrying
out of all the provisions of this Section 7 and in the taking of all such
action as may be necessary or appropriate in order to protect the rights
of the Warrantholders against impairment.
ARTICLE 8
NOTICES TO WARRANTHOLDERS
SECTION 8.1 Notices to Warrantholders.
(a) Notices to holders of Warrants shall be mailed to such
holders at the addresses of such holders as they appear in the Warrant
Register. Any such notice shall be sufficiently given if sent by first-
class certified or registered mail, postage prepaid, facsimile or overnight
courier.
(b) In the event (i) of any consolidation or merger or binding
exchange of interests to which the Company is a party and for which
approval of the Lender or any holders of equity interests of the Company
is required, or of the conveyance or sale of all or substantially all of
the assets of the Company, or of any change of the Common Stock or other
securities issuable upon exercise of the Warrants (other than the Rights
Offering for which no notice shall be required); or (ii) the Company shall
make any distribution in respect of the Common Stock; or (iii) of the
voluntary or involuntary dissolution, liquidation or winding up of the
Company; then the Company shall send to each Warrantholder at least
thirty days prior to the applicable date hereinafter specified, a written
notice stating (A) the date for the determination of the holders of Common
Stock (or other securities issuable upon the exercise of the Warrants)
entitled to receive any such distribution, (B) the initial expiration
date set forth in any offer for exchange of interests, or (C) the date
on which any such consolidation, merger, exchange of interests,
conveyance, transfer, reclassification, dissolution, liquidation or winding
up is expected to become effective or consummated, and the date as of which
it is expected that holders of record of Common Stock (or other securities
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issuable upon the exercise of the Warrants) shall be entitled to exchange
such Common Stock for securities or other property, if any, deliverable
upon such reclassification, consolidation, merger, exchange of interests,
conveyance, transfer, dissolution, liquidation or winding up.
SECTION 8.2 Notices to Company. Any notice or demand authorized
by this Agreement to be given to or on the Company shall be delivered in
person or by facsimile transmission, by courier guaranteeing overnight
delivery or mailed by first-class United States certified or registered
mail, postage prepaid, to the Company as follows:
I-Link Incorporated
13751 South Wadsworth Park Drive
Suite 200
Draper, Utah 84020
Attention: John W. Edwards, President
Telecopier: 801-576-5075
with copy to:
David E. Hardy, Esq.
60 E. South Temple
Suite 2200
Salt Lake City, Utah 84111
Telecopier: (801) 364-6664
SECTION 8.3 Receipt of Notice. Any notice hereunder shall be in
writing and shall be deemed to have been duly given if personally delivered,
sent by overnight courier or sent by United States mail, or by telex or
facsimile transmission, and will be deemed received (a) if sent by
certified or registered mail, return receipt requested, when actually
received, (b) if sent by overnight courier, when actually received, (c) if
sent by telex or facsimile transmission, on the date sent provided
confirmatory notice is sent by overnight courier or by first-class mail,
postage prepaid, and (d) if delivered by hand, on the date of receipt.
ARTICLE 9
MISCELLANEOUS
SECTION 9.1 Arbitration.
(a) To the fullest extent not prohibited by law, any
controversy, claim or dispute arising out of or relating to this Agreement,
including the determination of the scope or applicability of this
Agreement to arbitrate, shall be settled by final and binding
arbitration in accordance with the rules then in effect of the American
Arbitration Association ("AAA"), as modified or supplemented under this
section, and subject to the Federal Arbitration Act, 9 U.S.C. 1-16. The
decision of the arbitrators shall be final and binding; provided, however, that
where a remedy for breach is prescribed hereunder or limitations on remedies are
prescribed, the arbitrators shall be bound by such restrictions, and judgment
upon the award rendered by the arbitrators may be entered in any court having
jurisdiction thereof.
(b) If any series of claims arising out of the same or
related transactions shall involve claims which are arbitrable under the
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preceding paragraph and claims which are not, the arbitrable claims shall first
be finally determined before suit may be instituted upon the others and the
parties will take such action as may be necessary to toll any statutes of
limitations, or defenses based upon the passage of time, that are applicable to
such non-arbitrable claims during the period in which the arbitrable claims are
being determined.
(c) In the event of any controversy, claim or dispute that
is subject to arbitration under this Section 9.1, any party thereto may
commence arbitration hereunder by delivering notice to the other party
or parties thereto. Within five business days of delivery of a list of
qualified potential arbitrators from AAA, such parties shall attempt to
agree on one arbitrator; provided that if such parties cannot agree on
one arbitrator within such time period, each party to the controversy,
claim or dispute shall within five business days thereafter appoint one
arbitrator, and the two arbitrators so appointed shall within five
business days of their appointment mutually agree upon and appoint one
additional arbitrator (or, if such arbitrators cannot agree on an
additional arbitrator, the additional arbitrator shall be appointed by
the AAA as provided under its rules); provided that persons eligible to be
selected as arbitrators shall be limited to attorneys at law who (i) are
on the AAA's Large, Complex Case Panel and (ii) have practiced law for at
least fifteen years as an attorney specializing in either general
commercial litigation or general corporate and commercial matters.
(d) The arbitration hearing shall commence no later than
thirty business days after the completion of the selection of the
arbitrators or at such other time as the parties shall reasonably agree.
Consistent with the intent of the parties hereto that the arbitration be
conducted as expeditiously as possible, the parties agree that
(i) discovery shall be limited to the production of such documents and
the taking of such depositions as the arbitrator(s) determine are
reasonably necessary to the resolution of the controversy, claim or
dispute and (ii) the arbitrator(s) shall limit the presentation of
evidence by each side in such arbitration to not more than ten full
days (or the equivalent thereof) or such shorter period as the
arbitrator(s) shall determine to be necessary in order to resolve the
controversy, claim or dispute. The arbitrator(s) shall be instructed
to render a decision within thirty calendar days of the close of the
arbitration hearing. If arbitration has not been completed within one
hundred and twenty days of the commencement of such arbitration hearing,
any party to the arbitration may initiate litigation upon ten days
written notice to the other party(ies); provided, however, that if one
party has requested the other to participate in an arbitration and the
other has failed to participate, the requesting party may initiate
litigation before the expiration of such one hundred twenty-day
period; and provided, further, that if any party to the arbitration
fails to meet any of the time limits set forth in this Section 9.1 or
set by the arbitrators in the arbitration, any other party may provide
ten days written notice of its intent to institute litigation with
respect to the controversy, claim or dispute without the need to
continue or complete the arbitration and without awaiting the expiration
of such one hundred twenty-day period. The parties hereto further agree
that if any of the rules of the AAA are contrary to or conflict with any
of the time periods provided for hereunder, or with any other aspect of
the matters set forth in this Section 9.1, that such rules shall be
modified in all respects necessary to accord with the provisions of
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this Section 9.1 (and the arbitrators shall be so instructed by the
parties).
(e) The arbitrators shall base their decision on the terms
of this Agreement and the law of the State of Delaware, regardless of the
law that might be applicable under conflicts of law principles, and shall
render their decision in writing and include in such decision a statement
of the findings of fact and conclusions of law upon which the decision is
based. Each party agrees to cooperate fully with the arbitrator(s) to
resolve any controversy, claim or dispute. The arbitrator(s) shall not be
empowered to award punitive damages or damages in excess of actual damages.
The venue for all arbitration proceedings shall be Washington, D.C.
SECTION 9.2 Payment of Taxes. The Company covenants and agrees that
it will pay when due and payable all documentary, stamp and other taxes
attributable to the issuance or delivery of the Warrant Certificates or
of the Warrant Shares purchasable upon the exercise of Warrants; provided,
however, the Company shall not be required to pay any tax or taxes that
may be payable in respect of any transfer involving the issue of any
Warrant Certificate(s) or any certificate(s) for Warrant Shares in a name
other than that of the Warrantholder of such exercised Warrant
Certificate(s).
SECTION 9.3 Amendment.
(a) The Company may modify this Agreement and the terms of
the Warrants only with the consent of the Warrantholders representing
at least a majority of the Warrant Shares for the purpose of adding any
provision to or changing in any manner or eliminating any of the
provisions of this Agreement or modifying in any manner the rights of
the holders of the outstanding Warrants; provided, however, that no
such modification that (i) materially and adversely affects the exercise
rights of the holders of the Warrants, or (ii) reduces the percentage
required for modification, may be made without the consent of the holder
of all outstanding Warrants.
(b) Any such modification or amendment will be conclusive
and binding on all present and future holders of Warrant Certificates
whether or not they have consented to such modification or amendment or
waiver and whether or not notation of such modification or amendment is
made upon such Warrant Certificates. Any instrument given by or on behalf
of any holder of a Warrant Certificate in connection with any consent to
any modification or amendment will be conclusive and binding on all
subsequent holders of such Warrant Certificate.
SECTION 9.4 Termination. This Agreement shall terminate on or
upon (a) the repurchase by the Company of all Warrants, (b) the fifteenth
day following the date on which all of the Warrant Shares have been issued
upon the exercise of all Warrants issued pursuant hereto, or (c) upon
expiration of the Exercise Period.
SECTION 9.5 Reports to Warrantholders. The Company will cause to
be delivered, by first-class mail, postage prepaid, facsimile or overnight
courier, to each Warrantholder at such Warrantholder's address appearing
on the Warrant Register, a copy of any reports delivered by the Company to
any of the holders of Series M Preferred Stock or to holders of the Common
Stock.
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SECTION 9.6 GOVERNING LAW. THE LAWS OF THE STATE OF DELAWARE
SHALL GOVERN THIS AGREEMENT AND THE WARRANT CERTIFICATES WITHOUT
REGARD TO PRINCIPLES OF CONFLICTS OF LAW.
SECTION 9.7 Benefits of this Agreement. Nothing in this Agreement
shall be construed to give to any Person other than the Company, the
Warrantholders and the holders of Warrant Shares any legal or equitable
right, remedy or claim under this Agreement; this Agreement shall be for
the sole and exclusive benefit of the Company, the Warrantholders and the
holders of Warrant Shares.
SECTION 9.8 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 all such counterparts shall
together constitute but one and the same instrument.
SECTION 9.9 Severability of Provisions. Any provision of this
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 hereof
or affecting the validity or enforceability of such provision in any other
jurisdiction.
SECTION 9.10 Headings. The headings of the sections of this
Agreement are inserted for convenience only and shall not constitute a
part of this Agreement.
SECTION 9.11 Access to Company Records. So long as Warrants
remain outstanding, the Lender shall be entitled to review the financial
and corporate books and records of the Company and to meet with the
executive officers and independent accountants of the Company for
purposes reasonably related to the Lender's ownership of the Warrants,
which review and/or meetings shall take place at reasonable times during
the normal business hours of the Company and in such a manner as to not
unduly interfere with the conduct of the Company's business.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties hereto have caused this Warrant
Agreement to be duly executed, as of the date first above written.
I-LINK INCORPORATED
By: /s John Edwards
John Edwards, President
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
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EXHIBIT A
I-Link Incorporated
Common Stock Purchase Warrant
Number ____
Series [D] [E] [F] [G] [H] [I] [J] Warrant Certificate Evidencing Right to
Purchase
[1,734,000] [953,500] [1,229,000] [1,083,500]
[609,000] [475,020] [655,980] Shares of Common Stock
This is to certify that WINTER HARBOR, L.L.C., a Delaware limited
liability company, or assigns, is entitled to purchase at any time or from
time to time up to the above-referenced number of shares of Common Stock
("Common Stock"), of I-Link Incorporated, a Florida corporation (the
"Company"), for the Exercise Price for the Series [D] [E] [F] [G] [H] [I] [J]
Warrants specified in the Warrant Agreement, dated as of January 15, 1999, among
the Company and Winter Harbor, L.L.C. (the "Warrant Agreement"), pursuant to
which this Warrant Certificate is issued. All
rights of the holder of this Warrant Certificate are subject to the terms
and provisions of the Warrant Agreement, copies of which are available for
inspection the Company's office located at 13751 South Wadsworth Park Drive,
Suite 200, Draper, Utah 84020 (the "Office"). The Expiration Date (as defined
in the Warrant Agreement) of the right to purchase Common Stock pursuant to this
Certificate is October 15, 2005.
NEITHER THE WARRANTS REPRESENTED BY THIS CERTIFICATE NOR THE SHARES
OF COMMON STOCK THAT MAY BE PURCHASED UPON EXERCISE HEREOF HAVE BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER ANY APPLICABLE STATE LAW.
SUCH WARRANTS AND SHARES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR
PLEDGED WITHOUT (1) REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
AND ANY APPLICABLE STATE LAW, OR (2) AN EXEMPTION FROM SUCH REGISTRATION IS
AVAILABLE.
Subject to the provisions of the Act, applicable state laws and such
Warrant Agreement, this Warrant Certificate and all rights hereunder are
transferable, in whole or in part, at the Office by the holder hereof in person
or by a duly authorized attorney, upon surrender of this Warrant Certificate,
together with the assignment hereof duly endorsed. Until transfer of this
Warrant Certificate on the books of the Company, the Company may treat the
registered holder hereof as the owner hereof for all purposes.
IN WITNESS WHEREOF, the Company has caused this Warrant Certificate
to be executed on January 15, 1999, in Draper, Utah by its proper corporate
officers thereunto duly authorized.
I-LINK INCORPORATED,
a Florida corporation
By: _________________________
John Edwards, President
Attest:_______________________
Name:_________________________
Title:________________________
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EXHIBIT B
ELECTION TO PURCHASE
(To be executed by the registered holder if
such holder desires to exercise any Warrant Certificate)
The undersigned, the registered holder of the attached Warrant
Certificate, hereby irrevocably elects to exercise Warrants represented by
such Warrant Certificate and acquire an aggregate of ______________ shares
of Common Stock of I-Link Incorporated, a Florida corporation, and herewith
tenders payment for such Common Stock in the amount of $__________ (by
certified check or official bank check) in accordance with the terms hereof.
The undersigned requests that the aforementioned Common Stock be registered
in the name of _______________, whose address is ________________________
_________________________.
Dated:___________________
Name of registered holder of Warrant Certificate:
_________________________________________________________________
(please print)
Address of registered holder:____________________________________
Signature:_____________________________
(Note: the signature to the foregoing Election must correspond to the
name as written upon the face of the Warrant Certificate in every
particular, without alteration or any change whatsoever.)
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