Exhibit 10.46
SERIES X, X, X, X, X, X AND J WARRANT AGREEMENT
by and between
I-LINK INCORPORATED
and
WINTER HARBOR, L.L.C.
Dated as of January 15, 1999
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 00000 Xxxxx Xxxxxxxxx Xxxx Xxxxx, Xxxxx 000, Xxxxxx, Xxxx 00000 (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
11
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
12
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
00000 Xxxxx Xxxxxxxxx Xxxx Xxxxx
Xxxxx 000
Xxxxxx, Xxxx 00000
Attention: Xxxx X. Xxxxxxx, President
Telecopier: 000-000-0000
with copy to:
Xxxxx X. Xxxxx, Esq.
00 X. Xxxxx Xxxxxx
Xxxxx 0000
Xxxx Xxxx Xxxx, Xxxx 00000
Telecopier: (000) 000-0000
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
13
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
14
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.
15
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]
16
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 Xxxx Xxxxxxx
Xxxx Xxxxxxx, 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 Xxxxx X. Xxxxx Xx.
Xxxxx X. Xxxxx Xx., Secretary
17
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 00000 Xxxxx Xxxxxxxxx Xxxx Xxxxx,
Xxxxx 000, Xxxxxx, Xxxx 00000 (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: _________________________
Xxxx Xxxxxxx, 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.)
19
