AGREEMENT
THIS AGREEMENT is made and entered into as of April 14, 1998, by and
between I-LINK, INCORPORATED, a Florida corporation (the "Borrower"), and
WINTER HARBOR, L.L.C., a Delaware limited liability company (the "Lender").
Recitals
1. The Lender has lent to the Borrower $5,768,000 in four
installments on a demand loan basis (three of which are evidenced by demand
promissory notes (the "Notes")), which installments were made on January
26, 1998, February 23, 1998, March 3, 1998, and March 24, 1998
(collectively, the "Loans"). In connection with the Loans, the Lender was
granted warrants to acquire, in the aggregate, 5,000,000 shares of common
stock of the Borrower at an exercise price of 110% of the closing price of
such stock on the day each installment was made (the "1998 Warrants").
2. The Borrower has requested that the Lender not demand payment on
the Loans before the earlier of May 15, 1998, and the date on which the
Borrower consummates a loan transaction with another lender or consummates
the sale of any debt or equity securities, in either case in an amount
yielding net cash proceeds to the Borrower of not less than $6,000,000 (the
earlier of such dates being referred to hereinafter as the "Demand Date".)
Subject to the terms and conditions of this Agreement, the Lender has
agreed to such request.
Agreements
IN CONSIDERATION of the foregoing recitals, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows:
A. Demand. The Lender agrees that it will not make demand on the
Loans prior to the Demand Date. However, the Lender shall be deemed to
have made demand on the Demand Date, so that the outstanding principal
amount due under the Loans, together with all interest accrued through the
date of payment (the "Amount Outstanding") shall be automatically due and
payable on the Demand Date without further notice, demand or action by the
Lender.
B. Security. As security for the Borrowers obligations under the
Loans, the Borrower shall execute and deliver to the Lender, promptly
following the execution hereof, a pledge agreement in form and substance
satisfactory to the Lender pursuant to which the Borrower shall pledge to
the Lender all of the issued and outstanding equity interests in each of
its subsidiaries. In addition, the Borrower shall cause each such
subsidiary to execute and deliver, promptly following the execution hereof,
(a) a guaranty in form and substance satisfactory to the Lender, pursuant
to which such subsidiaries guaranty the obligations of the Borrower under
the Loans, and (b) a security agreement in form and substance satisfactory
to the Lender, pursuant to which such subsidiaries grant security interests
to the Lender in substantially all of their assets to secure their
obligations under such guaranty and the obligations of the Borrower under
the Loans.
C. Amendment of Existing Warrants. The Lender and the Borrower have
entered into (a) a Warrant Agreement dated as of June 6, 1997, pursuant to
which the Borrower issued to the Lender warrants to acquire 500,000 shares
of common stock of the Borrower, (b) a First Amendment Warrant Agreement
dated as of August 18, 1997, pursuant to which the Borrower issued to the
Lender warrants to acquire 300,000 shares of common stock of the Borrower,
and (c) a Warrant Agreement dated as of October 10, 1997, pursuant to which
the Borrower issued to the Lender warrants to acquire 10,000,000 shares of
common stock of the Borrower (collectively, the "Existing Warrants".) The
Existing Warrants all have exercise periods which expire on or prior to
September 30, 2002. In consideration of the Lender's agreement not to make
demand on the Loans prior to the Demand Date, the Borrower agrees that each
of the Existing Warrants is hereby amended to provide that the exercise
period thereunder shall extend to October 15, 2005.
D. Timely Payment of Amount Outstanding. If the Borrower pays the
Amount Outstanding in full in cash on the Demand Date, then the Lender
shall have the following rights and the Borrower shall take the following
actions:
1. the Borrower shall issue to the Lender the 1998 Warrants,
which warrants shall give the Lender the right to acquire 5,000,000 shares
of the Borrower's common stock, for an exercise period extending until
October 15, 2005, pursuant to a warrant agreement in substantially the form
of the Existing Warrant described in Clause 3(c); the exercise price for
1,734,000 of such shares shall be $5.50 per share; the exercise price for
953,500 of such shares shall be $5.95 per share; the exercise price for
1,229,000 of such shares shall be $5.98 per share; and the exercise price
for the remaining 1,083,500 of such shares shall be $7.22 per share; and
2. the Borrower shall pay to the Lender on the Demand Date an
amount equal to the lesser of $300,000 and the Lender's legal, due
diligence and transaction costs in connection with the transactions
contemplated by this Agreement and all prior transactions between the
Borrower and the Lender.
E. Non-Payment by Demand Date. If the Borrower fails to pay the
Amount Outstanding in full in cash on the Demand Date, then the Lender
shall have available to it the following rights and remedies:
1. at the Lender's option:
a) the interest rate payable on the Loans shall increase
to a rate equal to the prime rate as set forth in the Wall Street Journal
(Western Edition) plus four (4) percentage points; or
b) the Borrower shall issue to the Lender: (a) that
number of shares of the Borrower's Series M Preferred Stock equal to the
quotient of the Amount Outstanding divided by $2,500.00 as payment in
full of the Loans, and upon such issuance the Notes shall be cancelled; and
(b) warrants to acquire 10,000,000 shares of the Borrower's common stock,
at an exercise price of $2.50 per share, for an exercise period extending
until October 15, 2005, pursuant to a warrant agreement in substantially
the form of the Existing Warrant described in Clause 3(c); and
2. the Borrower shall issue to the Lender a promissory note in
form and substance satisfactory to the Lender in an amount equal to the
lesser of $300,000 and the Lender's legal, due diligence and transaction
costs in connection with the transactions contemplated by this Agreement
and all prior transactions between the Borrower and the Lender, which note
shall be convertible, at the option of the Lender, into shares of common
stock of the Borrower at a conversion rate equal to 110% of the market
price of such stock on the date of the issuance of the note.
F. Representations and Warranties. The Borrower hereby represents
and warrants to the Lender as follows:
1. Organization, Qualifications and Corporate Power .
a) The Borrower is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of Florida. The
Borrower has the requisite corporate power and authority to own and hold
its properties, to carry on its business as conducted or presently proposed
to be conducted, to execute, deliver and perform this Agreement, to issue
and deliver to the Lender the warrants required to be issued pursuant
hereto (the "New Warrants"), and to issue and deliver to the Lender the
shares of capital stock issuable pursuant to this Agreement and the shares
of capital stock upon exercise of the New Warrants (collectively, the
"Underlying Shares", and, together with the New Warrants, the
"Securities"). The Borrower is duly qualified to conduct business as a
foreign corporation in good standing under the laws of the State of Utah
and each other jurisdiction where the failure to so qualify could have a
material adverse effect on the financial condition, results of operations,
properties, assets, prospects or business of the Borrower or any of its
subsidiaries (a "Material Adverse Effect").
b) The Borrower does not own, directly or indirectly, any
shares of capital stock, partnership interests or other participation
rights or other interests in the nature of an equity interest in any
corporation, partnership, company, trust or other entity, or any option,
warrant or other security convertible into or exchangeable for any of the
foregoing, other than (a) the shares of capital stock of I-Link Systems,
Inc., a Utah corporation ("I-Link Systems"), (b) the shares of capital
stock of I-Link Communications, Inc., a Utah corporation ("I-Link
Communications"), (c) the shares of capital stock of MiBridge, Inc., a Utah
corporation ("MiBridge"), and (d) the membership interests of I-Link
Worldwide, L.L.C., a Delaware limited liability company ("Worldwide").
Each of I-Link Systems, I-Link Communications and MiBridge is a corporation
duly incorporated, validly existing and in good standing under the laws of
the State of Utah, and Worldwide is a limited liability company duly
organized, validly existing and in good standing under the laws of the
State of Delaware. Each of I-Link Systems, I-Link Communications, MiBridge
and Worldwide has the requisite corporate or limited liability company (as
appropriate) power and authority to own and hold its properties and to
carry on its business as conducted or presently proposed to be conducted.
Each of I-Link Systems, I-Link Communications, MiBridge and Worldwide is
duly qualified to conduct business as a foreign corporation or limited
liability company (as appropriate) in good standing under the laws of each
jurisdiction where the failure to so qualify could have a Material Adverse
Effect.
2. Authorization of Agreements .
a) The execution, delivery and performance by the Borrower
and its subsidiaries of this Agreement and the agreements, documents and
instruments to be executed and delivered pursuant hereto (collectively, the
"Transaction Documents") and the issuance, sale and delivery of the
Securities to the Lender have been duly authorized by all requisite
corporate or limited liability company action of the Borrower and its
subsidiaries, including, but not limited to, the requisite action by the
Board of Directors of the Borrower and the requisite approval or consent of
the Borrower's shareholders, and will not (with due notice or lapse of time
or both) violate, be in conflict with or constitute a default under any
provision of law, rule or regulation, any order of any court or other
governmental agency, the Articles of Incorporation or Bylaws or other
organizational documents of the Borrower or any of its subsidiaries, or any
provision of any indenture, mortgage, note, deed of trust, agreement or
other instrument to which the Borrower, any of its subsidiaries or any of
their respective properties or assets is bound, or conflict with, result in
a breach of or constitute (with due notice or lapse of time or both) a
default under any such indenture, mortgage, note, deed of trust, agreement
or other instrument, or result in the creation or imposition of any lien,
charge, restriction, claim or encumbrance of any nature whatsoever upon any
of the properties or assets of the Borrower or any of its subsidiaries.
b) The Underlying Shares have been duly and validly
reserved for issuance and, upon issuance in accordance with the terms of
the Borrower's Articles of Incorporation, as amended, this Agreement and
the New Warrants, will be duly and validly issued, fully paid and non-
assessable, and will be free of restrictions on transfer other than
restrictions on transfer under applicable state and federal securities
laws. The issuance, sale and delivery of the Securities are not subject to
any preemptive right of any shareholder of the Borrower or to any right of
first refusal or other right in favor of any person.
3. Validity . This Agreement has been duly executed and
delivered by the Borrower and constitutes the legal, valid and binding
obligation of the Borrower, enforceable in accordance with its terms,
subject to the effect of bankruptcy, insolvency, moratorium or other
similar laws affecting the enforcement of creditors' rights generally and
except as the availability of equitable remedies may be limited by general
principles of equity. The other Transaction Documents, when executed in
accordance with the terms of this Agreement, will be duly executed
and delivered by the Borrower and its subsidiaries and will constitute the
legal, valid and binding obligation of the Borrower and its subsidiaries,
enforceable in accordance with their respective terms, subject to the
effect of bankruptcy, insolvency, moratorium or other similar laws
affecting the enforcement of creditors' rights generally and except as the
availability of equitable remedies may be limited by general principles of
equity.
4. Litigation; Claims; Investigations . Except as set forth on
Schedule I attached hereto, there is no action, suit, proceeding or
investigation pending or threatened against the Borrower or any of its
subsidiaries and there are no suits, actions or claims, or any
investigations or inquiries by any administrative agency or governmental
body, or legal, administrative or arbitration proceedings pending against
or threatened against the Borrower or any of its subsidiaries or affecting
any of the Borrower's or any of its subsidiaries' properties, rights,
assets or business, or to which the Borrower or any of its subsidiaries is
a party or, in the case of threatened proceedings, is reasonably likely to
become a party. There is no outstanding order, writ, judgment, injunction
or decree of any court, administrative agency, governmental body or
arbitration tribunal against or affecting the Borrower, any of its
subsidiaries or any of the properties, rights, assets or business of the
Borrower or any of its subsidiaries.
5. Compliance . Neither the Borrower nor any of its
subsidiaries is in violation of or default under any provision of its
Articles of Incorporation or Bylaws or other organizational document.
Neither the Borrower nor any of its subsidiaries is in material violation
of or default under (i) any provision of any instrument, mortgage, deed of
trust, loan, contract, commitment, judgment, decree, order or obligation to
which it is a party or by which it or any of its properties or assets are
bound or (ii) any provision of any federal, state or local law, statute,
rule, order or governmental regulation.
6. Governmental Consents . No consent, approval, order or
authorization of, or registration, qualification, designation, declaration
or filing with, any federal or state governmental authority on the part of
the Borrower or any of its subsidiaries is required in connection with the
execution, delivery and performance of this Agreement and the offer, sale
or issuance of the Securities.
7. Disclosure . No representation or warranty made by the
Borrower contained in this Agreement or in any other Transaction Document
or in any certificate or instrument furnished or to be furnished pursuant
hereto contains or will contain any untrue statement of a material fact, or
omits or will omit to state any material fact known to the Borrower
required to make the statements herein or therein contained not misleading.
The Borrower is not aware of any impending or contemplated event or
occurrence that would cause any of the foregoing representations not to be
true and complete on the date of such event or occurrence as if made on
that date.
G. Arbitration . To the fullest extent not prohibited by law, any
controversy, claim or dispute arising out of or relating to this
Agreement, including the determination of the scope or applicability of
this agreement to arbitrate, shall be settled by final and binding
arbitration in accordance with the terms and conditions of the arbitration
provisions of the Shareholders Agreement by and among the Borrower, the
Lender and certain other shareholders of the Borrower, dated as of October
10, 1997.
H. Expenses . The Borrower shall pay all expenses of the Lender,
including but not limited to travel, legal and accounting fees and
expenses, incurred in connection with the transactions contemplated under
this Agreement.
I. Survival of Agreements . All covenants, agreements,
representations, and warranties made herein shall survive the execution and
delivery hereof and remain in full force and effect, notwithstanding any
investigation made at any time by or on behalf of either party hereto.
J. Parties in Interest . All representations, covenants, and
agreements contained in this Agreement by or on behalf of any of the
parties hereto shall bind and inure to the benefit of the respective
successors and permitted assigns of the parties hereto, whether so
expressed or not.
K. Notices . All notices, requests, consents, and other
communications hereunder shall be in writing and shall be deemed
effectively given and received upon delivery in person, or one business day
after delivery by national overnight courier service, or by telecopier
transmission with acknowledgment of transmission receipt, or three business
days after deposit via certified or registered mail, return receipt
requested, in each case addressed as follows:
(a) if to the Company, at
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
(b) if to the Lender, at
Winter Harbor, L.L.C.
c/o First Media, L.P.
00000 Xxxxxxxx Xxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxxxx, Xx.
Telecopier: (000) 000-0000
with copies to:
Xxxxx X. Xxxxx, Xx., Esq. and
Xxxxxxx X. Xxxxxx, Esq.
Dow, Xxxxxx & Xxxxxxxxx, PLLC
0000 Xxx Xxxxxxxxx Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000
Telecopier: (000) 000-0000
or, in any such case, at such other address or addresses as shall have been
furnished in writing by such party to the other.
L. Governing Law . THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE APPLICABLE TO
CONTRACTS MADE AND TO BE PERFORMED ENTIRELY WITHIN THE STATE OF DELAWARE
WITHOUT REGARD TO ITS PRINCIPLES OF CONFLICTS OF LAW.
1. Entire Agreement . This Agreement constitutes the sole and entire
agreement of the parties with respect to the subject matter hereof.
M. Counterparts . This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
N. No Waivers; Amendments . No failure or delay on the part of any
party in exercising any right, power or remedy hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any such right,
power or remedy preclude any other or further exercise thereof or the
exercise of any other right, power or remedy. The remedies provided for
herein are cumulative and are not exclusive of any remedies that may be
available to any party at law or in equity or otherwise. Any provision of
this Agreement may be amended or waived if, but only if, such amendment or
waiver is in writing and is signed by the Borrower and the Lender.
O. Severability . If any provision of this Agreement shall be
declared void or unenforceable by a judicial or administrative authority,
the validity of any other provision and of the entire Agreement shall not
be affected thereby.
P. Headings . The Section headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
Q. Tax Reporting. The Borrower agrees that it will not claim any
deduction for interest expense with respect to the Loans in excess of a
deduction for the stated cash interest payable on the Loans.
[remainder of page intentionally left blank]
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first set forth above.
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
Name: Xxxxx X. Xxxxx
Title: Secretary
I-LINK INCORPORATED
By: /s Xxxx Xxxxxxx
Name: Xxxx Xxxxxxx
Title: President
SCHEDULE I
Proceedings
