PLEDGE AGREEMENT
THIS PLEDGE AGREEMENT is made and entered into as of April 14, 1998, by
and between I-LINK INCORPORATED, a Florida corporation (the "Pledgor"), and
Winter Harbor, L.L.C., a Delaware limited liability company (the "Pledgee").
RECITALS
The Pledgee has lent to the Pledgor $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"). The
Pledgor has requested that the Pledgee not demand payment on the Loans before
the earlier of May 15, 1998, and the date on which the Pledgor 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 Pledgor of not less than $6,000,000 (the earlier of such dates being
referred to hereinafter as the "Demand Date"). The Pledgor and the Pledgee
have entered into that certain Agreement dated as of even date herewith (as
the same may be extended, amended, restated or modified from time to time,
the "Agreement"), pursuant to which the Pledgee has agreed to such request.
Capitalized terms used herein and not otherwise defined shall have the
meanings assigned to them in the Agreement. As security for the Loans and
the Agreement, the Pledgor has agreed to enter into this Pledge Agreement.
AGREEMENTS
In consideration of Loans, credit or other financial accommodation
extended or continued from time to time to the Pledgor by the Pledgee, the
Pledgor does hereby agree as follows:
1. Pledge.
(a) The Pledgor hereby grants to the Pledgee, as security for
the Loans and the obligations of the Pledgor under the Agreement, a first
priority security interest in, and pledges, assigns, hypothecates and
transfers to the Pledgee, all of the Pledgor's interests in and right
and title to, all of the issued and outstanding shares of capital stock of
each of I-Link Systems, Inc., I-Link Communications, Inc. and MiBridge, Inc.
and all of the issued and outstanding limited liability company interests of
I-Link Worldwide, L.L.C. (together, the "Collateral").
(b) The Pledgor covenants and agrees with the Pledgee that from
and after the date of this Pledge Agreement and until the Loans and
obligations of the Pledgor under the Agreement are fully paid and satisfied:
(i) At any time and from time to time, upon the reasonable
written request of the Pledgee, and at the sole expense of the Pledgor, the
Pledgor will promptly and duly execute and deliver any and all such
instruments and documents and take such action as the Pledgee may reasonably
deem desirable to obtain the full benefits of this Pledge Agreement and of
the rights and powers herein granted, including, without limitation, the
execution and filing of any financing or continuation statements under the
Uniform Commercial Code with respect to the lien and security interest
granted hereby. The Pledgor also hereby authorizes the Pledgee to file
any
such financing or continuation statement without the signature of the Pledgor
to the extent permitted by applicable law. If any of the Collateral shall be
or become evidenced by any Instrument (as defined in Section 9-105(1)(i) of
the UCC), the Pledgor agrees to pledge such Instrument to the Pledgee and
shall duly endorse such Instrument in a manner satisfactory to the Pledgee
and deliver the same to the Pledgee.
(ii) For the Pledgee's further security, the Pledgor agrees
that the Pledgee shall have a special property interest in all of the
Pledgor's books and records pertaining to the Collateral and, upon
reasonable notice from the Pledgee, the Pledgor shall permit any
representative of the Pledgee to inspect such books and records and will
provide photocopies thereof to the Pledgee.
(iii) The Pledgor will not change its name, identity or
corporate structure in any manner which might make any financing or
continuation statement filed in connection herewith seriously misleading
within the meaning of Section 9-402(7) of the UCC (or any other then
applicable provision of the UCC) unless the Pledgor shall have given the
Pledgee at least 30 days prior written notice thereof and shall have taken
all action (or made arrangements to take such action substantially
simultaneously with such change if it is impossible to take such action in
advance) necessary or reasonably requested by the Pledgee to amend such
financing statement or continuation statement so that it is not seriously
misleading or to file a new appropriate financing statement. The Pledgor
will not change its principal place of business or remove its records from
its office located at 00000 Xxxxx Xxxxxxxxx Xxxx Xxxxx, Xxxxx 000, Xxxxxx,
Xxxx 00000, unless it gives the Pledgee at least 30 days prior written
notice thereof and has taken such action as is necessary to cause the
security interest of the Pledgee in the Collateral to continue to be
perfected.
(c) The Pledgor and the Pledgee agree that the Collateral shall be
subject to the terms and conditions hereinafter set forth as collateral
security for the Loans and the obligations of the Pledgor to the Pledgee
under the Agreement.
2. Representations and Warranties. The Pledgor represents and
warrants to the Pledgee as follows:
(a) the Collateral constitutes all of the capital stock of
each of I-Link Systems, Inc. ("Systems"), I-Link Communications, Inc.
("Communications") and MiBridge, Inc. ("MiBridge") and the limited liability
company interests of I-Link Worldwide, L.L.C. ("Worldwide");
(b) the Collateral is validly issued, fully paid and
nonassessable and is not subject to any liens, charges or encumbrances
whatsoever, except for the security interest granted pursuant hereto;
(c) there are no existing options, warrants or other rights to
purchase any of the Collateral;
(d) the execution, delivery and performance of this Pledge
Agreement will not conflict with, result in a breach of or constitute a
default under any indenture or agreement to which the Pledgor, Systems,
Communications, MiBridge or Worldwide is a party or by which any of them
is bound, or result in the creation or imposition of any lien, charge or
encumbrance of any nature whatsoever on any of their respective property or
assets;
(e) this Pledge Agreement constitutes the legal, valid and
binding obligation of the Pledgor, enforceable in accordance with its terms;
(f) the Pledgor has all requisite power and authority to enter
into this Pledge Agreement and to carry out the transactions contemplated
hereby; and
(g) no consent or approval of any person or entity is or will be
required in connection with the execution, delivery and performance of this
Pledge Agreement.
3. Term. The Collateral shall constitute security for the Loans
and the performance by the Pledgor of its obligations and liabilities under
the Agreement until the principal and interest due on the Loans are paid in
full and the Agreement shall have terminated, at which time the Pledgee
shall deliver prepare, execute, deliver and file all documents necessary to
evidence the termination of the security interest pursuant hereto, and this
Pledge Agreement shall thereupon terminate.
4. Voting. While the Collateral continues to be pledged to the
Pledgee, such Collateral shall remain in the name of the Pledgor, and the
Pledgor shall have and exercise all rights of ownership, including the right
to vote the Collateral; provided, however, that the Pledgor shall not vote
the Collateral in any manner that is inconsistent with the provisions of the
Agreement or this Pledge Agreement. If the Pledgor does not pay the full
amount outstanding on the Demand Date (an "Event of Default") the Pledgee
shall be entitled to the remedies set forth in Section 6 hereof.
5. Adjustments. The Pledgor agrees that in the event that during the
term of this Pledge Agreement any dividend, distribution,
reclassification, readjustment or other change is declared or made with
respect to the Collateral, or any subscription, warrant or other option is
exercisable with respect to the Collateral, it shall cause all new,
substituted or additional shares, limited liability company interests or
other securities issued by reason of any such change or option to be
pledged to the Pledgee in the same manner as the Collateral originally
pledged hereunder. There likewise shall be pledged to the Pledgee, to be
added to the pledged property and subject to the pledge, any and all
additional issued shares of Systems, Communications and MiBridge and limited
liability company interests of Worldwide to the Pledgor by way of dividend,
splits, rights, new securities or otherwise, to the end that all the issued
and outstanding shares of Systems, Communications and MiBridge and limited
liability company interests of Worldwide will be pledged to Pledgee.
6. Remedies. If an Event of Default shall occur, the Pledgee may,
after fifteen days prior notice to the Pledgor, sell, assign and deliver
the whole or, from time to time, any part of the Collateral or any interest
or part thereof, at any private sale or at public auction, for cash, or
credit or for other property, for immediate or future delivery, and for such
price or prices and on such terms as the Pledgee reasonably may determine to
be commercially reasonable. The Pledgee shall give the Pledgor reasonable
notice of the time and place of any public sale of the Collateral or the
time after which any private sale or other intended disposition thereof is to
be made. The requirement of reasonable notice shall be met if notice of such
sale or other intended disposition is mailed, by certified or registered
mail, return receipt requested, to the Pledgor at the address set forth in
Section 9 at least fifteen days prior to the time of such sale or other
intended disposition. The Pledgor hereby waives and releases any and all
right or equity of redemption whether before or after sale hereunder. At any
such sale the Pledgee may bid for and purchase for its own account the whole
or any part of the Collateral so sold, free from any such right or equity
of redemption. Upon completion of the sale, Pledgee shall deliver the
Collateral, or any portion thereof, to the purchaser or purchasers thereof.
The net proceeds of any such sale shall be applied as follows:
(i) First, to the expenses of the sale and enforcement of this
Pledge Agreement, including but not limited to, attorneys' fees and expenses,
including attorneys' fees out of court, in trial, on appeal, in bankruptcy
proceedings, or otherwise;
(ii) Second, to the payment of the Pledgor's obligations under
the Agreement, including, without limitation, the payment of interest and
principal under the Loans; and
(iii) Third, only after payment in full of the above, to the
payment to the Pledgor of any excess proceeds, along with any Collateral
remaining unsold, subject to the receipt of notice of and the provisions of
any other agreement between the parties with respect to the disposition of
said excess proceeds or unsold Collateral. Notwithstanding the sale or other
disposition of the Collateral by the Pledgee hereunder, the Pledgor shall
remain liable for any deficiency.
7. Encumbrances. During the term of this Pledge Agreement specified
in Section 3, the Pledgor shall not sell, assign, transfer or otherwise
dispose of, grant any option to any individual or entity other than the
Pledgee with respect to, or mortgage, pledge or otherwise encumber any of
the Collateral.
8. Miscellaneous.
8.1 Transfer taxes, if any, applicable to any transfer of the
Collateral upon the occurrence of an Event of Default or upon termination of
this Pledge Agreement shall be payable by the person or persons to whom the
shares are being transferred; provided, however, that the Pledgor agrees to
reimburse the Pledgee promptly for all such transfer taxes which the Pledgee
may be required to pay.
5
8.2 No single or partial exercise of any power hereunder shall
preclude other or future exercise thereof or the exercise of any other power.
The holder of the Loans may proceed against any portion of the security
held therefor in such order and in such manner as the holder may see fit,
without waiver of any rights with respect to any other security.
8.3 The Pledgee may deal in any manner with the Loans, the
Agreement or any other agreement required thereby without notice to or the
consent of the Pledgor, including, without limitation, in the following
manner:
(a) to modify, supplement or otherwise change any terms of
the Loans, the Agreement or any such other agreement (subject to any right
of the Pledgor to consent to any modification of or supplement or change to
any such terms); to grant any extension or renewal of the Loans, the
Agreement or such other agreement; to grant any other waiver or indulgence
with respect to the Loans, the Agreement or such other agreement; and to
effect any release, compromise or settlement with respect to the Loans, the
Agreement or such other agreement; and
(b) to consent to the substitution, exchange or release of
all or any part of any other security (other than the Collateral) at any
time held by the Pledgee as security or surety for the obligations secured
hereby.
9. Notices. All notices required to be sent hereunder shall be in
writing and shall be sent by registered mail, return receipt requested, to
the parties as follows:
To the Pledgor:
I-Link Incorporated
00000 Xxxxx Xxxxxxxxx Xxxx Xxxxx
Xxxxx 000
Xxxxxx, Xxxx 00000
Attention: Xxxx X. Xxxxxxx, President
To the Pledgee:
Winter Harbor, L.L.C.
00000 Xxxxxxxx Xxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxxxx, Xx.
Addresses may be changed by notice in writing to the other parties.
10. Choice of Law, etc. This Pledge Agreement shall be construed and
enforced under and governed by the laws of the State of Delaware, other than
the conflicts of law provisions thereof. This Pledge Agreement embodies the
entire agreement and understanding between the parties and supersedes all
prior agreements and understandings relating to the subject matter hereof,
and this Pledge Agreement may not be modified or amended or any term or
provision hereof waived or discharged except in writing signed by the party
against whom such amendment, modification, waiver or discharge is sought to
be enforced. This Pledge Agreement shall be binding on the successors,
assigns, and legal representatives of the parties hereto and shall inure to
the benefit of and be enforceable by their successors, assigns, and legal
representatives; provided, however, that neither the Collateral nor this
Pledge Agreement may be assigned or transferred in whole or in part,
voluntarily or involuntarily, by the Pledgor without the prior written
consent of the Pledgee, and the Pledgee may assign this Pledge Agreement and
all of its rights hereunder without any consent of the Pledgor. The headings
of this Pledge Agreement are for the purpose of reference only and shall not
limit or otherwise affect the meaning hereof. The Pledgor shall take such
further actions as may be reasonably requested by the Pledgee from time to
time in order to perfect the security interest of the Pledgee hereunder and
to assure and confirm onto the Pledgee its rights, powers and remedies
hereunder.
IN WITNESS WHEREOF, the parties hereto have caused this
Pledge Agreement to be executed on their behalf all as of the day and year
first above mentioned.
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
Name: Xxxxx X. Xxxxx
Title: Secretary
