-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, ESVCR0IaYKbNvyy7321aU+zQwGWMBpMgdBgYdqIotZSgIy7ZVCh8SPNQg0NhSq+D NaCfzToWBk478kbkRoPmYg== 0000849145-99-000005.txt : 19990325 0000849145-99-000005.hdr.sgml : 19990325 ACCESSION NUMBER: 0000849145-99-000005 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 11 CONFORMED PERIOD OF REPORT: 19990115 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19990323 FILER: COMPANY DATA: COMPANY CONFORMED NAME: I LINK INC CENTRAL INDEX KEY: 0000849145 STANDARD INDUSTRIAL CLASSIFICATION: TELEGRAPH & OTHER MESSAGE COMMUNICATIONS [4822] IRS NUMBER: 592291344 STATE OF INCORPORATION: FL FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 000-17973 FILM NUMBER: 99570685 BUSINESS ADDRESS: STREET 1: 13751 S WADSWORTH PK DR STREET 2: STE 200 CITY: DRAPER STATE: UT ZIP: 84020 BUSINESS PHONE: 8015765000 MAIL ADDRESS: STREET 1: 13751 S WADSWORTH PK DR STREET 2: STE 200 CITY: DRAPER STATE: UT ZIP: 84020 FORMER COMPANY: FORMER CONFORMED NAME: MEDCROSS INC DATE OF NAME CHANGE: 19920703 8-K 1 FORM 8-K SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ------------------------------------ FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 ------------------------------------ Date of Report (date of earliest event reported): January 15, 1999 ------------------------------------ I-LINK INCORPORATED (Exact name of registrant as specified in its charter) ------------------------------------ Florida 0-17973 59-2291344 (State or other (Commission (I.R.S. Employer jurisdiction of File Number) Identification No.) incorporation) 13751 South Wadsworth Park Drive, Suite 200, Draper, UT 84020 (Address of principal executive offices) Registrant's telephone number, including area code: (801) 576-5000 ------------------------------------ Item 5. Other Events On November 23, 1998 I-Link reached an agreement in principal for a new financing arrangement with Winter Harbor, LLC. ("Winter Harbor"), as reported by the Company in its Current Report of the same date, filed with the Securities Commission on December 18, 1998 (the "Prior Form 8-K"). On January 15, 1999, definitive agreements relating to such financing arrangement were executed by and among the Company, certain of its subsidiaries and Winter Harbor. Further, on March 4, 1999, certain terms of the basic operative document, the Loan Agreement, were amended. Substantive terms as set forth in the Prior Form 8-K remain the same except that, as amended, the date by which the Company must determine whether to repay its obligations under the transactions, or in the alternative issue additional warrants to Winter Harbor, was amended from February 1, 1999 to April 26, 1999. The Company has scheduled a Special Meeting of Stockholders on April 14, 1999 for consideration and approval of the transactions. To date, the Company has drawn approximately $8,042,000 under the Loan Agreement. As undertaken in the Prior Form 8-K, the Company hereby files this Current Report on Form 8-K to enter into the record, as exhibits hereto, the definitive agreements relating to the subject transactions. Item 7. Financial Statements and Exhibits (c) Exhibits 4.10 Amended and Restated Registration Rights Agreement dated as of January 15, 1999 by and between the Company and Winter Harbor, amending Registration Rights Agreement dated October 10, 1997. 10.38 Loan Agreement dated as of January 15, 1999 by and between the Company and Winter Harbor. 10.39 First Amendment to Loan Agreement dated March 4, 1999 by and between the Company and Winter Harbor. 10.40 Promissory Note dated November 10, 1998, in principal amount of $8,000,000 executed the by Company in favor of Winter Harbor. 10.41 Series K Warrant Agreement dated as of January 15, 1999 by and between the Company and Winter Harbor and form of Series K Warrant. 10.42 Subsidiary Guaranty dated as of January 15, 1999 executed by five of the Company's wholly-owned subsidiaries in favor of Winter Harbor. 10.43 Agreement dated as of January 15, 1999 by and between the Company and Winter Harbor. 10.44 First Amendment to Security Agreement dated as of January 15, 1999, by and among the Company, five of its wholly-owned subsidiaries and Winter Harbor, amending Security Agreement dated April 14, 1997. 10.45 First Amendment to Pledge Agreement dated as of January 15, 1999, by and among the Company and Winter Harbor, amending Pledge Agreement dated April 14, 1997. 10.46 Series D, E, F, G, H, I and J Warrant Agreement dated as of January 15, 1999 by and between the Company and Winter Harbor, and related forms of warrant certificates. 1 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. I-LINK INCORPORATED (Registrant) Dated: March 23, 1999 By: /s John W. Edwards John W. Edwards, President and Chief Executive Officer 2 EX-4 2 EXHIBIT 4.10 Exhibit 4.10 AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT THIS AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT (this "Agreement") is entered into 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 "Investor"). WHEREAS, the Company and the Investor entered into a Registration Rights Agreement dated as of October 10, 1997 (the "Original Agreement") pursuant to which the Company granted certain rights with respect to shares of the Company's Series M Participating Convertible Preferred Stock (the "Series M Preferred") and the Common Stock issuable upon conversion thereof and shares of Common Stock issuable upon exercise of the warrants issued to the Investor pursuant to a Securities Purchase Agreement (the "Securities Purchase Agreement"), dated as of September 30, 1997; and WHEREAS, the Company has entered into a Series D, E, F, G, H, I and J Warrant Agreement and a Series K Warrant Agreement with Investor; and WHEREAS, the Company has entered into an Agreement (the "Additional Agreement"), dated as of the date hereof, with Investor providing, in relevant part, for the conversion of certain loans between the Company and the Investor into Series M Preferred and for the issuance to Investor of certain warrants to acquire 11,740,000 shares of the Common Stock of the Company (the "Additional Warrants" and, together with the Series D, E, F, G, H, I, J and K Warrants, the "Warrants"); and WHEREAS, the Company has agreed to enter into this Agreement and to amend and restate the Original Agreement to grant the same rights with respect to shares of Common Stock issuable upon (i) exercise of the Warrants, (ii) conversion of the additional shares of Series M Preferred issuable pursuant to the Additional Agreement and (iii) any other shares of Common Stock of the Company which the Investor holds or may obtain in any manner at any time hereafter (the "Additional Shares"); NOW, THEREFORE, in consideration of the foregoing and of the mutual promises and covenants contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending legally to be bound, hereby agree as follows: ARTICLE 1 DEFINITIONS As used herein, the following terms shall have the following respective meanings: 1.1 "Commission" shall mean the Securities and Exchange Commission or any other federal agency at the time administering the Securities Act. 1.2 The terms "register," "registered" and "registration" refer to a registration effected by preparing and filing a registration statement in 1 compliance with the Securities Act, and the Commission's declaration or ordering of the effectiveness of such registration statement. 1.3 "Registrable Securities" shall mean (i) all shares of Series M Preferred at any time held by the Investor, whether issued to the Investor pursuant to the Securities Purchase Agreement, the Additional Agreement or otherwise, (ii) all shares which haven't been previously registered of the Company's Series N Convertible Preferred Stock (the "Series N Preferred") at any time held by the Investor, whether issued to the Investor pursuant to the Loan Agreement dated as of the date hereof between the Investor and the Company, the Rights Offering required pursuant to such Loan Agreement or otherwise, (iii) any other shares of preferred stock of the Company at any time held by the Investor, (iv) any and all shares of Common Stock of the Company issued or issuable upon the exercise of the Warrants, the exercise of any other warrants issued at any time by the Company to the Investor or the conversion of the Series M Preferred, the Series N Preferred or any other preferred stock of the Company held by the Investor (iv) all Additional Shares, and (v) all securities of the Company issued or issuable with respect to any securities referred to in clauses (i), (ii), (iii) and (iv) above, upon any stock split, stock dividend, reclassification, recapitalization or similar event, but excluding from the foregoing clauses (i), (ii), (iii) and (iv) shares that (y) have been sold to or through a broker, dealer or underwriter in a public distribution or a public securities transaction, or (z) are then eligible to be sold without limitation, pursuant to Rule 144(k) promulgated under the Securities Act (or any similar successor provision thereto), and the holder of such shares is not then an "affiliate" of the Company within the meaning of such Rule 144(k) (and has not been such an affiliate for the preceding three months); to the extent that such holder is an "affiliate" of the Company within the meaning of Rule 144, such that such holder's shares of underlying Common Stock are not eligible to be sold pursuant to Rule 144(k) without limitation, such shares of underlying Common Stock shall remain Registrable Securities. 1.4 "Registration Expenses" shall mean all expenses, except Selling Expenses, incurred by the Company in complying with Articles 2, 3 and 4 hereof and in effecting any registration described therein, including, without limitation, all registration, qualification and filing fees, printing expenses, escrow fees, fees and disbursements of legal counsel and accountants for the Company, fees and disbursements of one legal counsel for the selling shareholders, blue sky fees and expenses, and the expense of any special audits incident to or required by any such registration (but excluding the compensation of regular employees of the Company which shall be paid in any event by the Company). 1.5 "Securities Act" shall mean the Securities Act of 1933, as amended, or any similar federal statute and the rules and regulations of the Commission thereunder, all as the same shall be in effect at the time. 1.6 "Selling Expenses" shall mean all underwriting fees, discounts, selling commissions and stock transfer taxes applicable to the Registrable Securities registered by the Investor. ARTICLE 2 REQUESTED REGISTRATION 2.1 Request for Registration. The Investor may request, in writing, that the Company effect a registration or qualification with respect 2 to all or part of the Registrable Securities. In the event the Company shall receive from the Investor such a written request, the Company will: (a) use its best efforts to effect such registration or qualification as soon as practicable (including, without limitation, undertaking to file post-effective amendments, appropriate qualifications under applicable blue sky or other state securities laws, and undertaking to effect appropriate compliance with applicable regulations issued under the Securities Act, and any other governmental requirements or regulations) as may be so requested and as would permit or facilitate the sale and distribution of all or such portion of such Registrable Securities as are specified in such request; provided, however, that the Company shall not be obligated to take any action to effect any such registration, qualification or compliance pursuant to this Article 2: (i) In any particular jurisdiction in which the Company would be required to execute a general consent to service of process in effecting such registration, qualification or compliance, unless the Company is already subject to service in such jurisdiction and except as may be required by the Securities Act; (ii) After the Company has effected four such requested registrations pursuant to this Article 2 (not including registrations on Form S-3), each such registration has been declared or ordered effective, and the securities offered pursuant to each such registration have been sold; or (iii) If the Company then meets the eligibility requirements applicable to the use of Form S-3 in connection with such registration and is able to effect such requested registration pursuant to Article 4 hereof. (b) Subject to the foregoing clauses (i) through (iii), the Company shall file a registration statement covering the Registrable Securities so requested to be registered as soon as practicable after receipt of the request of the Investor; provided, however, that if the Company shall furnish to the Investor a certificate signed by the chief executive officer of the Company stating that in the good faith judgment of the Board of Directors of the Company, it would be seriously detrimental to the Company and its shareholders for such registration statement to be filed as a result of a pending corporate transaction, the Company shall have the right to defer such filing for a period of not more than 90 days after receipt of the request of the Investor, provided, however, that the Company shall not be permitted to exercise such deferral right under this Section 2.1(b) or Section 4.1(c) hereof more than once in any 365-day period. 2.2 Underwriting. (a) The distribution of the Registrable Securities covered by the request of the Investor may, at the option of the Investor, be effected by means of an underwritten offering. (b) If the Investor elects to sell Registrable Securities pursuant to an underwritten offering, the Company and the Investor shall enter into an underwriting agreement in customary form with a managing underwriter of nationally recognized standing selected for such underwriting by the Investor, subject to the approval of the Company, which will not be unreasonably withheld or delayed. Notwithstanding any other provision of 3 this Article 2, if the managing underwriter advises the Investor in writing that marketing factors require a limitation of the number of shares to be underwritten, then the underwriters may exclude shares requested to be included in such registration; provided, however, that the Investor shall have first claim on the number of shares of Registrable Securities that may be included in the registration. No Registrable Securities excluded from the underwriting by reason of the managing underwriter's marketing limitation shall be included in such registration. (c) If the Investor disapproves of the terms of the underwriting, the Investor may elect to withdraw therefrom by written notice to the Company and the managing underwriter. The Registrable Securities so withdrawn shall also be withdrawn from registration. 2.3 Inclusion of Shares by Company. If the managing underwriter for an underwritten offering has not limited the number of Registrable Securities to be underwritten, the Company may include securities for its own account or for the account of others in such registration if the managing underwriter so agrees and if the number of Registrable Securities held by the Investor which would otherwise have been included in such registration and underwriting will not thereby be limited. The inclusion of such shares shall be on the same terms as the registration of shares held by the Investor. In the event that the underwriters exclude some of the securities to be registered, the securities to be sold for the account of the Company and any other holders shall be excluded in their entirety prior to the exclusion of any Registrable Securities held by the Investor. ARTICLE 3 COMPANY REGISTRATION 3.1 Notice of Registration to the Investor. If at any time or from time to time the Company shall determine to register any of its securities, either for its own account or the account of a security holder or holders, other than (i) a registration relating solely to employee benefit plans on Form S-8 (or any successor form), (ii) a registration relating solely to a Commission Rule 145 transaction on Form S-4 (or any successor form) or (iii) a registration on Form S-3 relating to a "Rights Offering" of the Company's Series N Preferred Stock, the Company will: (a) promptly give to the Investor written notice thereof; and (b) include in such registration (and any related qualification under blue sky laws or other compliance), and in any underwriting involved therein, all the Registrable Securities specified in a written request or requests, made within 15 days after receipt by the Investor of such written notice from the Company described in Section 3.1(a). 3.2 Underwriting. If the registration of which the Company gives notice is for a registered public offering involving an underwriting, the Company shall so advise the Investor as a part of the written notice given pursuant to Section 3.1(a). In such event, the right of the Investor to registration pursuant to this Article 3 shall be conditioned upon the Investor's participation in such underwriting and the inclusion of the Investor's Registrable Securities in the underwriting to the extent provided herein. If the Investor proposes to distribute its securities through such underwriting, it shall (together with the Company) enter into an underwriting 4 agreement in customary form with the managing underwriter selected for such underwriting by the Company. (a) Notwithstanding any other provision of this Article 3, if the managing underwriter determines that marketing factors require a limitation of the number of shares to be underwritten, the underwriter may exclude some or all Registrable Securities from such registration and underwriting. The Company shall so advise the Investor, and the number of shares of Common Stock to be included in such registration shall be allocated as follows: first, for the account of the Company, all shares of Common Stock proposed to be sold by the Company; second, for the account of the Investor participating in such registration, the number of shares of Common Stock requested to be included in the registration by the Investor at the time of filing the registration statement, and third, for the account of any other shareholders of the Company participating in such registration, the number of shares of Common Stock requested to be included in the registration by such other shareholders in proportion, as nearly as practicable, to the respective amounts of Common Stock that are proposed to be offered and sold by such other shareholders of Common Stock at the time of filing the registration statement. No Registrable Securities excluded from the underwriting by reason of the underwriters' marketing limitation shall be included in such registration. (b) The Company shall advise the Investor of any such limitation and of the number of shares of Registrable Securities held by the Investor that may be included in the registration and underwriting at the time of filing the registration statement. If the Investor disapproves of the terms of any such underwriting, the Investor may elect to withdraw therefrom by written notice to the Company and the managing underwriter. Any securities excluded or withdrawn from such underwriting shall be withdrawn from such registration. (c) The Company shall have the right to terminate or withdraw any registration initiated by it under this Article 3 prior to the effectiveness of such registration, whether or not the Investor has elected to include securities in such registration. ARTICLE 4 REGISTRATION ON FORM S-3 4.1 Request for Registration. (a) In addition to the rights set forth in Articles 2 and 3 hereof, if the Investor requests that the Company file a registration statement on Form S-3 (or any successor to Form S-3) for a public offering of shares of Registrable Securities in which the reasonably anticipated aggregate price to the public, net of underwriting discounts and fees, would exceed $500,000 and the Company is a registrant entitled to use Form S-3 (or any successor form to Form S-3) to register such shares for such an offering, the Company shall use its best efforts to cause such shares to be registered for the offering as soon as practicable on Form S-3 (or any such successor form to Form S-3). (b) Notwithstanding the foregoing, the Company shall not be obligated to take any action pursuant to this Article 4: (i) in any particular jurisdiction in which the Company 5 would be required to execute a general consent to service of process in effecting such registration, qualification or compliance, unless the Company is already subject to service in such jurisdiction and except as may be required by the Securities Act; (ii) more than once in any twelve-month period. (c) Subject to the foregoing clauses (i) and (ii), the Company shall file a registration statement on Form S-3 covering the Registrable Securities so requested to be registered as soon as practicable after receipt of the request of the Investor; provided, however, that if the Company shall furnish to the Investor a certificate signed by the chief executive officer of the Company stating that in the good faith judgment of the Board of Directors of the Company, it would be seriously detrimental to the Company and its shareholders, as the result of a pending corporate transaction, for such registration statement to be filed on or before the date filing would be required, and it is therefore essential to defer the filing of such registration statement, the Company shall have the right to defer such filing for a period of not more than 90 days after receipt of the request of the Investor (provided, however, that the Company shall not be permitted to exercise such deferral right under this Section 4.1(c) or Section 2.1(b) hereof more than once in any 365-day period). 4.2 Underwriting. (a) The distribution of the Registrable Securities covered by the registration on Form S-3 shall be effected by means of the method of distribution selected by the Investor. If such distribution is effected by means of an underwriting, the right of the Investor to registration pursuant to this Article 4 shall be conditioned upon the Investor's participation in such underwriting, if any, and the inclusion of the Investor's Registrable Securities in such underwriting. (b) If the distribution of the Registrable Securities pursuant to this Section 4.2 is effected by means of an underwriting, the Company and the Investor shall enter into an underwriting agreement in customary form with a managing underwriter of nationally recognized standing selected for such underwriting by the Investor. Notwithstanding any other provision of this Article 4, if the managing underwriter advises the Investor in writing that marketing factors require a limitation of the number of shares to be underwritten, then the underwriters may exclude some or all of the shares requested to be included in such registration, provided, however, that the Investor shall have first claim on the number of shares of Registrable Securities that may be included in the registration. No Registrable Securities excluded from the underwriting by reason of the managing underwriter's marketing limitation shall be included in such registration. (c) If the distribution of the Registrable Securities pursuant to this Section 4.2 is effected by means of an underwriting and if the Investor disapproves of the terms of the underwriting, the Investor may elect to withdraw therefrom by written notice to the Company and the managing underwriter. The Registrable Securities and/or other securities so withdrawn shall also be withdrawn from registration. 4.3 Inclusion of Shares by Company. If the distribution of the Registrable Securities pursuant to this Article 4 is effected by means of an 6 underwriting and if the managing underwriter has not limited the number of Registrable Securities to be underwritten, the Company may include securities for its own account or for the account of others in such registration if the managing underwriter so agrees and if the number of Registrable Securities held by the Investor requesting registration on Form S-3 which would otherwise have been included in such registration and underwriting will not thereby be limited. The inclusion of such shares shall be on the same terms as the registration of shares held by the Investor requesting such registration. In the event that the underwriters exclude some of the securities to be registered on Form S-3, the securities to be sold for the account of the Company and any other holders shall be excluded in their entirety prior to the exclusion of any Registrable Securities held by the Investor. ARTICLE 5 EXPENSES OF REGISTRATION All Registration Expenses incurred in connection with any registration, qualification or compliance pursuant to Articles 2, 3 or 4 shall be borne by the Company. Selling Expenses attributable to the sale of Registrable Securities by the Investor shall be borne by the Investor. ARTICLE 6 REGISTRATION PROCEDURES In the case of each registration or qualification effected by the Company pursuant to this Agreement, the Company will keep the Investor advised in writing as to the initiation of each registration and qualification and as to the completion thereof. At its expense, the Company will: (a) Keep such registration or qualification effective and current for a period of 180 days (or such longer period as may be necessary to accommodate the filing of amendments or supplements necessary to comply with the Securities Act) or until the Investor has completed the distribution described in the registration statement relating thereto, whichever first occurs; (b) Furnish such number of prospectuses and other documents incident thereto as the Investor from time to time may reasonably request; (c) Use its best efforts to register and qualify the securities covered by such registration statement under such other securities or blue sky laws of such jurisdictions as shall be reasonably requested by the Investor or any managing underwriter for the distribution of the Registrable Securities covered by the registration statement; provided that the Company shall not be required in connection therewith or as a condition thereto to qualify to do business or to file a general consent to service of process in any such states or jurisdiction; (d) Use its best efforts to cause all Registrable Securities covered by the registration statement to be listed or accepted for quotation on a national securities exchange or automated quotation system; (e) In the event of any underwritten public offering, enter into and perform its obligations under an underwriting agreement, in usual and customary form, with the managing underwriter of such offering. The 7 Investor participating in such underwriting shall also enter into and perform its obligations under such an agreement; (f) Subject to receiving reasonable assurances of confidentiality, for a reasonable period after the filing of such registration statement, and throughout each period during which the Company is required to keep a registration effective, make available for inspection by the Investor, and any underwriters, and their respective counsel, such financial and other information and books and records of the Company, and cause the officers, directors, employees, counsel and independent certified public accountants of the Company to respond to such inquiries as shall be reasonably necessary, in the judgment of such counsel, to conduct a reasonable investigation within the meaning of Section 11 of the Securities Act; (g) Notify the Investor, at any time when a prospectus relating thereto covered by such registration statement is required to be delivered under the Securities Act, of the occurrence of any event as a result of which the prospectus included in such registration statement, as then in effect, includes an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein not misleading in the light of the circumstances then existing; and (h) Promptly notify the Investor and any underwriters, and confirm such advice in writing, (i) when such registration statement or the prospectus included therein or any prospectus amendment or supplement or post-effective amendment has been filed, and, with respect to such registration statement or any post-effective amendment, when the same has become effective, (ii) of any comments by the Commission, by the National Association of Securities Dealers Inc. ("NASD"), and by the blue sky or securities commissioner or regulator of any state with respect thereto or any request by any such entity for amendments or supplements to such registration statement or prospectus or for additional information, (iii) of the issuance by the Commission of any stop order suspending the effectiveness of such registration statement or the initiation or threatening of any proceedings for that purpose, (iv) if at any time the representations and warranties of the Company cease to be true and correct in all material respects, and (v) of the receipt by the Company of any notification with respect to the suspension of the qualification of the Registrable Securities covered by the registration statement for sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose. ARTICLE 7 INDEMNIFICATION 7.1 The Company will indemnify the Investor, each of its officers, directors, members, partners, shareholders, employees and agents, and each person controlling any such persons within the meaning of Section 15 of the Securities Act, with respect to which registration or qualification has been effected pursuant to this Agreement, and each underwriter, if any, and each person who controls any underwriter within the meaning of Section 15 of the Securities Act, against all expenses, claims, losses, damages and liabilities (or actions in respect thereof), including any of the foregoing incurred in settlement of any litigation, commenced or threatened, arising out of or based on (i) any untrue statement (or alleged untrue statement) of a material fact contained in any registration statement, prospectus, offering circular 8 or other document, or any amendment or supplement thereof, incident to any such registration or qualification, or (ii) any omission (or alleged omission) to state therein, a material fact required to be stated therein or necessary to make the statements therein, not misleading, or (iii) any violation (or alleged violation) by the Company of any rule or regulation promulgated under the Securities Act or any state securities laws applicable to the Company and relating to action or inaction by the Company in connection with any such registration or qualification, and will reimburse the Investor, each of its officers, directors, members, partners, shareholders, employees and agents, and each person controlling any such persons, each such underwriter and each person who controls any such underwriter, for any legal and any other expenses reasonably incurred in connection with investigating, preparing or defending any such claim, loss, damage, liability or action; provided, however, that the Company will not be liable in any such case to the extent that any such claim, loss, damage, liability or expense arises out of or is based on any untrue statement or omission or alleged untrue statement or omission, made in reliance upon and in conformity with written information furnished to the Company by the Investor or underwriter and expressly intended for use in such registration statement, prospectus, offering circular or other document, or any amendment or supplement thereof. Expenses (including attorneys' and accountants' fees) incurred in defending a civil or criminal claim, action, suit, or proceeding shall be paid by the Company in advance of the final disposition of the matter upon receipt of an undertaking satisfactory to the Company by or on behalf of any person or entity entitled to indemnification pursuant to this Section 7.1 to repay such amount if such person or entity is ultimately determined not to be entitled to indemnity. 7.2 The Investor will, if Registrable Securities held by the Investor are included in the securities as to which such registration or qualification is being effected, indemnify the Company, each of its directors and officers, each underwriter, if any, of the Company's securities covered by such a registration statement, and each person who controls the Company or such underwriter within the meaning of Section 15 of the Securities Act, against all expenses, claims, losses, damages and liabilities (or actions in respect thereof), including any of the foregoing incurred in settlement of any litigation, commenced or threatened, arising out of or based on (i) any untrue statement (or alleged untrue statement) of a material fact contained in any such registration statement, prospectus, offering circular or other document, or any amendment or supplement thereto, incident to any such registration, qualification or compliance or (ii) any omission (or alleged omission) to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, and will reimburse the Company, such directors, officers, underwriters or control persons for any legal or any other expenses reasonably incurred in connection with investigating, preparing or defending any such claim, loss, damage, liability or action, in each case to the extent, but only to the extent, that such untrue statement (or alleged untrue statement) or omission (or alleged omission) is made in such registration statement, prospectus, offering circular, other document or amendment or supplement in reliance upon and in conformity with written information furnished to the Company by the Investor and expressly intended for use in such registration statement, prospectus, offering circular or other document, or any amendment or supplement thereof; provided, however, that the obligations of the Investor hereunder shall be limited to an amount equal to the net proceeds to the Investor from the sale of Registrable Securities sold pursuant to registration as contemplated herein. 9 7.3 Each party entitled to indemnification under this Section 7 (the "Indemnified Party") shall give notice to the party required to provide indemnification (the "Indemnifying Party") promptly after such Indemnified Party has actual knowledge of any claim as to which indemnity may be sought, and shall permit the Indemnifying Party to assume the defense of any such claim or any litigation resulting therefrom, provided that counsel for the Indemnifying Party, who shall conduct the defense of such claim or litigation, shall be approved by the Indemnified Party, whose approval shall not unreasonably be withheld. The Indemnified Party may participate in such defense at such party's expense; provided, however, that the Indemnifying Party shall bear the expense of such defense of the Indemnified Party if representation of both parties by the same counsel would be inappropriate due to actual or potential conflicts of interest. The failure of any Indemnified Party to give notice as provided herein shall not relieve the Indemnifying Party of its obligations under this Agreement, unless such failure is materially prejudicial to the ability of the Indemnifying Party to defend the action. No Indemnifying Party, in the defense of any such claim or litigation, shall, except with the consent of each Indemnified Party, consent to entry of any judgment or enter into any settlement which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such Indemnified Party of a release from all liability in respect of such claim or litigation. 7.4 If the indemnification provided for in Section 7.1 or 7.2 is unavailable or insufficient to hold harmless an Indemnified Party, then each Indemnifying Party shall contribute to the amount paid or payable by such Indemnified Party as a result of the expenses, claims, losses, damages or liabilities (or actions or proceedings in respect thereof) referred to in Section 7.1 or 7.2, in such proportion as is appropriate to reflect the relative fault of the Company on the one hand and the sellers of Registrable Securities on the other hand in connection with statements or omissions which resulted in such losses, claims, damages or liabilities (or actions or proceedings in respect thereof) or expenses, as well as any other relevant equitable considerations. The relative fault shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company or the sellers of Registrable Securities and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such untrue statement or omission. The Company and the Investor agree that it would not be just and equitable if contributions pursuant to this Section 7.4 were to be determined by pro rata allocation (even if all sellers of Registrable Securities were treated as one entity for such purpose) or by any other method of allocation which does not take account of the equitable considerations referred to in the first sentence of this Section 7.4. The amount paid by an Indemnified Party as a result of the expenses, claims, losses, damages or liabilities (or actions or proceedings in respect thereof) referred to in the first sentence of this Section 7.4 shall be deemed to include any legal or other expenses reasonably incurred by such Indemnified Party in connection with investigating or defending any claim, action or proceeding which is the subject of this Section 7.4. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. The obligations of sellers of Registrable Securities to contribute pursuant to this Section 7.4 shall be several in proportion to the respective amount of Registrable Securities sold by them pursuant to a registration statement. 10 ARTICLE 8 INFORMATION BY INVESTOR The Investor holding Registrable Securities included in any registration shall furnish in writing to the Company such information regarding the Investor and the distribution proposed by the Investor as the Company may reasonably request in writing and as shall be reasonably required in connection with any registration or qualification referred to in this Agreement. ARTICLE 9 RULE 144 REPORTING With a view to making available the benefits of certain rules and regulations of the Commission which may at any time permit the sale of securities of the Company to the public without registration, at such time as a public market exists for the Common Stock of the Company, the Company agrees to: 9.1 Make and keep public information available as those terms are understood and defined in Rule 144 under the Securities Act, at all times; and 9.2 Use its best efforts to file with the Commission in a timely manner all reports and other documents required of the Company under the Securities Act and the Securities Exchange Act of 1934, as amended (the "Exchange Act"), at any time that it is subject to such reporting requirements; and 9.3 So long as the Investor owns any Registrable Securities, furnish to the Investor forthwith upon request a written statement by the Company as to its compliance with the reporting requirements of said Rule 144, and of the Securities Act and the Exchange Act, a copy of the most recent annual or quarterly report of the Company, and such other reports and documents of the Company as the Investor may reasonably request in availing itself of any rule or regulation of the Commission allowing the Investor to sell any such securities without registration. ARTICLE 10 TRANSFER OF REGISTRATION RIGHTS The rights to cause the Company to register securities granted to the Investor under Articles 2, 3 and 4 hereof may be assigned in connection with any permitted transfer or assignment of the Investor's Registrable Securities. All transferees and assignees of the rights to cause the Company to register securities granted to the Investor under Articles 2, 3 and 4 hereof, as a condition to the transfer of such rights, shall agree in writing to be bound by the agreements set forth herein. ARTICLE 11 LIMITATIONS ON REGISTRATION RIGHTS GRANTED TO OTHER SECURITIES 11.1 Existing Registration Rights. The Company covenants, warrants and represents that: (a) The registration rights of the Company's Class B 11 Preferred Stock ("Class B"), Class C Preferred Stock ("Class C") and Series D Preferred Stock ("Series D") are subordinated in all respects to the rights of holders of the Series M Preferred in any offering made under Articles 2, 3 or 4 herein. The registration rights of holders of the Company's capital stock acquired after the date hereof shall be subordinated in all respects to the rights of holders of the other Registrable Securities in any offering made under Articles 2, 3 or 4 herein. (b) If holders of Class B, Class C and/or Series D shares request registration under circumstances similar to those in Articles 2, 3 or 4 hereof (a "Requested Registration"), the Company shall: (i) promptly give to the Investor written notice thereof; (ii) include in any Requested Registration (and any qualification under blue sky laws or other compliance), and in any underwriting involved therein, all the Registrable Securities specified in a written request or requests, made within 15 days after receipt of such written notice from the Company described in Section 11.1(b)(i) by the Investor; (iii) pay any Registration Expenses related to the Registrable Securities included in the Requested Registration; and (iv) upon expiration of the 15-day period prescribed in Section 11.1(b)(ii), promptly give each holder of Class B, Class C and/or Series D written notice of the number of Registrable Securities to be included in the Requested Registration and that if the underwriters exclude some of the securities to be registered, the securities to be sold for any Class B, Class C or Series D holder shall be excluded in their entirety prior to the exclusion of any Registrable Securities. 11.2 Additional Registration Rights. The parties hereto agree that additional holders of capital stock of the Company providing new financing to the Company may, in connection with the Company's obtaining such new financing, be granted registration rights subordinate to those granted herein, with respect to any or all securities of the Company held by them; provided, however, that from and after the date of this Agreement, the Company shall not without the prior written consent of the Investor, enter into any agreement with any holder or prospective holder of any securities of the Company providing for the grant to such holder of registration rights superior to those granted herein. ARTICLE 12 MISCELLANEOUS 12.1 Aggregation. Shares of capital stock of the Company owned by partnerships and corporations having substantially common ownership interests or managed by the same principals and owned by individual investors affiliated with one another may be aggregated for the purposes of calculating the aggregate percentage of capital stock of the Company owned by the Investor and any permitted transferee hereunder. 12.2 Waivers and Amendments. With the written consent of the Company and the Investor, the obligations and rights of the Company and the Investor under this Agreement may be waived (either generally or in a particular instance, either retroactively or prospectively, and either for a 12 specified period of time or indefinitely) or amended. This Agreement or any provision hereof may be amended, waived, discharged or terminated only by a statement in writing signed by the party against which enforcement of the amendment, waiver, discharge or termination is sought, except to the extent provided in this Section 12.2. 12.3 Damages. The Company recognizes and agrees that the Investor will not have an adequate remedy if the Company fails to comply with the provisions of this Registration Rights Agreement regarding registration and that damages will not be readily ascertainable, and the Company expressly agrees that, in the event of such failure, the Company shall not oppose an application by the Investor, or any other person entitled to the benefits of these provisions, requiring specific performance of any provisions hereof or enjoining the Company from continuing to commit any such breach of such provisions. 12.4 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 without regard to principles of conflicts of law. 12.5 Successors and Assigns. Except as otherwise expressly provided herein, the provisions hereof shall inure to the benefit of, and be binding upon, the successors, assigns, heirs, executors and administrators of the parties hereto. 12.6 Entire Agreement. This Agreement constitutes the full and entire understanding and agreement between the parties with regard to the subject matter hereof. 12.7 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: if to the Company: I-Link Incorporated 13751 South Wadsworth Park Drive Suite 200 Draper, Utah 84020 Attention: John W. Edwards, President Telecopier: 801-576-5075 with a copy to: David E. Hardy, Esq. 60 E. South Temple Suite 2200 Salt Lake City, Utah 84111 Telecopier: (801) 364-6664 if to the Investor, at the address shown in the records of the Company. 13 or, in any such case, at such other address or addresses as shall have been furnished in writing by such party to the others. 12.8 Severability. In case any provision of this Agreement shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions of this Agreement shall not in any way be affected or impaired thereby. 12.9 Titles and Subtitles. The titles of the sections and subsections of this Agreement are for convenience of reference only and are not to be considered in construing this Agreement. 12.10 Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be an original, but all of which together constitute one instrument. [SIGNATURE PAGE FOLLOWS] 14 IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written. I-LINK INCORPORATED By: /s John Edwards John Edwards, 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 Ralph W. Hardy Jr. Ralph W. Hardy Jr., Secretary 15 EX-10 3 EXHIBIT 10.38 Exhibit 10.38 LOAN AGREEMENT THIS LOAN 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: Borrower desires to borrow from Lender from time to time up to $8,000,000 on a term loan basis, the proceeds of which will be used for capital expenditures and working capital purposes in the operations of the Borrower and its subsidiaries. AGREEMENTS: IN CONSIDERATION of the mutual promises and agreements herein contained, Lender and Borrower agree as follows: ARTICLE I. AMOUNT AND TERMS OF THE LOAN Section 1.1 The Loan. Lender agrees from time to time, upon the terms and conditions hereinafter set forth, to make a loan or loans to Borrower in an aggregate principal amount not to exceed at any one time outstanding up to $8,000,000 (the "Loan"), $5,158,288 of which remains available for borrowing from the date hereof. As of the date hereof, the Lender has lent to the Borrower and the Borrower has borrowed from the Lender the principal amount of $4,841,712 in the amounts and on the dates set forth on Exhibit 2, attached hereto. $600,000 of such amount represents (a) accrued and unpaid interest and (b) accrued and unpaid expenses (the loans made as of the date hereof and such interest and expenses may be referred to hereinafter collectively as the "Preexisting Loans"), which amounts have not been paid and remain outstanding. The Borrower hereby acknowledges receipt of such funds and such debt and agrees that the Preexisting Loans shall be governed by the terms and conditions of this Agreement and the Loan Documents. The Preexisting Loan and the Loans shall be referred to herein collectively as the "Loan" or "Loans". The Loans shall be junior in right of payment to the loans in the aggregate principal amount of $7,768,000 made by Lender to Borrower prior to the date hereof (the "Prior Loans") and shall be pari passu with all other debt and liabilities of Borrower. Section 1.2 The Note. The outstanding principal amount of the Loan shall be evidenced by and subject to the terms of a promissory note, dated the date of the first borrowing hereunder, substantially in the form set forth as Exhibit 1 hereto (as amended, renewed, restated, increased, consolidated or substituted from time to time, the "Note"), payable to the order of Lender. Section 1.3 Interest. The Loan shall bear interest on the unpaid principal amount thereof at a rate per annum at all times equal to the sum of the rate of interest announced in the Wall Street Journal (Eastern Edition) as the prime rate from time to time (the "Prime Rate") plus (a) from November 10, 1998 through and including February 9, 1999, 4% per annum; (b) 1 from February 10, 1999 through and including May 8, 1999, 5% per annum; (c) from May 10, 1999 through and including August 9, 1999, 6% per annum; (d) and thereafter, 7% per annum (the "Interest Rate"). The prime rate functions as a reference rate index. The Prime Rate will automatically change as and when such prime rate changes. Interest shall be calculated on the basis of a year of 365 days and the actual number of days elapsed during the period for which such interest is payable. Interest shall begin to accrue on the outstanding principal amount of the Loan on the date of disbursement of all or a portion of the Loan. Accrued interest shall be paid monthly on the last business day of each calendar month until all principal and interest hereunder is paid in full at the repayment or maturity of the Loan. Upon the occurrence of any Event of Default (as that term is defined in Section 7.1), the entire outstanding principal amount of the Loan and (to the extent permitted by law) unpaid interest thereon and all other amounts due hereunder shall bear interest, from the date of occurrence of such Event of Default until the earlier of the date the Loan is paid in full and the date on which such Event of Default is cured or waived in writing, at an interest rate equal to the sum of the applicable Interest Rate plus 2% per annum, which shall be payable upon demand. Section 1.4 Principal Repayment. The outstanding principal balance of the Loan plus any accrued and unpaid interest thereon shall be due and payable on October 31, 1999 (the "Maturity Date"). The Loans shall be converted into Series N Preferred Stock upon consummation of the Rights Offering (as those terms are defined in Section 1.6(b)(iii)) in accordance with the provisions of Section 1.6(b)(iii). Section 1.5 Use of Proceeds and Advancement of Funds. Each borrowing hereunder shall be made by Lender in such amount as Borrower shall request in writing five business days prior to the date of the requested borrowing, provided that each borrowing shall be no more than $1,000,000. Borrower shall not be permitted to make more than five additional borrowings hereunder. The obligation of Lender to make any portion of the Loan is conditioned upon the fact that (i) no Event of Default and no event which with the lapse of any applicable grace period or the giving of notice or both would constitute an Event of Default (a "Potential Default") shall then exist or immediately after the Loan would exist; (ii) all of the Loan Documents (as that term is defined in Section 4.2) shall still be in full force and effect; (iii) the representations and warranties contained herein and in the Loan Documents shall be true and correct in all material respects as if made on and as of the date of such borrowing, except to the extent that any thereof expressly relate to an earlier date; and (iv) the Borrower's actual results of operations shall equal or exceed its monthly budget projections delivered to, and approved by, the Lender. Section 1.6 Prepayments. (a) Voluntary Prepayments. By written notice to Lender no later than 12:00 noon, Delaware time on the business day prior to such prepayment, Borrower may, at its option, prepay the Loan in whole at any time or in part from time to time without penalty or premium; provided, however, that each partial prepayment shall be in the aggregate principal amount of not less than $100,000 or an integral multiple of $50,000 in excess thereof. 2 (b) Mandatory Prepayments. (i) Proceeds of Asset Sales. Borrower shall make a mandatory prepayment of the Loan in an amount equal to the cash proceeds of any sale by it or any of its subsidiaries of any material assets, net of any reasonable costs directly incurred in connection with such sale and any taxes payable in connection with such sale. Together with any prepayment required by this Section, Borrower shall deliver to Lender a certificate executed by Borrower's chief financial officer setting forth the calculation of the net cash proceeds of such sale, including a calculation of the taxes payable in respect of such sale. Such prepayment shall be made simultaneously with the consummation of such sale. (ii) Net Equity and Debt Proceeds. If Borrower issues or sells any shares of its capital stock or other equity interests or securities convertible into or exercisable for any shares of its capital stock or other equity interests or incurs any indebtedness for borrowed money, it shall, within five days of such sale, issuance or incurrence, make a mandatory prepayment of the Loan in an amount equal to 100% of the cash proceeds thereof, net of any reasonable costs directly incurred in connection with such sale, issuance or incurrence; provided, however, that no such prepayment shall be required in connection with any such issuance or sale (a) in connection with an acquisition (including by way of merger or consolidation or share exchange) by Borrower, which acquisition is approved by Lender, of the stock or assets of another person in a transaction pursuant to which the purchase price is paid in whole or in part by the delivery of capital stock of Borrower to the seller or (b) to employees of Borrower or any of its subsidiaries pursuant to stock option or other employee benefit plans approved by Lender. (iii) Rights Offering. Borrower shall make a rights offering (the "Rights Offering") to all of its existing shareholders for $20,000,000 of a newly created class of Series N Convertible Preferred Stock (the "Series N Stock") having the terms and conditions set forth on Schedule I attached hereto and such other terms and conditions as may be reasonably acceptable to Borrower and Lender. Borrower shall file the documents relating to the Rights Offering with the Securities and Exchange Commission (the "SEC") no later than January 15, 1999. If Borrower mails the Rights Offering materials to its shareholders by the earlier of March 10, 1999 and that business day which is three business days following the receipt of clearance from the SEC (the "Mailing Date"), and consummates the Rights Offering by the earlier of April 16, 1999 and that business day which is the first business day following the 35th calendar day from the Mailing Date (the "Consummation Date"), then, so long as Borrower shall have notified Lender of such conversion on or prior to March 15, 1999, Borrower shall cause the outstanding principal amount of the Loans, together with all accrued interest to be converted into Series N Stock. Lender shall have the right, but not the obligation, to subscribe for any Series N Stock not otherwise subscribed for as part of the Rights Offering. (c) Application of Prepayments. All voluntary and mandatory prepayments of the Loan shall be applied first to accrued interest and then to the principal outstanding under the Loan. No amount so prepaid may be reborrowed. Section 1.7 Payment on Non-Business Days. Whenever any payment to be made hereunder or under the Note shall be due on a Saturday, Sunday or public 3 holiday, such payment may be made on the next succeeding business day, and such extension of time in such case shall be included in the computation of interest hereunder and under the Note. Section 1.8 Taxes. All sums payable by Borrower hereunder or under the Note, whether of principal, interest, fees, expenses or otherwise, shall be paid in full, free of any deductions or withholdings for any and all present and future taxes, levies, imposts, stamps, duties, fees, assessments, deductions, withholdings, and other governmental charges and all liabilities with respect thereto. If Borrower is prohibited by law from making payments hereunder or under the Note free of such deductions or withholdings, then Borrower shall pay such additional amount as may be necessary in order that the actual amount received by Lender after such deduction or withholding shall equal the full amount stated to be payable hereunder or under the Note. Section 1.9 Standby Letters of Credit. The Lender shall assist the Borrower in acquiring $3,000,000 aggregate stated amount of standby letters of credit (the "Standby Letter of Credit") to guaranty the Borrower's obligations under $3,000,000 of equipment capitalized leases. The Lender shall act as the account party, guarantying the Borrower's obligation to repay the Standby Letter of Credit. The amount of Lender's commitment in Section 1 shall be reduced by the aggregate stated amount of all Standby Letters of Credit issued pursuant to this Section. Borrower shall bear all costs and expenses of issuance of the Standby Letters of Credit, including any application or issuance fees, any annual fees and all attorneys fees. In addition, Borrower shall pay, at the beginning of each annual period, to the Lender a fee of 1.0% per annum on the stated amount of all Standby Letters of Credit. Upon any draw on a Standby Letter of Credit, Lender shall be deemed to have made a Loan to Borrower which shall bear interest in accordance with the provisions of Section 1.3 hereof. Section 1.10 Warrants. (a) As further consideration for Lender's commitment to make available the Loans and to arrange the Standby Letter of Credit, Borrower will grant to Lender warrants ("Warrants") to purchase a certain number of shares of the Borrower's common stock pursuant to the terms of a Warrant Agreement (the "Warrant Agreement"). Such Warrant Agreement shall have an exercise period of 7.5 years from the date hereof and shall grant the Lender the right to acquire (i) one Warrant for (A) every $10 in Loan proceeds made available to the Borrower hereunder and (B) every $10 of the aggregate stated amount of the Standby Letters of Credit and (ii) an additional nine Warrants for (A) every $10 in Loan proceeds made available to the Borrower hereunder upon the occurrence of an Event of Default 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 Letter of Credit; provided, however, in the event that a Equity Transaction (as defined below) occurs on or after February 1, 1999 and prior to March 15, 1999, then the Borrower shall issue to the Lender the additional Warrants referenced in subclauses (ii) (A) and (B) of this Section 1.10 prior to such Equity Transaction. As used herein, "Equity Transaction" shall mean (pursuant to a single transaction or a series of related transactions by a single party or related parties (other than the Lender)) (i) the acquisition of 20% or more of the Borrower's capital stock; (ii) the sale of all or substantially all of the assets of the Borrower; or (iii) repayment, directly or indirectly, of all or any portion of the Loan in 4 connection with the sale of the Borrower's capital stock or the sale or license of the Borrower's technology. (b) The Warrants shall have a strike price of $2.78 (the "Strike Price"), which Strike Price shall reset (the "Reset Price") to the lower of (i) $2.78; (ii) the average trading price for any 20 day period subsequent to the issuance of such Warrants; (iii) the price at which common stock or common stock equivalents of the Borrower is issued (whether by conversion, exercise or otherwise and whether any such security is outstanding on the date hereof); and (iv) the exercise price or conversion rate of any new options, warrants, preferred stock or other convertible security; provided, however the Reset Price shall not be below $1.25. ARTICLE II. CLOSING Section 2.1 Closing and Closing Date. The making of each disbursement of the Loan and the other transactions contemplated hereby shall take place on a date set forth in a notice delivered by Borrower to Lender at least five days before such date or at such other date and at such place as to which the parties may agree (the "Closing" and the "Closing Date"). Subject to the terms and conditions hereof, upon the fulfillment or waiver in writing of all the conditions precedent set out in Article IV below, Lender shall disburse such portion of the Loan to Borrower as Borrower may request. ARTICLE III. SECURITY Section 3.1 Guaranty. As partial security for the Loan, Borrower shall cause each of its subsidiaries listed on Schedule 3.1 hereto (the "Subsidiaries"), to execute and deliver to Lender, on or before the Closing Date, a guaranty (the "Guaranty"), in form and substance satisfactory to Lender, pursuant to which the Subsidiaries shall guarantee the obligations of Borrower to Lender hereunder and under the Note. Section 3.2 Security Interest. As further security for the Loan, Borrower shall, and shall cause its Subsidiaries to, execute and deliver to Lender, on or before the date hereof, an amendment to the security agreement, dated April 14, 1998 (as amended, the "Security Agreement"), in form and substance satisfactory to Lender, pursuant to which Borrower and its Subsidiaries grant to Lender a security interest in substantially all of their personal property (other than equipment leased to Borrower and its Subsidiaries and any leases which by their terms prohibit the grant of security interests in, or assignments of, Borrower or the Subsidiaries' leasehold interest therein) as collateral security for their obligations under the Guaranty and for Borrower's obligations hereunder and under the Note. The Security Interests granted pursuant to this amendment shall be subordinate to the security interest securing the Prior Loans. In addition, Borrower shall cause I-Link to execute and deliver to Lender, on or before the Closing Date, a patent assignment in form and substance satisfactory to Lender (the "Patent Assignment"), pursuant to which I-Link collaterally assigns to Lender as security for I-Link's obligations under the Guaranty and Borrower's obligations hereunder and under the Note its interest in all patent applications it has filed with the United States Patent and Trademark Office, including without limitation Patent Application No. 08/599,238 filed February 9, 1996 and entitled "Voice Internet Transmission System" and Patent Application No. 08/585,628 filed January 16, 1996, and entitle "Facsimile Internet Transmission System." 5 Section 3.3 Pledge Agreement. As further security for the Loan, on or before the Closing Date, Borrower shall execute and deliver to Lender an amendment to the pledge agreement, dated April 14, 1998 (as amended, the "Pledge Agreement"), in form and substance satisfactory to Lender, pursuant to which Borrower grants to Lender a security interest in all of the issued and outstanding equity interests of the Subsidiaries as collateral security for Borrower's obligations hereunder and under the Note. ARTICLE IV. CONDITIONS OF LENDING Section 4.1 Conditions Precedent to Loan. The obligation of Lender to disburse from time to time any portion of the Loan hereunder is subject to the following conditions precedent: (a) Lender shall have received all of the following, on or before the Closing Date, in form and substance satisfactory to Lender: (i) The Note, duly executed and delivered by Borrower; (ii) The Guaranty, duly executed and delivered by the Subsidiaries; (iii) The Security Agreement, together with appropriate UCC-1 financing statements duly executed and delivered by the Subsidiaries, and the Patent Assignment; (iv) The Pledge Agreement, duly executed and delivered by Borrower, together with stock certificates and blank stock powers, as applicable; (v) Certified copies of the resolutions of the Board of Directors of each of Borrower and the Subsidiaries evidencing approval of the execution, delivery and performance of this Agreement, the Note, the Guaranty, the Security Agreement, the Patent Assignment, the Pledge Agreement and other matters contemplated hereby; (vi) Certificates of Good Standing for each of Borrower and its Subsidiaries from the jurisdiction of their organization and from each other jurisdiction in which any is authorized to conduct business issued no more than ten days prior to the Closing Date; (vii) Copies of UCC, judgment and tax lien searches in each jurisdiction in which collateral covered by the Security Agreement is located, naming the Subsidiaries as debtors; (viii) Copies of the certificates evidencing the insurance required to be maintained by Borrower pursuant to Section 6.1(e); and (ix) Such other agreements, certificates, opinions of counsel and documents as Lender may reasonably require. Section 4.2 Compliance. All of the representations and warranties of Borrower and the Subsidiaries in this Agreement, the Guaranty, the Security Agreement, the Pledge Agreement, the Patent Assignment, the Warrant Agreement and in each other agreement, document, or instrument executed or delivered pursuant hereto or thereto (collectively, the "Loan Documents") shall be true and accurate in all material respects on and as of the 6 Closing Date and the date of any subsequent disbursement of any portion of the Loan, as if made on and as of such date and time. Borrower shall be in compliance with all of the applicable terms and provisions of this Agreement and no Event of Default or Potential Default shall have occurred and be continuing. Borrower shall have performed all obligations and taken all actions to be performed or taken by it hereunder on or prior to such date. On the date of each borrowing, Borrower shall deliver to Lender a certificate, dated as of such date and signed by an executive officer of Borrower, certifying compliance with the conditions of this Section 4.2. Each disbursement of all or a portion of the Loan to Borrower shall in and of itself, constitute a representation and warranty that Borrower as of the date of such Loan, is in compliance with this Section, and if Borrower is not in compliance with this Section, Lender shall not be required to disburse such Loan to Borrower. ARTICLE V. REPRESENTATIONS AND WARRANTIES In order to induce Lender to enter into this Agreement and make the Loan, Borrower represents and warrants as follows: Section 5.1 Existence and Standing. (a) Borrower is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Florida, is qualified to do business and in good standing under the laws of each other jurisdiction in which it conducts its business, and has all requisite power and authority, corporate or otherwise, to conduct its business, to own its properties and to execute and deliver, and to perform all of its obligations under, this Agreement, the Note, the Pledge Agreement, the Warrant Agreement and all other Loan Documents. (b) Each Subsidiary is duly organized, validly existing and in good standing under the laws of its jurisdiction of organization, is qualified to do business and in good standing under the laws of each other jurisdiction in which it conducts its business, and has all requisite power and authority, corporate or otherwise, to conduct its business, to own its properties and to execute and deliver, and to perform all of its obligations under, each Loan Document to which it is a party. Section 5.2 Authorizations, Compliance with Laws. The execution, delivery and performance by each of Borrower and its Subsidiaries of each Loan Document to which it is a party, and of each other document required to be executed and delivered by it pursuant to this Agreement or any other Loan Document, have been duly authorized by all necessary corporate action and do not and will not (i) violate (A) any provision of any law, rule, regulation, order, writ, judgment, injunction, decree, determination or award presently in effect having applicability to Borrower or any of its Subsidiaries or (B) any provision of the Certificate of Incorporation, By-laws or other organizational documents of Borrower or any of its Subsidiaries; or (ii) result in a breach of or constitute a default under any agreement or instrument to which Borrower or its Subsidiaries is a party or by which any of their properties may be affected; or (iii) result in the creation of a lien, charge or encumbrance of any nature upon Borrower's or any of its Subsidiaries' properties or assets other than as contemplated by this Agreement. Section 5.3 Financial Statements. Borrower has delivered to Lender true and complete copies of (a) the audited consolidated financial statements of 7 Borrower for the fiscal years ended December 31, 1997, December 31, 1996, and December 31, 1995, and (b) the unaudited consolidated financial statements of Borrower as of September 30, 1998, and for the three month period then ended (the "Financial Statements"). The Financial Statements are true and complete in all material respects (including, without limitation, a disclosure of all material contingent liabilities) and present fairly the financial condition and results of operations of Borrower and its subsidiaries, as of the dates and for the periods indicated and have been prepared in accordance with generally accepted accounting principles, consistently applied, subject in the case of statements for interim periods to normal year-end adjustments and the absence of footnotes. Section 5.4 Capitalization. All of the issued and outstanding capital stock of Borrower has been duly and validly issued, and is fully paid and nonassessable. All of the issued and outstanding equity interests of the Subsidiaries have been duly and validly issued, and is fully paid and nonassessable and is free and clear of any liens (except for the lien of Mr. Drore Nahumi on the capital stock of MiBridge, Inc.), security interests or other claims or encumbrances, except those granted to Lender pursuant to the terms of this Agreement and the other Loan Documents. Except as set forth on Schedule 5.4 attached hereto, neither Borrower nor any other person has any commitment or obligation, either firm or conditional, to issue, deliver, purchase or sell, under any offer, option agreement, bonus agreement, purchase plan, incentive plan, compensation plan, warrant, conversion rights, contingent share agreement, stockholders agreement, partnership agreement or otherwise, any capital stock or other equity securities or securities convertible into shares of capital stock or other equity securities. Section 5.5 No Consent. No authorization, consent, approval, license, exemption of or filing or registration with any court or governmental department or agency or any other person is or will be necessary for the valid execution, delivery and performance by Borrower or any of its Subsidiaries of this Agreement, the Note, the Pledge Agreement, the Guaranty, the Security Agreement, the Warrant Agreement or any other document required to be executed and delivered by Borrower and its Subsidiaries pursuant to this Agreement. Section 5.6 Binding Obligations. This Agreement, the Note, the Pledge Agreement, the Guaranty, the Security Agreement, the Warrant Agreement and all other documents required to be executed and delivered by Borrower and its Subsidiaries pursuant to this Agreement have been executed and delivered by a duly authorized officer of Borrower and its Subsidiaries and constitute legal, valid and binding obligations of Borrower and its Subsidiaries, enforceable in accordance with their respective terms. Section 5.7 Litigation. There are no actions, suits or proceedings pending, or, to the knowledge of Borrower, threatened against or affecting Borrower or its Subsidiaries or any of their properties before any court or governmental department or agency which materially adversely affects the transactions contemplated by this Agreement or which could have a material adverse effect on the business, properties, prospects, operation or condition (financial or otherwise) of Borrower or any of its Subsidiaries. Section 5.8 No Default. Neither Borrower nor any of its Subsidiaries is in material default in the performance, observance or fulfillment of any of the obligations or conditions contained in any material agreement or instrument to which it is a party, nor with respect to any order, judgment, writ, injunction or decree of any court, governmental authority or 8 arbitration board. Section 5.9 Compliance with Laws. Each of Borrower and each of its Subsidiaries has complied and is in compliance in all material respects with all applicable federal, state and local laws. Each of Borrower and each of its Subsidiaries has obtained all necessary licenses and permits required for the conduct of its business and operations or such licenses and permits have been applied for and are now being diligently pursued. Section 5.10 Taxes. Except as set forth on Schedule 5.10 attached hereto, each of Borrower and each of its Subsidiaries has filed all tax returns and reports (federal, state and local) required to be filed by it, and has paid all taxes shown thereon, including interest and penalties, and all assessments received by it (except to the extent that the same are being contested in good faith by appropriate proceedings diligently prosecuted and as to which adequate reserves have been set aside on the books of Borrower and its Subsidiaries, as appropriate, in conformity with generally accepted accounting principles). Section 5.11 Title to Properties. Each of Borrower, and each of its Subsidiaries has good and marketable title to all of its property and assets and valid and enforceable leasehold interests in the property which it holds under lease, all such property, assets and leasehold interests being free and clear of any and all mortgages, deeds of trust, assignments, liens, security interests, charges, encumbrances or adverse claims of any nature whatsoever, and no mortgages, deeds of trust, financing statements or other evidences of security interests covering all or any of the aforesaid property are on file among the records of any public office. Each of Borrower and each of its Subsidiaries owns or possesses the valid right to use all the patents, patent applications, patent and know-how licenses, inventions, technology, permits, trademark registrations and applications, trademarks, service marks, trade names, copyrights, product designs, applications, formulae, processes, circulation, and other subscriber lists, industrial property rights and licenses and rights in respect of the foregoing used or necessary for the conduct of its business (collectively, "proprietary rights"). Borrower is not aware of any existing or threatened infringement or misappropriation of (a) any such proprietary rights of others by Borrower or any of its subsidiaries or (b) any proprietary rights of Borrower or any of its subsidiaries by others. Section 5.12 Absence of Undisclosed Liabilities. Except for (i) obligations under the Loan Documents, and (ii) liabilities incurred in the ordinary course of business (other than for borrowed money), neither Borrower, nor any of its Subsidiaries has any material liabilities or obligations of any nature, whether accrued, absolute, contingent or otherwise. Section 5.13 Solvency. Each of Borrower and each of its Subsidiaries has received, or has the right to receive, consideration which is the reasonable equivalent value of the obligations and liabilities that it has incurred to Lender. Neither Borrower, nor any of its Subsidiaries is insolvent as defined in Section 101 of Title 11 of the United States Code or any applicable state insolvency statute, nor, after giving effect to the consummation of the transactions contemplated herein, will Borrower or its Subsidiaries be rendered insolvent by the execution and delivery of this Agreement, the Note or the other Loan Documents to Lender. Neither Borrower, nor any of its Subsidiaries is engaged, and is not about to engage, in any business or transaction for which the assets retained by it shall be an 9 unreasonably small capital, taking into consideration the obligations to Lender incurred hereunder and under the Loan Documents. Neither Borrower, nor any of its Subsidiaries intends to, nor believes that it will, incur debts beyond its ability to pay them as they mature. Section 5.14 Material Misstatement. No statement made herein or in any other Loan Document or information, exhibit or report furnished by Borrower or its Subsidiaries to Lender in connection with this Agreement or its negotiation, contains any material misstatement of fact or omits to state a material fact or any fact necessary to make the foregoing not misleading. Section 5.15 Absence of Material Adverse Effect. No material adverse effect upon or change in (a) the properties, assets, business, operations or condition (financial or otherwise) of the Borrower and its Subsidiaries taken as a whole or on the ability of the Borrower and its Subsidiaries to conduct their businesses, or (b) the ability of the Borrower or any of its Subsidiaries to perform its obligations hereunder or under any other Loan Document to which it is a party has occurred since September 30, 1998. ARTICLE VI. COVENANTS OF BORROWER Section 6.1 Affirmative Covenants. So long as the Note shall remain unpaid and this Agreement shall not have been terminated, Borrower hereby agrees that it will, and that it will cause each of its subsidiaries to, unless Lender shall otherwise consent in writing: (a) Payment of Obligations. Pay punctually and discharge when due: (i) all indebtedness heretofore or hereafter incurred; (ii) all taxes, assessments and governmental charges or levies imposed upon it or its income or profits, or upon any properties belonging to it; (iii) all claims or demands of materialmen, mechanics, carriers, warehousemen, landlords and other like persons which, if unpaid might become a lien or charge upon the property of Borrower or such subsidiary; provided that this covenant shall not require the payment of any of the matters set forth in (i), (ii) and (iii) above if the same shall be contested in good faith and by proper proceedings diligently pursued and as to which adequate reserves have been set aside on the books of Borrower or such subsidiary in accordance with generally accepted accounting principles. (b) Preservation of Existence. Preserve and maintain its respective corporate existence, and all material rights, franchises, licenses and privileges used or useful in the operation of its business. (c) Maintenance of Properties. Maintain and preserve all of its properties necessary or useful in the proper conduct of its business in good working order and condition, ordinary wear and tear excepted. (d) Compliance with Laws. Comply in all material respects with the requirements of all applicable laws, rules, regulations and orders of any governmental authority. (e) Maintenance of Insurance. Maintain with responsible and reputable insurance companies insurance policies on all of its properties and covering such risks, including public liability and workers' compensation, in such amounts as are usually carried by companies engaged in similar businesses and owning similar properties as Borrower or its subsidiaries, and promptly upon execution thereof provide to Lender copies of all such policies and any riders 10 or amendments thereto; the policies of insurance required hereunder shall name Lender as an additional loss payee or additional insured, as applicable, and shall provide that Lender shall receive at least thirty days written notice prior to the cancellation, termination or alteration of any such policy. (f) Operations in Ordinary Course. Continue to operate its business in the ordinary course. (g) Perfection of Liens. Do all things requested by Lender to preserve and perfect as first and second liens and security interests of Lender arising pursuant to the Security Agreement, the Pledge Agreement or any other agreement required hereunder. (h) Governmental Approval. If counsel to Lender reasonably determines that the consent of the Federal Communications Commission or any other federal, state or local governmental or licensing authority is required in connection with the execution, delivery and performance of this Agreement, the Note, the Pledge Agreement, the Guaranty, the Security Agreement, the Warrant Agreement or any other document delivered to Lender in connection herewith or therewith or as a result of any action which may be taken pursuant hereto or thereto, then Borrower, at its sole cost and expense, agrees to use its best efforts to secure such consent and to cooperate with Lender in any action commenced by Lender to secure such consent. (i) Agreements. Comply with its obligations under the Loan Documents. (j) Information and Inspection. Furnish to Lender from time to time, upon request, full information pertaining to any covenant, provision or condition hereof, or to any matter connected with its books, records, operations, financial condition, properties, activities or business. At all reasonable times, Borrower shall permit any authorized representatives designated by Lender to visit and inspect any of the properties of Borrower or any of its subsidiaries and its books and records, and to take extracts therefrom and make copies thereof, and to discuss Borrower's and its subsidiaries' affairs, finances and accounts with the management and independent accountants of Borrower. (k) Rights Offering. The Borrower shall (i) mail the Rights Offering to its shareholders as soon as practicable, but in no event later than the Mailing Date and (ii) consummate the Rights Offering as soon as practicable, but in no event later than the Consummation Date. Section 6.2 Negative Covenants. So long as the Note shall remain unpaid and this Agreement shall not have been terminated, Borrower hereby agrees that it will not, and that it will not permit any of its subsidiaries to, without Lender's prior written approval or pursuant to an agreement to which the Lender is a party: (a) Indebtedness. Create or incur, assume or suffer to exist any indebtedness, obligation or liability (or guaranty the indebtedness, obligation or liability of any other person), whether matured or unmatured, liquidated or unliquidated, direct or contingent, joint or several, except for: (i) indebtedness evidenced by the Note; (ii) indebtedness (other than for borrowed money) incurred in the ordinary course of business, and (iii) obligations or liabilities arising under the Loan Documents. (b) Liens. Except as disclosed herein, create, assume or suffer to 11 exist, directly or indirectly, any security interest, mortgage, deed of trust, pledge, lien, charge or other encumbrance, of any nature whatsoever upon any of its properties or assets, now owned or hereafter acquired, excluding, however, from the operation of this covenant: (i) any security interest or lien created pursuant to or in connection with this Agreement or securing the Loan; (ii) liens for taxes or assessments either not delinquent or the validity of which are being contested in good faith by appropriate legal or administrative proceedings and as to which adequate reserves shall have been set aside on its books, in conformity with generally accepted accounting principles; (iii) materialmen's, mechanics', carriers', workmen's, repairmen's, warehousemen's or other like statutory liens arising in the ordinary course of business and either not yet due and payable or being contested in good faith by appropriate legal proceedings and as to which adequate reserves shall have been set aside on its books, in conformity with generally accepted accounting principles; (iv) deposits or pledges to secure payment of workers' compensation, unemployment insurance or other social security benefits or obligations; or (v) any judgment lien, singly or aggregated with other judgment liens, in an amount less than $25,000, unless the judgment it secures shall not, within thirty days after the entry thereof, have been discharged, vacated, reversed, or execution thereof stayed pending appeal, or shall not have been discharged, vacated or reversed within thirty days after the expiration of any such stay. (c) Disposition of Assets. Sell, transfer, lease or otherwise dispose of any of its assets or properties (including without limitation the sale or other disposition of the capital stock or other equity interests in any subsidiary) other than sales of assets in the ordinary course of business and the disposition of obsolete or other assets which the board of directors of Borrower determines in good faith are no longer useful in the operations of Borrower's or any of its subsidiaries' business. (d) Merger; Acquisition; Joint Ventures; Liquidation. Enter into any consolidation or merger with, or into any acquisition of all or substantially all of the properties or assets of any person or entity; or enter into any partnership or joint venture with any other person; or dissolve or liquidate. (e) Transfer or Issuance of Shares. Issue or permit the transfer of any shares of the capital stock or other equity interests of Borrower or any subsidiary, or any options, warrants, convertible securities or other rights to purchase Borrower's or any subsidiary's stock or other equity interests except pursuant to the Loan Documents. (f) Change of Business. Change, in any material respect, the nature or character of its business as currently conducted, or engage in any activity not reasonably related to such business. (g) Remove Assets. Permit any of its Subsidiaries to remove any of 12 its assets to a jurisdiction in which no financing statement on Form UCC-1 has been filed by Lender with respect to such assets. (h) Distributions or Dividends. Other than with respect to the Rights Offering, declare or make, directly or indirectly, any payment or distribution to any of the shareholders of Borrower, or incur any liability for the purchase, acquisition, redemption or retirement of any capital stock of Borrower or as a dividend, return of capital or other payment or distribution of any kind to any shareholder of Borrower or any other affiliate of Borrower (other than any stock dividend or stock split or similar distribution payable only in capital stock of Borrower) in respect of Borrower's capital stock. (i) Transactions with Affiliates. Enter into any transaction or agreement, other than the Loan Documents, with any affiliate of Borrower or any affiliate of any shareholder of Borrower unless the terms of such transaction or agreement are fair and reasonable and no more onerous to Borrower or such subsidiary than could be obtained from an independent third party in an arms-length transaction. (j) Contracts. Enter into any contract or commitment except for contracts involving aggregate payments of less than $50,000 individually or $250,000 in the aggregate and contracts which can be terminated without penalty on thirty days notice or less, or amend or terminate any material contract (or waive any substantial right thereunder), or incur any obligation (including obligations relating to the borrowing of money or guarantee of indebtedness). (k) Adverse Change. Suffer any material adverse change in the business, assets, properties, prospects or condition (financial or otherwise) of Borrower or any subsidiary, or any damage, destruction or loss affecting any assets used or useful in the conduct of the business of Borrower or any subsidiary. (l) Employee Compensation. Suffer any material increase in excess of the reasonable range in the telecommunications industry for similarly situated companies in the same or similar markets in compensation payable or to become payable to any employees, or any bonus payment made or promised to any employee, or any material change in personnel policies, insurance benefits or other compensation arrangements affecting any employees, provided that nothing in this clause shall be construed to limit or restrict the commission compensation of employees who may be participating in I-Link's multi-level marketing program. (m) Cancellation of Debts. Cancel any material debts owed to or claims held by Borrower or any subsidiary. (n) Investments. Purchase or otherwise acquire, hold or invest in any stock or other securities or evidences of indebtedness of, or any interest or investment in, or make or permit to exist any loans or advances to, any other person, except: (i) direct obligations of the United States Government maturing within one year; (ii) certificates of deposit of a member bank of the Federal Reserve System having capital, surplus and undivided profits in excess of $2,000,000,000; 13 (iii) any investment in commercial paper which at the time of such investment is assigned the highest quality rating in accordance with the rating systems employed by either Moody's Investors Service, Inc. or Standard & Poor's Corporation; (iv) money market funds; and (v) investments in its existing subsidiaries. (o) Write-Down. Suffer any significant write-down of the value of any assets or any significant write-off as uncollectible of any accounts receivable without the prior written consent of Lender except and as required by generally accepted accounting principles as required to present accurate financial information on Borrower and its subsidiaries. (p) Rights. Transfer or grant any right under, or enter into any settlement regarding the breach or infringement of, any license, patent, copyright, trademark, service mark, trade name, franchise, or similar right, or modify any existing right relating to Borrower or any of its subsidiaries. (q) Agreements. Terminate, amend or commit any material breach or default under the Loan Documents. (r) Subsidiaries. Create or acquire any subsidiary unless Lender shall have approved such action in advance and Borrower shall have taken all actions required by Lender to grant Lender a first priority security interest in all of the issued and outstanding stock or other equity interests of such subsidiary and caused such subsidiary to execute and deliver to Lender a guaranty and security agreement in substantially the form of the Guaranty and Security Agreement. Borrower acknowledges and agrees that until such time as such security interest is granted and perfected, Lender shall have an equitable lien in the stock of any subsidiary created or acquired by Borrower. (s) Operating Budget. The Borrower shall not materially divert from its Budget without the prior consent of the Lender. Section 6.3 Reporting Requirements. So long as the Note shall remain unpaid and this Agreement shall not have been terminated, Borrower shall, unless Lender shall otherwise consent in writing, furnish to Lender: (a) Default Certificate. As soon as possible and in any event within five business days after the occurrence of each Event of Default (as defined in Section 7.1) of which Borrower has knowledge, the statement of the President of Borrower setting forth details of such Event of Default and the action which Borrower proposes to take with respect thereto. (b) Financial Statements. Monthly unaudited, unconsolidated financial statements for the Borrower and its subsidiaries within thirty days after the end of each month and quarterly unaudited consolidated and consolidating financial statements of the Borrower within forty-five days after the end of each fiscal quarter (or such longer period, not to exceed five calendar days, as shall be permitted by the U.S. Securities and Exchange Commission ("SEC") for the timely filing of the quarterly report on Form 10-Q pursuant to Rule 12b-25 of the SEC), each such monthly and quarterly financial statement to be certified by the chief financial 14 officer of Borrower; within ninety days after the end of each fiscal year of Borrower (or such longer period, not to exceed fifteen calendar days, as shall be permitted by the SEC for the timely filing of the quarterly report on Form 10-K pursuant to Rule 12b-25 of the SEC), a copy of the audited consolidated financial statements for such year for Borrower and its subsidiaries, including therein a consolidated balance sheet as of the end of such fiscal year, consolidated statements of income and expense of Borrower for such fiscal year, and a consolidated statement of cash flow of Borrower and its subsidiaries for such fiscal year, in each case prepared by an independent public accountant of recognized standing acceptable to Lender. Borrower shall deliver to Lender with each set of monthly financial statements a calculation of Adjusted Cash Flow (as that term is defined in Section 6.4(a) below) for such month. (c) Securities Filings. Copies of all reports and filings made by Borrower or any of its subsidiaries with the Securities and Exchange Commission or any securities exchange on which any of Borrower's or such subsidiary's securities are listed or traded and of all mailing or distributions to Borrower's shareholders. (d) Notice of Litigation. Promptly give written notice of all actions, suits and proceedings before any court or governmental agency, domestic or foreign, which may be commenced or threatened against Borrower or any of its subsidiaries in which the claim involved is $5,000 or more and of any other matter of the type described in Section 5.7. (e) Budget. An annual budget ("Budget") within thirty days before the beginning of each fiscal year of Borrower. Such Budget shall be satisfactory in form and substance to Lender. (f) Other Information. Such other information respecting the business, properties, operations or the condition, financial or otherwise, of Borrower or any of its subsidiaries as Lender may from time to time reasonably request. Section 6.4 Financial Covenants. (a) Adjusted Cash Flow. Borrower shall not permit Adjusted Cash Flow, as defined below to be less than $1,000,000. "Adjusted Cash Flow", for purposes of this Section 6.4(a), means for any period total consolidated revenues of Borrower and its subsidiaries for such period minus the sum of (i) all operating expenses (excluding depreciation and amortization) incurred in such period, (ii) all capital expenditures made in such period, (iii) all payments of principal made on any indebtedness (including capital leases and financing leases) in such period, (iv) all cash interest expense paid in such period and (v) all taxes paid or accrued in such period, in each case as determined by generally accepted accounting principles, consistently applied. (b) Working Capital. Borrower shall not permit its consolidated current liabilities (not including the liability arising hereunder and evidenced by the Note) at any time to exceed its consolidated current assets by an amount in excess of $1,000,000, in each case as determined by generally accepted accounting principles, consistently applied. 15 ARTICLE VII. EVENTS OF DEFAULT Section 7.1 Events of Default. Under this Agreement, an Event of Default shall be any of the following: (a) Borrower shall fail to pay any installment of principal or interest on the Note, or any other obligation to Lender when due whether at the due date thereof or by acceleration or otherwise, and, in the case of any installment of interest, such default shall remain unremedied for a period of three days; or (b) The security interest or lien of Lender in any material portion of the collateral covered by the Security Agreement or Pledge Agreement or any other Loan Document shall at any time cease to be a second priority (second only to the Lender's first priority security interest securing the Prior Loans), perfected security interest or lien or shall not constitute a legal, valid and enforceable security interest or lien; or (c) Any representation or warranty made by Borrower or any of its Subsidiaries (or any of their officers) herein, in the Pledge Agreement, the Warrant Agreement, the Guaranty, the Security Agreement or any other Loan Document or in any certificate, agreement, instrument or statement contemplated by or made or delivered pursuant to or in connection with this Agreement or any other Loan Document shall prove to have been incorrect in any material respect when made or deemed made; or (d) Borrower or any of its Subsidiaries shall fail to perform or observe any other term, covenant or agreement contained in this Agreement, the Note, the Guaranty, the Security Agreement, the Pledge Agreement, the Warrant Agreement or any other Loan Document, and any such failure remains unremedied for ten days after the occurrence of such failure; or (e) Borrower or any of its subsidiaries shall fail to pay any indebtedness for borrowed money owing by Borrower or any of its subsidiaries or any interest or premium thereon, when due, whether such indebtedness shall become due by scheduled maturity, by required prepayment, by acceleration, by demand or otherwise, or Borrower or any of its subsidiaries shall fail to perform any term, covenant or agreement under any agreement or instrument evidencing or securing or relating to any such indebtedness owing by Borrower or any of its subsidiaries if the effect of such failure is to accelerate, or to permit the holder of such indebtedness to accelerate, the maturity of such indebtedness; or (f) Either (i) Borrower or any of its subsidiaries shall fail to pay its debts as they mature in the ordinary course of business; or (ii) Borrower or any of its subsidiaries shall file a petition commencing a voluntary case concerning it under any Chapter of Title 11 of the United States Code entitled "Bankruptcy"; or (iii) Borrower or any of its subsidiaries shall apply for or consent to the appointment of any receiver, trustee, custodian or similar officer for it or for all or any substantial part of its property; or (iv) such receiver, trustee, custodian or similar officer shall be appointed without the application or consent of Borrower or any of its subsidiaries and such appointment shall continue undischarged for a period of thirty days; or (v) an involuntary case is commenced against Borrower or any of its subsidiaries under any Chapter of the aforementioned Title 11 and an order for relief under such Title 11 is entered or the petition commencing the case is controverted but is not dismissed within thirty days after the commencement of the case; or (vi) 16 Borrower or any of its subsidiaries shall institute (by petition, application, answer, consent or otherwise) any bankruptcy, insolvency, reorganization, arrangement, readjustment of debt, dissolution, liquidation or similar proceeding relating to it under the laws of any jurisdiction; or (vii) any such proceeding shall be instituted against Borrower or any of its subsidiaries and shall remain undismissed for a period of thirty days; or (viii) Borrower or any of its subsidiaries shall take any action for the purpose of effectuating any of the foregoing; or (g) Any court, government, or government agency shall condemn, seize or otherwise appropriate or take custody or control of all or a substantial portion of the property or assets of Borrower or any of its subsidiaries; or (h) Any money judgment, writ or warrant of attachment, or similar process involving, either individually or in the aggregate, an amount in excess of $25,000, and in either case not adequately covered by insurance as to which the insurance company has acknowledged coverage, shall be entered or filed against Borrower or any of its subsidiaries or its assets and shall remain undischarged, unvacated, unbonded or unstayed for a period of thirty days or in any event later than five days prior to the date of any proposed sale thereunder; or (i) Any person or group of persons (other than the Lender) is or becomes the "beneficial owner" (within the meaning of Rules 13d-3 and 13d-5 under the federal Securities Exchange Act of 1934, as amended), directly or indirectly, of a percentage of the common voting stock of Borrower greater than 25%; or (ii) Borrower shall cease or fail to own, directly or indirectly, beneficial and legal title to all of the issued and outstanding equity interests in any of its subsidiaries; or (iii) John W. Edwards shall cease for any reason to be the President and Chief Executive Officer of Borrower; or (j) Any material adverse effect upon or change in (i) the properties, assets, business, operations, financial condition, prospects, liabilities or capitalization of Borrower or any of its subsidiaries or on the ability of Borrower or any of its subsidiaries to conduct its business, (ii) the ability of Borrower or any of its Subsidiaries or any other party to a Loan Document (other than Lender) to perform its obligations hereunder or under any other Loan Document to which it is a party, (iii) the validity or enforceability of this Agreement, the Note or any other Loan Document, (iv) the rights or remedies of Lender under this Agreement, the Note, any other Loan Document or at law or in equity or (v) the value of any material collateral granted to Lender pursuant to any Loan Document shall occur. (k) Borrower shall fall short of its monthly budget by greater than 10% as set forth in the Budget delivered to the Lender. Section 7.2 Effect of Event of Default. Should any Event of Default occur, Lender may at its option by written notice to Borrower declare the entire unpaid principal amount of the Note, together with all unpaid interest and all other amounts payable under this Agreement and every other obligation of Borrower to Lender, immediately due and payable, whereupon the Note and all such obligations shall become and be forthwith due and payable, without presentment, demand, protest or other notice of any kind, all of which are hereby expressly waived by Borrower, anything contained herein or in the Note or in such other note or evidence of indebtedness to the contrary notwithstanding; provided, however, that in case of an Event of Default under 17 Section 7.1(f), all the obligations of Borrower under this Agreement and the Note shall become immediately due and payable as of the date of any such Event of Default regardless of the cause of such Event of Default and without any notice to Borrower required from Lender. Lender shall have, in addition to all other rights and remedies allowed by law, the rights and remedies of a secured party under the Uniform Commercial Code and, without limiting the generality of the foregoing, the rights and remedies provided for in the Guaranty, the Security Agreement, the Pledge Agreement and any other Loan Document, which provisions are hereby incorporated by reference. ARTICLE VIII. MISCELLANEOUS Section 8.1 No Waiver; Cumulative Remedies. No failure or delay on the part of Lender in exercising any right, power or remedy hereunder shall operate as a waiver, nor shall any single or partial exercise of any such right, power or remedy hereunder operate as a waiver. The remedies herein provided are cumulative and not exclusive of any remedies provided by law. Section 8.2 Amendments. No amendment, modification, termination or waiver of any provision of this Agreement, the Note or any other Loan Document, nor consent to any departure by Borrower or any of its Subsidiaries therefrom, shall in any event be effective unless in writing, signed by Lender and then only in the specific instance and for the specific purpose for which given. No notice to or demand on Borrower or any of its Subsidiaries in any case shall entitle it to any other or further notice or demand in similar or other circumstances except as expressly provided herein or in another Loan Document. Section 8.3 Address for Notices. All notices and other communications under this Agreement shall be in writing and shall be delivered in person or by mailing a copy thereof by registered or certified U.S. mail, return receipt requested, to the applicable party at the addresses indicated below: If to Borrower: I-LINK INCORPORATED 13751 South Wadsworth Park Drive Suite 200 Draper, Utah 84020 Attention: John W. Edwards, President Telecopier: 801-576-5075 with a copy (which shall not constitute notice) to: David E. Hardy, Esq. 60 E. South Temple Suite 2200 Salt Lake City, Utah 84111 Telecopier: (801) 364-6664 If to Lender: Winter Harbor, L.L.C. c/o First Media, L.P. 11400 Skipwith Lane Potomac, Maryland 20854 Attention: Ralph W. Hardy, Jr. Telecopier: (301) 983-2425 18 with a copy (which shall not constitute notice) to: Ralph W. Hardy, Jr., Esq. Dow, Lohnes & Albertson, PLLC 1200 New Hampshire Avenue, N.W. Washington, D.C. 20036 Telecopier: (202) 776-2222 or at such other address as may be designated by either party in a written notice to the other complying as to delivery with the terms of this Section. All such notices and other communications shall be effective when deposited in the mails. Section 8.4 Expenses. Borrower agrees to pay on demand all costs and expenses incurred by Lender directly in the enforcement of this Agreement, the Note, the Guaranty, the Security Agreement, the Pledge Agreement and other instruments and documents to be delivered hereunder, including, without limitation, the reasonable fees and expenses of any attorney to whom the Note is referred for collection (whether or not litigation is commenced) or for representation out of court, in trial, on appeal or in proceedings under any bankruptcy or insolvency law or otherwise. In addition, Borrower shall pay any and all taxes and fees payable or determined to be payable in connection with the execution, delivery or recordation of any instruments and documents to be delivered hereunder. In addition, Borrower agrees to pay (i) all the costs and expenses of Lender in connection with the negotiation, preparation and execution of the Loan Documents and all the costs of furnishing all opinions by counsel for Borrower, and of Borrower's performance of and compliance with all agreements and conditions contained herein and in the other Loan Documents on its part to be performed or complied with, including, without limitation, confirming compliance with environmental and insurance requirements; (ii) the fees, expenses and disbursements of counsel and consultants to the Lender in connection with the negotiation, preparation, execution and administration of the Rights Offering, Loan Documents and the Loan and any consents, amendments, waivers or other modifications hereto or thereto; and (iii) all the costs and expenses of creating and perfecting liens in favor of Lender pursuant to any Loan Document. Section 8.5 Binding Effect; Assignment. This Agreement shall become effective when executed and thereafter shall be binding upon and inure to the benefit of Borrower, Lender and their respective successors and assigns, except that Borrower shall not have the right to assign any rights or obligations hereunder without the prior written consent of Lender. Lender shall be permitted to assign, without Borrower's consent, all or any portion of Lender's rights and interests hereunder and under each other document executed in connection with this Agreement. Section 8.6 Governing Law. This Agreement, the Note, the Pledge Agreement, the Guaranty, the Security Agreement and related documents shall be governed by, and construed in accordance with, the laws of the State of Delaware with the exception of its conflicts of laws provisions; provided that the effect of any recordation shall be determined by the State thereof. Section 8.7 Severability of Provisions. Any provision of this Agreement, the Note, the Pledge Agreement, the Guaranty or the Security 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 19 invalidating the remaining provisions or affecting the validity or enforceability of any provisions in any other jurisdiction. Section 8.8 Headings. Article and Section headings in this Agreement are included for convenience of reference only and shall not constitute a part of this Agreement for any other purpose. Section 8.9 Rights Affected by Extensions. The rights of Lender and its assigns shall not be impaired by any indulgence, release, renewal, extension or modification which Lender may grant with respect to the indebtedness or any part thereof, or with respect to the collateral or with respect to any endorser, guarantor, or surety without notice or consent of Borrower or any endorser, guarantee or surety. Section 8.10 Survival of Representations and Warranties. All representations and warranties made in this Agreement and in any agreements, documents or certificates delivered pursuant hereto or thereto shall survive the execution and delivery of this Agreement and the Note and the making of the Loan hereunder and continue in full force and effect, as of the respective dates as of which they were made, until all of the obligations of Borrower to Lender hereunder have been paid in full. Section 8.11 Further Assurances. From time to time, Borrower shall execute and deliver, or cause to be executed and delivered, to Lender such additional documents as Lender may reasonably require to carry out the purposes of this Agreement or any of the documents entered into in connection herewith, or to preserve and protect the rights of Lender hereunder or thereunder. Section 8.12 Indemnification. Borrower hereby indemnifies and holds harmless Lender and its partners, directors, officers, shareholders, employees, agents, counsel, subsidiaries and affiliates (the "Indemnified Persons") from and against any and all losses, liabilities, obligations, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever which may be imposed on, incurred by, or asserted against any Indemnified Person in any way relating to or arising out of this Agreement, the other Loan Documents, the documents entered into in connection herewith or therewith, or any of them or any of the transactions contemplated hereby or thereby, the making of the Loan, the use of the proceeds of the Loan or the ownership or operation of the business or assets of Borrower or any of its subsidiaries; provided, however, that Borrower shall not be liable to any Indemnified Person, if there is a judicial determination that such losses, liabilities, obligations, damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting solely from the gross negligence or willful misconduct of such Indemnified Person. Section 8.13 JURY TRIAL WAIVER. EACH OF LENDER AND BORROWER HEREBY AGREES TO WAIVE ITS RESPECTIVE RIGHT TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT, ANY OF THE LOAN DOCUMENTS, OR ANY DEALINGS BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THIS LOAN TRANSACTION AND THE LENDER/BORROWER RELATIONSHIP THAT IS BEING ESTABLISHED. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND THE WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, REPLACEMENTS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT, THE LOAN DOCUMENTS OR TO ANY OTHER DOCUMENTS OR AGREEMENTS RELATING TO THE LOAN. 20 Section 8.14 Maximum Interest. Lender and Borrower intend that this Agreement and the other Loan Documents conform to all applicable usury laws. Accordingly, no provisions of the Loan Documents shall require the payment or permit the collection of interest in excess of the maximum rate permitted by applicable law ("Maximum Rate"), or obligate Borrower to pay any taxes, assessments, charges, insurance premiums or other amounts which are held to constitute interest to the extent that such payments, when added to the other obligations under the Loan Documents, would be held to constitute contracting for, or the payment by Borrower of, interest at a rate greater than the Maximum Rate. Lender and Borrower further agree that: (i) if any excess of interest in such respect is herein or in any such other instrument provided for, or shall be adjudicated to be so provided for herein or in any such instrument, the provisions of this subsection 8.14 shall govern, and neither Borrower nor its successors or assigns shall be obligated to pay the amount of such interest to the extent it is in excess of the Maximum Rate; (ii) if at any time the amount of interest under any of the Loan Documents for a calendar year exceeds the Maximum Rate had the Maximum Rate at all times been in effect, the interest chargeable under any such Loan Document shall be limited to the amount of interest that could have been charged if the Maximum Rate had at all times been in effect, but any subsequent reductions in the interest due shall not reduce the rate of interest chargeable under any such Loan Document below the Maximum Rate until the total amount of interest accrued under any such Loan Document equals the amount of interest that would have accrued if the interest provided for in any such Loan Document had at all times been in effect and collectible; (iii) if the maturity of any Loan Document is accelerated for any reason, or in the event of any prepayment by Borrower, or in any other event, earned interest may never include more than the Maximum Rate, computed from the date of disbursement of the funds evidenced by such Loan Document until payment, and any interest otherwise payable under such Loan Document that is in excess of the Maximum Rate shall be canceled automatically as of such acceleration or such other event and (if theretofore paid) shall be credited against principal; (iv) if it should be held that any interest payable or chargeable under any Loan Document is in excess of the Maximum Rate, the interest payable or chargeable under such Loan Document shall be reduced to the maximum amount permitted by applicable federal or state law, whichever shall permit the higher lawful interest, as construed by courts having jurisdiction thereof; and (v) the spreading, prorating and amortizing of interest over the Maturity Date of the Loan Documents shall be allowed to the fullest extent permitted by applicable law. 21 IN WITNESS WHEREOF, the parties hereto have caused this Loan Agreement to be executed by their respective duly authorized officers as of the date first above written. I-LINK INCORPORATED By: /s John Edwards John Edwards, President WINTER HARBOR, L.L.C. By: First Media, L.P., its member By: First Media Corporation, its sole general partner By: /s Ralph W. Hardy Jr. Ralph W. Hardy Jr., Secretary 22 Exhibit 1 FORM OF PROMISSORY NOTE $8,000,000 November 10, 1998 FOR VALUE RECEIVED, the undersigned, I-LINK INCORPORATED, a Florida corporation (the "Maker"), promises to pay to the order of WINTER HARBOR, L.L.C., a Delaware limited liability company (the "Payee"), on or before October 31, 1999 (the "Maturity Date"), the principal sum of $8,000,000, or if less, the outstanding principal balance of the Loans made by Payee to Maker pursuant to the Loan Agreement, as that term is defined below, together with interest thereon as provided herein. All capitalized terms used herein and not otherwise defined shall have the meanings ascribed to them in the Loan Agreement. 9. Interest. The unpaid principal balance of this Note shall bear interest at the rates determined in accordance with the provisions of that certain Loan Agreement dated as of January 15, 1999, between the Maker and the Payee (as the same may be amended, modified, extended or restated, the "Loan Agreement"). Interest accrued hereunder shall be paid monthly on the last business day of each calendar month until all principal and interest hereunder is paid in full at the repayment or maturity of the Loan. 10. Principal Repayment. The aggregate principal balance of this Note shall be due and payable as provided in Section 1.4 of the Loan Agreement. 11. Prepayments. This Note may be voluntarily prepaid in whole or in part without premium or penalty at any time and from time to time; provided, however, that each partial prepayment shall be in the aggregate principal amount of not less than $100,000 or an integral multiple of $50,000 in excess thereof. In making a prepayment in whole, the Maker shall pay all accrued interest through the date of such prepayment. The Maker shall make a mandatory prepayment of the outstanding principal amount of the Note together with all accrued interest on and subject to the terms and conditions of the Loan Agreement. 12. Payment on Business Days. If any payment of principal or interest on this Note shall become due on a Saturday, Sunday or public holiday, such payment may be made on the next succeeding business day, and such extension of time in such case shall be included in the computation of interest in connection with such payment. 13. Form of Payment. All payments made pursuant to the terms of this Note shall be made in lawful money of the United States of America and shall be payable to the Payee at its principal office located at 11400 Skipwith Lane, Potomac, Maryland 20854 or at such other place as the Payee shall have designated to the Maker in writing. 14. Choice of Law. This Note shall be governed by and construed in accordance with the laws of the State of Delaware with the exception of the conflicts of laws provisions thereof. 15. Events of Default. Upon the occurrence of any Event of Default, Lender may at its option by written notice to Borrower declare the entire unpaid principal amount of the Note, together with all unpaid interest and all other amounts payable hereunder, immediately due and payable. 23 16. Collection Expenses. If at any time the indebtedness evidenced by this Note is collected through legal proceedings or this Note is placed in the hands of attorneys for collection, the Maker and each endorser of this Note hereby jointly and severally agree to pay all costs and expenses (including reasonable attorneys' fees) incurred by the holder of this Note in collecting or attempting to collect such indebtedness. 17. Waivers. To the extent permitted by law, except as otherwise provided herein or in the Loan Agreement, the Maker and each endorser of this Note, and their respective heirs, successors, legal representatives and assigns, hereby severally waive presentment; protest and demand; notice of protest, demand, dishonor and nonpayment; diligence in collection, and any relief whatever from the valuation or appraisement laws of any state. IN WITNESS WHEREOF, the Maker has executed this Note as of the date and year first above written. I-LINK INCORPORATED, a Florida corporation By:_______________________________ John Edwards, President 24 Exhibit 2 Date Borrowed Amount Borrowed November 11, 1998 $600,000* November 11, 1998 $1,041,712 November 24, 1998 $1,200,000 December 1, 1998 $1,000,000 January 4, 1999 $1,000,000 Total as of the date hereof: $4,841,712 * Represents certain accrued and unpaid interest and accrued and unpaid expenses owed to the Lender. 25 Schedule 3.1 a. I-Link Communications, Inc. (f/k/a Family Telecommunication Incorporated); b. I-Link Worldwide LLC; c. MiBridge, Inc. (f/k/a I-Link Mergerco, Inc.); d. I-Link Systems, Inc. (f/k/a I-Link Worldwide, Inc.) e. Vianet Technologies, Ltd. 26 (PAGE> EX-10 4 EXHIBIT 10.39 Exhibit 10.39 FIRST AMENDMENT TO LOAN AGREEMENT THIS FIRST AMENDMENT TO LOAN AGREEMENT (this "Amendment") is made and entered into as of March 4, 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 Borrower and Lender entered into a Loan Agreement, dated as of January 15, 1999, pursuant to which Lender agreed to make available to the Borrower up to $8,000,000 (the "Original Agreement"). B. The Borrower has requested and the Lender has agreed to amend certain provisions of the Original Agreement as provided herein. The Original Agreement, as amended hereby, shall be referred to as the "Loan Agreement." Capitalized terms used herein and not otherwise defined shall have the meanings assigned to them in the Loan Agreement. AGREEMENTS In consideration of the foregoing Recitals and of the covenants and representations contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Borrower and the Bank, intending to be legally bound, hereby agree as follows: 1. Amendments. (a) Section 1.6(b)(iii) of the Original Agreement shall be amended in its entirety to read as follows: (iii) Rights Offering. Borrower shall make a rights offering (the "Rights Offering") to all of its existing shareholders for $20,000,000 of a newly created class of Series N Convertible Preferred Stock (the "Series N Stock") having the terms and conditions set forth on Schedule I attached hereto and such other terms and conditions as may be reasonably acceptable to Borrower and Lender. Borrower shall file the documents relating to the Rights Offering with the Securities and Exchange Commission (the "SEC") no later than January 15, 1999. If Borrower mails the Rights Offering materials to its shareholders by the earlier of April 22, 1999 and that business day which is three business days following the receipt of clearance from the SEC (the "Mailing Date"), and consummates the Rights Offering by the earlier of May 29, 1999 and that business day which is the first business day following the 35th calendar day from the Mailing Date (the "Consummation Date"), then, so long as Borrower shall have notified Lender of such conversion on or prior to April 26, 1999, Borrower shall cause the outstanding principal amount of the Loans, together with all accrued interest to be converted into Series N Stock. Lender shall have the right, but 1 not the obligation, to subscribe for any Series N Stock not otherwise subscribed for as part of the Rights Offering. (b) The third sentence of Section 1.9 of the Original Agreement shall be amended in its entirety and replaced with the following: At the Lender's option, the amount of Lender's commitment in Section 1 shall be reduced by the aggregate stated amount of any Standby Letters of Credit issued pursuant to this Section. (c) Section 1.10(a) of the Original Agreement shall be amended in its entirety to read as follows: Section 1.10 Warrants. (a) As further consideration for Lender's commitment to make available the Loans and to arrange the Standby Letter of Credit, Borrower will grant to Lender warrants ("Warrants") to purchase a certain number of shares of the Borrower's common stock pursuant to the terms of a Warrant Agreement (the "Warrant Agreement"). Such Warrant Agreement shall have an exercise period of 7.5 years from the date hereof and shall grant the Lender the right to acquire (i) one Warrant for (A) every $10 in Loan proceeds made available to the Borrower hereunder and (B) every $10 of the aggregate stated amount of the Standby Letters of Credit and (ii) an additional nine Warrants for (A) every $10 in Loan proceeds made available to the Borrower hereunder upon the occurrence of an Event of Default or if the Loan is not paid in full on or before April 26, 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 April 26, 1999 or if there is a draw on any Standby Letter of Credit; provided, however, in the event that a Equity Transaction (as defined below) occurs on or after February 1, 1999 and on or before April 26, 1999, then the Borrower shall issue to the Lender the additional Warrants referenced in subclauses (ii) (A) and (B) of this Section 1.10 prior to such Equity Transaction. As used herein, "Equity Transaction" shall mean (pursuant to a single transaction or a series of related transactions by a single party or related parties (other than the Lender)) (i) the acquisition of 20% or more of the Borrower's capital stock; (ii) the sale of all or substantially all of the assets of the Borrower; (iii) repayment, directly or indirectly, of all or any portion of the Loan in connection with the sale of the Borrower's capital stock or the sale or license of the Borrower's technology or (iv) repayment, directly or indirectly, of all or any portion of the Loan in connection with the Rights Offering. 2. Additional Amendment to Warrant Agreement. The Borrower and the Lender are parties to that certain Series K Warrant Agreement, dated as of January 15, 1999 (the "Series K Warrant Agreement"). The Borrower and Lender hereby agree that each reference to "March 15, 1999" contained in the Series K Warrant Agreement shall be deleted and replaced in lieu thereof with "April 26, 1999". 3. Issuance of New Promissory Note. In the event that the 2 Borrower is deemed to have borrowed more than $8,000,000 pursuant to Section 1.9 of the Loan Agreement upon the draw of any Standby Letter of Credit, the Borrower agrees to immediately deliver a new note (the "New Note") to the Lender in the amount deemed borrowed pursuant to the Loan Agreement. The New Note shall be in substantially the same form as the Note, dated as of November 10, 1998, executed in connection with the Original Agreement. 4. Representations and Warranties. Each and every representation and warranty set forth in the Original Agreement is hereby confirmed and ratified, in all material respects, by the Borrower, and such representations and warranties as so confirmed and ratified shall be deemed to have been made and undertaken as of the date of this Amendment as well as at the time they were made and undertaken. 5. Counterparts. This Amendment may be executed in as many counterparts as may be convenient and shall become binding when the Lender and the Borrower have each executed at least one counterpart. This Amendment may be delivered to such other party via fax. Any party's faxed signature shall be deemed an original and binding signature as of the date set forth above. 6. Governing Law. This Amendment shall be governed by, and construed in accordance with, the laws of the State of Delaware with the exception of its conflicts of laws provisions. 7. Binding Effect. This Amendment shall be binding upon and shall inure to the benefit of the Lender and the Borrower and their respective successors and assigns. 8. Reference to Original Agreement. Except as amended hereby, the Original Agreement shall remain in full force and effect and is hereby ratified and confirmed in all respects. On and after the effectiveness of the Amendment to the Original Agreement accomplished hereby, each reference in the Original Agreement to "this Agreement", "hereunder", "hereof", "herein" or words of like import, and each reference to the Original Agreement in the other agreements, documents or instruments executed and delivered pursuant to the Loan Agreement, shall be deemed a reference to the Original Agreement, as amended hereby. 9. No Other Modifications. Except as expressly provided in this Amendment, all of the terms and conditions of the Original Agreement shall remain unchanged and in full force and effect. 3 IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed by their respective duly authorized officers as of the date first above written. I-LINK INCORPORATED By: /s John Edwards John Edwards, President WINTER HARBOR, L.L.C. By: First Media, L.P., its member By: First Media Corporation, its sole general partner By: /s Ralph W. Hardy Jr. Ralph W. Hardy Jr., Secretary 4 EX-10 5 EXHIBIT 10.40 Exhibit 10.40 PROMISSORY NOTE $8,000,000 November 10, 1998 FOR VALUE RECEIVED, the undersigned, I-LINK INCORPORATED, a Florida corporation (the "Maker"), promises to pay to the order of WINTER HARBOR, L.L.C., a Delaware limited liability company (the "Payee"), on or before October 31, 1999 (the "Maturity Date"), the principal sum of $8,000,000, or if less, the outstanding principal balance of the Loans made by Payee to Maker pursuant to the Loan Agreement, as that term is defined below, together with interest thereon as provided herein. All capitalized terms used herein and not otherwise defined shall have the meanings ascribed to them in the Loan Agreement. 1. Interest. The unpaid principal balance of this Note shall bear interest at the rates determined in accordance with the provisions of that certain Loan Agreement dated as of January 15, 1999, between the Maker and the Payee (as the same may be amended, modified, extended or restated, the "Loan Agreement"). Interest accrued hereunder shall be paid monthly on the last business day of each calendar month until all principal and interest hereunder is paid in full at the repayment or maturity of the Loan. 2. Principal Repayment. The aggregate principal balance of this Note shall be due and payable as provided in Section 1.4 of the Loan Agreement. 3. Prepayments. This Note may be voluntarily prepaid in whole or in part without premium or penalty at any time and from time to time; provided, however, that each partial prepayment shall be in the aggregate principal amount of not less than $100,000 or an integral multiple of $50,000 in excess thereof. In making a prepayment in whole, the Maker shall pay all accrued interest through the date of such prepayment. The Maker shall make a mandatory prepayment of the outstanding principal amount of the Note together with all accrued interest on and subject to the terms and conditions of the Loan Agreement. 4. Payment on Business Days. If any payment of principal or interest on this Note shall become due on a Saturday, Sunday or public holiday, such payment may be made on the next succeeding business day, and such extension of time in such case shall be included in the computation of interest in connection with such payment. 5. Form of Payment. All payments made pursuant to the terms of this Note shall be made in lawful money of the United States of America and shall be payable to the Payee at its principal office located at 11400 Skipwith Lane, Potomac, Maryland 20854 or at such other place as the Payee shall have designated to the Maker in writing. 6. Choice of Law. This Note shall be governed by and construed in accordance with the laws of the State of Delaware with the exception of the conflicts of laws provisions thereof. 1 7. Events of Default. Upon the occurrence of any Event of Default, Lender may at its option by written notice to Borrower declare the entire unpaid principal amount of the Note, together with all unpaid interest and all other amounts payable hereunder, immediately due and payable. 8. Collection Expenses. If at any time the indebtedness evidenced by this Note is collected through legal proceedings or this Note is placed in the hands of attorneys for collection, the Maker and each endorser of this Note hereby jointly and severally agree to pay all costs and expenses (including reasonable attorneys' fees) incurred by the holder of this Note in collecting or attempting to collect such indebtedness. 9. Waivers. To the extent permitted by law, except as otherwise provided herein or in the Loan Agreement, the Maker and each endorser of this Note, and their respective heirs, successors, legal representatives and assigns, hereby severally waive presentment; protest and demand; notice of protest, demand, dishonor and nonpayment; diligence in collection, and any relief whatever from the valuation or appraisement laws of any state. IN WITNESS WHEREOF, the Maker has executed this Note as of the date and year first above written. I-LINK INCORPORATED, a Florida corporation By: /s John Edwards John Edwards, President 2 EX-10 6 EXHIBIT 10.41 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. 1 "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. 2 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 13751 South Wadsworth Park Drive, Suite 200, Draper, Utah 84020 (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 3 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. 4 (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 5 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 6 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 7 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 8 (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 9 (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. 10 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 11 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 13751 South Wadsworth Park Drive Suite 200 Draper, Utah 84020 Attention: John W. Edwards, President Telecopier: 801-576-5075 with copy to: David E. Hardy, Esq. 60 E. South Temple Suite 2200 Salt Lake City, Utah 84111 Telecopier: (801) 364-6664 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. 12 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 John Edwards John Edwards, President WINTER HARBOR, L.L.C. By: First Media, L.P., its member By: First Media Corporation, its sole general partner By: /s Ralph W. Hardy, Jr. Ralph W. Hardy, Jr., 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 13751 South Wadsworth Park Drive, Suite 200, Draper, Utah 84020 (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:_______________________________ John Edwards, President Attest:_______________________ Name:_________________________ Title:________________________ 18 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 13751 South Wadsworth Park Drive, Suite 200, Draper, Utah 84020 (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/ John Edwards John Edwards, President Attest: s/ David E. Hardy Name: David E. Hardy Title: Secretary 21 EX-10 7 EXHIBIT 10.42 Exhibit 10.42 SUBSIDIARY GUARANTY THIS SUBSIDIARY GUARANTY is made and entered into as of January 15, 1999, by and among I-LINK SYSTEMS, INC., a Utah corporation ("Systems"), I-LINK COMMUNICATIONS, INC., a Utah corporation ("Communications"), MIBRIDGE, INC., a Utah corporation ("MiBridge"), and I-LINK WORLDWIDE, L.L.C., a Delaware limited liability company ("Worldwide") and VIANET TECHNOLOGIES, LTD., an Israeli corporation ("Vianet" and, together with Systems, Communications, MiBridge and Worldwide, collectively, the "Guarantors" and individually, a "Guarantor"), in favor of WINTER HARBOR, L.L.C., a Delaware limited liability company (the "Lender"). RECITALS A. I-Link Incorporated, a Florida corporation (the "Borrower"), owns all of the issued and outstanding shares of the capital stock and membership interests of each of the Guarantors. The Lender has lent to the Borrower $7,768,000 in seven installments on a demand loan basis, which installments were made on January 26, 1998, February 23, 1998, March 3, 1998, March 24, 1998, May 13, 1998, May 29, 1998, and June 8, 1998 (collectively the "Prior Loans"). The Lender has made available for borrowing up to $8,000,000, pursuant to a Loan Agreement dated as of January 13, 1999 (the "Loan Agreement"). The Prior Loans and the Loans made or to be made pursuant to the Loan Agreement may be referred to hereinafter as the "Loans". Each of the Loans is evidenced by certain promissory notes (the "Notes"). All capitalized terms used herein and not otherwise defined herein shall have the meanings ascribed to such terms in the Loan Agreement. The proceeds of the Loans have been provided to the Guarantors for the acquisition of assets, for capital expenditures and for working capital purposes. B. It is a condition precedent to the Lender's entering into the Loan Agreement that, among other things, the Guarantors shall have executed and delivered this Guaranty. C. The Borrower and the Guarantors share an identity of interests as members of a consolidated group of companies engaged in substantially similar businesses. The Borrower provides certain centralized financial, accounting and management services to the Guarantors, and the Lender's extensions of credit to the Borrower have facilitated the expansion and will enhance the overall financial strength and stability of the Borrower's consolidated group, including the Guarantors. Accordingly, the Guarantors will derive substantial benefits as a result of the Lender's extensions of credit to the Borrower, which benefits are hereby acknowledged by the Guarantors, and the Guarantors, therefore, desire to enter into this Guaranty in order to satisfy the condition precedent described in the preceding paragraph. 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, 1 agree as follows: 1. Guaranty of Payment. The Guarantors, jointly and severally, hereby absolutely, unconditionally and irrevocably guarantee as primary obligors, and not merely as sureties, the prompt performance and payment in full when due, whether at stated maturity, by acceleration or otherwise (including, without limitation, obligations that would become due but for the operation of the automatic stay under Section 362(a) of Title 11 of the United States Code, and including interest, fees and other charges whether or not a claim is allowed for such obligations in any such bankruptcy proceeding), of (i) all indebtedness, obligations and liabilities of the Borrower arising at any time, now or in the future, pursuant to the Loan Agreement, the Loans or the Notes; (ii) all reasonable costs and expenses incurred by the Lender, including, without limitation, reasonable attorneys fees and legal expenses, in the exercise, preservation or enforcement of any of the rights, powers or remedies of the Lender, or in the enforcement of the obligations of the Guarantors, hereunder and under any other Loan Document to which any Guarantor is a party; and (iii) any renewals, continuations or extensions of any of the foregoing (all of which are referred to herein as the "Guaranteed Obligations"). 2. Fraudulent Transfer Laws. Anything contained in this Guaranty to the contrary notwithstanding, the obligations of each Guarantor hereunder shall be limited to a maximum aggregate amount equal to the largest amount that would not render its obligations hereunder subject to avoidance as a fraudulent transfer or conveyance under Section 548 of Title 11 of the United States Code or any applicable provisions of comparable state law (collectively, the "Fraudulent Transfer Laws"), in each case after giving effect to all other liabilities of such Guarantor, contingent or otherwise, that are relevant under the Fraudulent Transfer Laws (specifically excluding, however, any liabilities of such Guarantor in respect of intercompany indebtedness to the Borrower or other affiliates of the Borrower to the extent that such indebtedness would be discharged in an amount equal to the amount paid by such Guarantor hereunder) and after giving effect as assets to the value (as determined under the applicable provisions of the Fraudulent Transfer Laws) of any rights to subrogation or contribution of such Guarantor pursuant to applicable law, this Guaranty or any other agreement providing for an equitable allocation among such Guarantor and other affiliates of the Borrower of obligations arising under guaranties by such parties. This Section 2 shall be construed with the goal of maximizing the amount payable by each Guarantor hereunder without rendering it insolvent, leaving it with an unreasonably small amount of capital with which to conduct its business or leaving it unable to pay its debts as they mature, and in determining the solvency or net worth of a Guarantor, its right of contribution from the other Guarantors shall be taken into account to the fullest extent permitted by law. 3. Contribution. (a) The Guarantors desire to allocate among themselves in a fair and equitable manner their obligations arising under this Guaranty. Accordingly, in the event any payment or distribution is made by a Guarantor under this Guaranty (a "Funding Guarantor") that exceeds its Fair Share (as defined below), that Funding Guarantor shall be entitled to a contribution from each of the other Guarantors in the amount of such other Guarantor's Fair Share Shortfall (as defined below), with the result that all such contributions will cause each Guarantor's Aggregate Payments (as defined below) to equal its Fair 2 Share. The amounts payable as contributions hereunder shall be determined as of the date on which the related payment or distribution is made by the applicable Funding Guarantor. The allocation among Guarantors of their obligations as set forth in this Section 3 shall not be construed in any way to limit the liability of any Guarantor hereunder. Any right of contribution which a Guarantor may have against any other Guarantor of the Guaranteed Obligations as a result of a payment pursuant to this Section 3 shall only be exercisable at such time and shall be subordinated as set forth in Section 13. (b) "Fair Share" means, with respect to a Guarantor as of any date of determination, an amount equal to (i) the ratio of (x) the Adjusted Maximum Amount (as defined below) with respect to such Guarantor to (y) the aggregate of the Adjusted Maximum Amounts with respect to all Guarantors, multiplied by (ii) the aggregate amount paid or distributed on or before such date by all Funding Guarantors under this Guaranty in respect of the Guaranteed Obligations. (c) "Fair Share Shortfall" means, with respect to a Guarantor as of any date of determination, the excess, if any, of the Fair Share of such Guarantor over the Aggregate Payments of such Guarantor. (d) "Adjusted Maximum Amount" means, with respect to a Guarantor, the maximum aggregate amount of the obligations of such Guarantor under this Guaranty, determined in accordance with Section 2. (e) "Aggregate Payments" means, with respect to a Guarantor as of any date of determination, the aggregate amount of all payments and distributions made on or before such date by such Guarantor in respect of this Guaranty (including, without limitation, in respect of this Section 3). 4. Extension or Renewal of Guaranteed Obligations; Waiver. Each Guarantor agrees that the Guaranteed Obligations may be extended or renewed, in whole or in part, without notice or further assent from it, that such Guarantor will remain bound upon this Guaranty notwithstanding any extension, renewal or other alteration of any Guaranteed Obligation and the guaranty herein made shall apply to the Guaranteed Obligations as so amended, renewed or altered. Each Guarantor waives diligence, presentment, demand of payment, filing of claims with a court in the event of insolvency or bankruptcy of the Borrower, any right to require a proceeding first against the Borrower, protest, notice and all demands whatsoever and covenants that its guaranty of the Borrower's obligations under this Guaranty will not be discharged except by complete performance by the Borrower or another Guarantor of such obligations. 5. Nature of Guaranty: Continuing, Absolute and Unconditional. (a) This Guaranty is and is intended to be a continuing guaranty of payment when due of the Guaranteed Obligations, and not of collection, and is independent of and in addition to any other guaranty, indorsement, collateral or other agreement held by the Lender therefor or with respect thereto, whether or not furnished by a Guarantor. Each Guarantor waives any right to require that any resort be had by the Lender to the other Guarantors or to any of the security held for payment of any of the Guaranteed Obligations or to any balance of any deposit account or credit on the books of the Lender in favor of the Borrower or any other Person. Upon the occurrence and during the continuance of any Event of Default, the Lender may, at its sole election, proceed directly and at once, without notice, against any or all of the Guarantors to collect and recover the full amount or any portion of the Guaranteed Obligations, without 3 first proceeding against the Borrower, the other Guarantors or any other Person, or against any security or collateral for the Guaranteed Obligations. All Guaranteed Obligations shall be conclusively presumed to have been created in reliance hereon. (b) This Guaranty shall not be changed or affected by any representation, oral agreement, act or thing whatsoever, except as herein provided. This Guaranty is intended by the Guarantors to be the final, complete and exclusive expression of the agreement among the Guarantors and the Lender with respect to the subject matter hereof. (c) The obligations of the Guarantors under this Guaranty are absolute and unconditional and shall not be impaired or discharged by: (i) the failure of the Lender to assert any claim or demand or to enforce any right or remedy against the Borrower, any other guarantor or any other party under the provisions of the Loan Agreement, the Loans, the Notes or any other agreement or otherwise; (ii) any extension, renewal or other alteration of any provision of the Loan Agreement, the Loans, any Notes or any other agreement or otherwise; (iii) any rescission, waiver, amendment or modification of any of the terms or provisions of the Loan Agreement, the Loans, any Note or any other agreement or otherwise; (iv) the failure of the Lender to assert any claim or demand or to exercise or enforce any right or remedy under the Loan Agreement, the Loans, any Note or any other agreement or otherwise, or against any other guarantor of, or any other party which has provided security for, any of the Guaranteed Obligations; (v) the sale, exchange, release, surrender, realization of or upon or the failure to perfect with respect to or otherwise deal with in any manner and in any order any property by whomsoever at any time pledged or mortgaged to secure, or howsoever securing, the Guaranteed Obligations; (vi) the settlement or compromise of any of the Guaranteed Obligations, any security therefor or any liability (including any of those hereunder) incurred directly or indirectly in respect thereof or hereof, or any subordination of the payment of all or any part thereof to the payment of any liability (whether due or not) of the Borrower to creditors of the Borrower other than the Lender and the Guarantors; (vii) application of any sums by whomsoever paid or howsoever realized to any liability or liabilities of the Borrower to the Lender regardless of what liability or liabilities of the Borrower remain unpaid; (viii) the act or failure to act in any manner referred to in this Guaranty which may deprive any Guarantor of its right to subrogation or contribution against the Borrower or any other guarantor to recover any payments made pursuant to this Guaranty; or (ix) or any other act, agreement, thing, omission or delay to do any other act or thing that may or might in any manner or to any extent vary the risk of any Guarantor or that would otherwise operate as a discharge of 4 a guarantor as a matter of law or equity. (d) Each Guarantor's obligation hereunder is to pay the Guaranteed Obligations in full when due according to the Loan Agreement to the extent provided herein, and such obligation shall not be affected by any stay or extension of time for payment by the Borrower resulting from any proceeding under Title 11 of the United States Code, as now constituted or hereafter amended or replaced, or any similar federal or state law. 6. No Discharge or Diminishment of Guaranty. The obligations of the Guarantors under this Guaranty shall not be subject to any reduction, limitation, impairment or termination for any reason (other than if the Guaranteed Obligations have been indefeasibly paid in full in cash), including, without limitation, any claim of waiver, release, surrender, alteration or compromise of any of the Guaranteed Obligations, and shall not be subject to any defense or setoff, counterclaim, recoupment or termination whatsoever by reason of the invalidity, illegality or unenforceability of any of the Guaranteed Obligations or any discharge of the Borrower from any of the Guaranteed Obligations in a bankruptcy or similar proceeding or otherwise. 7. Representations and Warranties. Each Guarantor hereby represents, warrants and agrees as follows: (a) Such Guarantor (i) is a duly organized and validly existing corporation or limited liability company, in good standing under the laws of its state of incorporation or formation, (ii) has the corporate or limited liability company power and authority to own its property and assets and to transact the business in which it is engaged and (iii) is duly qualified as a foreign corporation or limited liability company and in good standing in each jurisdiction where the ownership, leasing or operation of property or the conduct of its business requires such qualification, except where the failure to so qualify could not reasonably be expected to have a material adverse effect. (b) Such Guarantor has the corporate or limited liability company power and authority to execute, deliver and perform the terms and provisions of this Guaranty, the Security Agreement and the other documents to which it is a party (collectively, the "Subsidiary Agreements") and has taken all necessary action to authorize the execution, delivery and performance by it of this Guaranty and the Subsidiary Agreements. Such Guarantor has duly executed and delivered this Guaranty and the Subsidiary Agreements, and this Guaranty and the Subsidiary Agreements constitute its legal, valid and binding obligations enforceable in accordance with their respective terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization or other similar laws affecting the enforcement of creditors' rights generally and by general principles of equity. (c) Neither the execution, delivery or performance by such Guarantor of this Guaranty and the Subsidiary Agreements, nor compliance by it with the terms and provisions hereof and thereof, (i) will contravene any provision of any law, statute, rule or regulation or any order, writ, injunction or decree of any court or governmental instrumentality, (ii) will conflict or be inconsistent with or result in any breach of any of the terms, covenants, conditions or provisions of, or constitute a default under, or result in the creation or imposition of (or the obligation to create 5 or impose) any lien, security interest or encumbrance (other than pursuant to the Subsidiary Agreements) upon any of the property or assets of such Guarantor pursuant to the terms of any indenture, mortgage, deed of trust, loan agreement or any other agreement, contract or instrument to which such Guarantor is a party or by which it or any of its property or assets is bound or to which it may be subject or (iii) will violate any provision of the organizational documents of such Guarantor. (d) No order, consent, approval, license, authorization or validation of, or filing, recording or registration with, or exemption by, any governmental or public body or authority, or any subdivision thereof, is required to authorize, or is required in connection with, the execution, delivery, performance, legality, validity, binding effect or enforceability of this Guaranty and the Subsidiary Agreements by or against such Guarantor. (e) There are no actions, suits or proceedings pending or, to the best knowledge of such Guarantor, threatened against or affecting such Guarantor. No judgment or order for the payment of money has been entered against such Guarantor which remains outstanding and unpaid. (f) There have been no changes in the business, properties, operations or condition, financial or otherwise, or prospects of such Guarantor since September 30, 1998, which could reasonably be expected to have a material adverse effect. (g) Such Guarantor has received, or has the right hereunder to receive (including rights to contribution and subrogation), consideration which is the reasonably equivalent value of the obligations and liabilities that such Guarantor has incurred to the Lender. Such Guarantor is not insolvent as defined in Section 101 of Title 11 of the United States Code or any applicable state insolvency statute, nor, after giving effect to the consummation of the transactions contemplated herein, will such Guarantor be rendered insolvent by the execution and delivery of this Guaranty or any other Subsidiary Agreement to which it is a party. Such Guarantor is neither engaged nor about to engage in any business or transaction for which the assets retained by it shall be an unreasonably small capital, taking into consideration the obligations to the Lender incurred hereunder. Such Guarantor does not intend to, nor does it believe that it will, incur debts beyond its ability to pay them as they mature. (h) The representations and warranties contained in the Loan Agreement as they pertain to such Guarantor are true and correct in all material respects. 8. Covenants. (a) Each Guarantor will at all times preserve and keep in full force and effect its existence as a corporation or limited liability company, organized in its state of incorporation or formation, and shall at all times preserve and keep in full force and effect all rights and franchises material to its business. (b) Each Guarantor shall comply in all material respects with all applicable material laws, rules, regulations and orders, such compliance to include, without limitation, paying when due all material taxes, assessments and governmental charges imposed upon it or upon any of its properties or assets or in respect of any of its franchises, businesses, income or property before any penalty or interest accrues thereon unless such taxes, assessments or 6 governmental charges are being diligently contested by such Guarantor in good faith. (c) Each Guarantor shall keep and maintain books, records and accounts with respect to its operations sufficient to enable it to prepare its financial statements in accordance with generally accepted accounting principles, consistently applied, and shall permit the Lender and its officers, employees and authorized agents to examine, copy and make excerpts from such books and records and to inspect the properties of such Guarantor both real and personal at any reasonable time. 9. Security. To secure timely payment of the Guaranteed Obligations and performance in full of the obligations related thereto, each Guarantor is concurrently herewith entering into a Security Agreement pursuant to which such Guarantor is granting to the Lender a security interest in substantially all of such Guarantor's personal property. 10. Information. Each Guarantor assumes all responsibility for being and keeping itself informed of the financial condition and assets of the Borrower and its subsidiaries and of all other circumstances bearing upon the risk of nonpayment of the Guaranteed Obligations and the nature, scope and extent of the risks which such Guarantor assumes and incurs hereunder, and agrees that the Lender shall not have any duty to advise such Guarantor of information known to it regarding such circumstances or risks. 11. Reinstatement. Each Guarantor agrees that this Guaranty shall continue to be effective or be reinstated, as the case may be, if at any time any payment, or any part thereof, of principal of, interest on or any other amount with respect to the Guaranteed Obligations is rescinded or must otherwise be restored by the Lender upon the bankruptcy, insolvency or reorganization of the Borrower, any Guarantor or any other Person. 12. Use of Proceeds. Each Guarantor further agrees, in furtherance of the foregoing and not in limitation of any other right that the Lender may have at law or in equity against any Guarantor by virtue hereof, upon the failure of the Borrower to pay any of the Guaranteed Obligations when and as the same shall become due, whether at stated maturity, by acceleration or otherwise (including, without limitation, amounts that would have become due but for the operation of the automatic stay under Section 362(a) of Title 11 of the United States Code), the Guarantors shall jointly and severally forthwith pay, or cause to be paid, in cash, to the Lender an amount equal to the sum of the unpaid principal amount of such Guaranteed Obligations then due as aforesaid, accrued and unpaid interest on such Guaranteed Obligations (including, without limitation, interest, fees and other charges that, but for the filing of a petition in bankruptcy with respect to the Borrower, would have accrued on such Guaranteed Obligations, whether or not a claim is allowed against the Borrower for such interest, fees or other charges in any such bankruptcy proceeding) and all other Guaranteed Obligations then owed to the Lender as aforesaid. All such payments shall be applied promptly, from time to time, by the Lender: First, to the payment of the costs and expenses of any collection or other realization under this Guaranty, and all expenses, liabilities and advances made or incurred by the Lender in connection therewith; Second, after payment in full of the amounts specified in the preceding subparagraph, to the payment in full of all other Guaranteed Obligations; and 7 Third, after payment in full of all Guaranteed Obligations, to the Guarantors or to whomsoever may be lawfully entitled to receive the same or as a court of competent jurisdiction may direct, of any surplus then remaining from such payments. 13. Subrogation and Subordination. Until the indefeasible payment in full in cash of the Guaranteed Obligations, each Guarantor hereby waives any claim, right or remedy, direct or indirect, that such Guarantor now has or may hereafter have against the Borrower or its assets in connection with this Guaranty or the performance by such Guarantor of its obligations hereunder, in each case whether such claim, right or remedy arises in equity, under contract, by statute, under common law or otherwise, including, without limitation (a) any right of subrogation, reimbursement or indemnification that such Guarantor now has or may hereafter have against the Borrower, (b) any right to enforce, or to participate in, any claim, right or remedy that the Lender now has or may hereafter have against the Borrower or any other guarantor, and (c) any benefit of, and any right to participate in, any collateral or security now or hereafter held by the Lender. In addition, until the Guaranteed Obligations shall have been indefeasibly paid in full in cash, each Guarantor shall withhold exercise of any right of contribution that such Guarantor may have against the other Guarantors or any other guarantor of the Guaranteed Obligations under Section 3 hereof or at law or in equity or otherwise. Each Guarantor further agrees that, to the extent the waiver of its rights of subrogation, reimbursement, indemnification and contribution as set forth herein is found by a court of competent jurisdiction to be void or voidable for any reason, such rights of subrogation, reimbursement or indemnification that such Guarantor may have against the Borrower or against any collateral or security, and any rights of contribution that such Guarantor may have against any such other guarantor, shall be junior and subordinate to any rights that the Lender may have against the Borrower, to all right, title and interest the Lender may have in any such collateral or security, and to any right the Lender may have against such other guarantor. The Lender may use, sell or dispose of any items of collateral or security as it sees fit without regard to any subrogation rights arising out of this Guaranty that any Guarantor may have and, upon any such disposition or sale, any rights of subrogation that any Guarantor may have shall, with respect to the collateral disposed of, terminate. If any amount shall be paid to any Guarantor on account of subrogation rights at any time when all Guaranteed Obligations shall not have been paid in full in cash, such amount shall be held in trust for the Lender and shall forthwith be paid over to the Lender to be credited and applied against the Guaranteed Obligations, whethermatured or unmatured, in accordance with the terms of the Loan Agreement, the Loans or the Notes. 14. Delays; Omissions. No delay or omission by the Lender in the exercise of any right under this Guaranty shall impair any such right, nor shall it be construed to be a waiver thereof; nor shall any single or partial exercise of any right hereunder preclude any other or further exercise of any other right. 15. Modification. Any term of this Guaranty may be amended and the observance of any term of this Guaranty may be waived (either generally or in a particular instance and either retroactively or prospectively) only with the written consent of the affected Guarantor and the Lender. No waiver of any single breach or default under this Guaranty shall be deemed a waiver of any other breach or default. 8 16. Successors and Assigns. This Guaranty is a continuing guaranty and shall be binding upon the Guarantors and their successors and assigns; provided, however, that no Guarantor may assign or transfer any of its rights or obligations hereunder without the prior written consent of the Lender. This Guaranty shall inure to the benefit of the successors and assigns of the Lender. 17. GOVERNING LAW. THIS GUARANTY SHALL BE CONSTRUED IN ACCORDANCE WITH, AND GOVERNED BY, THE LAWS OF THE STATE OF DELAWARE WITHOUT REGARD TO THE CONFLICTS OF LAW PROVISIONS THEREOF. 18. ENFORCEMENT. EACH GUARANTOR (A) HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF THE FEDERAL AND STATE COURTS IN THE STATE OF DELAWARE FOR THE PURPOSE OF ANY SUIT, ACTION OR OTHER PROCEEDING ARISING OUT OF OR BASED UPON THIS GUARANTY OR THE SUBJECT MATTER HEREOF BROUGHT BY THE LENDER OR ITS SUCCESSORS OR ASSIGNS AND (B) HEREBY WAIVES, AND AGREES NOT TO ASSERT, BY WAY OF MOTION, AS A DEFENSE, OR OTHERWISE, IN ANY SUCH SUIT, ACTION OR PROCEEDING, ANY CLAIM THAT IT IS NOT SUBJECT PERSONALLY TO THE JURISDICTION OF THE ABOVE-NAMED COURTS, THAT ITS PROPERTY IS EXEMPT OR IMMUNE FROM ATTACHMENT OR EXECUTION, THAT THE SUIT, ACTION OR PROCEEDING IS BROUGHT IN AN INCONVENIENT FORUM, THAT THE VENUE OF THE SUIT, ACTION OR PROCEEDING IS IMPROPER OR THAT THIS GUARANTY OR THE SUBJECT MATTER HEREOF MAY NOT BE ENFORCED IN OR BY SUCH COURT, AND (C) HEREBY WAIVES AND AGREES NOT TO SEEK ANY REVIEW BY ANY COURT OF ANY OTHER JURISDICTION WHICH MAY BE CALLED UPON TO GRANT AN ENFORCEMENT OF THE JUDGMENT OF ANY SUCH DELAWARE STATE OR FEDERAL COURT. EACH GUARANTOR HEREBY CONSENTS TO SERVICE OF PROCESS BY REGISTERED MAIL AT THE ADDRESS TO WHICH NOTICES ARE TO BE GIVEN. EACH GUARANTOR AGREES THAT ITS SUBMISSION TO JURISDICTION AND ITS CONSENT TO SERVICE OF PROCESS BY MAIL IS MADE FOR THE EXPRESS BENEFIT OF THE LENDER. FINAL JUDGMENT AGAINST EACH GUARANTOR IN ANY SUCH ACTION, SUIT OR PROCEEDING MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT, ACTION OR PROCEEDING ON THE JUDGMENT, OR IN ANY OTHER MANNER PROVIDED BY OR PURSUANT TO THE LAWS OF SUCH OTHER JURISDICTION; PROVIDED, HOWEVER, THAT THE LENDER MAY AT ITS OPTION BRING SUIT, OR INSTITUTE OTHER JUDICIAL PROCEEDINGS, AGAINST EACH GUARANTOR OR ANY OF ITS ASSETS IN ANY STATE OR FEDERAL COURT OF THE UNITED STATES OR OF ANY COUNTRY OR PLACE WHERE SUCH GUARANTOR, OR SUCH ASSETS, MAY BE FOUND. 19. JURY TRIAL WAIVER. EACH GUARANTOR WAIVES IRREVOCABLY, TO THE EXTENT PERMITTED BY LAW, ALL RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE, BETWEEN THE LENDER AND SUCH GUARANTOR ARISING OUT OF, IN CONNECTION WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED BETWEEN THEM IN CONNECTION WITH THIS GUARANTY OR THE LOANS OR OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH OR THE TRANSACTIONS RELATED HERETO. 20. Notices. All notices, demands and requests required or permitted to be given under the provisions of this Guaranty shall be in writing and shall be deemed to have been duly delivered and received if given in accordance with the provisions of the Loan Agreement with the address of the Guarantors being the address of the Borrower in the Loan Agreement. 21. Separability. If any one or more of the provisions contained in this Guaranty should be invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of all remaining provisions shall not in any way be affected or impaired. Any provision of this Guaranty which 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 9 other jurisdiction. 22. Section Headings. The section headings contained herein are for reference purposes only and shall not in any way affect the meaning and interpretation of this Guaranty. 23. Counterparts. This Guaranty may be executed in any number of counterparts or duplicate originals, each of which shall be deemed to be an original, but all of which together shall constitute one and the same instrument. 10 IN WITNESS WHEREOF, the Guarantors have caused this Subsidiary Guaranty to be duly executed as of the day and year first written above. GUARANTORS: I-LINK SYSTEMS, INC. By: /s John Edwards John Edwards, President I-LINK COMMUNICATIONS, INC. By: /s John Edwards John Edwards, President MIBRIDGE, INC. By: /s John Edwards John Edwards, President I-LINK WORLDWIDE, L.L.C. By: I-Link Incorporated, its sole member By: /s John Edwards John Edwards, President VIANET TECHNOLOGIES, LTD. By: /s John Edwards John Edwards, President 11 EX-10 8 EXHIBIT 10.43 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 1 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 2 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 3 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. 4 (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: 5 (a) if to the Company, at I-LINK INCORPORATED 13751 South Wadsworth Park Drive Suite 200 Draper, Utah 84020 Attention: John W. Edwards, President Telecopier: 801-576-5075 with a copy (which shall not constitute notice) to: David E. Hardy, Esq. 60 E. South Temple Suite 2200 Salt Lake City, Utah 84111 Telecopier: (801) 364-6664 (b) if to the Lender, at Winter Harbor, L.L.C. c/o First Media, L.P. 11400 Skipwith Lane Potomac, Maryland 20854 Attention: Ralph W. Hardy, Jr. Telecopier: (301) 983-2425 with a copy (which shall not constitute notice) to: Ralph W. Hardy, Jr., Esq. Dow, Lohnes & Albertson, PLLC 1200 New Hampshire Avenue, N.W. Washington, D.C. 20036 Telecopier: (202) 776-2222 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 6 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. 7 IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first set forth above. I-LINK INCORPORATED By: /s John Edwards John Edwards, 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 Ralph W. Hardy Jr. Ralph W. Hardy Jr., Secretary 8 SCHEDULE I Proceedings 9 EX-10 9 EXHIBIT 10.44 Exhibit 10.44 FIRST AMENDMENT TO SECURITY AGREEMENT THIS FIRST AMENDMENT TO SECURITY AGREEMENT is made and entered into as of January 15, 1999, by and among I-LINK INCORPORATED, a Florida corporation (the "Company"), I-LINK SYSTEMS, INC., a Utah corporation with its principal place of business at 13751 South Wadsworth Park Drive, Suite 200, Draper, UT 84020 ("Systems"), I-LINK COMMUNICATIONS, INC., a Utah corporation, with its principal place of business at 13751 South Wadsworth Park Drive, Suite 200, Draper, UT 84020 ("Communications"), MIBRIDGE, INC., a Utah corporation, with its principal place of business at 13751 South Wadsworth Park Drive, Suite 200, Draper, UT 84020 ("MiBridge"), I-LINK WORLDWIDE, L.L.C., a Delaware limited liability company, with its principal place of business at 13751 South Wadsworth Park Drive, Suite 200, Draper, UT 84020 ("Worldwide"), VIANET TECHNOLOGIES, LTD., an Israeli corporation, headquartered in Ramat Hasharon, Israel ("Vianet" and together with the Company, Systems, Communications, MiBridge and Worldwide, collectively, the "Debtors" and individually, a "Debtor"), and WINTER HARBOR, L.L.C., a Delaware limited liability company with its principal place of business at 11400 Skipwith Lane, Potomac, Maryland 20854 (the "Secured Party"). RECITALS A. The Company owns all of the capital stock and the limited liability company interests of Systems, Communications, MiBridge, Worldwide and Vianet. B. The Secured Party has lent to the Company (i) $5,768,000 in four installments on a demand loan basis, which installments were made on January 26, 1998, February 23, 1998, March 3, 1998, and March 24, 1998 (collectively, the "Original Loans"). The obligations of the Company under the Original Loans and under the notes and other documents and instruments entered into in connection therewith are secured by a Security Agreement, dated as of April 14, 1997 (the "Original Security Agreement"), entered into pursuant to the Original Agreement, dated April 14, 1998 (the "Original Agreement"), by and between the Secured Party and the Debtors, other than Vianet. All capitalized terms used herein and not otherwise defined herein shall have the meanings ascribed to such terms in the Original Agreement. C. The Secured Party has further lent to the Company $2,000,000 in three installments on a demand loan basis, which installments were made on May 13, 1998, May 29, 1998, and June 8, 1998 (collectively the "Second Loans"), and has made available for borrowing $8,000,000 pursuant to a Bridge Loan Agreement, dated January 15, 1999 (the "Loan Agreement" and together with the Original Loan and the Second Loan, the "Loans"). Each of the Loans are evidenced by certain promissory notes (the "Notes"). D. In order to induce the Secured Party to enter into the Loan Agreement and to secure the Loans made pursuant to the Second Loans and Loan Agreement, the Company and the Debtors have agreed to enter into this Amendment, the Original Security Agreement as amended hereby shall be referred to as the "Security Agreement". 1 AGREEMENTS In consideration of the foregoing Recitals, and of the agreements made herein, and of the Loans made or to be made by the Secured Party to the Company, the Debtors, the Company and the Secured Party agree as follows: 1. Amendments. 1.1 The First Recital of the Original Security Agreement is hereby amended in its entirety to read as follows: I-Link Incorporated, a Florida corporation (the "Company"), owns all of the capital stock and membership interests, as applicable, of I-Link Systems, Inc., I-Link Communications, Inc., MiBridge, Inc., I-Link Worldwide, L.L.C. and Vianet Technologies, Ltd. (collectively, including the Company, the "Debtors" and individually, a "Debtor"). The Secured Party has lent to the Company (i) $5,768,000 in four installments on a demand loan basis, which installments were made on January 26, 1998, February 23, 1998, March 3, 1998, and March 24, 1998 (collectively, the "Original Loans"). The Secured Party has further lent to the Company $2,000,000 in three installments on a demand loan basis, which installments were made on May 13, 1998, May 29, 1998, and June 8, 1998 (collectively the "Second Loans"), and has made available for borrowing $8,000,000 pursuant to a Loan Agreement, dated January 15, 1999 (the "Loan Agreement" and together with the Original Loan and the Second Loan, the "Loans"). The Loans are evidenced by certain promissory notes (the "Notes"). The Company requested that the Secured Party not demand payment on the Original Loans before May 15, 1998 (the "Demand Date"). Pursuant to the Agreement, dated April 14, 1998 (the "Original Agreement"), the Original Loans automatically came due upon the Demand Date since the Company did not make payment in full of the Original Loans by that date. The Lender has revoked such demand pursuant to the terms of an Agreement, dated January 15, 1999 (the "Amended Agreement"). Capitalized terms used herein and not otherwise defined herein shall have the meanings assigned to them in the Original Agreement. Unless otherwise set forth herein, references in this Security Agreement to the "Agreement" shall mean the Original Agreement, the Amended Agreement and the Loan Agreement. As security for the Loans and the Agreement, the Debtors and the Company have agreed to enter into this Security Agreement. 1.2 The Second Recital of the Original Security Agreement is hereby amended in its entirety to read as follows: The Debtors, other than the Company, have guaranteed the Loans and the obligations of the Company under the Notes and the Loan Agreement pursuant to the terms of a Subsidiary Guaranty dated as of January 15, 1999 (the "Guaranty"). 1.4 Section 1 of the Original Security Agreement is hereby amended by deleting it in its entirety and inserting the following in place thereof: GRANT OF SECURITY INTEREST. In order to secure the payment and performance of all of the obligations of the Company under the Notes and the Loan Agreement and of the other Debtors under the Guaranty and the payment and performance of the Loans, plus interest accrued thereon (being hereinafter collectively referred to as the "Obligations"), the Debtors hereby (i) reaffirm and acknowledge the first priority security interest granted pursuant to the 2 Original Agreement, and (ii) grant to the Secured Party, a second priority perfected security interest in all of their respective right, title and interest in and to all of their personal property, both tangible and intangible and of every kind and description, whether now or hereafter existing, or now owned or hereafter acquired, and wherever located, and all proceeds, products, replacements, additions, accessions and/or substitutes therefor, including, without limitation, all goods, machinery, equipment, furniture, furnishings, fixtures, inventory, accounts, chattel paper, instruments and general intangibles, as such terms may be defined in the Uniform Commercial Code in the jurisdiction in which such assets are located (other than equipment leased to the Company or any Debtor and any leases which by their terms prohibit the grant of security interests in, or assignments of, the Company's or such Debtor's leasehold interest therein), and the proceeds and products of any and all of the foregoing assets and properties described in this Section 1, including proceeds of insurance policies relating to any and all of the foregoing assets and properties. All of the foregoing shall be hereinafter referred to as the "Collateral." 2. Representations and Warranties. Each and every representation and warranty set forth in the Original Security Agreement is hereby confirmed and ratified, in all material respects, by the Debtors and the Company, and such representations and warranties as so confirmed and ratified shall be deemed to have been made and undertaken as of the date of this Amendment as well as at the time they were made and undertaken except to the extent such representations and warranties have been affected by events contemplated by or permitted pursuant to the Agreement. 3. Counterparts. This Amendment may be executed in as many counterparts as may be convenient and shall become binding when the Company, the Debtors and the Secured Party have each executed at least one counterpart. 4. Governing Law. This Amendment shall be a contract made under and governed by the laws of the State of Delaware, without regard to the conflicts of law provisions thereof. 5. Binding Effect. This Amendment shall be binding upon and shall inure to the benefit of the Company, the Debtors and the Secured Party and their respective successors and assigns, and in particular, any holder of the Notes. 6. Reference to Original Security Agreement. Except as amended hereby, the Original Security Agreement shall remain in full force and effect and is hereby ratified and confirmed in all respects. On and after the effectiveness of the amendment to the Original Security Agreement accomplished hereby, each reference in the Original Security Agreement to "this Agreement", "hereunder", "hereof", "herein" or words of like import, and each reference to the Original Security Agreement in the Agreement or other agreement, document or instrument executed and delivered pursuant to the Agreement, shall be deemed a reference to the Original Security Agreement, as amended hereby. 7. No Other Modifications. Except as expressly provided in this Amendment, all of the terms and conditions of the Original Security Agreement shall remain unchanged and in full force and effect. [Signature Page Follows] 3 IN WITNESS WHEREOF, the undersigned have executed this First Amendment to Security Agreement on the day and year first above written. WINTER HARBOR, L.L.C. By: First Media, L.P., its member By: First Media Corporation, its sole general partner By: /s Ralph W. Hardy Ralph W. Hardy Jr., Secretary I-LINK INCORPORATED By: /s John Edwards John Edwards, President I-LINK WORLDWIDE, L.L.C. I-LINK SYSTEMS, INC. By: I-Link Incorporated, its sole member By: /s John Edwards John Edwards, President By: s/ John Edwards John Edwards, President I-LINK COMMUNICATIONS, INC. VIANET TECHNOLOGIES, LTD. By: /s John Edwards By: /s John Edwards John Edwards, President John Edwards, President MIBRIDGE, INC. By: /s John Edwards John Edwards, President 4 EX-10 10 EXHIBIT 10.45 Exhibit 10.45 FIRST AMENDMENT TO PLEDGE AGREEMENT THIS FIRST AMENDMENT TO PLEDGE AGREEMENT is made and entered into as of January 15, 1999, 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 A. The Pledgor owns all of the capital stock of I-Link Systems, Inc., I-Link Communications, Inc., Vianet Technologies, Ltd. and MiBridge, Inc. and the limited liability company interests of I-Link Worldwide, L.L.C. (collectively, the "Companies" and individually, a "Company"). B. The Pledgee has lent to the Pledgor (i) $5,768,000 in four installments on a demand loan basis, which installments were made on January 26, 1998, February 23, 1998, March 3, 1998, and March 24, 1998 (collectively, the "Original Loans"). The obligations of the Pledgor under the Original Loans and under the notes and other documents and instruments entered into in connection therewith are secured by a Pledge Agreement, dated as of April 14, 1997 (the "Original Pledge Agreement"), entered into pursuant to the Agreement, dated April 14, 1998 (the "Original Agreement"), by and between the Pledgee and the Pledgor. All capitalized terms used herein and not otherwise defined herein shall have the meanings ascribed to such terms in the Original Agreement. C. The Pledgee has further lent to the Pledgor $2,000,000 in three installments on a demand loan basis, which installments were made on May 13, 1998, May 29, 1998, and June 8, 1998, totaling $2,000,000 (collectively the "Second Loans") and has made available for borrowing $8,000,000 pursuant to a Loan Agreement, dated January 15, 1999 (the "Loan Agreement"). The loans made pursuant to the Loan Agreement, together with the Original Loan and the Second Loan, may be referred to hereinafter as the "Loans". Each of the Loans is evidenced by certain promissory notes (the "Notes"). D. In order to induce the Pledgee to enter into the Loan Agreement and to secure the Second Loans and the Loans made pursuant to the Loan Agreement, the Pledgor has agreed to enter into this Amendment. The Original Pledge Agreement as amended hereby shall be referred to as the "Pledge Agreement". AGREEMENTS In consideration of the foregoing Recitals, and of the agreements made herein, and of the Loans made or to be made by the Pledgee to the Pledgor, the Pledgor and the Pledgee agree as follows: 1. Amendments. 1.1 The Recital of the Original Pledge Agreement is hereby amended in its entirety to read as follows: 1 The Pledgee has lent to the Pledgor (i) $5,768,000 in four installments on a demand loan basis, which installments were made on January 26, 1998, February 23, 1998, March 3, 1998, and March 24, 1998 (collectively, the "Original Loans"). The Pledgee has further lent to the Pledgor $2,000,000 in three installments on a demand loan basis, which installments were made on May 13, 1998, May 29, 1998, and June 8, 1998, totaling $2,000,000 (collectively the "Second Loans"), and has made available for borrowing $8,000,000 pursuant to a Loan Agreement, dated January 15, 1999 (the "Loan Agreement"). The loans made pursuant to the Loan Agreement, together with the Original Loan and the Second Loan, may be referred to hereinafter as the "Loans". Each of the Loans is evidenced by certain promissory notes (the "Notes"). The Pledgor requested that the Pledgee not demand payment on the Original Loans before May 15, 1998 (the "Demand Date"). Pursuant to the Agreement, dated April 14, 1998 (the "Original Agreement"), the Original Loans automatically came due upon the Demand Date since the Borrower did not make payment in full of the Original Loans by that date. The Lender has revoked such demand pursuant to the terms of an Agreement, dated January 15, 1999 (the "Amended Agreement"). Capitalized terms used herein and not otherwise defined herein shall have the meanings assigned to them in the Original Agreement. Unless otherwise set forth herein, references in this Pledge Agreement to the "Agreement" shall mean the Original Agreement, the Amended Agreement and the Loan Agreement. As security for the Loans and the Agreement, the Pledgor has agreed to enter into this Pledge Agreement. 1.2 Section 1(a) of the Original Pledge Agreement is hereby amended in its entirety to read as follows: (a) The Pledgor hereby grants to the Pledgee, as security for the Loans and the obligations of the Pledgor (i) under the Original Agreement, a first priority perfected security interest in, and (ii) under the Amended Agreement and the Loan Agreement, second priority perfected 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., Vianet Technologies, Ltd. and MiBridge, Inc. and all of the issued and outstanding limited liability company interests of I-Link Worldwide, L.L.C. (together, the "Collateral"). 1.3 Section 2(a) of the Original Pledge Agreement is hereby amended in its entirety to read as follows: (a) the Collateral constitutes all of the capital stock of each of I-Link Systems, Inc. ("Systems"), I-Link Communications, Inc. ("Communications"), Vianet Technologies, Ltd. ("Vianet") and MiBridge, Inc. ("MiBridge") and the limited liability company interests of I-Link Worldwide, L.L.C. ("Worldwide"); 1.4 Section 2(b) of the Original Pledge Agreement is hereby amended in its entirety to read as follows: (b) the Collateral is validly issued, fully paid and nonassessable and is not subject to any liens (except for the lien of Mr. Drore Nahumi on the capital stock of MiBridge, Inc.), charges or encumbrances whatsoever, except for the security 2 interest granted pursuant hereto; 1.5 Section 2(d) of the Original Pledge Agreement is hereby amended in its entirety to read as follows: (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, Vianet, 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; 1.6 The last sentence of Section 5 of the Original Pledge Agreement is hereby amended in its entirety to read as follows: 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, Vianet 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, Vianet and MiBridge and limited liability company interests of Worldwide will be pledged to Pledgee. 2. Representations and Warranties. Each and every representation and warranty set forth in the Original Pledge Agreement is hereby confirmed and ratified, in all material respects, by the Pledgor, and such representations and warranties as so confirmed and ratified shall be deemed to have been made and undertaken as of the date of this Amendment as well as at the time they were made and undertaken except to the extent such representations and warranties have been affected by events contemplated by or permitted pursuant to the Agreement. 3. Counterparts. This Amendment may be executed in as many counterparts as may be convenient and shall become binding when the Pledgor and the Pledgee have each executed at least one counterpart. 4. Governing Law. This Amendment shall be a contract made under and governed by the laws of the State of Delaware, without regard to the conflicts of law provisions thereof. 5. Binding Effect. This Amendment shall be binding upon and shall inure to the benefit of the Pledgor and the Pledgee and their respective successors and assigns, and in particular, any holder of the Notes. 6. Reference to Original Pledge Agreement. Except as amended hereby, the Original Pledge Agreement shall remain in full force and effect and is hereby ratified and confirmed in all respects. On and after the effectiveness of the amendment to the Original Pledge Agreement accomplished hereby, each reference in the Original Pledge Agreement to "this Agreement", "hereunder", "hereof", "herein" or words of like import, and each reference to the Original Pledge Agreement in the Agreement or other agreement, document or instrument executed and delivered pursuant to the Agreement, shall be deemed a reference to the Original Pledge Agreement, as amended hereby. 3 7. No Other Modifications. Except as expressly provided in this Amendment, all of the terms and conditions of the Original Pledge Agreement shall remain unchanged and in full force and effect. [Signature Page Follows] 4 IN WITNESS WHEREOF, the undersigned have executed this First Amendment to Pledge Agreement on the day and year first above written. PLEDGOR: I-LINK INCORPORATED By: /s John Edwards John Edwards, President PLEDGEE: WINTER HARBOR, L.L.C. By: First Media, L.P., its member By: First Media Corporation, its sole general partner By: /s Ralph W. Hardy Jr. Ralph W. Hardy Jr., Secretary 5 EX-10 11 EXHIBIT 10.46 Exhibit 10.46 SERIES D, E, F, G, H, I AND J WARRANT AGREEMENT by and between I-LINK INCORPORATED and WINTER HARBOR, L.L.C. Dated as of January 15, 1999 WARRANT AGREEMENT THIS 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 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. In connection with the Original Loans, the Lender promised to issue warrants to acquire, in the aggregate, 5,000,000 shares of common stock of the Company at an exercise price of 110% of the closing price of such stock on the day each installment was made (the "1998 Warrants"). The Company has not repaid the Original Loans. B. Subsequent to the Original Agreement, the Company 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 (the "Additional Loans" and, collectively with the Original Loans, the "Loans"), each of which is evidenced by a demand note (collectively, the "Additional Notes"). In connection with the Additional Loans, the Company agreed to issue warrants to buy 1,740,000 shares of common stock of the Company (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 (the "Additional Warrants")). The Company's agreement to issue the Additional Warrants is evidenced in the Agreement (the "Additional Agreement") dated as of January 15, 1999, between the Company and the Lender. C. In order to satisfy the Company's obligations to deliver the 1998 Warrants and the Additional Warrants, the Company, concurrently with the execution and delivery of this Agreement, is issuing and selling to the Lender Series D Warrants, Series E Warrants, Series F Warrants, Series G Warrants, Series H Warrants, Series I Warrants and Series J Warrants of the Company (being referred to herein as the "Warrants"), such Warrants initially entitling the holders thereof to purchase shares of Common Stock of the Company (the "Common Stock"), subject to adjustment as hereinafter provided (the Common Stock and, pursuant to Article 7 hereof, such other securities as may be issuable upon exercise of the Warrants being referred to herein as the "Warrant Shares"); and D. The Company wishes to define the terms and provisions of the Warrants and the respective rights and obligations thereunder of the Company and the holders of the 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: 1 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. "Rights Offering" shall have the meaning set forth in Section 7.1(c) hereof. "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. "Winter Harbor Agreement" means collectively the Original Agreement and the Additional Agreement. ARTICLE 2 ISSUANCE, FORM AND EXECUTION OF WARRANT CERTIFICATES SECTION 2.1 Issuance of Warrants. The Warrants shall be originally issued by the Company in connection with the Loans pursuant to the Winter Harbor Agreement. The Warrants shall be evidenced by Warrant Certificates, and each Warrant Certificate shall represent the right, subject to the provisions contained herein and therein, to purchase from the Company (and the Company shall issue and sell to the registered holder of such Warrants) 2 the number of shares of Common Stock (as may be adjusted pursuant to Article 7 hereof) issuable to the Warrantholder upon exercise of such Warrants, at the price specified herein and therein. SECTION 2.2 Form of Warrant Certificates. The certificates evidencing the 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. 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 13751 South Wadsworth Park Drive, Suite 200, Draper, Utah 84020 (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 3 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 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 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 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, 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 Warrants, together with the form of election to purchase (the "Election to Purchase"), in the form 4 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 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 Warrants to which such items relate will be effective on the next Business Day. (c) The number and kind of Warrant Shares for which Warrants may be exercised shall be subject to adjustment from time to time as set forth in Article 7 hereof. (d) The 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 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 Warrants shall be canceled and disposed of by the Company. SECTION 5.3 Exercise Price. The price at which each of the Series D Warrants, Series E Warrants, Series F Warrants, Series G Warrants, Series H Warrants, Series I Warrants and Series J Warrants shall be exercisable in exchange for Warrant Shares shall be the price as set forth below (as such price may be adjusted pursuant to Article 7 hereof and Section 4(c) of the Additional Agreement) (being referred to herein as the "Exercise Price"): (a) $5.50 per Warrant Share for Series D Warrants; (b) $5.95 per Warrant Share for Series E Warrants; (c) $5.98 per Warrant Share for Series F Warrants; (d) $7.22 per Warrant Share for Series G Warrants; (e) $6.67 per Warrant Share for Series H Warrants; (f) $6.37 per Warrant Share for Series I Warrants; and (g) $6.12 per Warrant Share for Series J Warrants. SECTION 5.4 Exercise Period. The right to exercise the Series D Warrants, Series E Warrants, Series F Warrants, Series G Warrants, Series H 5 Warrants, Series I Warrants and Series J Warrants shall terminate on October 15, 2005 (the "Expiration Date"). A Warrantholder may exercise any 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 Warrants, the Warrantholder may, at its option, exchange such 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 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 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 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 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 Warrants. 6 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. 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 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 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 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 7 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 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 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 effectshall forthwith be readjusted to such Exercise Price as would have 8 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 (A) the Company shall 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 (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 9 (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 Warrants effect a subdivision of the outstanding Common Stock, the Exercise Price of each 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 Warrant shall be proportionately increased. If the Company shall at any time or from time to time after the Original Issue Date for the Warrants combine the outstanding shares of Common Stock, the Exercise Price of each 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 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 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 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 (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 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 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 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 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 10 period giving application to all adjustments called for during such period, under this paragraph with respect to the rights of the holders of the Warrants. SECTION 7.8 Adjustment for Reclassification, Exchange, or Substitution. If the Common Stock issuable upon the exercise of the 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 Warrants shall have the right thereafter to convert each such share of Common Stock issuable upon the exercise of the 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 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 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 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 Warrants. SECTION 7.10 Adjustment of Exercise Price for Warrants. In addition to any other adjustment to the Exercise Price provided hereunder, in the event that, as of the time of exercise of any of the Warrants, the average closing bid price of the Common Stock for the five trading days immediately preceding the date of such exercise (the "Average Bid Price") is less than the Exercise Price then in effect for the Warrants, then such Exercise Price shall be decreased to equal the Average Bid Price; provided, however, that notwithstanding the foregoing, if the Average Bid Price is less than $2.50, the Exercise Price for the Warrants shall be deemed to be equal to $2.50. Any adjustment under this Section 7.10 shall become effective immediately. 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 11 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 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 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 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 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 12 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 13751 South Wadsworth Park Drive Suite 200 Draper, Utah 84020 Attention: John W. Edwards, President Telecopier: 801-576-5075 with copy to: David E. Hardy, Esq. 60 E. South Temple Suite 2200 Salt Lake City, Utah 84111 Telecopier: (801) 364-6664 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. 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. 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 13 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 action 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. (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 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 14 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 Warrants; provided, however, that no such modification that (i) materially and adversely affects the exercise rights of the holders of the 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. SECTION 9.4 Termination. This Agreement shall terminate on or upon (a) the repurchase by the Company of all Warrants, (b) the fifteenth day following the date on which all of the Warrant Shares have been issued upon the exercise of all 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 Series M Preferred Stock or to holders of the Common Stock. 15 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 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 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] 16 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 John Edwards John Edwards, 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 Ralph W. Hardy Jr. Ralph W. Hardy Jr., Secretary 17 EXHIBIT A I-Link Incorporated Common Stock Purchase Warrant Number ____ Series [D] [E] [F] [G] [H] [I] [J] Warrant Certificate Evidencing Right to Purchase [1,734,000] [953,500] [1,229,000] [1,083,500] [609,000] [475,020] [655,980] 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 [D] [E] [F] [G] [H] [I] [J] 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 13751 South Wadsworth Park Drive, Suite 200, Draper, Utah 84020 (the "Office"). The Expiration Date (as defined in the Warrant Agreement) of the right to purchase Common Stock pursuant to this Certificate is October 15, 2005. 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. IN WITNESS WHEREOF, the Company has caused this 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: _________________________ John Edwards, President Attest:_______________________ Name:_________________________ Title:________________________ 18 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 Warrant Certificate, hereby irrevocably elects to exercise Warrants represented by such 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 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 Warrant Certificate in every particular, without alteration or any change whatsoever.) 19 -----END PRIVACY-ENHANCED MESSAGE-----