Exhibit 10.43
AGREEMENT
THIS AGREEMENT is made and entered into as of January 15, 1999, 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
A. The Lender and the Borrower 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 (the "Original Demand Date").
The Borrower did not repay the Original Loans on the Original Demand
Date and has not repaid the Original Loans as of the date of this
Agreement.
B. Since the date of the Original Agreement, the Borrower has 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 (collectively the "New Loans"), each of which is evidenced by a
demand note (collectively, the "New Notes").
C. The Borrower and the Lender desire to reflect in this Agreement
their agreement that made in connection with each of the New Loans that (i) each
New Loan would be secured by the same collateral and to the same extent as the
Original Loans, (ii) each New Loan would be convertible to Series M Preferred
Stock of the Borrower to the same extent as the Original Loans and (iii) the
Borrower would issue to the Lender in connection with each New Loan warrants to
acquire common stock of the Borrower.
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, intending to be legally bound, agree as follows:
1. Demand. Pursuant to the Original Agreement, the Original Notes
automatically came due upon the Original Demand Date since the Borrower did not
make payment in full of the Original Loans by that date. The Lender hereby
revokes such demand; however, the parties acknowledge and agree that the
forbearance period specified in the Original Agreement has expired and that the
Lender may make demand on any or all of the Original Notes as well as the New
Notes at any time.
2. Security. The New Loans and the New Notes shall be secured to the same
extent and by the same collateral as the Existing Loans and the
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Existing Notes. The Borrower shall execute and deliver, and cause its
subsidiaries to execute and deliver, such amendments to the existing security
documents and such additional agreements, documents and instruments as the
Lender may request to provide for such security.
3. Conversion. Pursuant to Section 5(a)(ii) of the Original Agreement,
since the Original Notes and the Original Loans were not paid by the Original
Demand Date, the Lender is entitled to convert the Original Notes into a
specified number of shares of the Borrower's Series M Preferred Stock and to
receive warrants to acquire 10,000,000 shares of the Borrower's common stock.
The parties agree that the Lender shall also be permitted at any time to convert
the New Loans and all accrued interest thereon into shares of the Borrower's
Series M Preferred Stock at the same conversion rate as provided in Section
5(a)(ii) of the Original Agreement. The Lender may convert the Original Loans
without converting the New Loans and may convert the New Loans without
converting the Original Loans, in its sole discretion. Any such conversion may
be referred to hereinafter as a
"Conversion."
4. Warrants.
(a) The Borrower has not yet issued to the Lender any of the warrants
described in either Section 4 or Section 5 of the Original Agreement, nor has
the Borrower issued any of the warrants which it agreed to issue in connection
with the making of the New Loans. Immediately upon its execution of this
Agreement, the Borrower shall execute a warrant agreement in substantially the
form attached hereto as Exhibit A, pursuant to which the Borrower shall grant to
the Lender (i) the 1998 Warrants, as that term is defined in the Original
Agreement, and (ii) warrants to buy 1,740,000 shares of common stock of the
Borrower for an exercise period extending until October 15, 2005. 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.
(b) The parties acknowledge and agree that pursuant to Section
5(a)(ii) of the Original Agreement, since the Original Notes and the Original
Loans were not paid by the Original Demand Date, the Lender is entitled to
effect the Conversion of the Original Loans and also to receive warrants to
acquire 10,000,000 shares of the Borrower's common stock for an exercise price
of $2.50 per share for an exercise period extending until October 15, 2005 (the
"Conversion Warrants"). The warrants issued pursuant to Section 4(a)(i) above
shall be deemed to be included in the Conversion Warrants so that upon
Conversion of the Original Loans, the Borrower shall only be required to issue
to the Lender warrants for 5,000,000 shares of the Borrower's common stock.
(c) Upon Conversion of the Original Loans, the exercise price for the
warrants granted pursuant to Section 4(a)(i) above shall be reduced
automatically without any further action by the Borrower or the Lender to $2.50
per share, and upon Conversion of the New Loans, the exercise price for the
warrants granted pursuant to Section 4(a)(ii) above shall be reduced
automatically without any further action by the Borrower or the Lender to $2.50
per share.
5. Encore Transaction. The Borrower agrees, for purposes of (a) Section
4(f)(i)(D)(IV) of the Articles of Amendment to the Amended and
Restated Articles of Incorporation of the Borrower establishing the Borrower's
Series M Participating Convertible Preferred Stock and (b) each Warrant
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Agreement between the Borrower and the Lender, that any shares of common stock
of the Borrower issued to JNC Opportunity Fund Ltd. or its successors or assigns
("Encore") pursuant to the Convertible Preferred Stock Purchase Agreement dated
as of June 30, 1998, between the Borrower and Encore, any warrant issued
pursuant thereto or any other document, agreement or instrument entered into in
connection therewith, shall be deemed to be "Additional Shares of Common Stock"
for all purposes of such Articles of Amendment and such Warrant Agreements.
6. Representations and Warranties. The Borrower hereby represents and
warrants to the Lender as follows:
(a) Organization, Qualifications and Corporate Power.
(i) 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 upon any Conversion 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").
(ii) 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.
(b) Authorization of Agreements.
(i) 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
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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.
(ii) 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.
(c) 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.
(d) 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.
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(e) 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.
(f) 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.
(g) 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.
7. 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.
8. 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.
9. 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.
10. 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.
11. 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:
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(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 a copy (which shall not constitute notice) 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 a copy (which shall not constitute notice) to:
Xxxxx X. Xxxxx, Xx., 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.
12. 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.
13. Entire Agreement. This Agreement constitutes the sole and entire
agreement of the parties with respect to the subject matter hereof.
14. 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.
15. 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
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the Borrower and the Lender.
16. 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.
17. 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.
18. Tax Reporting. The parties agree that, for tax purposes, the New
Warrants granted pursuant to this Agreement had a fair market value of $0.00 on
the dates on which they were issued. Each party shall file its tax returns in a
manner that is consistent with this valuation.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first set forth above.
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
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SCHEDULE I
Proceedings
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