WARRANT EXCHANGE AGREEMENT
This WARRANT EXCHANGE AGREEMENT, dated as of March 1, 2001 (this
"AGREEMENT"), by and between WINTER HARBOR, LLC, a Delaware limited liability
company (the "HOLDER" or "Winter Harbor") and I-LINK, INCORPORATED, a Florida
corporation (the "COMPANY").
W I T N E S S E T H:
WHEREAS, Holder proposes to transfer to the Company and the Company
proposes to acquire from Holder all of the warrants to purchase equity
securities of the Company beneficially owned by Holder; and
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements hereinafter contained, the parties hereby agree as
follows:
ARTICLE I. AUTHORIZATION AND EXCHANGE OF THE OWNED SECURITIES
1.1 EXCHANGE OF OWNED SECURITIES. Upon the terms and subject to the
conditions contained herein, at the Closing (as hereinafter defined), the Holder
shall assign, transfer, convey and deliver to the Company, and the Company shall
be obligated to acquire from the Holder on the terms described herein, the
"Owned Securities," as that term is defined in Section 6.1 hereof.
ARTICLE II. CONSIDERATION AND CLOSING
2.1 CONSIDERATION. The aggregate consideration for the Owned Securities
to be purchased at the Closing shall be 5,000,000 shares of common stock of the
Company (the "CONSIDERATION" or the "COMPANY STOCK").
2.2 CLOSING DATE. The closing of the acquisition of the Owned
Securities provided for in Section 1.1 hereof (the "CLOSING") shall take place
at 3:30 p.m. Eastern Standard Time on March 1, 2001 at the offices of the
Company on the date hereof.
ARTICLE III. REPRESENTATIONS OF HOLDER
Holder, subject to the provisions of Section 3.9, represents and
warrants to the Company as follows:
3.1 ORGANIZATION AND AUTHORITY. Holder is a limited liability company
duly organized, validly existing, and in good standing under the laws of the
State of Delaware.
3.2 AUTHORIZATION AND BINDING OBLIGATION. Holder has full power and
authority to execute and deliver this Agreement and the assignment described in
Section 5.1 (this Agreement, together with the assignment being hereinafter
referred to, collectively, as the "HOLDER DOCUMENTS"), and to consummate the
transactions contemplated hereby and thereby. The execution, delivery and
performance by the Holder of this Agreement and each other Holder Document have
been duly authorized by all necessary action on behalf of the Holder. This
Agreement has been, and each other Holder Documents will be at or prior to the
Closing, duly executed and delivered by the Holder and (assuming the due
authorization, execution and delivery by the other parties hereto and thereto)
this Agreement constitutes, and each Holder Document when so executed and
delivered will constitute, legal, valid and binding obligations of the Holder,
enforceable against the Holder 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).
3.3 OWNERSHIP OF OWNED SECURITIES. Except as otherwise provided in this
Agreement, Holder owns of record and beneficially the Owned Securities listed as
owned by it on EXHIBIT A, free and clear of any lien, pledge, or other security
interest or encumbrance (other than any restrictions under securities laws and
restrictions under this Agreement and the I-Link Shareholders Agreement and
other than those arising out of the Red Cube AG Claims or the Red Cube AG
Securities Purchase Agreement (as hereinafter defined). Holder is not a party to
any option, warrant, purchase right, or other contract or commitment that
requires Holder to sell, transfer, or otherwise dispose of any Owned Securities
(other than this Agreement and the I-Link Shareholders Agreement and other than
those arising out of the Red Cube AG Claims or the Red Cube AG Securities
Purchase Agreement), and, following Closing, the Company will have all rights to
title to the Owned Securities being acquired.
3.4 ABSENCE OF CONFLICTING AGREEMENTS; CONSENTS. To the knowledge of
Holder the execution, delivery, and performance by Holder of this Agreement and
the documents contemplated hereby (with or without the giving of notice, the
lapse of time, or both): (a) do not require the consent of any third party; (b)
will not conflict with any provision of the limited liability company agreement
or certificate of formation of Holder, each as currently in effect; (c) will not
conflict with, result in a breach of, or constitute a default under any permit,
authorization, consent or approval of, any court, arbitrational tribunal,
administrative agency or commission or other governmental or regulatory
authority or agency; and (d) will not conflict with, constitute grounds for
termination of, result in a breach of, constitute a default under, or accelerate
or permit the acceleration of any performance required by the terms of any
agreement, instrument, license, or permit to which Holder is a party or by which
Holder may be bound.
3.5 INVESTMENT. Holder is acquiring the Consideration for its own
account for investment and not with a view to, or for sale in connection with,
any distribution thereof, nor with any present intention of distributing the
same; and, except as contemplated by this Agreement or the Securities Purchase
Agreement by and between Holder and Counsel Communications, LLC, Holder has no
present or contemplated agreement, undertaking, arrangement, obligation,
indebtedness or commitment providing for the disposition thereof. Holder is an
"ACCREDITED INVESTOR" as defined in Rule 501(a) under the Securities Act of
1933, as amended (the "SECURITIES ACT").
3.6 EXPERIENCE. Holder has made detailed inquiries concerning the
Company, its business and its personnel; the officers of the Company have made
available to such Holder any and all written information which it has requested
and have answered to such Holder's satisfaction all inquiries made by such
Holder; and such Holder has sufficient knowledge and
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experience in finance and business that it is capable of evaluating the risks
and merits of its investment in the Company and such Holder is able
financially to bear the risks thereof. Holder understands that unless the
offer and sale of the Consideration are registered pursuant to the Securities
Act, or an exemption from registration is available, Holder will not be able
to sell the Consideration.. Except as required by Section 6.5, Holder
understands that the Company has no present intention of registering the
Consideration.
3.7 INVESTMENT REPRESENTATIONS. Holder understands that the offer and
sale of the Consideration has not been registered under the Securities Act.
Holder also understands that the Consideration is being offered and sold
pursuant to an exemption from registration pursuant to the Securities Act.
3.8 LITIGATION. Other than any legal proceeding with Red Cube
International AG ("Red Cube AG"), there are no legal proceedings pending 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. Nothing in this Agreement shall
be construed to assign, affect, or release any claim, right of recovery or
amounts due to the Company from Red Cube AG, KPR Finanz-Und Verwlatungs AG
("KPR") or any of their respective parent entities, subsidiaries, affiliates,
officers, directors, shareholders, agents or employees or any person or entity
acting in concert therewith (the "Red Cube Affiliates"). Winter Harbor shall, at
the Company's sole expense, render all reasonable assistance in the prosecution
of any claims by the Company against Red Cube AG, KPR or the Red Cube AG
Affiliates.
3.9 EXCLUSION. The Company has been apprised of that certain Securities
Purchase Agreement by and among the Holder, KPR and Red Cube, dated August 30,
2000 (as amended, the "Red Cube AG Securities Purchase Agreement"), the Holder's
termination thereof and Red Cube and KPR's allegation regarding their purported
rights to the Covered Securities pursuant thereto. No representation, warranty
or statement, express or implied, made by or on behalf of the Holder shall be
deemed to be false or misleading or shall form the basis of any claim against
the Holder, its directors, officers, agents or shareholders as a result of any
claim of any kind or nature made by or on behalf of Red Cube, KPR or their
respective Affiliates, officers, directors, agents, employees, creditors or
shareholders (a "Red Cube Claim").
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Holder that:
4.1 AUTHORIZATION OF AGREEMENT. The Company 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 the Company 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 "COMPANY DOCUMENTS"), and to
consummate the transactions contemplated hereby and thereby. The execution,
delivery and performance by the Company of this Agreement and each other
Company Document have been duly authorized by all necessary action on behalf
of the Company. This Agreement has been, and each other Company
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Documents will be at or prior to the Closing, duly 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
Company Document 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, 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).
4.2 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
Company in connection with the execution and delivery of this Agreement or the
Company Documents or the compliance by the Company with any of the provisions
hereof or thereof.
4.3 LITIGATION. There are no legal proceedings pending 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.
4.4 RED CUBE LITIGATION. Nothing in this Agreement shall be construed
to assign, affect, or release any claim, right of recovery or amounts due to
Winter Harbor from Red Cube AG, KPR or any of their respective parent entities,
subsidiaries, affiliates, officers, directors, shareholders, agents or employees
or any person or entity acting in concert therewith (the "Red Cube AG
Defendants"). The Company shall, at Winter Harbor's sole expense, render all
reasonable assistance in the prosecution of any claims by Winter Harbor against
Red Cube AG, KPR or the Red Cube AG Defendants.
4.5 ABSENCE OF CONFLICTING AGREEMENTS; CONSENTS. To the knowledge of
the Company the execution, delivery, and performance by the Company of this
Agreement and the documents contemplated hereby (with or without the giving of
notice, the lapse of time, or both): (a) do not require the consent of any third
party; (b) will not conflict with any provision of the Articles of Incorporation
or Bylaws of the Company, each as currently in effect; (c) will not conflict
with, result in a breach of, or constitute a default under any permit,
authorization, consent or approval of, any court, arbitrational tribunal,
administrative agency or commission or other governmental or regulatory
authority or agency; and (d) will not conflict with, constitute grounds for
termination of, result in a breach of, constitute a default under, or accelerate
or permit the acceleration of any performance required by the terms of any
agreement, instrument, license, or permit to which the Company is a party or by
which the Company may be bound.
4.6 COMPANY STOCK. The Company Stock issued hereunder is fully paid,
validly issued and nonassessable and is free and clear of any lien, pledge or
other security interest or encumbrance (other than any restrictions under the
securities laws). Following Closing, Holder will have all rights to title to the
Company Stock. Attached hereto as EXHIBIT A is an accurate description of the
warrants issued by the Company to Holder.
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ARTICLE V. DOCUMENTS TO BE DELIVERED
5.1 DELIVERIES BY THE HOLDER TO THE COMPANY AT THE CLOSING. At Closing,
Holder shall deliver, or shall cause to be delivered, to the Company
certificates representing the Owned Securities (to the extent such Owned
Securities are certificated), together with duly executed assignments separate
from certificate in form and substance sufficient to effectuate the transfer of
the Owned Securities to the Company, free and clear of any lien, pledge or other
security interest or encumbrance (other than any restrictions under the
securities laws and restrictions under this Agreement and the I-Link
Shareholders Agreement and other than the Red Cube AG Claims).
5.2 DELIVERIES BY THE HOLDER TO THE COMPANY PRIOR TO CLOSING. On or
before 3:15 p.m. Eastern Standard Time on March 1, 2001, Holder shall deliver,
or shall cause to be delivered, to the Company duly executed instruments
effecting the conversion of all convertible debt issued by the Company and
beneficially owned by the Holder (the "Convertible Debt"), which is convertible
into 4,122 shares of Series M Preferred Stock, in accordance with the documents
and instruments governing the Convertible Debt.
5.3 DELIVERIES BY THE COMPANY AT THE CLOSING. The Company shall have
delivered, or cause to be delivered, to Holder an irrevocable instruction letter
addressed to the Company's transfer agent, instructing such transfer agent to
issue certificates representing the Consideration free and clear of any lien,
pledge or other security interest or encumbrance (other than any restrictions
under the securities laws) to the Holder within three (3) business days of the
date of this Agreement. The Company hereby covenants with the Holder that such
certificates shall be delivered to Holder within three (3) business days. Each
certificate representing the Consideration shall be stamped or otherwise
imprinted with the following legend:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR THE
SECURITIES LAWS OF ANY STATE. THE SHARES REPRESENTED BY THIS
CERTIFICATE MAY NOT BE TRANSFERRED, AND THE COMPANY WILL NOT REGISTER
THE TRANSFER OF SUCH SECURITIES, EXCEPT (A) IF REGISTERED UNDER THE
ACT, (B) PURSUANT TO RULE 144 UNDER THE ACT OR (C) UPON RECEIPT BY THE
COMPANY OF AN OPINION OF COUNSEL, REASONABLY SATISFACTORY TO THE
COMPANY, THAT SUCH TRANSFER IS EXEMPT FROM REGISTRATION UNDER THE ACT.
5.4 CONVERSION OF OWNED SECURITIES AT CLOSING. Effective at the time of
Closing, all of the Owned Securities shall automatically terminate, and become
null and void, without the necessity of any further action by any party hereto.
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ARTICLE VI. MISCELLANEOUS
6.1 CERTAIN DEFINITIONS.
For purposes of this Agreement, the following terms shall have the
meanings specified in this Section 6.1:
"ORDER" means any order, injunction, judgment, decree, ruling, writ,
assessment or arbitration award.
"OWNED SECURITIES" means all of the warrants to purchase equity
securities of the Company beneficially owned by Holder, including warrants to
purchase equity securities of the Company that will be issued by the Company
upon the Holder's conversion of any convertible debt pursuant to Section 5.2
hereof, and prior to the Closing contemplated by Sections 5.1 and 5.3 hereof.
"PERSON" means any individual, corporation, partnership, firm, joint
venture, association, joint-stock company, trust, unincorporated organization,
Governmental Body or other entity.
6.2 SURVIVAL OF REPRESENTATIONS AND WARRANTIES; COVENANTS.
(a) Representations and Warranties. The parties hereto hereby
agree that the representations and warranties contained in this Agreement, 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.
6.3 SPECIFIC PERFORMANCE. Each of the Company and Holder acknowledges
and agrees that the breach of this Agreement would cause irreparable damage to
the Company and/or the Holder and that the Company and/or the Holder will not
have an adequate remedy at law. Therefore, the obligations under this Agreement
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.
6.4 OTHER ASSURANCES. The Holder and the Company each agree to execute
and deliver such other documents or agreements and to take such other action as
may be necessary for the implementation of this Agreement and the consummation
of the transactions contemplated hereby.
6.5 SUBMISSION TO JURISDICTION; CONSENT TO SERVICE OF PROCESS.
(a) The parties hereto hereby irrevocably submit to the
non-exclusive jurisdiction of any federal or state court located within the
State of New York over any dispute arising out of or relating to this Agreement
or any of the transactions contemplated hereby and
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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 ANY RIGHT TO
A TRIAL BY A JURY. 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.
(b) 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 6.9
hereof.
6.6 DEMAND REGISTRATION. For a period of 18 months following the
release to Holder of the Company Stock from escrow pursuant to the Escrow
Agreement to be entered into by and among Holder, Counsel Communications LLC
(U.S.), and the escrow agent named therein, Holder shall have the right to
demand and the Company shall, at its expense, register the Company Stock
pursuant to a shelf registration statement. Such registration statement shall
remain effective for twelve (12) months..
6.7 ENTIRE AGREEMENT; AMENDMENTS AND WAIVERS. This Agreement (including
the schedules and exhibits hereto) represents the entire understanding and
agreement between the parties hereto with respect to the subject matter hereof
and can be amended, supplemented or changed, and any provision hereof can be
waived, only by written instrument making specific reference to this Agreement
signed by the Company and the Holder.
6.8 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York without giving effect to their
conflict of laws principles.
6.9 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 Holder:
Winter Harbor, LLC
00000 Xxxxxxxx Xxxx
Xxxxxxx, Xxxxxxxx 00000-0000
Attention: Xxxxx X. Xxxxx, Xx.
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With a copy to:
Dow, Xxxxxx & Xxxxxxxxx, PLLC
0000 Xxx Xxxxxxxxx Xxxxxx, XX
Xxxxx 000
Xxxxxxxxxx, XX 00000-0000
Attention: Xxxxx X. Wild
Facsimile: (000) 000-0000
If to the Company, to:
I-Link, Incorporated
00000 X. Xxxxxxxxx Xxxx Xxxxx
Xxxxx 000
Xxxxxx, XX 00000
Attention: Xxxx X. Xxxxxxx, Chairman and
Chief Executive Officer
Facsimile: (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
9.12 SEVERABILITY. If any provision of this Agreement is invalid or
unenforceable, the balance of this Agreement shall remain in effect.
9.13 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. No assignment of this Agreement or of any rights or obligations
hereunder may be made by the Company (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.
9.14 COUNTERPARTS. This Agreement may be executed in two 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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WARRANT EXCHANGE AGREEMENT
SIGNATURE PAGE
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 HOLDER
WINTER HARBOR, LLC
By: First Media, L.P., its sole member and
manager
By: First Media Corporation, its sole
general partner
By:
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Name:
---------------------------------
Title:
---------------------------------
THE COMPANY
I-LINK, INCORPORATED
By:
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Name:
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Title:
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