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Exhibit 1.3
SECURITIES SUPPORT AGREEMENT
SECURITIES SUPPORT AGREEMENT, dated as of March __, 2001 (this
"Agreement"), by and among I-LINK INCORPORATED, a Florida corporation (the
"Company"), and COUNSEL COMMUNICATIONS LLC ("Counsel" or the "Purchaser").
WITNESSETH:
WHEREAS, immediately prior to the execution of this Agreement, the
Company had issued and outstanding the equity securities and other convertible
instruments described in Exhibit A hereto, which constituted all of the issued
and outstanding shares of capital stock of the Company on a fully diluted basis;
and
WHEREAS, Counsel proposes to purchase all of the securities and other
convertible instruments owned by Winter Harbor, LLC ("Holder") as reflected on
Exhibit A (the "Owned Securities") pursuant to a Securities Purchase Agreement
of even date herewith (the "Purchase Agreement"); and
WHEREAS, the Company has entered into this Agreement for the purpose of
providing certain representations, warranties, covenants and other commitments
to Purchaser as an inducement to Purchaser entering in to the Purchase
Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements hereinafter contained, the parties hereby agree as
follows:
ARTICLE VIII. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to the Purchaser that:
8.1 Organization and Good Standing. The Company is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Florida and has all requisite corporate power and authority to own,
lease and operate its properties and to carry on its business as currently
conducted.
8.2 Authorization. The Company has all requisite power, authority
and legal capacity to execute and deliver this Agreement and each other
agreement, document, instrument or certificate contemplated by this Agreement or
to be executed by the Company in connection with the consummation of the
transactions contemplated by this Agreement (this Agreement, together with all
such other agreements, documents, instruments and certificates required to be
executed by the Company being referred to herein, collectively, as the "Company
Documents"), and to consummate the transactions contemplated hereby and thereby.
The execution, delivery and performance of this Agreement by the Company has
been duly authorized by the Board of Directors of the Company, and no further
corporate action on the part of the Company or its shareholders is necessary to
authorize this Agreement and the performance of the transactions contemplated
hereby. This Agreement has been, and each of the other Company Documents will be
at or prior to Closing, duly and validly executed and delivered by the Company
and (assuming the due authorization, execution and delivery by the other parties
hereto and thereto) this Agreement constitutes, and each of the other Company
Documents when so executed and delivered will constitute, legal, valid and
binding obligations of the Company, enforceable against the Company in
accordance with their respective terms, subject to applicable bankruptcy,
insolvency, reorganization, moratorium and similar laws affecting creditors'
rights and remedies generally, and subject,
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as to enforceability, to general principles of equity, including principles of
commercial reasonableness, good faith and fair dealing (regardless of whether
enforcement is sought in a proceeding at law or in equity).
8.3 Capitalization. (a) As of the date hereof:
(i) all of the issued and outstanding shares of
capital stock of the Company were duly authorized for issuance
and are validly issued, fully paid and non-assessable;
(ii) Exhibit A fully and accurately describes the
capital structure of the Company and, except as set forth on
Exhibit A, there are no outstanding securities of the Company
convertible into or evidencing the right to purchase or
subscribe for any shares of capital stock of the Company,
there are no outstanding or authorized options, warrants,
calls, subscription rights, commitments or other agreements of
any character requiring, and there are no securities
outstanding which upon conversion or exchange would require,
the issuance, sale or transfer of any additional shares of
capital stock of the Company or other equity securities of the
Company or other securities convertible into, exchangeable for
or evidencing the right to subscribe for or purchase shares of
capital stock of the Company or other equity securities of the
Company, or any stock appreciation rights, phantom stock or
similar equity equivalent rights issued by or binding upon the
Company ("Equity Equivalents"); and
(iii) there are no voting trusts or other voting
agreements with respect to the capital stock of the Company or
other ownership interests of the Company or any agreement
relating to the issuance, sale, redemption, transfer or other
disposition of any such interests of the Company to which the
Company is a party, or of which the Company has knowledge.
Except as disclosed in the Purchase Agreement, the shares of
Common Stock issuable upon conversion of the Owned Securities, when issued upon
conversion of the Owned Securities (i) will be validly issued, fully paid and
nonassessable, (ii) will be free and clear of all Liens, and (iii) will be
issued in compliance with all applicable U.S. federal and state securities laws.
8.4 Corporate Records; Conflicts; Consents. Except as disclosed in
the Purchase Agreement, the execution and delivery by the Company of this
Agreement and the other Company Documents, the consummation of the transactions
contemplated hereby or thereby, or compliance by the Company with any of the
provisions hereof or thereof will not (i) conflict with, or result in the breach
of, any provision of the Articles of Incorporation or Bylaws of the Company;
(ii) conflict with, violate, result in the breach or termination of, or
constitute a default under any note, bond, mortgage, indenture, license,
agreement or other instrument or obligation to which the Company is a party or
by which the Company or its properties or assets are bound; (iii) violate any
statute, rule, regulation, order or decree of any Governmental Body by which the
Company is bound; or (iv) result in the creation of any Lien (except as
contemplated herein) upon the properties or assets of the Company except, in
case of clauses (ii), (iii) and (iv), for such violations, breaches or defaults
as would not, individually or in the aggregate, have a Material Adverse Effect.
No consent, waiver, approval, order, permit or authorization of, or declaration
or filing with, or notification to, any Person, including without limitation any
Governmental Body, is required on the part of the Company in connection with the
execution, delivery and performance of this Agreement or the other Company
Documents, or the compliance by the Company with any of the provisions hereof or
thereof.
8.5 Reports and Financial Statements.
(a) Since January 1, 1996, the Company has filed with the
SEC all forms, statements, reports and documents (including all exhibits,
post-effective amendments and supplements thereto) required to be filed by it
under each of the Securities Act, the Exchange Act and the respective rules and
regulations promulgated thereunder, all of which, as amended (if applicable),
complied in all material respects, when filed
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with all applicable requirements of the appropriate act and the rules and
regulations thereunder. The Company has previously delivered or made available
to Purchaser copies (including all exhibits, post-effective amendments and
supplements thereto) of its (i) Annual Reports on Form 10-K for the years ended
December 31, 1999, December 31, 1998 and December 31, 1997, as filed with the
SEC; (ii) definitive proxy and information statements relating to all meetings
of its stockholders (whether annual or special) from December 31, 1997 until the
date hereof; and (iii) all other reports, including quarterly reports, and
registration statements filed by the Company with the SEC since December 31,
1997 (other than registration statements filed on Form S-8) (the documents
referred to in clauses (i), (ii) and (iii) being referred to as the "Company SEC
Reports"). As of their respective dates (or to the extent amended or superseded
by a subsequent filing, with respect to the information in such subsequent
filing, or as of the date of the subsequent filing), the Company SEC Reports did
not or will not (as the case may be) contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements therein, in the light of the circumstances under which
they were made, not misleading. The audited consolidated financial statements of
the Company included in the Company's Annual Report on Form 10-K for the years
ended December 31, 1999, December 31, 1998 and December 31, 1997 and the
unaudited consolidated interim financial statements included in the Company's
Quarterly Report on Form 10-Q for the quarter ending September 30, 2000
(collectively, the "Company Financial Statements") have been prepared in
accordance with United States generally accepted accounting principles ("GAAP")
applied on a basis consistent with prior periods and fairly presented the
consolidated financial position of the Company and the Company Subsidiaries as
of the dates thereof and the related consolidated statement of operations, cash
flows and stockholders' equity included in the Company SEC Reports fairly
presented the consolidated results of operations of the Company and the Company
Subsidiaries for the respective periods then ended (subject, in the case of
unaudited interim statements to normal year-end adjustments and the absence of
certain footnote disclosures).
(b) The audited consolidated financial statements of the
Company included in the Company's Annual Report on Form 10-K for the years ended
December 31, 1999, December 31, 1998 and December 31, 1997 and the unaudited
consolidated interim financial statements included in the Company's Quarterly
Report on Form 10-Q for the quarter ending September 30, 2000 (collectively, the
"Company Financial Statements") have been prepared in accordance with the United
States generally accepted accounting principles ("GAAP") applied on a basis
consistent with prior periods and fairly presented the consolidated financial
position of the Company as of the dates thereof and the related consolidated
statement of operations, cash flows and stockholders' equity included in the
Company SEC Reports fairly presented the consolidated results of operations of
the Company for the respective periods then ended (subject, in the case of
unaudited interim statements to normal year-end adjustments and the absence of
certain footnote disclosures).
(c) As of the date of this Agreement, except as set forth
in the Company's Annual Report for the year ended December 31, 1999 or in any
other Company SEC Report filed since that Annual Report and prior to the date of
this Agreement, neither the Company nor any of its subsidiaries is a party to or
bound by (i) any "material contract" (as such term is defined in Item 601(b)(10)
of Regulation S-K of the SEC) or (ii) any non-competition agreement or any other
agreement or arrangement that limits the Company or any of its subsidiaries or
any of their respective affiliates, or that would, after the date hereof
similarly limit the Company or the Purchaser or any successor thereto, from
engaging or competing in any line of business or in any geographic area after
giving effect to the transactions contemplated hereby.
(d) The audited consolidated financial statements of the
Company for the year ended December 31, 2000 will not differ in any material
respect from the unaudited consolidated financial statements of the Company for
the year ended December 31, 2000 attached hereto as Exhibit 1.5.
8.6 Absence of Undisclosed Liabilities; Affiliate Transactions.
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(a) Except for matters reflected or reserved against in
the balance sheet for the period ended September 30, 2000 included in the
Company Financial Statements, neither the Company nor any of the Company
Subsidiaries had at such date or has incurred since that date any liabilities,
obligations (whether absolute, accrued, contingent or otherwise) or
contingencies of any nature, except (i) liabilities, obligations or
contingencies (A) which are accrued or reserved against in the Company Financial
Statements or reflected in the notes thereto or (B) which were incurred after
September 30, 2000 in the ordinary course of business and consistent with past
practices; or (ii) liabilities, obligations or contingencies which are of a
nature not required to be reflected in the consolidated financial statements of
the Company and the Company Subsidiaries prepared in accordance with GAAP
consistently applied and which were incurred in the ordinary course of business.
(b) Except as specifically disclosed in the Company SEC
Reports filed prior to the date of this Agreement, there are no other
transactions, agreements, arrangements or understandings between the Company or
the Company Subsidiaries, on the one hand, and the Company's affiliates (other
than wholly-owned subsidiaries of the Company) or other Persons, on the other
hand, that would be required to be disclosed under Item 404 of Regulation S-K
promulgated under the Securities Act.
8.7 Intellectual Property. The Company owns, or has the right to
use (or believes, after due inquiry, that it can obtain the right to use on
reasonable commercial terms), all patents, patent applications, trademarks,
service names, trade names, copyrights, licenses, trade secrets or other
proprietary rights necessary to conduct its business as now being conducted and
as proposed to be conducted to the Company's knowledge without any conflict or
infringement of the rights of others and the Company has not received a notice
that it is infringing upon or otherwise acting adversely to the right or claimed
right of any person under or with respect to any of the foregoing, and to the
Company's knowledge there is no basis for any such claim. The Company has
disclosed to Counsel a complete list of patents and pending patent applications
of the Company. The Company is not aware of any violation by a third party of
any of the Company's patents, trademarks, service marks, trade names,
copyrights, trade secrets or other proprietary rights. The Company is not aware
that any of its employees is obligated under any contract (including licenses,
covenants or commitments of any nature) or other agreement, or subject opt any
judgment, decree or order of any court or administrative agency, that would
interfere with their duties to the Company or that would conflict with the
Company's business as now being conducted and as proposed to be conducted.
Neither the execution nor delivery of this Agreement or any of the Related
Agreements, nor the conduct of the Company's business will, to the Company's
knowledge, conflict with or result in a breach of the terms, conditions or
provisions of, or constitute a default under, any contract, covenant or
instrument under which any employee is now obligated. The Company does not
believe it is or will be necessary to utilize any inventions of any of its
employees (or people it currently intends to hire) made prior to or outside the
scope of their employment with the Company.
8.8 Anti-takeover Laws. Prior to the date hereof, the Board of
Directors of the Company took all action necessary to exempt under or make not
subject to any takeover or other law that purports to limit or restrict business
combinations and transactions of the type described herein: (i) the execution of
this Agreement, the Purchase Agreement, and the other related Agreements; and
(ii) the transactions contemplated hereby and thereby.
8.9 Litigation. Except as disclosed in the Warrant Repurchase
Agreement and the Stock Purchase Agreement, both of even date herewith, and the
Disclosure Schedule, there are no Legal Proceedings pending
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or, to the knowledge of the Company, threatened that are reasonably likely to
prohibit or restrain the ability of the Company to enter into this Agreement or
consummate the transactions contemplated hereby.
8.10 No Misrepresentation. Neither this Agreement (including the
Exhibits hereto), the related Agreements executed as of the date hereof nor (as
of the date hereof) any Company SEC Report contains any untrue statement of a
material fact nor omits a material fact necessary in order to make the
statements contained herein or therein not misleading.
ARTICLE IX. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
Purchaser hereby represents and warrants to the Company that:
9.1 Authorization of Agreement. Purchaser has full power and
authority to execute and deliver this Agreement and each other agreement,
document, instrument or certificate contemplated by this Agreement or to be
executed by Purchaser in connection with the consummation of the transactions
contemplated hereby and thereby (this Agreement, together with such other
agreements, documents, instruments and certificates being hereinafter referred
to, collectively, as the "Purchaser Documents"), and to consummate the
transactions contemplated hereby and thereby. The execution, delivery and
performance by the Purchaser of this Agreement and each other Purchaser Document
have been duly authorized by all necessary action on behalf of the Purchaser.
This Agreement has been, and each other Purchaser Documents will be at or prior
to the Closing, duly executed and delivered by the Purchaser and (assuming the
due authorization, execution and delivery by the other parties hereto and
thereto) this Agreement constitutes, and each Purchaser Document when so
executed and delivered will constitute, legal, valid and binding obligations of
the Purchaser, enforceable against the Purchasers in accordance with their
respective terms, subject to applicable bankruptcy, insolvency, reorganization,
moratorium and similar laws affecting creditors' rights and remedies generally,
and subject, as to enforceability, to general principles of equity, including
principles of commercial reasonableness, good faith and fair dealing (regardless
of whether enforcement is sought in a proceeding at law or in equity).
9.2 Conflicts; Consents of Third Parties. No consent, waiver,
approval, Order, Permit or authorization of, or declaration or filing with, or
notification to, any Person or Governmental Body is required on the part of the
Purchaser in connection with the execution and delivery of this Agreement or the
Purchaser Documents or the compliance by Purchasers with any of the provisions
hereof or thereof.
9.3 Litigation. There are no Legal Proceedings pending or, to the
knowledge of the Purchaser, threatened that are reasonably likely to prohibit or
restrain the ability of the Purchaser to enter into this Agreement or consummate
the transactions contemplated hereby.
ARTICLE X. COVENANTS
10.1 Covenants. Counsel and the Company hereby covenant to take the
actions following Closing set forth on Exhibit 3.1 hereto and to take all
necessary actions reasonable necessary to effectuate the actions set forth
therein.
10.2 Limitations on Actions. For so long as the Company has not
fully effectuated its corporate governance covenants set forth in Item 3 of
Exhibit 6.3, the Company agrees that it will not, without the prior written
consent of Counsel: (i) redeem or repurchase any outstanding stock of the
Company; (ii) adopt or amend any employee stock plan or employee benefit or
compensation arrangement; (iii) enter into any transaction with affiliated
entities other than on an arms length basis; (iv) enter into any other line of
business other than business substantially similar or related to the existing
business of the Company; (v) consummate any acquisition of any entity whether by
purchase of equity securities or by purchase of substantially all of the
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assets of such entity; (vi) dispose any material assets of the Company; (vii)
incur funded indebtedness; or (viii) effect a merger or consolidation or sell
substantially all of the Company's assets.
ARTICLE XI. INDEMNIFICATION
11.1 Indemnification.
The Company hereby agrees to indemnify and hold the Purchaser
and its respective directors, officers, employees, agents, successors, assigns
and their affiliates (collectively, the "Purchaser Indemnified Parties")
harmless from and against any and all losses, liabilities, obligations, damages,
claims, judgments, assessments, penalties, costs and expenses, including
attorneys' and other professionals' fees and disbursements (collectively,
"Losses") based upon, attributable to or resulting from the breach of any
representation, warranty or covenant of the Company set forth herein.
The Purchaser hereby agrees to indemnify and hold the Company
harmless from and against any and all Losses based upon, attributable to or
resulting from the breach of any representation, warranty or covenant of the
Purchaser set forth herein.
11.2 Indemnification Procedures.
In the event that any third-party Legal Proceedings shall be
instituted or any third-party claim or demand ("Claim") shall be asserted by any
Person in respect of which payment may be sought under Section 4.1 hereof, the
indemnified party shall promptly cause written notice of the assertion of any
Claim of which it has knowledge which is covered by this indemnity to be
forwarded to the indemnifying party. The indemnifying party shall have the
right, at its sole option and expense, to be represented by counsel of its
choice, which must be reasonably satisfactory to the indemnified party, and to
assume the defense of, negotiate, settle or otherwise deal with any Claim which
relates to any Losses indemnified against hereunder. If the indemnifying party
elects to assume the defense of, negotiate, settle or otherwise deal with any
Claim which relates to any Losses indemnified against hereunder, it shall within
five (5) days of receipt of written notice of the assertion of a Claim (or
sooner, if the nature of the Claim so requires) notify the indemnified party of
its intent to do so. If the indemnifying party elects not to defend against,
negotiate, settle or otherwise deal with any Claim which relates to any Losses
indemnified against hereunder, fails to notify the indemnified party of its
election as herein provided or contests its obligation to indemnify the
indemnified party for such Losses under this Agreement, the indemnified party
may defend against, negotiate, settle or otherwise deal with such Claim. If the
indemnified party defends any Claim, then the indemnifying party shall reimburse
the indemnified party for the expenses of defending such Claim upon submission
of periodic bills. If the indemnifying party shall assume the defense of any
Claim, the indemnified party may participate, at his or its own expense, in the
defense of such Claim; provided, however, that such indemnified party shall be
entitled to participate in any such defense with separate counsel at the expense
of the indemnifying party if, (i) so requested by the indemnifying party to
participate or (ii) in the reasonable opinion of counsel to the indemnified
party, a conflict or potential conflict exists between the indemnified party and
the indemnifying party that would make such separate representation advisable.
The parties hereto agree to cooperate fully with each other in connection with
the defense, negotiation or settlement of any such Claim.
After any final judgment or award shall have been rendered by
a court, arbitration board or administrative agency of competent jurisdiction
and the expiration of the time in which to appeal therefrom, or a settlement
shall have been consummated, or the indemnified party and the indemnifying party
shall have arrived at a mutually binding agreement with respect to a Claim
hereunder, the indemnified party shall forward to the indemnifying party notice
of any sums due and owing by the indemnifying party pursuant to this Agreement
with respect to such matter and the indemnifying party shall be required to pay
all of the sums so
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due and owing to the indemnified party by wire transfer of immediately available
funds within ten (10) Business Days after the date of such notice.
The failure of the indemnified party to give reasonably prompt
notice of any Claim shall not release, waive or otherwise affect the
indemnifying party's obligations with respect thereto except to the extent that
the indemnifying party can demonstrate actual loss and prejudice as a result of
such failure.
In the circumstance in which the Company is the Indemnifying
Party, in order to prevent the Purchasers from effectively bearing a portion of
any such Loss, any indemnification payment required to be made by the Company
pursuant to this Section shall be increased such that (i) the indemnification
payment minus (ii) the product of the indemnification payment and the
Purchasers' fully diluted ownership percentage of Common Stock, equals the Loss.
11.3 Tax Treatment of Indemnity Payments. The parties agree to
treat any indemnity payment made pursuant to this Article VIII as an adjustment
to the Purchase Price for federal, state, local and foreign income tax purposes.
ARTICLE XII. MISCELLANEOUS
12.1 Certain Definitions.
For purposes of this Agreement, the following terms shall have the
meanings specified in this Section 5.1:
"Governmental Body" means any government or governmental or regulatory
body thereof, or political subdivision thereof, whether federal, state, local or
foreign, or any agency, instrumentality or authority thereof, or any court or
arbitrator (public or private). rvice.
"Legal Proceeding" means any judicial, administrative or arbitral
actions, suits, proceedings (public or private), claims or governmental
proceedings.
"Lien" means any lien, pledge, mortgage, deed of trust, security
interest, claim, lease, charge, option, right of first refusal, easement,
servitude, transfer restriction under any shareholder or similar agreement,
encumbrance or any other restriction or limitation whatsoever.
"Material Adverse Change" means any material adverse change in (i) the
business, properties, results of operations, condition (financial or otherwise)
or prospects of the Company, (ii) the ability of the Company to perform its
obligations under this Agreement or to perform its obligations hereunder, or
(iii) the ability of the Company to conduct its business after the Closing Date
as such business is being conducted as of the date hereof.
"Material Adverse Effect" means any effect which has resulted in, or is
reasonably likely to result in, a Material Adverse Change.
"Order" means any order, injunction, judgment, decree, ruling, writ,
assessment or arbitration award.
"Person" means any individual, corporation, partnership, firm, joint
venture, association, joint-stock company, trust, unincorporated organization,
Governmental Body or other entity.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations of the Commission thereunder, all as the same shall be in
effect at the relevant time.
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12.2 Transfer Taxes. All documentary stamp or similar Taxes or
charges, of any nature whatsoever, applicable to, or resulting from, the
transactions contemplated by the Purchase Agreement shall be borne by the
Company.
12.3 Survival of Representations and Warranties; Covenants.
(a) Representations and Warranties. The parties hereto
hereby agree that the representations and warranties contained in this Agreement
or in any certificate, document or instrument delivered in connection herewith,
shall survive the execution and delivery of this Agreement, and the Closing
hereunder, regardless of any investigation made by the parties hereto, through
the period until the applicable statute of limitations is reached.
(b) Covenants. All covenants and agreements of the
parties herein shall survive the consummation of the transactions contemplated
hereby.
12.4 Specific Performance. Each of the Company and Holder
acknowledges and agrees that the breach of this Agreement would cause
irreparable damage to the Purchaser and that the Purchaser will not have an
adequate remedy at law. Therefore, the obligations of the Holder and the Company
under this Agreement, including, without limitation, the Holder's obligation to
sell the Owned Securities to the Purchaser, shall be enforceable by a decree of
specific performance issued by any court of competent jurisdiction, and
appropriate injunctive relief may be applied for and granted in connection
therewith. Such remedies shall, however, be cumulative and not exclusive and
shall be in addition to any other remedies which any party may have under this
Agreement or otherwise.
12.5 Fees and Expenses. Upon consummation of the transactions
contemplated hereby and by the Purchase Agreement, all reasonable costs and
expenses of Counsel including without limitation Counsel's reasonable attorneys'
and accountants' fees and expenses and other out-of-pocket costs, shall be borne
by the Company upon receipt of invoices for such fees, expenses and costs.
12.6 Other Assurances. The Company, the Holder and the Purchaser
each agree to execute and deliver such other documents or agreements and to take
such other action as may be reasonably necessary or desirable for the
implementation of this Agreement and the consummation of the transactions
contemplated hereby.
12.7 Submission to Jurisdiction; Consent to Service of Process.
The parties hereto hereby irrevocably submit to the
non-exclusive jurisdiction of any federal or state court located within the
State of Florida over any dispute arising out of or relating to this Agreement
or any of the transactions contemplated hereby and each party hereby irrevocably
agrees that all claims in respect of such dispute or any suit, action proceeding
related thereto may be heard and determined in such courts. The parties hereby
irrevocably waive, to the fullest extent permitted by applicable law, any
objection which they may now or hereafter have to the laying of venue of any
such dispute brought in such court or any defense of inconvenient forum for the
maintenance of such dispute. Each of the parties hereto agrees that a judgment
in any such dispute may be enforced in other jurisdictions by suit on the
judgment or in any other manner provided by law.
Each of the parties hereto hereby consents to process
being served by any party to this Agreement in any suit, action or
proceeding by the mailing of a copy thereof in accordance with the provisions of
Section 5.10 hereof.
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12.8 Entire Agreement; Amendments and Waivers Any provision hereof
can be waived, only by written instrument making specific reference to this
Agreement signed by the Company and the Purchaser. No action taken pursuant to
this Agreement, including without limitation, any investigation by or on behalf
of any party, shall be deemed to constitute a waiver by the party taking such
action of compliance with any representation, warranty, covenant or agreement
contained herein. The waiver by any party hereto of a breach of any provision of
this Agreement shall not operate or be construed as a further or continuing
waiver of such breach or as a waiver of any other or subsequent breach. No
failure on the part of any party to exercise, and no delay in exercising, any
right, power or remedy hereunder shall operate as a waiver thereof, nor shall
any single or partial exercise of such right, power or remedy by such party
preclude any other or further exercise thereof or the exercise of any other
right, power or remedy. All remedies hereunder are cumulative and are not
exclusive of any other remedies provided by law.
12.9 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Florida.
12.10 Notices. All notices and other communications under this
Agreement shall be in writing and shall be deemed given when delivered
personally or mailed by certified mail, return receipt requested, to the parties
(and shall also be transmitted by facsimile to the Persons receiving copies
thereof) at the following addresses (or to such other address as a party may
have specified by notice given to the other party pursuant to this provision):
If to the Company:
I-Link, Incorporated
00000 X. Xxxxxxxxx Xxxx Xxxxx
Xxxxxx, XX 00000
Attention: Xxxxx Xxxxx, Esq.
Facsimile: 000-000-0000
Telephone: 000-000-0000
with a copy to:
De Xxxxxxx Xxxxxxxxxxx Xxxxx & Xxxxx
0000 X Xxxxxx, X.X.
Xxxxx 000
Xxxxxxxxxx, XX 00000
Attention: Xxxxx X. Xx Xxxxxxx, Esq.
Facsimile: 000-000-0000
Telephone: 000-000-0000
If to a Purchaser, to:
Counsel Corporation (US)
000 Xxxx Xxxxxx
Xxxx Xxxxxxxx, 00xx Xxxxx
00
Xxx Xxxx, XX 00000
Attention: Chief Executive Officer
Facsimile: (000) 000-0000
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With a copy to:
Xxxxxxx Xxxxxx Xxxx Xxxxxxx & Manner, PC
0000 Xxxxx Xxxxxxxx Xxxxxx
Xxxxxxxxx XX 00000
Attention: Xxxx Manner
Facsimile: (000) 000-0000
5.11 Severability. If any provision of this Agreement is
invalid or unenforceable, the balance of this Agreement shall remain in effect.
5.12 Binding Effect; Assignment. This Agreement shall be
binding upon and inure to the benefit of the parties and their respective
successors and permitted assigns. Nothing in this Agreement shall create or be
deemed to create any third party beneficiary rights in any person or entity not
a party to this Agreement except as provided below. No assignment of this
Agreement or of any rights or obligations hereunder may be made by either the
Company or Purchaser (by operation of law or otherwise) without the prior
written consent of the other parties hereto and any attempted assignment without
the required consents shall be void; provided, however, that Purchaser may
assign its rights and obligations under this Agreement (including, without
limitation, such Purchaser's rights to purchase the Owned Securities and to seek
indemnification hereunder) to any affiliate of Purchaser and any key employee(s)
or personnel of Purchaser or any affiliate thereof. Upon any such permitted
assignment, the references in this Agreement to the Purchasers shall also apply
to any such assignee unless the context otherwise requires.
5.13 Counterparts. This Agreement may be executed in one
or more counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized, as of the date
first written above.
THE COMPANY
I-LINK, INCORPORATED
By:
-----------------------------------------
Name:
Title:
THE PURCHASER
COUNSEL COMMUNICATIONS LLC
By:
-----------------------------------------
Name:
Title:
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Exhibit 3.1
Covenants of Counsel Communications LLC
1. COUNSEL AGREES THAT IT WILL, PROMPTLY FOLLOWING THE DATE HEREOF, TAKE
ALL STEPS NECESSARY TO CONVERT THE HOLDER'S EQUITY INTERESTS ACQUIRED
BY COUNSEL IN CONNECTION WITH THIS AGREEMENT INTO 61,966,057 SHARES OF
COMPANY COMMON STOCK AS AGREED BY THE PARTIES HERETO.
2. COUNSEL AGREES THAT IN CONNECTION WITH THE FOREGOING IT WILL ASSIST THE
COMPANY IN RETIRING THE WARRANTS ACQUIRED BY IT FROM HOLDER.
3. COUNSEL ACKNOWLEDGES THAT WINTER HARBOR CONVERTED ITS CONVERTIBLE DEBT
INTO SERIES M PREFERRED STOCK PRIOR TO THE DATE HEREOF.
Covenants of Company
1. THE COMPANY AGREES THAT IT WILL AGREES THAT IT WILL, PROMPTLY FOLLOWING
THE DATE HEREOF, TAKE ALL STEPS NECESSARY TO ALLOW COUNSEL TO CONVERT
THE HOLDER'S EQUITY INTERESTS ACQUIRED UNDER THIS AGREEMENT INTO
61,966,057 SHARES OF THE COMPANY COMMON STOCK AS AGREED BY THE PARTIES
HERETO.
2. THE COMPANY WILL TAKE ALL STEPS NECESSARY TO GRANT TO COUNSEL THE
FOLLOWING REGISTRATION RIGHTS:
DEMAND REGISTRATION: Counsel may demand registration by the
Company of Registrable Securities having a
minimum anticipated aggregate net offering
price of $10 million. Counsel may make three
(3) such requests, which will be at the
expense of the Company. In addition, Counsel
will have unlimited S-3 demand registration
rights. Counsel shall have the right to
select underwriters for Company
registrations pursuant to a demand by
Counsel, subject to approval by the Company,
which shall not be unreasonably withheld. In
the event of an underwriter cutback in a
registration pursuant to a demand
registration by Counsel, Counsel shall
receive priority in such cutbacks. These
rights survive conversion from the Note to
common stock so long as the shares are not
registered.
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COMPANY REGISTRATION: Counsel may request that its Registrable
Securities be included in any other
registrations of the Company's common stock
subject, however, to the right of the
Company, upon advice of its underwriters, to
reduce the number of shares that are
requested to be registered by Counsel.
3. THE COMPANY WILL TAKE ALL STEPS NECESSARY TO GRANT TO COUNSEL THE
FOLLOWING GOVERNANCE RIGHTS:
BOARD REPRESENTATION &
CORPORATE GOVERNANCE: The Company shall promptly appoint two (2)
designees of Counsel, reasonably acceptable
to the Company, to the Board of Directors.
Subsequent to the appointment of those
designees, the Board of Directors of will
consist of six (6) members. Immediately
following the initial funding of the Note,
the Company shall increase the size of the
Board of Directors to no more than nine (9)
members and, as soon as reasonably possible,
shall solicit the proxies of the Company's
shareholders to elect three (3) additional
nominees designated by Counsel. The
Compensation and Audit Committees shall each
include one Counsel nominated director.
The Company agree not to, without the consent of a majority of the
Board of Directors: (i) redeem or repurchase
any outstanding stock; (ii) adopt or amend
any employee stock plan or employee benefit
or compensation arrangement; (iii) enter
into any transaction with affiliated
entities other than on an arms length basis;
(iv) enter into any other line of business
other than business substantially similar or
related to the existing business; (v)
consummate acquisitions; (vi) dispose any
material assets of the Company; (vii) incur
funded indebtedness; or (viii) effect a
merger or consolidation or sell
substantially all of the Company's assets.
Moreover, the Board of Directors shall have
the right to approve the Company's: (i)
auditors; (ii) annual operating and capital
budget; (iii) major sales and marketing
programs.
4. THE COMPANY WILL TAKE ALL STEPS NECESSARY TO GRANT TO COUNSEL THE
FOLLOWING INFORMATION RIGHTS:
INFORMATION RIGHTS: Counsel shall be furnished by the Company
with any information that it may reasonably
request, including but not limited to: (i)
monthly financial statements, including a
comparison of actual results to budget, in
the form customarily prepared; (ii)
notification of defaults under material
agreements; (iii) notification of and status
reports regarding material litigation; and
(iv) copies of all filings made with the
Securities and Exchange Commission.
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5. THE COMPANY WILL TAKE ALL STEPS NECESSARY TO SIGN OR AMEND EMPLOYMENT
AGREEMENTS WITH SELECTED KEY EMPLOYEES TO BE DETERMINED, THE TERMS OF
WHICH WILL BE REASONABLY ACCEPTABLE TO COUNSEL. IN ADDITION, CERTAIN
KEY EMPLOYEES WILL SIGN NON-COMPETE AND CONFIDENTIALITY AGREEMENTS
ACCEPTABLE TO COUNSEL.
6. THE COMPANY WILL TAKE ALL STEPS NECESSARY TO REIMBURSE COUNSEL IN THE
AMOUNT OF $50,000 FOR EXPENSES INCURRED BY COUNSEL IN CONJUNCTION WITH
THIS TRANSACTION.
7. THE COMPANY WILL ENGAGE THE APPROPRIATE ADVISORS AND PROCEED TO TAKE
ALL STEPS NECESSARY TO MERGE NEXBELL COMMUNICATIONS INTO THE COMPANY AT
A VALUATION EQUAL TO COUNSEL'S CASH INVESTMENT (ESTIMATED AT $9.2
MILLION).
