Exhibit 10.41
SERIES K WARRANT AGREEMENT
by and between
I-LINK INCORPORATED
and
WINTER HARBOR, L.L.C.
Dated as of January 15, 1999
SERIES K WARRANT AGREEMENT
THIS SERIES K WARRANT AGREEMENT (this "Agreement"), dated as of January 15,
1999, by and between I-LINK INCORPORATED, a Florida corporation (the "Company"),
and WINTER HARBOR, L.L.C., a Delaware limited liability company (the "Lender").
R E C I T A L S:
A. The Lender and the Company have entered into a Loan Agreement dated as
of the date hereof (the "Loan Agreement"), pursuant to which the Lender agrees
to loan to the Company up to $8,000,000 (the "Loan") and to assist the Company
to obtain $3,000,000 aggregate stated amount of standby letters of credit (the
"Standby Letters of Credit");
B. As consideration for the Loan and the Standby Letters of Credit, the
Company agrees to issue warrants to purchase common stock of the Company, $.007
par value per share (the "Common Stock"), (the "Series K Warrants" or the
"Warrants"); and
C. The Company wishes to define the terms and provisions of the Series K
Warrants and the respective rights and obligations thereunder of the Company and
the holders of the Series K Warrants (the "Warrantholders");
NOW, THEREFORE, in consideration of the foregoing recitals and the
mutual agreements herein set forth, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
SECTION 1.1 Certain Definitions. As used in this Agreement, the
following terms have the meanings specified below:
"Board of Directors" means the Board of Directors of the Company.
"Business Day" means any day other than Saturday, Sunday or any other
day on which banking institutions in the City of New York, New York are
permitted or required to close.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated thereunder.
"GAAP" means generally accepted accounting principles set forth in
opinions and pronouncements of the Accounting Principles Board of the
American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as may be approved by a significant segment
of the accounting profession, in each case as the same are applicable to the
circumstances as of the date of the determination.
"Person" means an individual, partnership, corporation (including a
business trust), limited liability company, joint stock company, trust,
unincorporated association, joint venture or other entity.
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"SEC" means the Securities and Exchange Commission or any successor
thereto.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.
"Securities Purchase Agreement" means that certain Securities Purchase
Agreement by and between the Company and the Lender, dated as of September
30, 1997.
"Series M Preferred Stock" means the Series M Participating Convertible
Preferred Stock issued to the Lender.
ARTICLE 2
ISSUANCE, FORM AND EXECUTION OF WARRANT CERTIFICATES
SECTION 2.1 Issuance of Warrants. The Series K Warrants shall be
originally issued by the Company in the following amounts: (i) one Series K
Warrant for the purchase of one share of Common Stock for (A) every $10 in Loan
proceeds made available to the Company pursuant to the Loan Agreement and (B)
every $10 of the aggregate stated amount of the Standby Letters of Credit and
(ii) an additional nine Series K Warrants for the purchase of nine shares of
Common Stock for (A) every $10 in Loan proceeds made available to the Company
under the Loan Agreement upon the occurrence of an Event of Default (as defined
in the Loan Agreement) or if the Loan is not paid in full on or before March 15,
1999 and (B) every $10 of the aggregate stated amount of the Standby Letters of
Credit upon the occurrence of an Event of Default or if the Loan is not paid in
full on or before March 15, 1999 or if there is a draw on any Standby Letters of
Credit; provided, however, in the event that a Equity Transaction (as such term
is defined in the Loan Agreement) occurs on or after February 1, 1999 and prior
to March 15, 1999, then the Company shall issue to Lender the additional
Warrants referenced in subclauses (ii) (A) and (B) of this Section 2.1. The
Series K Warrants shall be evidenced by Warrant Certificates, and each Warrant
Certificate shall represent the right, subject to the provisions contained
herein, to purchase from the Company (and the Company shall issue and sell to
the registered holder of such Warrants) the number of shares of Common Stock (as
may be adjusted pursuant to Article 7hereof) issuable to the Warrantholder upon
exercise of such Series K Warrants, at the price specified herein.
SECTION 2.2 Form of Warrant Certificates. The certificates evidencing
the Series K Warrants (the "Warrant Certificates") shall be in registered form
only and shall be substantially in the form set forth in Exhibit A attached
hereto, shall be dated the date on which signed by the Company and may have such
letters, numbers or other marks of identification or designation printed,
lithographed, engraved or otherwise affixed thereon as the Company may deem
appropriate and as are not inconsistent with the provisions of this Agreement,
or as may be required to comply with any law or with any rule or regulation made
pursuant thereto.
SECTION 2.3 Execution of Warrant Certificates. Warrant Certificates
shall be executed on behalf of the Company by the president, any vice president
or the treasurer of the Company and signed by the secretary or any assistant
secretary of the Company and have affixed thereon the seal of the Company. Each
such signature and seal may be manual or facsimile.
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In case any officer of the Company who shall have signed any of the
Warrant Certificates shall cease to be such officer before countersignature
and delivery by the Company, such Warrant Certificates, nevertheless, may be
countersigned, issued and delivered with the same force and effect as though
such person had not ceased to be such officer; and any Warrant Certificate may
be signed on behalf of the Company by any person who, at the actual date of the
execution of such Warrant Certificate, shall be a proper officer of the Company
to sign such Warrant Certificate, although at the date of the execution of this
Agreement such person was not such an officer of the Company. Upon
countersignature on behalf of the Company and delivery, the Warrant Certificate
shall be valid and binding upon the Company, and the Warrantholder thereof shall
be entitled to all of the benefits of this Agreement.
ARTICLE 3
REGISTRATION
SECTION 3.1 Registration. The Company shall number and register the
Warrant Certificates in a register (the "Warrant Register") maintained at 00000
Xxxxx Xxxxxxxxx Xxxx Xxxxx, Xxxxx 000, Xxxxxx, Xxxx 00000 (the "Office") as they
are issued by the Company (or such other location as the Company may establish
after giving notice thereof to the Warrantholders). The Company shall keep
copies of this Agreement available for inspection by the Warrantholders during
normal business hours at the Office.
ARTICLE 4
TRANSFER, EXCHANGE OR REPLACEMENT OF WARRANT CERTIFICATES
SECTION 4.1 Registration of Transfers. The Company shall from time to
time register the transfer of any outstanding Warrant Certificate on the
Warrant Register maintained at the Office, upon surrender thereof accompanied by
a written instrument or instruments of transfer in form reasonably satisfactory
to the Company, duly endorsed by the registered holder thereof or by such
Warrantholder's appointed legal representative or attorney-in-fact, or
accompanied by proper evidence of succession, assignment or authority to
transfer. In all cases of transfer by an attorney, the original power of
attorney, duly approved, or an official copy thereof, duly certified, shall be
deposited and remain with the Company. Upon any such registration or transfer
in such name or names as may be directed in writing by the Warrantholder, the
Company shall execute and deliver (or cause to be delivered) a new Warrant
Certificate(s) without charge to such Warrantholder, or to the Person or Persons
entitled to receive the same, and the surrendered Warrant Certificate shall be
canceled by the Company.
SECTION 4.2 Exchanges of Warrant Certificates. Each Warrant Certificate
may be exchanged at the option of the Warrantholder without charge to such
Warrantholder when surrendered to the Company at the Office properly endorsed in
the manner described in Section 4.1 hereof for another Warrant Certificate(s) of
like tenor and representing in the aggregate a like number of shares of Common
Stock, as may be adjusted pursuant to Article 7 hereof. Thereupon, the Company
shall execute and deliver to the Person(s) entitled thereto a new Warrant
Certificate(s) as so requested. Warrant Certificates surrendered for exchange
shall be canceled by the Company.
SECTION 4.3 Mutilated or Missing Warrant Certificates. In the event
that any Warrant Certificate shall be mutilated, lost, stolen or destroyed, the
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Company shall execute and deliver in exchange and substitution for and upon
cancellation of the mutilated Warrant Certificate, or in lieu of and
substitution for the Warrant Certificate lost, stolen or destroyed, a new
Warrant Certificate of like tenor and representing Warrants for a like amount of
Warrant Shares, but only, in case of a lost, stolen or destroyed Warrant
Certificate, upon receipt of evidence satisfactory to the Company of such loss,
theft or destruction and the absence of actual notice to the Company that such
Warrant Certificate has been acquired by a bona fide purchaser or holder in due
course. Every substitute Warrant Certificate executed and delivered pursuant to
this Section 4.3 in lieu of any lost, stolen or destroyed Warrant Certificate
shall constitute an additional contractual obligation of the Company, whether or
not the lost, stolen or destroyed Warrant Certificate shall be at any time
enforceable by anyone, and shall be entitled to the benefits of (but shall be
subject to all the limitations of rights set forth in) this Agreement equally
and proportionately with any and all other Warrant Certificates duly executed
and delivered hereunder. The provisions of this Section 4.3 are exclusive with
respect to the replacement of mutilated, lost, stolen or destroyed Warrant
Certificates.
ARTICLE 5
EXERCISE OF WARRANTS; EXERCISE PRICE; EXERCISE PERIOD
SECTION 5.1 Exercise of Series K Warrants. Subject to the provisions of
this Agreement, each Warrantholder shall have the right to purchase from the
Company the number of shares of Common Stock that the Warrantholder may at the
time be entitled to purchase on exercise of the Series K Warrants and payment of
the Exercise Price (as defined below) for such Warrant Shares.
SECTION 5.2 Mechanics of Exercise.
(a) Subject to the provisions of this Agreement, Series K Warrants
may be exercised by the Warrantholder in whole or in part upon surrender at the
Office to the Company of the Warrant Certificate(s) evidencing the Series K
Warrants, together with the form of election to purchase (the "Election to
Purchase"), in the form set forth as Exhibit B hereto, duly completed and signed
by such Warrantholder or by such Warrantholder's appointed legal representative
or attorney-in-fact and upon payment in full of the Exercise Price for each
Warrant exercised. Payment of the aggregate Exercise Price shall be made by
certified or official bank check payable to the order of the Company.
(b) Upon due exercise of the Series K Warrants and surrender of the
Warrant Certificate, duly completed and signed, and payment of the Exercise
Price as aforesaid, the Company shall cause to be issued to or upon the
written order of the Warrantholder and in such name or names as the
Warrantholder may designate in the Election to Purchase, the Warrant Shares
so purchased. If all of the items referred to in the first sentence of the
preceding paragraph are received by the Company at or prior to 1:00 p.m.,
Delaware time, on a Business Day, the exercise of the Warrants to which
such items relate will be effective on such Business Day. If all of such items
are received after 1:00 p.m., Delaware time, on a Business Day, the exercise of
the Series K Warrants to which such items relate will be effective on the next
Business Day.
(c) The number and kind of Warrant Shares for which Series K Warrants
may be exercised shall be subject to adjustment from time to time as set
forth in Article 7 hereof.
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(d) The Series K Warrants shall be exercisable as provided herein at
the election of the Warrantholder in whole or in part. In the event that the
holder of a Warrant Certificate shall exercise Series K Warrants with respect to
fewer than all the Warrant Shares evidenced thereby, a new Warrant
Certificate(s) evidencing the remaining unexercised Warrant Shares shall be
issued to such Warrantholder, and the Company is hereby irrevocably authorized
to execute and deliver the required new Warrant Certificate(s) pursuant to
provisions of Article 2 and Article 3 of this Agreement.
(e) All Warrant Certificates surrendered upon exercise of Series K
Warrants shall be canceled and disposed of by the Company.
SECTION 5.3 Exercise Price. The price at which the Warrants shall be
exercisable in exchange for Warrant Shares shall be $2.78 per Warrant Share, as
such price may be adjusted pursuant to Article 7 hereof(the "Exercise Price").
SECTION 5.4 Exercise Period. The right to exercise the Series K
Warrants shall terminate on June 15, 2006 (the "Expiration Date"). A
Warrantholder may exercise any Series K Warrant from the date of issuance up to
and including the Expiration Date. The Company shall record the Expiration Date
of each Warrant in the Warrant Register.
SECTION 5.5 Cashless Exercise.
(a) At any time prior to the Expiration Date of any Series K, the
Warrantholder may, at its option, exchange such Series K Warrants, in whole
or in part (a "Warrant Exchange"), into the number of fully paid and non-
assessable Warrant Shares determined in accordance with this Section 5.5, by
surrendering the Warrant Certificate relating to such Series K Warrants at the
Office, accompanied by a notice stating such Warrantholder's intent to effect
such exchange, the number of Warrant Shares to be exchanged and the date on
which the Warrantholder requests that such Warrant Exchange occur (the "Notice
of Exchange"). The Warrant Exchange shall take place on the date specified in
the Notice of Exchange, or, if later, the date the Notice of Exchange is
received by the Company (the "Exchange Date"). Certificates for the Warrant
Shares issuable upon such Warrant Exchange and, if applicable, a new Warrant
Certificate of like tenor evidencing the balance of the Warrant Shares remaining
subject to the Warrantholder's Warrant Certificate, shall be issued as of the
Exchange Date and delivered to the Warrantholder within three days following the
Exchange Date. In connection with any Warrant Exchange, the Warrantholder's
Warrant Certificate shall represent the right to subscribe for and acquire the
number of Warrant Shares (rounded to the next highest integer) equal to (A) the
number of Warrant Shares specified by the Warrantholder in its Notice of
Exchange (the "Total Share Number") less (B) the number of Warrant Shares equal
to the quotient obtained by dividing (i) the product of the
Total Share Number and the existing Exercise Price per Warrant Share by (ii) the
Market Price (as hereafter defined) of a share of Common Stock.
(b) As used in this Section 5.5, the phrase "Market Price" at any date
shall be deemed to be the last reported sale price, or, in case no such reported
sale takes place on such day, the average of the last reported sale prices for
the last three trading days, in either case as officially reported by the
principal securities exchange on which the Common Stock is listed or admitted to
trading or by the Nasdaq Stock Market, National Market ("Nasdaq"), or, if the
Common Stock is not listed or admitted to trading on any national securities
exchange or quoted by Nasdaq, the average closing bid price as furnished by the
National Association of Securities Dealers, Inc. ("NASD") through Nasdaq or
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similar organization if Nasdaq is no longer reporting such information, or if
the Common Stock is not quoted on Nasdaq, as determined in good faith by
resolution of the Board of Directors of the Company, based on the best
information available to it for the two days immediately preceding such issuance
or sale and the day of such issuance or sale.
ARTICLE 6
RESERVATION AND REGISTRATION RIGHTS OF WARRANT SHARES
SECTION 6.1 Reservation. The Company shall at all times keep reserved,
free from preemptive rights, out of its authorized Common Stock, or other
securities of the Company issuable upon the exercise of the Series K Warrants, a
number of shares of Common Stock, or such other securities, sufficient to
provide for the exercise of the right of purchase represented by all outstanding
and unexpired Series K Warrants.
SECTION 6.2 Covenant. The Company covenants that any Warrant Shares
will, upon issuance, be validly issued and upon payment of the exercise price
therefor, fully paid and free from all taxes payable by the Company, liens,
charges and security interests (except any liens, charges or security interests
created or suffered to be created by any of the Warrantholders), and will not be
subject to any restrictions on voting or transfer thereof that are created by
the Company, except for such restrictions on transfer under the Securities Act
or applicable state securities laws.
SECTION 6.3 Registration Rights. The Warrant Shares shall be subject to
certain demand and incidental registration rights as provided in that certain
Registration Rights Agreement entered into by and between the parties hereto as
of the date hereof.
ARTICLE 7
ADJUSTMENTS AFFECTING THE EXERCISE OF WARRANTS
SECTION 7.1 Special Definitions. For purposes of this Article 7, the
following definitions shall apply:
(a) "Additional Shares of Common Stock" shall mean all shares of
Common Stock issued (or, pursuant to Section 7.2 below, deemed to be issued) by
the Company after the Original Issue Date, other than shares of Common Stock
issued or issuable:
(i) upon conversion of shares of the Company's Class B Preferred
Stock, Class C Preferred Stock, Series D Preferred Stock, Series F Preferred
Stock or Series M Preferred Stock outstanding on the Original Issue Date;
(ii) upon the exercise of Warrants issued under the Securities
Purchase Agreement;
(iii) as a dividend or distribution on the Company's Class B
Preferred Stock, Class C Preferred Stock, Series D Preferred Stock, Series M
Preferred Stock or Warrants;
(iv) in connection with an acquisition or other transaction by
the Company, in either case approved by the Lender, unless the Company agrees to
include such issuance in the definition of Additional Shares of Common Stock in
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connection with obtaining the approval of the Lender to such acquisition or
other transaction;
(v) by reason of a dividend, stock split, split-up or other
distribution on shares of Common Stock excluded from the definition of
Additional Shares of Common Stock by the foregoing clauses (i), (ii), (iii), and
(iv) or this clause (v); or
(vi) upon the exercise of options excluded from the definition of
"Option" in Section 7.1(c).
(b) "Convertible Securities" shall mean any evidences of
indebtedness, shares or other securities directly or indirectly convertible into
or exchangeable for Common Stock.
(c) "Option" shall mean rights, options or warrants to subscribe for,
purchase or otherwise acquire Common Stock or Convertible Securities,
excluding (i) options granted to employees or issued to consultants of the
Company or warrants which, in each such case, are outstanding as of the date of
this Agreement, (ii) any Series K Warrants issued under this Agreement or as a
direct result of the issuance of Series M Preferred Stock pursuant to the
Securities Purchase Agreement, (iii) options granted to employees or
consultants pursuant to stock option plans adopted by the Board of Directors and
approved by the Compensation Committee of the Board of Directors and by the
Lender after the date hereof, (iv) options granted to employees, directors or
consultants pursuant to the Company's Director Stock Option Plan, Employee
Qualified Stock Purchase Plan, 1995 Director Stock Option Plan, 1995 Employee
Stock Option Plan and 1997 Recruitment Stock Option Plan, previously approved by
the Lender or (v) options issued pursuant to the Series N Rights Offering (the
"Rights Offering").
(d) "Original Issue Date" shall mean the date on which a Series K
Warrant was first issued.
SECTION 7.2 Issue of Securities Deemed Issue of Additional Shares of
Common Stock. If the Company at any time or from time to time after the
Original Issue Date shall issue any Options or Convertible Securities or
shall fix a record date for the determination of holders of any class of
securities entitled to receive any such Options or Convertible Securities,
then the maximum number of shares of Common Stock (as set forth in the
instrument relating thereto without regard to any provision contained therein
for a subsequent adjustment of such number) issuable upon the exercise of such
Options or, in the case of Convertible Securities and Options therefor, the
conversion or exchange of such Convertible Securities and the exercise of such
Options therefor, shall be deemed to be Additional Shares of Common Stock issued
as of the time of such issuance or, in case such a record date shall have been
fixed, as of the close of business on such record date, provided that Additional
Shares of Common Stock shall not be deemed to have been issued unless the
consideration per share (determined pursuant to Section 7.4 hereof) of such
Additional Shares of Common Stock would be less than the applicable Exercise
Price in effect on the date of and immediately prior to such issuance, or such
record date, as the case may be, and provided further that in any such case in
which Additional Shares of Common Stock are deemed to be issued:
(a) No further adjustment in the Exercise Price shall be made upon
the subsequent issuance of Convertible Securities or shares of Common Stock upon
the exercise of such Options or conversion or exchange of such Convertible
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Securities;
(b) If such Options or Convertible Securities by their terms provide,
with the passage of time or otherwise, for any increase in the consideration
payable to the Company, or decrease in the number of shares of Common Stock
issuable, upon the exercise, conversion or exchange thereof, the Exercise Price
computed upon the original issuance thereof (or upon the occurrence of a record
date with respect thereto), and any subsequent adjustments based thereon, shall,
upon any such increase or decrease becoming effective, be recomputed to reflect
such increase or decrease insofar as it affects such Options or the rights of
conversion or exchange under such Convertible Securities;
(c) No readjustment pursuant to clause (b) above shall have the
effect of increasing the Exercise Price to an amount which exceeds the Exercise
Price on the original adjustment date; and
(d) In the event of any change in the number of shares of Common
Stock issuable upon the exercise, conversion or exchange of any Option or
Convertible Security, including, but not limited to, a change resulting from the
anti-dilution provisions thereof, the Exercise Price then in effect shall
forthwith be readjusted to such Exercise Price as would have obtained had the
adjustment which was made upon the issuance of such Option or Convertible
Security not exercised or converted prior to such change been made upon the
basis of such change, but no further adjustment shall be made for the actual
issuance of Common Stock upon the exercise or conversion of any such Option or
Convertible Security.
SECTION 7.3 Adjustment of Exercise Price Upon Issuance of Additional
Shares of Common Stock. In the event the Company shall (A) at any time after
the Original Issue Date issue Additional Shares of Common Stock (including
Additional Shares of Common Stock deemed to be issued pursuant to Section 7.2,
but excluding shares issued as a dividend or distribution as provided in Section
7.6 or upon a stock split or combination as provided in Section 7.5), without
consideration or for a consideration per share (determined pursuant to Section
7.4 hereof) less than the applicable Exercise Price in effect on the date of and
immediately prior to such issuance or (B) if at any time the "Conversion Price"
for which the Series F Convertible Preferred Stock may be converted into the
Company's Common Stock is less than the applicable Exercise Price then in
effect, then and in any such event, the Exercise Price shall be reduced to
such lower price per share at which such Additional Shares of Common Stock are
being issued or may be issued or deemed issued.
SECTION 7.4 Determination of Consideration. For purposes of this
Section 7.4, the consideration received by the Company for the issuance of any
Additional Shares of Common Stock shall be computed as follows:
(a) Cash and Property. Such consideration shall:
(i) insofar as it consists of cash, be computed at the aggregate
of cash received by the Company, excluding amounts paid or payable for
accrued interest or accrued dividends;
(ii) insofar as it consists of property other than cash, be
computed at the fair market value thereof at the time of such issuance, as
determined in good faith by the Board of Directors; and
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(iii) in the event Additional Shares of Common Stock are issued
together with other shares of securities or other assets of the Company for
consideration which covers both, be the proportion of such consideration so
received, computed as provided in clauses (i) and (ii) above, as determined
in good faith by the Board of Directors.
(b) Options and Convertible Securities. The consideration per share
received by the Company for Additional Shares of Common Stock deemed to have
been issued pursuant to Section 7.2, relating to Options and Convertible
Securities, shall be determined by dividing:
(i) the total amount, if any, received or receivable by the
Company as consideration for the issuance of such Options or Convertible
Securities, plus the minimum aggregate amount of additional consideration (as
set forth in the instruments relating thereto, without regard to any
provision contained therein for a subsequent adjustment of such
consideration) payable to the Company upon the exercise of such Options or
the conversion or exchange of such Convertible Securities, or in the case of
Options for Convertible Securities, the exercise of such Options for
Convertible Securities and the conversion or exchange of such Convertible
Securities, by
(ii) the maximum number of shares of Common Stock (as set forth
in the instruments relating thereto, without regard to any provision
contained therein for a subsequent adjustment of such number) issuable upon
the exercise of such Options or the conversion or exchange of such
Convertible Securities.
SECTION 7.5 Adjustment for Stock Splits and Combinations. If the
Company shall at any time or from time to time after the Original Issue Date for
the Series K Warrants effect a subdivision of the outstanding Common Stock, the
Exercise Price of each Series K Warrant then in effect immediately before that
subdivision shall be proportionately decreased and the number of shares of
Common Stock issuable upon exercise of such Series K Warrant shall be
proportionately increased. If the Company shall at any time or from time to
time after the Original Issue Date for the Series K Warrants combine the
outstanding shares of Common Stock, the Exercise Price of each Series K Warrant
then in effect immediately before the combination shall be proportionately
increased and the number of shares of Common Stock issuable upon exercise of
such Series K Warrant shall be proportionately
decreased. Any adjustment under this Section 7.5 shall become effective at the
close of business on the date the subdivision or combination becomes effective.
SECTION 7.6 Adjustment for Certain Dividends and Distributions. In the
event the Company at any time or from time to time after the Original Issue Date
for the Series K Warrants shall make or issue, or fix a record date for the
determination of holders of Common Stock entitled to receive, a dividend or
other distribution payable in additional shares of Common Stock, then and in
each such event the Exercise Price for the Series K Warrants then in effect
shall be decreased as of the time of such issuance or, in the event such a
record date shall have been fixed, as of the close of business on such record
date, by multiplying the Exercise Price for the Warrants then in effect by a
fraction:
(a) the numerator of which shall be the total number of shares of
Common Stock issued and outstanding immediately prior to the time of such
issuance or the close of business on such record date, and
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(b) the denominator of which shall be the total number of shares of
Common Stock issued and outstanding immediately prior to the time of such
issuance or the close of business on such record date plus the number of shares
of Common Stock issuable in payment of such dividend or distribution; provided,
however, if such record date shall have been fixed and such dividend is not
fully paid or if such distribution is not fully made on the date fixed therefor,
the Exercise Price for the Series K Warrants shall be recomputed accordingly as
of the close of business on such record date and thereafter the Exercise Price
for the Warrants shall be adjusted pursuant to this paragraph as of the time of
actual payment of such dividends or distributions.
SECTION 7.7 Adjustments for Other Dividends and Distributions. In the
event the Company at any time or from time to time after the Original Issue Date
for the Series K Warrants shall make or issue, or fix a record date for the
determination of holders of Common Stock entitled to receive, a dividend or
other distribution payable in securities of the Company other than shares of
Common Stock, then and in each such event provision shall be made so that the
holders of the Series K Warrants shall receive upon exercise thereof in addition
to the number of shares of Common Stock receivable thereupon, the amount of
securities of the Company that they would have received had their Series K
Warrants been exercised on the date of such event and had thereafter, during the
period from the date of such event to and including the conversion date,
retained such securities receivable by them as aforesaid during such period
giving application to all adjustments called for during such period, under this
paragraph with respect to the rights of the holders of the Series K Warrants.
SECTION 7.8 Adjustment for Reclassification, Exchange, or Substitution.
If the Common Stock issuable upon the exercise of the Series K Warrants shall be
changed into the same or a different number of shares of any class or classes of
stock, whether by capital reorganization, reclassification or otherwise (other
than a subdivision or combination of shares or stock dividend provided for
above, or a reorganization, merger, consolidation, or sale of assets provided
for below), then and in each such event the holder of the Series K Warrants
shall have the right thereafter to convert each such share of Common Stock
issuable upon the exercise of the Series K Warrants into the kind and amount of
shares of stock and other securities and property receivable upon such
reorganization, reclassification, or other change, by holders of the number of
shares of Common Stock for which such Series K Warrants might have been
exercised immediately prior to such reorganization, reclassification, or change,
all subject to further adjustment as provided herein.
SECTION 7.9 Adjustment for Merger or Reorganization. In case of any
consolidation or merger of the Company with or into another Company, each Series
K Warrant shall thereafter be exercisable for the kind and amount of shares of
stock or other securities or property to which a holder of the number of shares
of Common Stock of the Company deliverable upon exercise of such Warrant would
have been entitled upon such consolidation or merger; and, in such case,
appropriate adjustment (as determined in good faith by the Board of Directors)
shall be made in the application of the provisions in this Article 7 set forth
with respect to the rights and interest thereafter of the holders of the Series
K Warrants, to the end that the provisions set forth in this Article 7
(including provisions with respect to changes in and other adjustments of the
Exercise Price) shall thereafter be applicable, as nearly as reasonably may be,
in relation to any shares of stock or other property thereafter deliverable upon
the exercise of the Series K Warrants.
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SECTION 7.10 Adjustment of Exercise Price for Series K Warrants. The
Exercise Price shall further be adjusted to the lowest of: (i) $2.78; (ii)
the lowest average closing bid price of the Common Stock for any twenty
trading days after the date hereof; (iii) the price at which any Common Stock or
common stock equivalent is issued, whether such issue is public or private and
whether by conversion, exercise or otherwise and whether any such security is
outstanding as of the date hereof; and (iv) the exercise price or conversion
rate of any new options, warrants, preferred stock or other convertible
security; provided, however, that if any adjustment pursuant to the preceding
clause would result in the setting of the Exercise Price at less than $1.25,
then the Exercise Price shall be $1.25.
SECTION 7.11 Notice of Adjustment to Exercise Price. Whenever the
Exercise Price is required to be adjusted as provided in this Article 7, the
Company shall forthwith compute the adjusted Exercise Price and shall prepare a
certificate setting forth such adjusted Exercise Price and showing in reasonable
detail the facts upon which such adjustment is based. Whenever the Exercise
Price is adjusted, the Company shall promptly mail, or cause to be mailed, to
the Warrantholders a statement setting forth the adjustment and the reasons for
such adjustment.
SECTION 7.12 Form of Warrant Certificate. Irrespective of any
adjustments in the Exercise Price or the kind of Warrant Shares purchasable
upon the exercise of the Warrants, Warrant Certificates evidencing such Warrants
theretofore or thereafter issued may continue to express the same number and
kind of Warrant Shares as are stated in the Warrant Certificates initially
issuable pursuant to this Agreement.
SECTION 7.13 No Impairment. Without limiting the generality of the
foregoing, the Company shall take all such action as may be necessary or
appropriate in order that the Warrant Shares to be issued upon the exercise
of the Warrants from time to time outstanding will, when issued, be fully
paid and non-assessable. In addition, without limiting the generality of
Section 6.1, the Company shall take all such action as shall be necessary so
that, after any adjustment to the Exercise Price required hereunder, the
total number of shares of Common Stock or other capital stock of the Company
then authorized by the articles of incorporation of the Company as then in
effect and available for the purpose of issuance upon such exercise shall exceed
the total number of shares of Common Stock issuable upon the exercise of all of
the outstanding Warrants. The Company will not, by amendment of its Articles of
Incorporation or through any reorganization, transfer of assets, consolidation,
merger, dissolution, issue or sale of securities or any other voluntary action,
avoid or seek to avoid the observance or performance of any of the terms to be
observed or performed hereunder by the Company, but will at all times in good
faith assist in the carrying out of all the provisions of this Section 7 and in
the taking of all such action as may be necessary or appropriate in order to
protect the rights of the Warrantholders against impairment.
ARTICLE 8
NOTICES TO WARRANTHOLDERS
SECTION 8.1 Notices to Warrantholders.
(a) Notices to holders of Series K Warrants shall be mailed to such
holders at the addresses of such holders as they appear in the Warrant
Register. Any such notice shall be sufficiently given if sent by first-class
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certified or registered mail, postage prepaid, facsimile or overnight
courier.
(b) In the event (i) of any consolidation or merger or binding
exchange of interests to which the Company is a party and for which approval of
the Lender or any holders of equity interests of the Company is required, or of
the conveyance or sale of all or substantially all of the assets of the Company,
or of any change of the Common Stock or other securities issuable upon exercise
of the Series K Warrants (other than the Rights Offering for which no notice
shall be required); or (ii) the Company shall make any distribution in respect
of the Common Stock; or (iii) of the voluntary or involuntary dissolution,
liquidation or winding up of the Company; then the Company shall send to each
Warrantholder at least thirty days prior to the applicable date hereinafter
specified, a written notice stating (A) the date for the determination of the
holders of Common Stock (or other securities issuable upon the exercise of the
Series K Warrants) entitled to receive any such distribution, (B) the initial
expiration date set forth in any offer for exchange of interests, or (C) the
date on which any such consolidation, merger, exchange of interests, conveyance,
transfer, reclassification, dissolution, liquidation or winding up is expected
to become effective or consummated, and the date as of which it is expected that
holders of record of Common Stock (or other securities issuable upon the
exercise of the Warrants) shall be entitled to exchange such Common Stock for
securities or other property, if any, deliverable upon such reclassification,
consolidation, merger, exchange of interests, conveyance, transfer, dissolution,
liquidation or winding up.
SECTION 8.2 Notices to Company. Any notice or demand authorized by this
Agreement to be given to or on the Company shall be delivered in person or by
facsimile transmission, by courier guaranteeing overnight delivery or mailed by
first-class United States certified or registered mail, postage prepaid, to the
Company as follows:
I-Link Incorporated
00000 Xxxxx Xxxxxxxxx Xxxx Xxxxx
Xxxxx 000
Xxxxxx, Xxxx 00000
Attention: Xxxx X. Xxxxxxx, President
Telecopier: 000-000-0000
with copy to:
Xxxxx X. Xxxxx, Esq.
00 X. Xxxxx Xxxxxx
Xxxxx 0000
Xxxx Xxxx Xxxx, Xxxx 00000
Telecopier: (000) 000-0000
SECTION 8.3 Receipt of Notice. Any notice hereunder shall be in writing
and shall be deemed to have been duly given if personally delivered, sent by
overnight courier or sent by United States mail, or by telex or facsimile
transmission, and will be deemed received (a) if sent by certified or registered
mail, return receipt requested, when actually received, (b) if sent by overnight
courier, when actually received, (c) if sent by telex or facsimile transmission,
on the date sent provided confirmatory notice is sent by overnight courier or by
first-class mail, postage prepaid, and (d) if delivered by hand, on the date of
receipt.
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ARTICLE 9
MISCELLANEOUS
SECTION 9.1 Arbitration.
(a) To the fullest extent not prohibited by law, any controversy,
claim or dispute arising out of or relating to this Agreement, including the
determination of the scope or applicability of this Agreement to arbitrate,
shall be settled by final and binding arbitration in accordance with the rules
then in effect of the American Arbitration Association ("AAA"), as modified or
supplemented under this section, and subject to the Federal Arbitration Act, 9
U.S.C. sectionsection 1-16. The decision of the arbitrators shall be final and
binding; provided, however, that where a remedy for breach is prescribed
hereunder or limitations on remedies are prescribed, the arbitrators shall be
bound by such restrictions, and judgment upon the award rendered by the
arbitrators may be entered in any court having jurisdiction thereof.
(b) If any series of claims arising out of the same or related
transactions shall involve claims which are arbitrable under the preceding
paragraph and claims which are not, the arbitrable claims shall first be
finally determined before suit may be instituted upon the others and the
parties will take such actio as may be necessary to toll any statutes of
limitations, or defenses based upon the passage of time, that are applicable to
such non-arbitrable claims during the period in which the arbitrable claims are
being determined.
(c) In the event of any controversy, claim or dispute that is
subject to arbitration under this Section 9.1, any party thereto may commence
arbitration hereunder by delivering notice to the other party or parties
thereto. Within five business days of delivery of a list of
qualified potential arbitrators from AAA, such parties shall attempt to agree on
one arbitrator; provided that if such parties cannot agree on one arbitrator
within such time period, each party to the controversy, claim or dispute shall
within five business days thereafter appoint one arbitrator, and the two
arbitrators so appointed shall within five business days of their appointment
mutually agree upon and appoint one additional arbitrator (or, if such
arbitrators cannot agree on an additional arbitrator, the additional arbitrator
shall be appointed by the AAA as provided under its rules); provided that
persons eligible to be selected as arbitrators shall be limited to attorneys at
law who (i) are on the AAA's Large, Complex Case Panel and (ii) have practiced
law for at least fifteen years as an attorney specializing in either general
commercial litigation or general corporate and commercial matters and.
(d) The arbitration hearing shall commence no later than thirty
business days after the completion of the selection of the arbitrators or at
such other time as the parties shall reasonably agree. Consistent with the
intent of the parties hereto that the arbitration be conducted as
expeditiously as possible, the parties agree that (i) discovery shall be
limited to the production of such documents and the taking of such
depositions as the arbitrator(s) determine are reasonably necessary to the
resolution of the controversy, claim or dispute and (ii) the arbitrator(s)
shall limit the presentation of evidence by each side in such arbitration to not
more than ten full days (or the equivalent thereof) or such shorter
period as the arbitrator(s) shall determine to be necessary in order to
resolve the controversy, claim or dispute. The arbitrator(s) shall be
instructed to render a decision within thirty calendar days of the close of
13
the arbitration hearing. If arbitration has not been completed within one
hundred and twenty days of the commencement of such arbitration hearing, any
party to the arbitration may initiate litigation upon ten days written notice to
the other party(ies); provided, however, that if one party has requested the
other to participate in an arbitration and the other has failed to participate,
the requesting party may initiate litigation before the expiration of such one
hundred twenty-day period; and provided, further, that if any party to the
arbitration fails to meet any of the time limits set forth in this Section 9.1
or set by the arbitrators in the arbitration, any other party may provide ten
days written notice of its intent to institute litigation with respect to the
controversy, claim or dispute without the need to continue or complete the
arbitration and without awaiting the expiration of such one hundred twenty-day
period. The parties hereto further agree that if any of the rules of the AAA
are contrary to or conflict with any of the time periods provided for hereunder,
or with any other aspect of the matters set forth in this Section 9.1, that such
rules shall be modified in all respects necessary to accord with the provisions
of this Section 9.1 (and the arbitrators shall be so instructed by the parties).
(e) The arbitrators shall base their decision on the terms of this
Agreement and the law of the State of Delaware, regardless of the law that might
be applicable under conflicts of law principles, and shall render their decision
in writing and include in such decision a statement of the findings of fact and
conclusions of law upon which the decision is based. Each party agrees to
cooperate fully with the arbitrator(s) to resolve any controversy, claim or
dispute. The arbitrator(s) shall not be empowered to award punitive damages or
damages in excess of actual damages. The venue for all arbitration proceedings
shall be Washington, D.C.
SECTION 9.2 Payment of Taxes. The Company covenants and agrees that it
will pay when due and payable all documentary, stamp and other taxes
attributable to the issuance or delivery of the Warrant Certificates or of the
Warrant Shares purchasable upon the exercise of Warrants; provided, however, the
Company shall not be required to pay any tax or taxes that may be payable in
respect of any transfer involving the issue of any Warrant Certificate(s) or any
certificate(s) for Warrant Shares in a name other than that of the Warrantholder
of such exercised Warrant Certificate(s).
SECTION 9.3 Amendment.
(a) The Company may modify this Agreement and the terms of the
Warrants only with the consent of the Warrantholders representing at least a
majority of the Warrant Shares for the purpose of adding any provision to or
changing in any manner or eliminating any of the provisions of this Agreement or
modifying in any manner the rights of the holders of the outstanding Series K
Warrants; provided, however, that no such modification that (i) materially and
adversely affects the exercise rights of the holders of the Series K Warrants,
or (ii) reduces the percentage required for modification, may be made without
the consent of the holder of all outstanding Warrants.
(b) Any such modification or amendment will be conclusive and binding
on all present and future holders of Warrant Certificates whether or not they
have consented to such modification or amendment or waiver and whether or not
notation of such modification or amendment is made upon such Warrant
Certificates. Any instrument given by or on behalf of any holder of a Warrant
Certificate in connection with any consent to any modification or amendment will
be conclusive and binding on all subsequent holders of such Warrant Certificate.
14
SECTION 9.4 Termination. This Agreement shall terminate on or upon (a)
the repurchase by the Company of all Series K Warrants, (b) the fifteenth day
following the date on which all of the Warrant Shares have been issued upon the
exercise of all Series K Warrants issued pursuant hereto, or (c) upon expiration
of the Exercise Period.
SECTION 9.5 Reports to Warrantholders. The Company will cause to be
delivered, by first-class mail, postage prepaid, facsimile or overnight
courier, to each Warrantholder at such Warrantholder's address appearing on
the Warrant Register, a copy of any reports delivered by the Company to any
of the holders of Preferred Stock or to holders of the Common Stock.
SECTION 9.6 GOVERNING LAW. THE LAWS OF THE STATE OF DELAWARE SHALL
GOVERN THIS AGREEMENT AND THE WARRANT CERTIFICATES WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAW.
SECTION 9.7 Benefits of this Agreement. Nothing in this Agreement shall
be construed to give to any Person other than the Company, the Warrantholders
and the holders of Warrant Shares any legal or equitable right, remedy or claim
under this Agreement; this Agreement shall be for the sole and exclusive benefit
of the Company, the Warrantholders and the holders of Warrant Shares.
SECTION 9.8 Counterparts. This Agreement may be executed in any number
of counterparts, and each of such counterparts shall for all
purposes be deemed to be an original, and all such counterparts shall together
constitute but one and the same instrument.
SECTION 9.9 Severability of Provisions. Any provision of this Agreement
that is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof or
affecting the validity or enforceability of such provision in any other
jurisdiction.
SECTION 9.10 Headings. The headings of the sections of this Agreement
are inserted for convenience only and shall not constitute a part of this
Agreement.
SECTION 9.11 Access to Company Records. So long as Series K Warrants
remain outstanding, the Lender shall be entitled to review the financial and
corporate books and records of the Company and to meet with the executive
officers and independent accountants of the Company for purposes reasonably
related to the Lender's ownership of the Series K Warrants, which review and/or
meetings shall take place at reasonable times during the normal business hours
of the Company and in such a manner as to not unduly interfere with the conduct
of the Company's business.
[SIGNATURE PAGE FOLLOWS]
15
IN WITNESS WHEREOF, the parties hereto have caused this Warrant
Agreement to be duly executed, as of the date first above written.
I-LINK INCORPORATED
By: /s Xxxx Xxxxxxx
Xxxx Xxxxxxx, President
WINTER HARBOR, L.L.C.
By: First Media, L.P., its member
By: First Media Corporation,
its sole general partner
By: /s Xxxxx X. Xxxxx, Xx.
Xxxxx X. Xxxxx, Xx., Secretary
16
EXHIBIT A
I-Link Incorporated
Common Stock Purchase Warrant
Number ____
Series K Warrant Certificate Evidencing Right to Purchase
1,100,000 Shares of Common Stock
This is to certify that WINTER HARBOR, L.L.C., a Delaware limited
liability company, or assigns, is entitled to purchase at any time or from
time to time up to the above-referenced number of shares of Common Stock
("Common Stock"), of I-Link Incorporated, a Florida corporation (the
"Company"), for the Exercise Price for the Series K Warrants specified in t the
Warrant Agreement, dated as of January 15, 1999, among the Company and Winter
Harbor, L.L.C. (the "Warrant Agreement"), pursuant to which this Warrant
Certificate is issued. All rights of the holder of this Warrant Certificate are
subject to the terms and provisions of the Warrant Agreement, copies of which
are available for inspection the Company's office located at 00000 Xxxxx
Xxxxxxxxx Xxxx Xxxxx, Xxxxx 000, Xxxxxx, Xxxx 00000 (the "Office"). The
Expiration Date (as defined in the Warrant Agreement) of the right to purchase
Common Stock pursuant to this Certificate is June 15, 2006.
NEITHER THE WARRANTS REPRESENTED BY THIS CERTIFICATE NOR THE SHARES OF
COMMON STOCK THAT MAY BE PURCHASED UPON EXERCISE HEREOF HAVE BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER ANY APPLICABLE STATE LAW.
SUCH WARRANTS AND SHARES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR
PLEDGED WITHOUT (1) REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
AND ANY APPLICABLE STATE LAW, OR (2) AN EXEMPTION FROM SUCH REGISTRATION IS
AVAILABLE.
Subject to the provisions of the Act, applicable state laws and such
Warrant Agreement, this Warrant Certificate and all rights hereunder are
transferable, in whole or in part, at the Office by the holder hereof in
person or by a duly authorized attorney, upon surrender of this Warrant
Certificate, together with the assignment hereof duly endorsed. Until
transfer of this Warrant Certificate on the books of the Company, the Company
may treat the registered holder hereof as the owner hereof for all purposes.
17
IN WITNESS WHEREOF, the Company has caused this Series K Warrant
Certificate to be executed on January 15, 1999, in Draper, Utah by its proper
corporate officers thereunto duly authorized.
I-LINK INCORPORATED,
a Florida corporation
By:_______________________________
Xxxx Xxxxxxx, President
Attest:_______________________
Name:_________________________
Title:________________________
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EXHIBIT B
ELECTION TO PURCHASE
(To be executed by the registered holder if
such holder desires to exercise any Warrant Certificate)
The undersigned, the registered holder of the attached Series Warrant
Certificate, hereby irrevocably elects to exercise Series K Warrants
represented by such Series K Warrant Certificate and acquire an aggregate of
______________ shares of Common Stock of I-Link Incorporated, a Florida
corporation, and herewith tenders payment for such Common Stock in the amount of
$__________ (by certified check or official bank check) in accordance with the
terms hereof. The undersigned requests that the aforementioned Common Stock be
registered in the name of _______________, whose address is
________________________ _________________________.
Dated:___________________
Name of registered holder of Series K Warrant Certificate:
___________________________________________________________________________
(please print)
Address of registered holder:____________________________________
Signature:_____________________________
(Note: the signature to the foregoing Election must correspond to the name
as written upon the face of the Series K Warrant Certificate in every
particular, without alteration or any change whatsoever.)
19
I-Link Incorporated
Common Stock Purchase Warrant Number____
Series K Warrant Certificate Evidencing Right to Purchase
1,100,000 Shares of Common Stock
This is to certify that WINTER HARBOR, L.L.C., a Delaware limited
liability company, or assigns, is entitled to purchase at any time or from
time to time up to the above-referenced number of shares of Common Stock
("Common Stock"), of I-Link Incorporated, a Florida corporation (the
"Company"), for the Exercise Price for the Series K Warrants specified in
the Warrant Agreement, dated as of January 15, 1999, among the Company and
Winter Harbor, L.L.C. (the "Warrant Agreement"), pursuant to which this
Warrant Certificate is issued. All rights of the holder of this Warrant
Certificate are subject to the terms and provisions of the Warrant
Agreement, copies of which are available for inspection the Company's
office located at 00000 Xxxxx Xxxxxxxxx Xxxx Xxxxx, Xxxxx 000, Xxxxxx,
Xxxx 00000 (the "Office"). The Expiration Date (as defined in the Warrant
Agreement) of the right to purchase Common Stock pursuant to this
Certificate is June 15, 2006.
NEITHER THE WARRANTS REPRESENTED BY THIS CERTIFICATE NOR THE SHARES
OF COMMON STOCK THAT MAY BE PURCHASED UPON EXERCISE HEREOF HAVE BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER ANY
APPLICABLE STATE LAW. SUCH WARRANTS AND SHARES MAY NOT BE OFFERED FOR
SALE, SOLD, TRANSFERRED OR PLEDGED WITHOUT (1) REGISTRATION UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND ANY APPLICABLE STATE LAW, OR
(2) AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE.
Subject to the provisions of the Act, applicable state laws and such
Warrant Agreement, this Warrant Certificate and all rights hereunder are
transferable, in whole or in part, at the Office by the holder hereof in
person or by a duly authorized attorney, upon surrender of this Warrant
Certificate, together with the assignment hereof duly endorsed. Until
transfer of this Warrant Certificate on the books of the Company, the
Company may treat the registered holder hereof as the owner hereof for
all purposes.
20
IN WITNESS WHEREOF, the Company has caused this Series K Warrant
Certificate to be executed on January 15, 1999, in Draper, Utah by its proper
corporate officers thereunto duly authorized.
I-LINK INCORPORATED,
a Florida corporation
By: s/ Xxxx Xxxxxxx
Xxxx Xxxxxxx, President
Attest: s/ Xxxxx X. Xxxxx
Name: Xxxxx X. Xxxxx
Title: Secretary
21
