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): April 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 April 15, 1999 I-Link Incorporated (the "Company") and Winter Harbor,
L.L.C. ("Winter Harbor") made further amendments to the January 1999
financing agreements between the parties. Under the terms of a Second
Amendment to Loan Agreement ("Second Amendment") the parties amended certain
target dates by which the Company will be required to effect a rights
offering to its existing securityholders. In addition, Winter Harbor agreed
not to make demand on an aggregate of $7,768,000 in 1998 lendings made to the
Company before April 15, 2000.
Pursuant to a Term Sheet of even date, Winter Harbor agreed to make a
new bridge loan to the Company in the amount of $4,000,000 (the "New Loan")
substantially on the same terms as loans made under the January 1999 Loan
Agreement, with the following exceptions: (i) no warrants were issued upon
the origination of the New Loan, and (ii) the outstanding balance of the New
Loan plus any accrued and unpaid interest shall be due and payable on
September 30, 1999; provided, however, that the Company may elect to extend the
due date of the New Loan past September 30, 1999 to April 15, 2000. As
partial consideration for the New Loan and the Second Amendment, the Company
has agreed to hold a meeting of its stockholders at which it would seek
stockholder approval of a modification to the conversion terms of the Series
N Preferred Stock, and if such modification is approved, to amend its
Articles of Incorporation accordingly. The Company is in the process of
preparing preliminary proxy materials for an annual meeting of shareholders
at which such items will be addressed. In the event that (a) the
stockholders do not approve the proposed modification and (b) the Company
elects to extend the due date of the New Loan past September 30, 1999, then
the Company shall be obligated to issue to Winter Harbor warrants to purchase
4,000,000 shares of Common Stock which shall be exercisable, through June 15,
2006 for $2.78 per share, which price is adjustable.
To date, the Company has drawn approximately $1,400,000 under the New Loan.
Item 7. Financial Statements and Exhibits
(c) Exhibits
10.47 Second Amendment to Loan Agreement dated April 15, 1999, by and between
the Company and Winter Harbor.
10.48 Term Sheet dated dated April 15, 1999 by and between the Company and
Winter Harbor.
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: April 29, 1999 By: /s John W. Edwards
John W. Edwards, President and
Chief Executive Officer
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SECOND AMENDMENT TO LOAN AGREEMENT
THIS SECOND AMENDMENT TO LOAN AGREEMENT (this "Amendment") is made and
entered into as of April 15, 1999, by and between I-LINK INCORPORATED, a
Florida corporation (the "Borrower"), and WINTER HARBOR, LLC, a Delaware
limited liability company (the "Lender").
RECITALS:
A. The Borrower and Lender entered into a Loan Agreement, dated as
of January 15, 1999, as amend by the First Amendment thereto dated as of
March 4, 1999 (the "Original Agreement"), pursuant to which Lender agreed
to make available to the Borrower up to $8,000,000 (the "Loan").
B. The Borrower has requested and the Lender has agreed to amend
certain of the terms of the Original Agreement, as amended hereby. 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 Lender, 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 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 June 30,
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 August 6, 1999
and that business day which is the first business day following
the 35th calendar day from the Mailing Date (the "Consummation
Date"), then Borrower may cause the outstanding principal amount
of the Loan, together with all accrued interest to be exchanged
for 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.
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(b) Section 7.2 of the Original Agreement shall be amended in its
entirety to read as follows:
Section 7.2 Effect of Event of Default.
(a) With respect to the Loan, should any Event of Default
occur on or after the October 31, 1999, Lender may at its option
by written notice to Borrower declare the unpaid principal amount
of the Note representing the Loan, together with the applicable
unpaid interest thereon, immediately due and payable, whereupon
the Loan 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.
4. Representations and Warranties. Except as otherwise
disclosed to the Lender in writing, 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.
6. Prior Loans. The Prior Loans are represented by a number of
demand promissory notes. The Lender hereby agrees that it will not make a
demand on the Prior Loans prior April 15, 2000.
7. 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.
8. 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.
9. 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.
10. 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.
11. 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, LLC
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
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Term Sheet
$4,000,000 New Loan
April 15, 1999
This Term Sheet, dated April 15, 1999, represents the basic terms agreed
to between I-Link Incorporated ("I-Link") and Winter Harbor, LLC ("Winter
Harbor"), relative to the agreement of Winter Harbor to make a new loan to I-
Link of up to Four Million Dollars ($4,000,000). It is the intent of the
parties that this Term Sheet be binding upon the parties.
In consideration of the mutual covenants and promises contained herein,
and for other good and valuable consideration, the sufficiency and receipt of
which are hereby acknowledged, the parties agree as follows:
Winter Harbor agrees to lend to I-Link and I-Link agrees to borrow the
additional sum of $4,000,000 (the "New Loan") upon the terms and conditions
set forth herein. The terms and conditions of the New Loan shall be
substantially identical to the terms and conditions set forth in the Loan
Agreement between the parties, dated as of January 15, 1999, as amended by
the First Amendment thereto dated as of March 4, 1999, and the Second
Amendment dated as of April 15, 1999 (the "Second Amendment") (collectively
referred to as the "January 15, 1999 Loan Agreement"), with the exception of
the following provisions. Capitalized terms used herein and not defined
herein shall have the meaning set forth in the January 15, 1999 Loan
Agreement.
1. The outstanding principal balance of the New Loan plus any accrued and
unpaid interest thereon shall be due and payable on September 30,
1999.
2. No additional warrants shall be issued to Winter Harbor in
consideration of the New Loan, except as provided in Paragraph 4
below.
3. As partial consideration for (i) the New Loans and (ii) the Second
Amendment, I-Link has agreed to hold a meeting of the shareholders
(whether annual or special) as soon as practicable at which I-Link
shall seek shareholder approval of a modification to the conversion
terms of the Series N Stock in substantially the same form as Exhibit
B attached hereto, and, if approved by the shareholders, shall so
amend the designation of preferences of the Series N Stock..
4. I-Link shall have the right at its election to extend the due date of
the New Loan past September 30, 1999, to April 15, 2000; provided,
however, that in the event I-Link's shareholders fail to approve the
modification to the conversion price of the Series N Preferred Stock
as provided in Paragraph 3 above, as additional consideration for such
extension I-Link shall be required to issue to Winter Harbor one
warrant for each $1 of principal outstanding on the New Loan as of the
date of such extension (the "Extension Warrants"), which Extension
Warrants shall be issued on the same terms and conditions as the
Series K warrants issued in connection with the January 15, 1999 Loan
Agreement.
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5. I-Link may cause the New Loan to be exchanged for Series N Stock upon
consummation of the Rights Offering in accordance with the provisions
of Section 1.6(b)(iii) of the January 15, 1999 Loan Agreement.
6. With respect to the New Loan, should any Event of Default (as
defined in the January 15, 1999 Loan Agreement) occur on or after
the due date (or if extended, the extended due date), Winter Harbor
may at its option by written notice to I-Link declare the entire
unpaid principal amount of the note or notes evidencing the New
Loan (collectively the "Note"), together with all unpaid interest
and all other amounts payable in connection therewith and every
other obligation of I-Link to Winter Harbor, 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 I-Link, anything contained herein or in the
Note or in such other note or evidence of indebtedness to the
contrary notwithstanding. Winter Harbor shall not have this right
prior to the due date, or if extended, prior to the extended due
date.
7. The above terms and conditions shall take precedence over any
conflicting terms and conditions in January 15, 1999 Loan Agreement
with respect to the New Loan.
8. The parties shall execute a written loan agreement consistent with the
above provisions (the "New Loan Agreement"), and such other ancillary
instruments as shall be required to carry out the purposes of this
Term Sheet.
DATED April 15, 1999. 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
The undersigned, First Media, L.P., the sole member of Winter Harbor,
L.L.C. (the "Lender"), hereby consents to the terms and provisions of this
Term Sheet and unconditionally promises to make available to Winter Harbor
sufficient funds in order for Winter Harbor to lend the entire New Loan as
provided hereunder.
FIRST MEDIA, L.P.
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
FORM OF PROMISSORY NOTE
$4,000,000 April 16, 1999
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
September 30, 1999 (or April 15, 2000 if extended by Payee as provided in
Section ___ of the [New Loan Agreement]) (the "Maturity Date"), the
principal sum of $4,000,000, or if less, the outstanding principal balance
of the loans ("Loans") made by Payee to Maker in connection with this Note
pursuant to the [New Loan Agreement], 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 [New Loan
Agreement].
The Payee may, and is hereby authorized by the Borrower to, set
forth on the grid attached hereto, or in other comparable records
maintained by it, the amount of each Loan, all payments and prepayments of
principal and interest received, the current outstanding principal balance,
and other appropriate information. The aggregate unpaid amount of any Loan
set forth in any records maintained by the Payee with respect to this Note
shall be presumptive evidence of the principal amount owing and unpaid on
this Note. Failure of the Payee to record the principal amount of any Loan
on the grid attached hereto shall not limit or otherwise affect the
obligation of the Borrower hereunder to repay the principal amount of such
Loan and all interest accruing thereon.
1. Interest. The unpaid principal balance of this Note shall bear
interest at the rates determined in accordance with the provisions of [the
New Loan Agreement] 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 ___ 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
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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.
7. 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.
8. 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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PAYMENT INFORMATION
AMOUNT AMOUNT UNPAID OFFICER'S
DATE BORROWED PAID BALANCE INITIALS
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Exhibit B
Conversion Price. The Conversion Price at which shares of Common Stock shall
be deliverable upon conversion of Series N Preferred Stock without the
payment of additional consideration by the holder thereof shall initially be
$2.78 (the "Conversion Price"). The Conversion Price shall reset ("Reset") to
the lowest of, but not lower than $1.25, (i) 110% of the average trading
price for any 20 day period subsequent to issuance, (ii) the price at which
common stock or common stock equivalent is issued (whether by conversion,
exercise or otherwise and whether any such security is outstanding on the
date hereof), (iii) the exercise price or conversion rate of any new options,
warrants, preferred stock or other convertible security and (iv) if at any
the "Conversion Price" set forth in Section III(j)(5)(c) for which the Series
F Convertible Preferred Stock may be converted into the Corporation's Common
Stock is less than the applicable Conversion Price for the Series N Preferred
Stock then in effect, then and in any such event, the Conversion Price for
the Series N Preferred Stock shall be reduced to equal the Conversion Price
of the Series F Convertible Preferred Stock. Such Conversion Price, and the
rate at which shares of Series N Preferred Stock may be converted into shares
of Common Stock, shall be subject to further adjustment as provided in this
Section III(k)(4).
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