-----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, HlwVbC1xhEOj9W0mel69mt9swoHfWAaITBRQKe45r33vTaLPqnxuKEq622ncFnc9 AZWHnZMri6b0ykpgtIqqMA== 0000950109-97-006260.txt : 19971009 0000950109-97-006260.hdr.sgml : 19971009 ACCESSION NUMBER: 0000950109-97-006260 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 19970930 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19971008 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: MEDCROSS INC CENTRAL INDEX KEY: 0000849145 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-MEDICAL LABORATORIES [8071] 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: 97692257 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: 3227 BENNET STREET NORTH CITY: ST PETERSBURG STATE: FL ZIP: 33713 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): September 30, 1997 ----------------------------------- Medcross, Inc. (Exact name of registrant as specified in its charter) ----------------------------------- Florida 0-17973 59-2291344 (State or other jurisdiction (Commission File Number) (I.R.S. Employer of incorporation) Identification No.) 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 Medcross, Inc. (the "Company") and Winter Harbor, L.L.C. ("Winter Harbor") entered into a Securities Purchase Agreement ("Purchase Agreement"), dated as of September 30, 1997 and contemplating a closing on October 10 1997, pursuant to which Winter Harbor will make an investment for equity of the Company (the "Investment"). The prospective Investment was disclosed in the Company's previous public filings. Pursuant to the Purchase Agreement, Winter Harbor will invest an aggregate of $12,100,000 in a new series of the Company's convertible preferred stock (the "Series M Preferred Stock"). Winter Harbor will purchase approximately 2,545 shares of Series M Preferred Stock (convertible into 2,545,000 shares of Common Stock) for an aggregate cash consideration of approximately $7,000,000 (equivalent to $2.75 per share of Common Stock). The Purchase Agreement also provides for the purchase of approximately 1,855 additional shares of Series M Preferred Stock (convertible into 1,855,000 shares of Common Stock); such additional shares of Series M Preferred Stock will be paid for by Winter Harbor exchanging $5,000,000 of outstanding principal balance under loans to the Company plus approximately $100,000 accrued interest. After closing on the Investment and exchanging principal and interest due, Winter Harbor's total equity investment in the Company will equal $12,100,000. As additional consideration for its equity financing commitments, Winter Harbor will be issued warrants by the Company to acquire (a) 2,500,000 shares of Common Stock at an exercise price of $2.75 per share (the "Series A Warrants"), (b) 2,500,000 shares of Common Stock at an exercise price of $4.00 per share (the "Series B Warrants") and (c) 5,000,000 shares of Common Stock at an exercise price of $4.69 (the "Series C Warrants"). The respective exercise prices for the Series A Warrants, the Series B Warrants and the Series C Warrants (collectively, the "Investment Warrants"), shall be subject to adjustment. The Series A Warrants will be exercisable at any time for thirty months from the date of issuance, and the Series B Warrants and Series C Warrants will be exercisable at any time for sixty months from the date of issuance. All of the Investment Warrants (i) will have demand registration rights and anti-dilution rights and (ii) will contain cashless exercise provisions. Item 7. Financial Statements and Exhibits (c) Exhibits 4(u) Securities Purchase Agreement by and between the Company and Winter Harbor, L.L.C., dated as of September 30, 1997 ("Purchase Agreement"). 4(v) Form of Registration Rights Agreement by and between the Company and Winter Harbor, L.L.C., which constitutes Exhibit C to the Purchase Agreement. 4(w) Form of Shareholders Agreement by and among the Company, Winter Harbor, L.L.C. and certain holders of the Company's securities, which constitutes Exhibit D to the Purchase Agreement. 4(x) Form of Warrant Agreement by and between Medcross, Inc. and Winter Harbor, L.L.C., which constitutes Exhibit F to the Purchase Agreement. 4(y) Form of Articles of Amendment to the Amended and Restated Articles of Incorporation of the Company, relating to Series M Preferred Stock, which constitutes Exhibit A to the Purchase Agreement. -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. MEDCROSS, INC. (Registrant) Dated: October 6, 1997 By: /s/ John W. Edwards ----------------------------- John W. Edwards, President, Chief Executive Officer Dated: October 6, 1997 By: /s/ Karl S. Ryser, Jr. ----------------------------- Karl S. Ryser, Jr., Chief Financial Officer -2- EX-4.U 2 EXHIBIT 4(U) Exhibit 4(u) SECURITIES PURCHASE AGREEMENT THIS SECURITIES PURCHASE AGREEMENT (this "Agreement"), dated as of September 30, 1997, by and between MEDCROSS, INC., a Florida corporation (the "Company"), and WINTER HARBOR, L.L.C., a Delaware limited liability company (the "Investor"). WITNESSETH: WHEREAS, subject to the terms and conditions set forth herein, the Company desires to issue and sell to the Investor, and the Investor desires to purchase from the Company, 4,400 shares (as such number may be adjusted as provided herein) of the Company's Series M Participating Convertible Preferred Stock (the "Series M Preferred"), par value $10.00 per share, and warrants to purchase up to 10,000,000 shares (as such number may be adjusted as provided herein) of the Company's common stock, par value $.007 per share (the "Common Stock"), for an aggregate purchase price of $12,100,000; NOW, THEREFORE, in consideration of the premises and the 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 PURCHASE AND SALE OF SHARES Section 1.1 Conversion of Notes; Purchase and Sale of Shares of Series M Preferred Stock and Warrants. (a) Subject to the terms and conditions set forth herein, on the Closing Date (as that term is defined in Section 1.2), the Company shall issue and sell to the Investor, and the Investor shall purchase from the Company, (i) that number of shares of Series M Preferred (the "Acquired Shares") equal to the excess of 4,400 over the number of Converted Shares issued pursuant to Section 1.1(b), having the rights, privileges and preferences set forth in the Articles of Amendment attached hereto as Exhibit A (the "Series M Amendment"), and (ii) warrants to purchase (A) 2,500,000 shares (as such number may be adjusted as provided herein) of Common Stock at an exercise price of $2.75 per share (as such price per share may be adjusted as provided herein) (the "Series A Warrants"), (B) 2,500,000 shares (as such number may be adjusted as provided herein) of Common Stock at an exercise price of $4.00 per share (as such price per share may be adjusted as provided herein) (the "Series B Warrants"), and (C) 5,000,000 shares (as such number may be adjusted as provided herein) of the Common Stock at an exercise price of $4.69 per share (as such price per share may be adjusted as provided herein) (the "Series C Warrants" and together with the Series A Warrants and the Series B Warrants, collectively, the "Warrants"), which Warrants shall be subject to the terms and conditions set forth in a Warrant Agreement in substantially the form attached hereto as Exhibit F (the "Warrant Agreement"). The purchase price to be paid by Investor for the Acquired Shares and the Warrants shall equal the excess of (i) $12,100,000 over (ii) the outstanding principal balance and all unpaid interest accrued thereon as of the Closing Date under those certain promissory notes executed by the Company in favor of the Investor and dated June 6, 1997, and August 18, 1997 (the "Notes"). The aggregate purchase price for the Acquired Shares and the Warrants shall be allocated (i) 80% to the Purchased Shares, (ii) 7% to the Series A Warrants, (iii) 5% to the Series B Warrants, and (iv) 8% to the Series C Warrants. (b) Subject to the terms and conditions set forth herein, on the Closing Date, the outstanding principal balance and all unpaid interest accrued as of the Closing Date under the Notes (together, the "Note Amount") shall be converted into shares (the "Converted Shares", and together with the Acquired Shares, the "Purchased Shares") of Series M Preferred. The number of Converted Shares shall equal (i) the product of (A) 12,100,000, and (B) a fraction, the numerator of which is the Note Amount, and the denominator of which is the sum of the Note Amount and the purchase price allocable to the Acquired Shares, divided by (ii) 2,750. Upon issuance of the Converted Shares, the Notes shall be surrendered by the Investor and cancelled by the Company. (c) The parties agree that the number of Purchased Shares and Warrants (together, the "Securities") to be issued by the Company to the Investor on the Closing Date, and the exercise price of the Warrants, shall be equitably adjusted, subject to the agreement of each party, to reflect any spin-off, split-up, reclassification, combination of shares, recapitalization or similar corporate reorganization, or any consolidation or merger under which the surviving entity is or becomes the "Company" as defined in this Agreement, in any such case which occurs between the effective date of this Agreement and the Closing Date. Section 1.2 Closing. (a) Subject to the satisfaction or, to the extent permissible by law, waiver by the parties hereto on the Closing Date of the conditions described in Article 4 of this Agreement, and to the provisions of Article 5 hereof, the closing of the -2- issuance and sale of the Securities (the "Closing") shall occur on such date as the Company and the Investor may mutually agree in writing, or on a date selected by the Company, by written notice to the Investor, on which the Company has determined that the condition precedent to the obligations of the Investor to consummate the Closing set forth in Section 4.1(j) is reasonably likely to be satisfied, which date so selected shall not, in any event, be earlier than three business days after the date of such notice; provided, however, that, if such condition precedent is not actually satisfied or waived in writing by such date, then either the Company or the Investor may elect, by written notice to the other party, to postpone the date of the Closing, in which event the date of the Closing shall be a subsequent date, as shall be designated by the Company by written notice to the Investor, which is at least five business days after the date on which the Company gives the Investor written notice of the actual satisfaction (or, if applicable, the prior waiver in writing by the Investor) of the condition precedent set forth in said Section 4.1(j) (such date on which the Closing takes place being the "Closing Date"). The Closing shall take place at the offices of Dow, Lohnes & Albertson, PLLC, 1200 New Hampshire Avenue, N.W., Suite 800, Washington, D.C., or at such other place as the Company and the Investor may mutually agree upon in writing. (b) At the Closing, the Company shall deliver to the Investor certificates representing the Purchased Shares and the Warrants and the Warrant Agreement against payment of the Purchase Price by certified check payable to the Company or by wire transfer of immediately available federal funds to such account as the Company may designate in writing to the Investor and by cancellation of the Notes, as provided in Section 1.1(c). Section 1.3 Proxy Statement; Special Shareholders Meeting to Approve Amendment to Articles of Incorporation. The Company has prepared and filed with the Securities and Exchange Commission (the "SEC") proxy statement materials for the purpose of soliciting proxies from the holders of the Company's Common Stock in order to approve, at a meeting of the Company's shareholders (which meeting, in any event shall be scheduled to occur not later than thirty days after the date hereof), (i) the adoption of an amendment to the Company's Articles of Incorporation in the form attached hereto as Exhibit B (the "Authorized Shares Amendment" and, together with the Series M Amendment, collectively the "Amendments"), which is necessary in order, among other things, to permit the issuance of shares of Common Stock upon conversion of shares of Series M Preferred, and (ii) to approve all actions or agreements to consummate the transactions contemplated herein. The Company shall use its commercially reasonable efforts to obtain the approval of its shareholders to the adoption of the Authorized Shares Amendment and the approval of the other matters described in this Section -3- 1.3. The Company shall promptly file with the Secretary of State of the State of Florida the Amendments in the forms attached hereto as Exhibits A and B. ARTICLE 2 REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY The Company represents and warrants to, and covenants with, the Investor as follows: Section 2.1 Organization, Qualifications and Corporate Power. (a) The Company is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Florida, and it has the requisite corporate power and authority to own and hold its properties and to carry on its business as conducted or presently proposed to be conducted. The Company has requisite corporate power and authority to execute, deliver and perform this Agreement and to sell, issue and deliver to the Investor the Securities, and the Company has, or will have within thirty days of the date hereof, requisite corporate power and authority to issue and deliver to the Investor the shares of Common Stock issuable upon conversion of the Series M Preferred or exercise of the Warrants (collectively, the "Underlying Shares"). The Company 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 Company or any of its subsidiaries (a "Material Adverse Effect"). The Company has delivered to the Investor complete and correct copies of the Company's Articles of Incorporation (including all amendments thereto) and Bylaws, in each case in effect as of the date hereof (the "Company Existing Articles" and "Company Existing Bylaws," respectively). (b) The Company 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. (formerly known as "Family Telecommunications, 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, -4- 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. The Company has delivered to the Investor complete and correct copies of the Articles of Incorporation (including all amendments thereto), Bylaws and operating agreement (as appropriate) of each of I-Link Systems, I-Link Communications, MiBridge and Worldwide, in each case in effect as of the date hereof (the "Subsidiary Existing Articles", "Subsidiary Existing Bylaws" and "Subsidiary Operating Agreement", respectively; the Existing Articles and Existing Bylaws are sometimes referred to herein, together with the Company Existing Articles and the Company Existing Bylaws, as the "Existing Articles" and the "Existing Bylaws", respectively). -5- Section 2.2 Authorization of Agreements. (a) (i) Except as set forth in Schedule 2.2, each of the execution, delivery and performance by the Company of this Agreement, the Warrant Agreement, the Shareholders Agreement (as that term is defined in Section 4.1(f)) and the Registration Rights Agreement (as that term is defined in Section 4.1(e)) and the other agreements, documents and instruments to be entered into pursuant hereto (collectively, the "Transaction Documents") and the issuance, sale and delivery of the Securities and the Underlying Shares to the Investor have been, or, prior to the Closing Date, will have been (in the case only of approval or consent of the Company's shareholders), duly authorized by all requisite corporate action of the Company, including, but not limited to, the requisite action by the Board of Directors of the Company and the requisite approval or consent of the Company's shareholders, and (ii) 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 of the Company, or any provision of any indenture, mortgage, note, deed of trust, agreement or other instrument to which the Company, 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 Company or any of its subsidiaries. (b) The Securities have been duly authorized and, when issued in accordance with this Agreement, shall be validly issued, fully paid and non-assessable, with the rights, powers and privileges as set forth herein, in the Articles of Incorporation, as amended, and in the Warrant Agreement, and will be free and clear of all liens, charges, restrictions, claims and encumbrances other than restrictions on transfer under applicable state and federal securities laws. The Underlying Shares issuable upon conversion of the Purchased Shares and upon exercise of the Warrants have been, or, within thirty days of the date hereof, will have been, duly and validly reserved for issuance and, upon issuance in accordance with the terms of the Company's Articles of Incorporation, as amended, and the Warrant Agreement, 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 and the Underlying Shares are not subject to any preemptive right of any shareholder of the Company or to any right of first refusal or other right in favor of any person. -6- Section 2.3 Validity. This Agreement has been duly executed and delivered by the Company and constitutes the legal, valid and binding obligation of the Company, 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 Company and will constitute the legal, valid and binding obligation of the Company, 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. Section 2.4 Capital Stock. (a) The authorized capital stock of the Company consists of (i) 20,000,000 shares of Common Stock, of which 11,627,597 shares were issued and outstanding as of August 8, 1997, and (ii) 500,000 shares of Preferred Stock, of which (A) 7,500 shares are designated as 12% Cumulative Convertible Preferred Stock (of which no shares are outstanding), (B) 200,000 shares are designated Class A Variable Rate Cumulative Convertible Preferred Stock (of which no shares are outstanding), (C) 22,500 shares are designated Class B Variable Rate Cumulative Convertible Preferred Stock (of which 7,500 shares are outstanding), (D) 240,000 shares are designated as Class C Convertible Cumulative Redeemable Preferred Stock (of which all 240,000 shares were outstanding as of September 6, 1997), (E) 1,000 shares are designated as Series D Convertible Preferred Stock (of which all 1,000 shares are outstanding) and (F) 29,000 shares are designated as Series M Participating Convertible Preferred Stock. All of the issued and outstanding shares of capital stock of the Company have been validly issued, are fully paid and non-assessable and have been issued pursuant to applicable exemptions from registration or qualification under applicable federal and state securities laws and regulations. (b) All of the issued and outstanding capital stock of each of I-Link Systems, I-Link Communications and MiBridge is owned beneficially and of record by the Company. All of the issued and outstanding membership interests of Worldwide are owned beneficially and of record by the Company. All of the issued and outstanding shares of capital stock of each of I-Link Systems, I-Link Communications and MiBridge and all of the issued and outstanding membership interests of Worldwide have been validly issued, are fully paid and non-assessable and have been issued pursuant to applicable exemptions from registration or -7- qualification under applicable federal and state securities laws and regulations. (c) Except for the warrants and options listed on Schedule 2.4 attached hereto, no subscriptions, warrants, options, convertible debt, participation rights or securities, or any commitments, agreements or rights of any kind with respect to securities of the Company are outstanding as of the date hereof or shall be outstanding as of the Closing Date. There are no subscriptions, warrants, options, convertible debt, participation rights or securities, or any commitments, agreements or rights of any kind with respect to securities of any of I-Link Systems, I-Link Communications, MiBridge or Worldwide outstanding. Section 2.5 Litigation; Claims; Investigations. There is no action, suit, proceeding or investigation pending or threatened against the Company 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 Company or any of its subsidiaries or affecting any of the Company's or any of its subsidiaries' properties, rights, assets or business, or to which the Company or any of its subsidiaries is a party or, in the case of threatened proceedings, is reasonably likely to become a party. The foregoing includes, without limitation, any action, suit, proceeding or investigation pending or currently threatened involving the prior employment of any of the Company's or any of its subsidiaries' employees, their use in connection with the Company's or such subsidiary's business of any information or techniques allegedly proprietary to any of their former employers, their obligations under any agreements with prior employers, or negotiations by the Company or any of its subsidiaries with potential backers of, or investors in, the Company or its proposed business. There is no outstanding order, writ, judgment, injunction or decree of any court, administrative agency, governmental body or arbitration tribunal against or affecting the Company, any of its subsidiaries or any of the properties, rights, assets or business of the Company or any of its subsidiaries. Section 2.6 Compliance. Neither the Company nor any of I-Link Systems, I-Link Communications, MiBridge or Worldwide is in violation of or default under any provision of its Articles of Incorporation or Bylaws or Subsidiary Operating Agreement. Except as set forth on Schedule 2.6 attached hereto, neither the Company 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 -8- assets are bound or (ii) any provision of any federal, state or local law, statute, rule, order or governmental regulation. Section 2.7 Brokers. The Company does not have any contract, arrangement or understanding with any broker, finder, investment or commercial banker or similar agent with respect to the transactions contemplated by this Agreement. Section 2.8 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 Company or any of its subsidiaries is required in connection with the offer, sale or issuance of the Securities and the Underlying Shares, except for the filing of the Amendments in the office of the Secretary of State of the State of Florida, which shall be filed by the Company on or prior to the Closing. Section 2.9 Employee Matters. Except as described on Schedule 2.9 attached hereto, neither the Company nor any of its subsidiaries is a party to or bound by any employment contract, deferred compensation agreement, bonus plan, incentive plan, profit sharing plan, retirement agreement or other employee compensation or benefit agreement or arrangement, including without limitation any multiemployer plan, and neither the Company nor any of its subsidiaries is a party to any collective bargaining agreement or any arrangement with any collective bargaining agent. No employees of the Company or any of its subsidiaries are represented by any labor union or covered by any collective bargaining agreement. There is no pending or, to the Company's knowledge, threatened labor disagreement involving the Company or any of its subsidiaries and any group of their employees. Section 2.10 Offerees; Regulation D. Neither the Company, nor any of its subsidiaries nor any of their respective directors, officers, affiliates or any person or entity acting as agent for or on behalf of any of the foregoing, directly or indirectly, has sold, offered for sale, or solicited offers to purchase any of the Securities or other securities of the Company by means of any general advertising or general solicitation so as to bring the offer, issuance or sale of the Securities or the Underlying Shares contemplated by this Agreement within the registration requirements of the Securities Act of 1933, as amended (the "Securities Act"), or within the registration or qualification requirements of any "blue sky" or securities laws of any state or other jurisdiction. Assuming the accuracy of the representations and warranties of the Investor set forth in Article 3 of this Agreement, the offer, sale and issuance of the Securities and the Underlying Shares to the Investor in conformity with the terms of this Agreement are exempt -9- from the registration requirements of Section 5 of the Securities Act. Section 2.11 Registration Rights. Except as provided in the Registration Rights Agreement in the form attached hereto as Exhibit C (the "Registration Rights Agreement"), which is to be executed and delivered by the parties at the Closing, and except as set forth on Schedule 2.11 attached hereto, the Company has not granted or agreed to grant any registration rights, including piggyback rights, to any person or entity. Section 2.12 Financial Statements. Attached hereto as Schedule 2.12 are complete and correct copies of (i) audited consolidated financial statements of the Company containing a balance sheet and a statement of income as at and for the Company's fiscal year ending December 31, 1996 and (ii) an unaudited balance sheet and statement of income of the Company as at and for the six-month period ended June 30, 1997 (the items referred to in clauses (i) and (ii), collectively, the "Financial Statements"). The Financial Statements have been prepared from the books and records of the Company, have been prepared in accordance with generally accepted accounting principles consistently applied and maintained throughout the periods indicated, accurately reflect the books, records and accounts of the Company, are complete and correct in all material respects, and present fairly the financial condition of the Company and its subsidiaries on a consolidated basis as at the respective dates and the results of their operations for the periods then ended. None of the Financial Statements understates the true costs and expenses of conducting the business or operations of the Company and its subsidiaries, fails to disclose any material contingent liabilities or inflates the revenues of the Company and its subsidiaries. Section 2.13 Events Subsequent to the Date of the Financial Statements. Except as set forth on Schedule 2.13 attached hereto, since the latest date of the Financial Statements, neither the Company nor any of its subsidiaries has (i) issued any stock, bond or other corporate security, (ii) borrowed any amount or incurred or become subject to any liability (absolute, accrued or contingent), except current liabilities incurred in the ordinary course of business and liabilities under contracts entered into in the ordinary course of business, (iii) discharged or satisfied any lien or encumbrances or incurred or paid any obligation or liability (absolute, accrued or contingent) other than current liabilities shown in the latest Financial Statements and current liabilities incurred since the date of such Financial Statements in the ordinary course of business, (iv) declared or made any payment or distribution to shareholders or purchased or redeemed any share of its capital stock or other security, (v) mortgaged, pledged or subjected to lien any of its assets, tangible or intangible, (vi) -10- sold, assigned or transferred any of its assets except in the ordinary course of business, or cancelled any debt or claim, (vii) sold, assigned, transferred or granted any license with respect to any patent, trademark, trade name, service mark, copyright, trade secret or other intangible asset, (viii) suffered any material loss of property or waived any right of substantial value whether or not in the ordinary course of business, (ix) made any change in officer compensation except in the ordinary course of business and consistent with past practice, (x) made any material change in the manner of business or operations, (xi) accelerated the payment terms of any note or account receivable or delayed payment of any account payable or other liability beyond its due date, (xii) instituted, amended or terminated any employee benefit plan, contract or written agreement, (xiii) made any material change in the accounting policies applied in the preparation of the Financial Statements, (xiv) entered into any material transaction except in the ordinary course of business or as otherwise contemplated hereby or (xv) entered into any commitment (contingent or otherwise) to do any of the foregoing. Section 2.14 Intellectual Property. Set forth on Schedule 2.14 attached hereto is a list of all patents, pending patent applications, trademarks, service marks, trade names, copyrights, licenses, computer codes or computer software, proprietary rights, proprietary processes and other intellectual property rights (collectively "Intellectual Property") owned by, or licensed to, the Company or any of its subsidiaries, with an indication as to which of such items are owned by the Company or any of its subsidiaries and which are licensed to the Company or its subsidiaries. The Company's and its subsidiaries' legal rights to such Intellectual Property is sufficient for their respective businesses as now conducted and as presently proposed to be conducted. Except as set forth on Schedule 2.14 attached hereto, neither the Company nor any of its subsidiaries is infringing upon, or in conflict with, the right or claimed right of any third party with respect to any of the Intellectual Property. Except for the license agreements set forth in Schedule 2.14, neither the Company nor any of its subsidiaries has licensed any of the listed Intellectual Property to any other person or entity, nor does any other person or entity have any option or other right to acquire any of the Intellectual Property which is owned by the Company or any of its subsidiaries. Except as set forth on Schedule 2.14, neither the Company nor any of its subsidiaries has received any communications alleging that the Company or such subsidiary has violated or, by conducting its business as proposed, would violate any patent, trademark, service mark, trade name, copyright or trade secret or other proprietary right of any other person or entity. The Company is not aware that any of its or its subsidiaries' employees is obligated under any contract (including licenses, covenants or commitments of any nature) or other agreement, or -11- subject to any judgment, decree or order of any court or administrative agency, that would interfere with the use of such employee's best efforts to promote the interests of the Company or such subsidiary or that would conflict with the Company's or such subsidiary's business as proposed to be conducted. Neither the execution and delivery of this Agreement, nor the carrying on of the Company's or any of its subsidiary's business by their respective employees, nor the conduct of such business as presently proposed, will, to the Company's knowledge, conflict with or result in a breach of the terms, conditions or provisions of, or constitute a default under, any contract, covenant or instrument under which any of such employees is now obligated. Except as set forth on Schedule 2.14, the Company does not believe it is or will be necessary to utilize any inventions of any of its or its subsidiaries' employees (or people it currently intends to hire) made prior to their employment by the Company or any subsidiary. Section 2.15 Material Contracts. Schedule 2.15 lists each contract relating to the Company or any of its subsidiaries that (a) represents a contract upon which the Company or such subsidiary is substantially dependent or which is otherwise material to the Company or such subsidiary, (b) provides for borrowings or similar extensions of credit, (c) limits or restricts the ability of the Company or such subsidiary to compete or otherwise to operate in any manner or place, (d) provides for a guaranty or indemnity (other than customary indemnities for infringement of Intellectual Property rights), (e) grants a power of attorney, agency or similar authority to another person or entity, (f) contains a right of first refusal with respect to the sale or acquisition of the capital stock or assets of the Company or any of its subsidiaries, (g) contains a right or obligation (other than in the ordinary course of business) of any officer or director of the Company or any of its subsidiaries, or any of their respective affiliates or associates, (h) is an employment or consulting agreement to which the Company or any of its subsidiaries is a party, or (i) was not made in the ordinary course of business (collectively, "Material Contracts"). True copies of each Material Contract, including all amendments and supplements thereto, have been made available to the Investor. Except as set forth on Schedule 2.15, each Material Contract is valid and subsisting and no breach or default, alleged breach or default, or event which would (with the passage of time, notice or both) constitute a breach or default thereunder on the part of the Company or any of its subsidiaries, or, to the knowledge of the Company, on the part of any other party thereto, has occurred. -12- Section 2.16 Title to and Sufficiency of Assets. (a) Subject only to the encumbrances set forth in Schedule 2.16, the Company and each of its subsidiaries have good and marketable title to, or ownership of, all of their respective assets. Such title or ownership is sufficient for the Company and its subsidiaries to conduct their respective businesses as currently conducted. (b) The assets of the Company and its subsidiaries include all properties (whether real or personal, tangible or intangible), Material Contracts, licenses, permits, franchises and authorizations necessary for the Company and its subsidiaries to continue to conduct their respective businesses as currently conducted. All material tangible assets are in a reasonable state of maintenance and repair (except for ordinary wear and tear) and are adequate for the uses to which they are put. All assets constituting leasehold interests are held under valid, binding and enforceable leases, subject only to the effect of bankruptcy, insolvency or other similar laws affecting the enforcement rights of creditors generally and such exceptions as are not, individually or in the aggregate, material to the Company or any of its subsidiaries. There is no pending or, to the knowledge of the Company, threatened action that would materially interfere with the quiet enjoyment of any such leasehold by the Company or any of its subsidiaries. Section 2.17 Minute Books. Except as provided in Schedule 2.17 attached hereto, the minute books of the Company and its subsidiaries (complete and correct copies of which have been made available to the Investor) accurately reflect all actions and proceedings taken to date by the shareholders, boards of directors and committees of the Company and its subsidiaries, and such minute books contain correct and complete copies of the charter documents of the Company, its subsidiaries and all related amendments. The stock record books of the Company and its subsidiaries (complete and correct copies of which have been made available to the Investor) reflect accurately all transactions in their respective capital stock of all classes. Section 2.18 Insurance. Schedule 2.18 lists all insurance policies and bonds that are material to the Company and its subsidiaries. All such insurance policies and bonds are in full force and effect and, to the knowledge of the Company, no defaults exist under any of them. In the past three years neither the Company nor any of its subsidiaries has been refused insurance for which it applied or had any policy of insurance terminated (except at its request). -13- Schedule 2.19 Licenses, Permits and Authorizations. Schedule 2.19 attached hereto is a list of all licenses, permits, franchises and authorizations issued by a governmental entity to the Company or any of its subsidiaries and which are required or necessary in connection with the operation of the Company's or such subsidiary's business (the "Licenses"). All such Licenses are valid and are in full force and effect, and no suspension, cancellation or termination of any of the Licenses is pending or, to the knowledge of the Company, threatened. Section 2.20 Environmental Laws. The Company, its subsidiaries, the operation of their respective businesses and any real property that they own, lease or otherwise occupy or use are in compliance in all material respects with all applicable Environmental Laws and orders or directives of any governmental authorities having jurisdiction under such Environmental Laws. Neither the Company nor any of its subsidiaries has received any citation, directive or notice of any proceedings, claims or other actions from any governmental authority arising out of the ownership or occupation of its properties or premises or the conduct of its respective operations, nor is it aware of any basis therefor. No material expenditure on behalf of the Company or any of its subsidiaries will be required in order to comply with any Environmental Law. As used herein, "Environmental Laws" means any federal, state, municipal, local or foreign law, statute, ordinance, code, rule or regulation pertaining to land use, air, soil, surface water, groundwater (including protection, cleanup, removal, remediation or damage thereof), public or employee health or safety or any other environmental matter, including, without limitation, the following laws as the same may be amended from time to time: (i) Clean Air Act (42 U.S.C. (S) 7401, et seq.), (ii) Clean Water Act (33 U.S.C. (S) 1251, et seq.), (iii) Resource Conservation and Recovery Act (42 U.S.C. (S) 6901, et seq.), (iv) Comprehensive Environmental Response Compensation Liability Act, as amended (42 U.S.C. (S) 9601, et seq.) ("CERCLA"), (v) Safe Drinking Water Act (42 U.S.C. (S) 300f, et seq.), (vi) Toxic Substance Control Act (15 U.S.C. (S) 2601, et seq.), (vii) Rivers and Harbors Act (33 U.S.C. (S) 401, et seq.), (viii) Endangered Species Act (16 U.S.C. (S) 1531, et seq.), and (ix) Occupational Safety and Health Act (29 U.S.C. (S) 651, et seq.), together with any other applicable federal, state or local laws relating to emissions, discharges, releases or threatened releases of any Hazardous Substance (as defined herein) into ambient air, land, surface water, ground water, personal property or structures, or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport, discharge or handling of any Hazardous Substance. As used herein, "Hazardous Substances" means any pollutant, contaminant, hazardous or toxic substance, material, constituent or waste or any pollutant that is labeled or regulated -14- as such terms are defined in any Environmental Law or that is labeled or regulated as such by (i) The United States of America, (ii) any state, commonwealth, territory or possession of the United States of America and (iii) any political subdivision thereof (including counties, municipalities and the like) or any agency, authority or instrumentality of any of the foregoing, including any court, tribunal, department, bureau, commission or board, including, without limitation, asbestos and asbestos-containing materials and any material or substance that is: (i) designated as a "hazardous substance" pursuant to Section 307 of the Federal Water Pollution Control Act, 33 U.S.C. Section 1251, et seq. (33 U.S.C. (S) 1317), (ii) defined as a "hazardous waste" pursuant to Section 1004 of the Federal Solid Waste Disposal Act, 42 U.S.C. Section 6901, et seq. (42 U.S.C. (S) 6903), (iii) defined as a "hazardous substance" pursuant to Section 101 of CERCLA or (iv) is so designated or defined under any other applicable Environmental Law. Section 2.21 Taxes. The Company and its subsidiaries have accurately prepared and filed all federal, state, local and foreign tax returns required to be filed by them. All taxes shown to be due and payable on such returns, any assessment received, and all other taxes due and payable by the Company or any of its subsidiaries have been paid or will be paid prior to the time they become delinquent. The federal income tax returns of the Company and its subsidiaries have never been audited by the Internal Revenue Service. Except as specified in Schedule 2.21, no deficiency assessment or proposed adjustment of the Company's or any of its subsidiaries' income taxes is pending by any federal, state, local or foreign taxation authority, and the Company has no knowledge of any proposed liability for any tax to be imposed upon its or any of its subsidiaries' properties for which the Company has not established adequate reserves which are reflected on the Financial Statements. Section 2.22 Conflicts of Interest. Except as specified in Schedule 2.22, no director, officer or any affiliate thereof (as such term is defined in Rule 405 under the Securities Act) of any such person or, to the best of the Company's knowledge, any shareholder of the Company or its affiliates has any direct or indirect interest (i) in any entity which does business with the Company or any of its subsidiaries, or (ii) in any property, asset or right which is used by the Company or any of its subsidiaries in the conduct of their respective businesses, or (iii) in any contractual relationship with the Company or any of its subsidiaries other than as an employee. For the purpose of this Section 2.22, there shall be disregarded any interest which arises solely from the ownership of less than a 1% equity interest in a corporation whose stock is regularly traded on any national securities exchange or in the over-the-counter market. -15- Section 2.23 Retirement Plans. Except as set forth on Schedule 2.23 attached hereto, neither the Company nor any of its subsidiaries has any retirement plans in which any of their employees participate that are subject to any provisions of the Employee Retirement Income Security Act of 1974 and of the regulations adopted pursuant thereto ("ERISA"). Section 2.24 Disclosure. No representation or warranty made by the Company 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 Company required to make the statements herein or therein contained not misleading. The Company 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. ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF THE INVESTOR The Investor represents and warrants to the Company as follows: Section 3.1 Unregistered Securities. The Investor understands that the Securities are not, and the Underlying Shares may not be, registered under the Securities Act or under the Florida Securities and Investor Protection Act (the "Florida Securities Laws") on the ground that the offer and sale of securities provided for in this Agreement are exempt from (i) the registration requirements of the Securities Act pursuant to Section 4(2) of the Securities Act and Regulation D promulgated thereunder, and (ii) the registration requirements of the Florida Securities Law pursuant to Section 517.061 thereunder. The Investor hereby acknowledges that the Company's reliance on such exemptions is based, in part, on the Investor's representations set forth herein. Section 3.2 Authorization. The Investor has the limited liability company power and authority to enter into and perform this Agreement and to purchase the Securities; and this Agreement has been duly authorized, executed and delivered by the Investor and constitutes the legal, valid and binding obligation of the Investor, 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 -16- as the availability of equitable remedies may be limited by general principles of equity. Section 3.3 No Conflict With Other Agreements. The execution, delivery and performance by the Investor of this Agreement will not (with due notice or lapse of time or both) violate any provision of law, rule or regulation, any order of any court or other agency of government, its operating agreement or any provision of any indenture, mortgage, note, deed of trust, agreement or other instrument to which it 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, if such violation could have a material adverse effect upon its ability to perform its obligations hereunder. Section 3.4 Investment Knowledge. The Investor has sufficient knowledge and experience in financial and business matters so as to be capable of evaluating the risks and merits of its investment in the Company; and it is capable of bearing the economic risks of such investment, including a complete loss of its investment. Section 3.5 Distribution. The Securities are being acquired for the Investor's own account for the purpose of investment and not with a view to or for resale in connection with any distribution or public offering thereof or interest therein. ARTICLE 4 CONDITIONS PRECEDENT TO CLOSING Section 4.1 Conditions Precedent to the Closing. The obligation of the Investor to purchase the Securities is subject to the satisfaction of, or the waiver by, the Investor of the following conditions prior to or contemporaneously with the Closing, unless otherwise indicated: (a) The representations and warranties of the Company contained in this Agreement and in each other Transaction Document shall be true and correct at and as of the Closing Date with the same force and effect as if given as of such date, and the Company shall have complied with the covenants, agreements and obligations set forth in this Agreement and each other Transaction Document required to be performed by it at or prior to the Closing; -17- (b) The President of the Company shall have delivered to the Investor at the Closing a certificate stating that the conditions specified in paragraph (a) above been fulfilled; (c) There shall not be any order, decree, injunction or judgment enjoining the consummation of this Agreement; (d) The Company shall have delivered to the Investor the certificates described in Section 1.2(b) hereof; (e) The Company shall have entered into the Registration Rights Agreement in the form attached hereto as Exhibit C (the "Registration Rights Agreement"); (f) The Company and each of the other parties identified therein as signatories shall have entered into the Shareholders Agreement in the form attached hereto as Exhibit D (the Shareholders Agreement"); (g) The Company shall have entered into the Warrant Agreement in the form attached hereto as Exhibit F; (h) The Company shall have delivered to the Investor the opinions of Hardy and Allen, counsel for the Company, and of Rutledge, Ecenia, Underwood, Purnell & Hoffman, Florida counsel for the Company, in each case dated as of the Closing Date, in the forms attached hereto as Exhibits E-1 and E-2; (i) The Company shall have delivered to the Investor a copy of the Series M Amendment, certified by the Secretary of State of the State of Florida; (j) The Company shall have received, and shall have delivered copies thereof to the Investor, all shareholder, regulatory, governmental, third party and other consents, permits and waivers necessary to consummate the transactions contemplated by this Agreement, and the Company shall have received, and shall have delivered copies thereof to the Investor, agreements from shareholders holding at least 51% of the outstanding shares of Common Stock to vote all of their shares of Common Stock in favor of the Authorized Shares Amendment; (k) All corporate and other proceedings in connection with the transactions contemplated hereby and all documents and instruments incident to such transactions shall have been approved by the Investor, and the Investor shall have received a certificate of the Secretary of the Company as to the resolutions authorizing the transactions contemplated by this Agreement and such other documents as are specified by the Investor; -18- (l) Complete and correct copies of each written employment agreement which the Company or any of its subsidiaries has entered into with any of their respective employees shall have been provided to the Investor and each such agreement shall be acceptable to the Investor in form and substance; (m) Between the date of this Agreement and the Closing Date, there shall have been no Material Adverse Effect; and (n) The Company shall have delivered or caused to be delivered to the Investor such additional instruments, documents, opinions, consents and certificates as the Investor may reasonably request. Section 4.2 Conditions Precedent to Obligations of the Company. The obligation of the Company to issue and sell the Securities to the Investor pursuant to this Agreement is subject to the satisfaction of or the waiver by the Company of the condition that contemporaneously with the Closing the representations and warranties made by the Investor in this Agreement shall be true and correct as of the Closing as if made at and as of the Closing Date, and the Investor shall have complied in all respects with all agreements hereunder required to be performed by it at or prior to such Closing. If requested by the Company, the Investor shall have delivered to the Company at the Closing a certificate to the effect that the foregoing conditions have been satisfied in all respects. ARTICLE 5 ADDITIONAL COVENANTS Section 5.1 Conduct of Business Prior to Closing. During the period from the date of this Agreement to the Closing, except as expressly permitted by this Agreement or as otherwise approved in writing by the Investor, the Company will not enter into any agreement or take any action that is in conflict with the terms of this Agreement. During the period from the date of this Agreement to the Closing, the Company shall notify the Investor of any action it desires to take or any transaction it desires to enter into which, pursuant to the terms of the Shareholders Agreement, would require the consent of the Investor, if the Shareholders Agreement were then in effect, and during such period, the Company will not take such action or enter into such transaction without the prior written consent of the Investor. Section 5.2 Access to Information. From the date hereof until the Closing, upon reasonable notice, the Company shall, and shall cause each of its officers, directors, employees, auditors and agents to, (i) afford the officers, employees and authorized -19- agents and representatives of the Investor reasonable access, during normal business hours, to the offices, properties, books and records of the Company and (ii) furnish to the officers, employees and authorized agents and representatives of the Investor such additional financial and operating data and other information regarding the assets, properties, goodwill and business of the Company and its subsidiaries as the Investor may from time to time reasonably request, including, without limitation, monthly financial statements and operating reports for the Company and its subsidiaries prepared in a manner consistent with such financial statements and operating reports as have been previously furnished to the Investor, copies of which financial statements and operating reports shall be delivered by the Company to the Investor each month as soon as they become available. Section 5.3 Further Action. Each of the parties hereto shall cooperate fully with each other and their respective counsel and other representatives in connection with any action required to be taken as part of their respective obligations under this Agreement or as may otherwise be required to consummate the transactions contemplated hereby. Each of the parties shall use reasonable efforts to consummate the transactions contemplated hereby, and shall execute and deliver such documents and other papers and take such further actions as may be reasonably required, or as may be reasonably requested by the other party, in any case whether before or after the Closing, to carry out the provisions hereof and give effect to the transactions contemplated hereby. Neither of the parties shall take any action that is inconsistent with its obligations under the Agreement. Section 5.4 Key Man Life Insurance. By no later than December 1, 1997, the Company shall acquire key man life insurance policies on the lives of John Edwards, Steve Campbell and Dror Nahumi in such amounts as the Investor may deem reasonable. ARTICLE 6 CONVERSION OF PREFERRED SHARES AND EXERCISE OF WARRANTS Section 6.1 Conversion of Preferred Shares. The Investor may, at its option, at any time and from time to time, convert all or any portion of the Purchased Shares into Common Stock at the rate and upon the terms and conditions and subject to the adjustments set forth in the Series M Amendment. Section 6.2 Exercise of Warrants. The Investor may, at its option, exercise any Warrant, or any portion thereof, in exchange for Common Stock at the rate and upon the terms and conditions set forth in the Warrant Agreement. -20- Section 6.3 Underlying Shares Fully Paid; Reservation of Common Stock. The Company covenants and agrees that all Underlying Shares shall be issued upon the exercise of the conversion privilege referred to in Section 6.1 and the right of exercise referred to in Section 6.2 and shall, upon issuance in accordance with the terms of the Company's Articles of Incorporation, as amended, and the Warrant Agreement, respectively, be fully paid and non- assessable, and that the issuance thereof shall not give rise to any preemptive rights on the part of any person. The Company further covenants and agrees that the Company will at all times from and after a date no later than thirty days after the Closing have authorized and reserved a sufficient number of shares of its Common Stock for the purpose of issuing the Underlying Shares. Section 6.4 Adjustment of Number of Shares. The number of shares of Common Stock issuable upon conversion of Series M Preferred as well as the number of shares of Common Stock issuable upon exercise of any Warrant (and the exercise price payable in connection with such exercise) shall be subject to adjustment from time to time as set forth in the Series M Amendment and in the Warrant Agreement. ARTICLE 7 TERMINATION Section 7.1 Termination. (a) This Agreement may be terminated at any time prior to the Closing: (i) by the mutual written consent of the Company and the Investor; (ii) by either party hereto, if the Closing has not occurred prior to December 31, 1997; provided, however, that the right to terminate this Agreement under this Section 7.1(a)(ii) shall not be available to a party whose failure to fulfill any obligation under this Agreement has been the cause of, or has resulted in, the failure of the Closing to occur prior to such date; (iii) by the Investor, by notice given to the Company if the Company shall breach or fail to comply with any of its representations, warranties, covenants or agreements contained in this Agreement, or any such representation or warranty shall have become untrue, in any such case such that the conditions precedent to the Investor's obligation to close specified in -21- Section 4.2 will not be satisfied, and such breach has not been promptly cured within ten days following receipt by the Company of notice of such breach; provided, however, the Investor's right to terminate under this provision shall not be available if the Investor shall then be in material breach or material noncompliance with any of its representations, warranties, covenants or agreements contained in this Agreement; and (iv) by the Company, by notice given to the Investor if the Investor shall breach or fail to comply with any of its representations, warranties, covenants or agreements contained in this Agreement, or any such representation or warranty shall have become untrue, in any such case such that the conditions precedent to the Company's obligation to close specified in Section 4.1 will not be satisfied, and such breach has not been promptly cured within ten days following receipt by the Investor of notice of such breach; provided, however, the Company's right to terminate under this provision shall not be available if the Company shall then be in material breach or material noncompliance with any of its representations, warranties, covenants or agreements contained in this Agreement. (b) Notwithstanding anything to the contrary contained in this Section 7, in the event this Agreement is terminated pursuant to Section 7.1(a)(iii) or 7.1(a)(iv), then the Company or the Investor, as appropriate, shall have the right to seek all appropriate legal and equitable remedies available to it. Section 7.2 Procedure and Effect of Termination or Failure to Close. (a) In the event of termination of this Agreement and abandonment of the transactions contemplated hereby by either party pursuant to Section 7.1, prompt written notice thereof shall be given to the other party and this Agreement shall terminate and the transactions contemplated hereby shall be abandoned, without further action by either party hereto. If this Agreement is terminated as permitted herein: (i) neither of the parties hereto or their affiliates, nor any of such parties' or their affiliates' directors, officers, shareholders, employees or agents, shall have any liability or further obligation to the other party or its affiliates, or to any of such party's or its affiliates' directors, officers, shareholders, employees or agents, pursuant to this Agreement, except as stated in Sections 7.1(b) and 8.2 hereof; and (ii) all filings, applications and other submissions relating to the transactions contemplated hereby shall, -22- to the extent practicable, be withdrawn from the agency or other person to which made. ARTICLE 8 MISCELLANEOUS Section 8.1 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 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. (S)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. 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 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. In the event of any controversy, claim or dispute that is subject to arbitration under this Section 8.1, 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, (ii) have practiced law for at least fifteen years as an attorney specializing in -23- either general commercial litigation or general corporate and commercial matters and (iii) are experienced in matters involving the telecommunications industry. 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 8.1 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 8.1, that such rules shall be modified in all respects necessary to accord with the provisions of this Section 8.1 (and the arbitrators shall be so instructed by the parties). 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. -24- Section 8.2 Expenses. The Company shall pay all expenses of the Investor, including but not limited to travel, legal and accounting fees and expenses, incurred in connection with the transactions contemplated under this Agreement. Section 8.3 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 any party hereto. Section 8.4 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. Section 8.5 Notices. All notices, requests, consents, and other communications hereunder shall be in writing and shall be deemed effectively given and received upon delivery in person, or one business day after delivery by national overnight courier service, or by telecopier transmission with acknowledgment of transmission receipt, or three business days after deposit via certified or registered mail, return receipt requested, in each case addressed as follows: (a) if to the Company, at Medcross, Inc. 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 -25- (b) if to the Investor, 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 copy 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 others. Section 8.6 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. Section 8.7 Entire Agreement. This Agreement, including the Schedules and Exhibits hereto, constitutes the sole and entire agreement of the parties with respect to the subject matter hereof. All Schedules and Exhibits hereto are hereby incorporated herein by reference. Section 8.8 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. Section 8.9 No Waivers; Amendments. (a) No failure or delay on the part of any party in exercising any right, power or remedy hereunder shall operate as a waiver of 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. -26- (b) Any provision of this Agreement may be amended or waived if, but only if, such amendment or waiver is in writing and is signed by the Company and the Investor. Section 8.10 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. Section 8.11 Gender. All pronouns and all variations thereof shall be deemed to refer to the masculine, feminine, or neuter, singular or plural, as the identity of the person or persons, thing or entity may require. Section 8.12 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. -27- IN WITNESS WHEREOF, the parties have executed this Securities Purchase Agreement as of the day and year first above written. MEDCROSS, INC. By: /s/ John W. Edwards John W. 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. Name: Ralph W. Hardy, Jr. Title: Secretary EXHIBITS AND SCHEDULES Exhibit A - Series M Amendment Exhibit B - Authorized Shares Amendment Exhibit C - Registration Rights Agreement Exhibit D - Shareholders Agreement Exhibit E-1 - Form of Opinion of Counsel to the Company Exhibit E-2 - Form of Opinion of Florida Counsel to the Company Exhibit F - Warrant Agreement SCHEDULES Schedule 2.2 - Authorization of Agreements Schedule 2.4 - Outstanding Options and Warrants Schedule 2.6 - Default Under Other Instruments Schedule 2.9 - Employee Matters Schedule 2.11 - Existing Registration Rights Schedule 2.12 - Financial Statements Schedule 2.13 - Subsequent Events Schedule 2.14 - Intellectual Property Schedule 2.15 - Material Contracts Schedule 2.16 - Title to and Sufficiency of Assets Schedule 2.17 - Minute Books Schedule 2.18 - Insurance Schedule 2.19 - License, Permits and Authorizations Schedule 2.21 - Tax Matters Schedule 2.22 - Conflicts of Interest Schedule 2.23 - Retirement Plans EX-4.V 3 EXHIBIT 4(V) Exhibit 4(v) REGISTRATION RIGHTS AGREEMENT THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement") is entered into as of October __, 1997, by and between I-LINK INCORPORATED (formerly known as Medcross, Inc.), a Florida corporation (the "Company"), and WINTER HARBOR, L.L.C., a Delaware limited liability company (the "Investor"). WHEREAS, the Company has entered into a Securities Purchase Agreement (the "Securities Purchase Agreement"), dated as of September 30, 1997, together with the Investor, pursuant to which the Company is issuing and selling to the Investor shares of the Company's Series M Participating Convertible Preferred Stock (the "Series M Preferred") and warrants to acquire shares of the Company's Common Stock; and WHEREAS, the Company has agreed to grant certain rights with respect to shares of 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 the Securities Purchase Agreement; 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 compliance with the Securities Act, and the Commission's declaration or ordering of the effectiveness of such registration statement. 1.3 "Registrable Securities" means any and all shares of (i) the Company's Series M Preferred issued to the Investor under the Securities Purchase Agreement, (ii) Common Stock of the Company, issued or issuable upon conversion of the Series M Preferred, (iii) Common Stock of the Company issued or issuable upon exercise of Warrants issued to the Investor under the Securities Purchase Agreement, and (iv) any securities of the Company issued or issuable with respect to any securities referred to in clauses (i), (ii) and (iii) above, upon any stock split, stock dividend, reclassification, recapitalization or similar event, but excluding from the foregoing clauses (i), (ii) and (iii) shares that (A) have been sold to or through a broker, dealer or underwriter in a public distribution or a public securities transaction, or (B) 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 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: - 2 - (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 three 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. - 3 - 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 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 - 4 - form), or (ii) a registration relating solely to a Commission Rule 145 transaction on Form S-4 (or any successor form), 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 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. - 5 - (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 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 - 6 - 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. 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. - 7 - 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 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 - 8 - 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 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 - 9 - 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. - 10 - 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 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 - 11 - 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. 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 - 12 - 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. 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 - 13 - 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. - 14 - 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 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. (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. - 15 - 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 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 - 16 - 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. 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. - 17 - IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written. I-LINK INCORPORATED By: ------------------------------ John W. Edwards, President WINTER HARBOR, L.L.C. By: First Media, L.P., its General Manager/Member By: First Media Corporation, sole General Partner By: Name: ----------------------------- Title: ---------------------------- 18 EX-4.W 4 EXHIBIT 4(W) Exhibit 4(w) SHAREHOLDERS AGREEMENT THIS SHAREHOLDERS AGREEMENT (this "Agreement"), dated as of October __, 1997, by and among MEDCROSS, INC., a Florida corporation (the "Company"), WINTER HARBOR, L.L.C., a Delaware limited liability company (the "New Investor"), and those shareholders of the Company whose signatures appear on the signature page hereof (collectively referred to herein as the "Existing Investors" and individually as an "Existing Investor"). WHEREAS, concurrently with the execution and delivery of this Agreement and pursuant to a Securities Purchase Agreement, dated as of September 30, 1997, by and between the Company and the New Investor, the New Investor has agreed to purchase from the Company shares of the Company's Series M Participating Convertible Preferred Stock; and WHEREAS, the obligation of the New Investor to enter into the Purchase Agreement and to purchase the Series M Participating Convertible Preferred Stock is conditioned upon the execution and delivery by each of the parties hereto of this Agreement; and WHEREAS, the Existing Investors collectively hold shares of the Company's common stock or options or warrants to acquire such common stock; and WHEREAS, the parties hereto desire to set forth their mutual agreement regarding various matters relating to the Company, including certain restrictions with respect to the ownership of shares of the Company's capital stock, corporate governance and certain other matters; NOW, THEREFORE, in consideration of the foregoing and the mutual covenants set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound, agree as follows: ARTICLE 1 DEFINITIONS Section 1.1 Certain Definitions. As used in this Agreement, the following terms shall have the following respective meanings: "Board" means the Board of Directors of the Company, as constituted from time to time. "Business Day" means each day on which banking institutions in the City of New York, New York are not authorized or obligated by law or executive order to close. "Bylaws" means the Company's Bylaws, as the same may hereafter be amended in accordance with applicable law and the terms thereof and hereof. "Charter" means the Company's Amended and Restated Articles of Incorporation, as amended, as the same may hereafter be further amended in accordance with applicable law and the terms thereof and hereof. "Change in Control" shall be deemed to have occurred at such time as (i) a "person" or "group" (within the meaning of Sections 13(d) and 14(d)(2) of the Exchange Act) becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act) of more than 50% of the total voting power required to elect or designate for election a majority of the Company's Board of Directors, or (ii) during any period of twenty-four consecutive months, individuals who at the beginning of such period constituted the Board (together with any new directors whose election by the Board or whose nomination for election by the stockholders of the Company was approved by a majority of the directors then still in office who were either directors at the beginning of such period or whose election or nomination for election was previously so approved or who have been elected by the holders, as of the date hereof, of the Company's Common Stock) cease for any reason to constitute a majority of the Board then in office. "Class B Preferred Stock" means the Class B Variable Rate Cumulative Convertible Preferred Stock, $10.00 par value per share, of the Company. "Class C Preferred Stock" means the Class C Convertible Cumulative Redeemable Preferred Stock, $10.00 par value per share, of the Company. "Commission" means the Securities and Exchange Commission. "Common Stock" means the Common Stock, $.007 par value per share, of the Company. "Co-Sale Shares" has the meaning set forth in Section 2.4(a). "Election Notice" has the meaning set forth in Section 2.4(b). - 2 - "Exchange Act" means the Securities Exchange Act of 1934, as amended, including the rules and regulations of the Commission promulgated thereunder. "Fully-Diluted Basis" gives effect, without duplication, to (i) all shares of Common Stock outstanding at the time of determination plus (ii) all shares of Common Stock issuable upon conversion of the Class B Preferred Stock, the Class C Preferred Stock, the Series D Preferred Stock and the Series M Preferred Stock or any other convertible securities or the exercise of any option, warrant or similar right (whether or not presently exercisable) to acquire shares of Common Stock, as if such Class B Preferred Stock, Class C Preferred Stock, Series D Preferred Stock, Series M Preferred Stock or other convertible securities had been so converted or such option, warrant or similar right had been so exercised. "Notice of Transfer" has the meaning set forth in Section 2.4(a). "Person" means any individual, corporation, partnership, limited liability company, joint venture, association, joint stock company, trust, unincorporated organization or government or any agency or political subdivision thereof. "Purchase Agreement" means the Securities Purchase Agreement, dated as of September 30, 1997, by and between the Company and the New Investor. "Put Notice" has the meaning set forth in Section 2.6(a). "Put Right" has the meaning set forth in Section 2.6. "Representing Party" has the meaning set forth in Article 5. "Securities Act" means the Securities Act of 1933, as amended, including the rules and regulations of the Commission promulgated thereunder. "Seller" has the meaning set forth in Section 2.4(a). "Series D Preferred Stock" means the Series D Convertible Preferred Stock, $10.00 par value per share, of the Company. "Series M Preferred Stock" means the Series M Participating Convertible Preferred Stock, $10.00 par value per share, of the Company. - 3 - "Shareholders" means the New Investor, the Existing Investors and such other Persons that become parties to this Agreement pursuant to the terms of this Agreement. "Stock" means collectively, the Common Stock, the Class B Preferred Stock, the Class C Preferred Stock, the Series D Preferred Stock and the Series M Preferred Stock. "Subsidiary" means, with respect to the Company, (i) any corporation more than 50% of whose stock of any class or classes having by the terms thereof ordinary voting power to elect a majority of the directors of such corporation (irrespective of whether or not at the time stock of any class or classes of such corporation shall have or might have voting power by reason of the happening of any contingency) is at the time owned by the Company and/or one or more Subsidiaries of the Company and (ii) any partnership, limited liability company, association, joint venture or other entity (a) in which the Company and/or one or more Subsidiaries of the Company has more than a 50% equity interest at the time or (b) as to which the Company and/or one or more of its Subsidiaries has the power to direct or cause the direction of the management and policies of such entity by contract or otherwise. "Tag-Along Shares" has the meaning set forth in Section 2.4(b). "Third Party" has the meaning set forth in Section 2.4(a). "Transfer" (including with correlative meaning the term "Transferred") means any transfer, sale, assignment, pledge, encumbrance or other disposition of any of the capital stock of the Company held by a Shareholder or any portion of the ownership interest therein, irrespective of whether any of the foregoing are effected voluntarily or involuntarily, by operation of law or otherwise, or whether inter vivos or upon death. ARTICLE 2 TRANSFERS OF STOCK SECTION 2.1 Transfers of Series M Preferred Stock. The New Investor may Transfer all, or any part of, or interest in, the Series M Preferred Stock or Common Stock held by it at any time provided that either a registration statement under the Securities Act or applicable state securities laws shall have become effective with regard thereto or such Transfer is made pursuant to an exemption from registration under the Securities Act (or the regulations promulgated thereunder) and applicable state securities laws. Notwithstanding the foregoing provisions of this Section 2.1, the restrictions imposed by this Section 2.1 - 4 - upon the transferability of any Stock shall terminate when such Stock has been registered under the Securities Act and sold by the holder thereof in accordance with such registration. In connection with the termination of restrictions on transferability of Stock provided for hereunder, the holder of a certificate representing such Stock as to which such restrictions shall have terminated shall be entitled to receive from the Company, without expense to such holder, one or more new certificates not bearing the restrictive legend set forth in Section 2.2. SECTION 2.2 Restrictive Legend. Unless and until otherwise permitted by Section 2.1, each certificate for Stock issued to the New Investor, or to any of its successors, assigns or transferees, shall be stamped or otherwise imprinted with the following restrictive legend: "The securities represented by this Certificate have been acquired for investment and have not been registered pursuant to the Securities Act of 1933, as amended (the "Act"), or any applicable state statutes. Such securities may not be sold, transferred or otherwise disposed of unless (i) a registration statement under the Act or applicable state securities laws shall have become effective with regard thereto, or (ii) an exemption from registration exists under the Act (or the regulations promulgated thereunder) and applicable state securities laws and such exemption is applicable thereto." SECTION 2.3 Transfer of Rights. The rights granted to the New Investor under this Agreement shall inure to the benefit of each of its successors, assigns and transferees. SECTION 2.4 Tag-Along Rights (a) If any Existing Investor or group of Existing Investors desires to Transfer shares of Stock (or any interest therein or any option, warrant or other right to receive any shares of Stock) held by it or them (the "Co-Sale Shares") in one transaction or a series of related transactions to any Person or group of Persons (collectively, a "Third Party"), such Existing Investor or group (collectively, the "Seller") shall deliver a written notice (the "Notice of Transfer") to the Company prior to making any such Transfer of Co-Sale Shares. The Notice of Transfer will contain a copy of the definitive documentation pursuant to which the Co-Sale Shares, subject to compliance with this Section 2.4, may be Transferred and will state (i) the Seller's bona fide intention to Transfer, (ii) the name and address of the Third Party, (iii) the number of Co-Sale Shares to be Transferred, (iv) the expected closing date of the - 5 - transaction, and (v) confirmation that the Third Party has been informed of the provisions of this Section 2.4 and has agreed to purchase Co-Sale Shares and shares of Stock held by the New Investor proposed to be sold in accordance with the terms of this Section 2.4. The Company shall promptly, and in any event within five Business Days after receipt of such Notice of Transfer, deliver a copy of such Notice of Transfer to the New Investor. (b) The New Investor may elect to participate in the Transfer contemplated by Section 2.4(a) above on the same terms and conditions applicable to the Transfer of the Co-Sale Shares by delivering a written notice (an "Election Notice") to the Seller and the Company within fifteen Business Days after receipt of a Notice of Transfer, and the New Investor may elect to Transfer in such contemplated Transfer up to that number of shares of Stock held by it or issuable upon exercise of warrants issued pursuant to the Purchase Agreement (collectively referred to herein as "Tag-Along Shares") that is equal to the product of (i) the number of Co-Sale Shares proposed to be sold by the Seller multiplied by (ii) a fraction the numerator of which is the total number of shares of Stock owned by the New Investor on a Fully-Diluted Basis and the denominator of which is the total number of shares of Stock held by the Seller and by the New Investor on a Fully-Diluted Basis. If the New Investor fails to deliver an Election Notice by the close of business on the fifteenth Business Day after receipt of a Notice of Transfer, the New Investor shall be deemed to have elected not to participate in the Transfer covered by such Election Notice. (c) If the New Investor participates in a Transfer pursuant to this Section, it shall deliver to the Third Party at a closing to be held at the offices of the Company (or such other place as the parties agree) one or more certificates, properly endorsed for Transfer, which represent the number of Tag- Along Shares which the New Investor elects to Transfer, and may Transfer, pursuant to this Section 2.4. Such certificates shall be transferred to the Third Party simultaneously with the consummation of the Transfer of the Co-Sale Shares pursuant to the terms and conditions specified in the Notice of Transfer against receipt by the New Investor of the proceeds of the Transfer of the Tag- Along Shares. If there is to be an agreement of sale or similar instrument with respect to the proposed Transfer (a "Sale Agreement"), the Seller will furnish a copy of the Sale Agreement in its then current form to the New Investor with the Notice of Transfer. As promptly as practicable after receipt of an Election Notice, if the Sale Agreement has not previously been executed, the Seller shall furnish the New Investor with successive drafts of the Sale Agreement, if any, as available. The New Investor shall have the right to withdraw - 6 - from any Transfer contemplated by this Section at any time prior to the consummation of such Transfer. (d) The exercise or non-exercise of the rights of the New Investor hereunder to participate in one or more Transfers of Co-Sale Shares made by a Seller shall not adversely affect its rights to participate in subsequent Transfers of Co-Sale Shares (including by the Seller) which meet the conditions specified in this Section 2.4. (e) Any Transfer made pursuant to Section 2.4(a) shall be consummated on the terms set forth in the Notice of Transfer, whether or not the New Investor participates in such Transfer. The Company shall use reasonable efforts to aid such closing, including, but not limited to, exchanging the New Investor's certificates for new certificates in requested denominations. (f) Notwithstanding anything in this Section 2.4 to the contrary, the foregoing tag-along rights shall not apply to (i) pledges of stock to financial institutions by any Existing Investor to secure personal borrowings, (ii) the foreclosure by any such financial institution on any such pledged stock, (iii) transfers from an Existing Investor to a person who is currently an Existing Investor, (iv) other transfers or series of related transfers of fewer than 250,000 shares in the aggregate of Stock not involving a Change in Control or (v) sales of registered shares of Common Stock in public, open-market transactions. SECTION 2.5 Preemptive Rights. (a) The Company hereby grants to the New Investor a preemptive right to purchase its pro rata share of all or any part of any New Securities (as defined below) which the Company may, from time to time, propose to sell and issue. The New Investor's pro rata share, for purposes of this preemptive right, is the ratio that the number of shares of Stock held by the New Investor on a Fully-Diluted Basis bears to the total number of shares of Common Stock of the Company on a Fully-Diluted Basis then outstanding. (b) Except as set forth in the next succeeding sentence, "New Securities" shall mean any shares of capital stock of the Company, including Common Stock, whether now authorized or not, and rights, options or warrants to purchase said shares of capital stock, and securities of any type whatsoever that are, or may become, convertible into said shares of capital stock. Notwithstanding the foregoing, "New Securities" does not include (i) securities offered to the public generally pursuant to a registration statement filed with the Commission and declared effective under the Securities Act, (ii) securities issued in the - 7 - acquisition of another corporation by the Company by merger, purchase of substantially all of the assets or other reorganization or in a transaction governed by Rule 145 under the Exchange Act, (iii) options exercisable for Common Stock issued to employees or consultants of the Company outstanding as of the date of this Agreement or options issued to employees pursuant to a stock option plan adopted by the Board of Directors and approved by the New Investor after the date hereof, (iv) shares of Common Stock issued on conversion of outstanding Class B Preferred Stock, Class C Preferred Stock, Series D Preferred Stock or Series M Preferred Stock, (v) shares of Common Stock issued upon exercise of warrants (A) outstanding as of the date of this Agreement or (B) issued in connection with the sale of Series M Preferred Stock under the Purchase Agreement, (vi) stock issued pursuant to any rights or agreements, including without limitation convertible securities, options and warrants, provided that the preemptive rights established by this Section 2.5 shall apply with respect to the initial sale or grant by the Company of interests in its capital stock pursuant to such rights or agreements, or (vii) stock issued in connection with any stock split, stock dividend or recapitalization by the Company. (c) In the event the Company proposes to undertake an issuance of New Securities, it shall give the New Investor written notice of its intention, describing the type of New Securities, and the price and terms upon which the Company proposes to issue the same. The New Investor shall have thirty days from the date of receipt of any such notice to agree to purchase up to its respective pro rata share of such New Securities for the price and upon the terms specified in the notice by giving written notice to the Company and stating therein the quantity of New Securities to be purchased. (d) If the New Investor fails to exercise such preemptive right within said thirty-day period, the Company shall have ninety days thereafter to sell or enter into an agreement (pursuant to which the sale of New Securities covered thereby shall be closed, if at all, within sixty days from the date of said agreement) to sell the New Securities not elected to be purchased by the New Investor at a price and upon terms no more favorable to the purchasers of such securities than specified in the Company's notice to the New Investor. In the event the Company has not sold the New Securities or entered into an agreement to sell the New Securities within said ninety-day period (or sold and issued New Securities in accordance with the foregoing within sixty days from the date of said agreement), the Company shall not thereafter issue or sell any of such New Securities without first offering such securities to the New Investor in the manner provided above. - 8 - SECTION 2.6 Put Right. At any time on or after a Change in Control, the New Investor shall have the right to cause the Company to purchase all (but not less than all) of the equity interests in the Company then held by the New Investor including, without limitation, all Series M Preferred Stock, Common Stock and warrants held by the New Investor, upon the terms and conditions set forth herein (the "Put Right"). (a) The Put Right, if exercised at all, must be exercised by the New Investor by giving written notice (the "Put Notice") to the Company of its election to exercise the Put Right. The price to be paid to the New Investor for its equity interests in the Company pursuant to the exercise of the Put Right shall be the Fair Market Value (as defined herein) of such shares as of the date of the Put Notice, as the same shall be determined pursuant to Section 2.6(c). (b) Notwithstanding any other provision of this Agreement, if the purchase of such equity interests upon the exercise of the Put Right would, at the time the Company incurs the obligation to purchase the equity interests, violate any applicable statute or law, or any provision of the Company's Charter or Bylaws, or any material credit agreement entered into between the Company and a lending institution or other contractual obligation of the Company prior to the exercise of the Put Right, or render the Company insolvent, the Company shall use its best efforts to obtain any waiver or consent or to take any other action to authorize or permit the purchase or payment required by this Agreement, including without limitation (i) the sale of additional equity interests, (ii) any necessary action under applicable law to reduce the Company's stated capital or otherwise increase the Company's surplus or other funds legally available, (iii) additional borrowings by, or a refinancing of, the Company, and (iv) sale of the Company's assets. If sufficient funds of the Company are not legally available to redeem all equity interests which are the subject of the exercise of the Put Right, then funds to the extent legally available shall be used for such redemption pro rata according to the number of such equity interests so tendered (a "Partial Redemption") as of the date of payment. The Company shall make additional Partial Redemptions beginning thirty days after the date of the initial payment hereunder and each thirty days thereafter until all tendered equity interests have been redeemed. (c) The Fair Market Value of the equity interests (the "Transferred Shares") which are the subject of the exercise of the Put Right shall be equal to the price that would be payable with respect to the Transferred Shares if all of the assets of - 9 - the Company were sold to a third party in a transaction structured to maximize cash sale proceeds, treating the business of the Company as a going concern, and the Company then had been dissolved and liquidated and its remaining assets distributed to its shareholders in accordance with their equity interests in the Company (and without any discount for a minority position or illiquidity), after first deducting from the cash proceeds resulting from such sale and any other cash on hand held by the Company all liabilities of the Company (determined in accordance with generally accepted accounting principles, and giving effect to any brokerage fees that would be required to be paid in connection with any such sale). Within the thirty-day period following the delivery of the Put Notice, the Company and the New Investor shall negotiate in good faith in an effort to reach mutual agreement as to the Fair Market Value of the Transferred Shares. (d) If the Company and the New Investor are unable to reach agreement as to the Fair Market Value of the Transferred Shares within such thirty-day period, the Fair Market Value of the Transferred Shares shall be determined by an appraisal process as set forth herein. Each of the Company and the New Investor shall designate, within fifteen days after the conclusion of the thirty-day negotiation period referred to above, an independent and experienced telecommunications industry appraiser (each individually an "Appraiser" and collectively the "Appraisers"). The Appraisers shall be instructed to complete their appraisals of the Fair Market Value of the Transferred Shares by no later than thirty days after their appointment. If the determination of the Appraiser with the higher determination is not greater than 110% of the determination of the other Appraiser, the Fair Market Value shall be equal to the average of the determinations of the two Appraisers; provided, however, if the higher determination is greater than 110% of the lower determination, then the two Appraisers shall jointly select a third Appraiser within ten days after the first date on which both of such two Appraisers have delivered their reports. Such third Appraiser shall deliver its report of its good faith determination of the Fair Market Value of the Transferred Shares within thirty days after such appointment, and in such case the Fair Market Value shall be equal to the average of the closest determinations; provided, however, that if the highest and lowest of such three determinations differ from the middle determination by an equal amount, the Fair Market Value shall be equal to such middle determination. The cost of all such appraisals shall be borne by the Company. (e) Payment for the Transferred Shares purchased pursuant to this Agreement shall be made by wire transfer of - 10 - immediately available federal funds in accordance with instructions provided by the New Investor. SECTION 2.7 Closing. Unless otherwise specified under the terms of this Agreement, the closing (the "Closing") of any purchase of the equity interests of the Company under this Agreement shall be held at the offices of the Company and on such date and time as the parties to the Closing shall agree in writing; provided, however, that in no event shall such Closing occur later than ninety days after the occurrence of the event giving rise to the obligation to purchase and sell such equity interests. At the Closing, the selling party shall deliver to the purchasing party(ies) the stock certificate(s) evidencing the equity interests of the Company to be sold or redeemed, properly endorsed in blank with all transfer and excise taxes paid (and, where appropriate, stamps affixed thereto). The selling party shall represent and warrant to the purchasing party(ies) that such equity interests are being transferred free and clear of all liens, encumbrances and claims. The purchasing party(ies) shall deliver to the selling party payment of the purchase price for such equity interests required to be paid at Closing hereunder by wire transfer of immediately available federal funds, and, if the Company is a purchasing party, certified copies of corporate resolutions authorizing such purchase. ARTICLE 3 GOVERNANCE SECTION 3.1 Composition of Board of Directors. The Board shall consist of seven individuals. As provided in the Charter and the Bylaws, the New Investor, so long as it holds any shares of Series M Preferred Stock, shall have the right to appoint two directors. SECTION 3.2 Removal and Vacancies. Each director appointed by the New Investor pursuant to Section 3.1 shall be subject to removal only at the request of the New Investor. If, as a result of death, disability, retirement, resignation, removal (with or without cause) or otherwise, a director appointed by the New Investor ceases to be a director, then, so long as it holds any shares of Series M Preferred Stock, the New Investor shall have the right to appoint another director to fill the vacancy so created. SECTION 3.3 Voting Rights. The holders of the outstanding Series M Preferred Stock shall vote on an "as converted" basis with holders of outstanding Common Stock on the matters which are submitted to a vote of the Company's shareholders. In addition, the holders of Series M Preferred Stock shall have the right to vote as part of a separate class - 11 - with other holders of the Company's preferred stock or a separate series of a class with respect to matters as to which holders of a single class or a series of a class are entitled to a separate vote under the Florida Business Corporation Act. SECTION 3.4 Conflicting Charter or Bylaw Provisions. Each party to this Agreement shall vote its shares of Stock, and shall take all other actions necessary, to ensure that the Company's Charter and Bylaws facilitate and do not at any time conflict with the provisions of this Agreement. ARTICLE 4 COVENANTS SECTION 4.1 Approval Rights. So long as the New Investor holds any shares of Series M Preferred Stock, the Company shall not, and shall not permit any of its subsidiaries to, without the prior written consent of the New Investor: (i) amend, modify or repeal the Charter or Bylaws of the Company or the Articles of Incorporation, Bylaws, Operating Agreement or other organizational document of any subsidiary, or take any action with respect to the creation, authorization, designation or issuance of any class or series of equity securities of the Company or any subsidiary or any option, warrants or other rights to receive any class or series of equity securities of the Company or any subsidiary (other than pursuant to employee benefit or incentive plans in effect as of the date hereof or described in the Company's definitive proxy statement for its 1997 annual shareholders meeting); (ii) effect any merger, recapitalization or consolidation with or into another entity, or enter into any binding share exchange or similar transaction with any entity; (iii) sell, transfer, lease or dispose of all or substantially all of its assets in one transaction or a series of related transactions, or liquidate, dissolve or wind-up its affairs; (iv) sell, transfer, dispose of, lease, pledge or encumber (a "disposition"), or engage in a series of related dispositions, of any of its assets (including rights) having a value, in the aggregate for such transaction or series of transactions, in excess of $250,000; (v) lease or otherwise acquire any assets having a value, in the aggregate, in excess of $250,000; - 12 - (vi) incur or prepay any indebtedness (or guarantee obligations of others or enter into any other guarantee or credit support arrangement) other than trade debt incurred in the ordinary course of business; (vii) pay any dividend or make other distributions or redemption payments with respect to any of its equity interests; (viii) conduct or engage in any business other than the business in which it is presently engaged (and such other businesses as are reasonably ancillary thereto); (ix) form and own, in whole or in part, one or more corporations, trusts, partnerships or other subsidiary entity; (x) acquire, own or hold for investment any equity interests in another entity or any option, warrant, or other debt or equity interest convertible into or evidencing the right to acquire (whether or not for additional consideration) any equity interest in such entity; (xi) enter into any transaction or agreement (or amend any agreement) with any affiliate of the Company or any of the Company's shareholders; (xii) adopt or amend its annual budget; (xiii) hire, employ or discharge any of its executive officers, managers or key employees; (xiv) engage or discharge its independent certified public accountants; (xv) initiate or settle any litigation involving an amount in controversy in excess of $250,000; (xvi) adopt or amend any employee benefit plan or program; (xvii) enter into any commitment or series of related commitments involving a payment or payments of an aggregate amount in excess of $500,000; (xviii) file for voluntary or involuntary protection under federal or state bankruptcy or insolvency laws or make any assignment for the benefit of creditors; or - 13 - (xix) take any action that would make it impossible for the Company or any of its subsidiaries to carry on its ordinary business or take any action that is in contravention of the Charter. SECTION 4.2 Financial Statements. The Company shall maintain true and complete books and records of account in accordance with generally accepted accounting principles consistently applied. The Company shall furnish or cause to be furnished to the New Investor: (a) Within ninety days after the end of each fiscal year of the Company (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), audited consolidated financial statements, including an audited balance sheet showing the financial condition of the Company and any subsidiaries as of the close of such fiscal year, together with statements of income and cash flow, setting forth in comparative form with respect to such financial statements figures for the previous fiscal year and to the current year's annual budget, all in reasonable detail; (b) As soon as reasonably possible, and in any event within thirty days after the end of each month, monthly operating reports, and an unaudited balance sheet, together with a statement of income and cash flows of the Company and its subsidiaries for and as at the end of such month, setting forth in comparative form with respect to the corresponding period for the previous fiscal year and to the current month's budget; (c) As soon as reasonably possible, the Company's annual financial plan and budget; and (d) Such other information regarding the business, affairs, operations and financial condition of the Company as the New Investor may from time to time reasonably request. SECTION 4.3 Press Release and Filings. The Company shall provide the New Investor, promptly after release or filing, with copies of any press releases or other public announcements concerning the Company or any of its subsidiaries and copies of any filing by the Company with the Commission. SECTION 4.4. Inspection. The Company shall permit the New Investor and its designated representatives to inspect the books and records and any of the properties or assets of the Company and any of its subsidiaries at such reasonable times during normal business hours, and to speak with such officers, employees or agents of the Company and any of its subsidiaries and the - 14 - Company's independent public accountants as the New Investor may from time to time reasonably request. SECTION 4.5 Maintenance of Insurance. The Company shall, and shall cause each of its subsidiaries to, keep at all times all of their material properties which are of an insurable nature insured against loss or damage with insurers believed by the Company to be responsible to the extent that property of similar character usually is so insured by companies similarly situated in like businesses and geographic areas and owning like properties in accordance with good business practice and said insurance is commonly available at commercially reasonable rates. SECTION 4.6 Taxes. The Company shall pay prior to delinquency all material taxes, assessments and governmental levies and charges, except for those taxes, assessments and governmental levies and charges contested in good faith by appropriate proceedings and for which the Company shall have set aside on its books reserves (segregated to the extent required by generally accepted accounting principles, consistently applied in the United States). SECTION 4.7 Corporate Existence; Compliance with Laws. The Company shall, and shall cause each of its subsidiaries to, maintain its corporate or limited liability company existence in full force and effect. The Company shall, and shall cause each of its subsidiaries to, comply with all applicable laws, rules and regulations. SECTION 4.8 Future Registration Rights. Except as expressly permitted in the Registration Rights Agreement (as that term is defined in the Purchase Agreement), the Company shall not, without the prior written consent of the New Investor, agree with the holders of any securities issued or to be issued by the Company to register such securities under the Securities Act nor will it grant any incidental registration rights. ARTICLE 5 REPRESENTATIONS AND WARRANTIES Each of the Company and each Shareholder (each, a "Representing Party") hereby represents and warrants to each other Representing Party as follows: SECTION 5.1 Organization, Qualification and Power. Such Representing Party (other than any Representing Party which is an individual) is a corporation, limited partnership or limited liability company, as the case may be, duly organized, validly existing and in good standing under the laws of the state of its - 15 - organization, and it has the requisite corporate, partnership or limited liability company power and authority, as the case may be, to own and hold its properties, and to carry on its business as conducted or presently proposed to be conducted. Such Representing Party (other than any Representing Party which is an individual) has requisite corporate, partnership or limited liability company power and authority to execute, deliver and perform this Agreement. SECTION 5.2 Authorization of Agreement; No Conflict. The execution, delivery and performance by such Representing Party of this Agreement have been duly authorized by all requisite corporate, partnership, limited liability company and individual action, as the case may be, of such Representing Party, and will not violate any provision of law, any order of any court or other agency of government, any of such Representing Party's organizational documents, if any, or any provision of any indenture, agreement or other instrument to which such Representing Party or any of such Representing Party's properties or assets is bound, or conflict, result in a breach of, or constitute (with due notice or lapse of time or both) a default under any such indenture, agreement or other instrument. SECTION 5.3 Validity. This Agreement has been duly executed and delivered by such Representing Party and constitutes a legal, valid and binding obligation of such Representing Party, enforceable against such Representing Party 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 to the extent the availability of equitable remedies may be limited to general principles of equity. ARTICLE 6 MISCELLANEOUS SECTION 6.1 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 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. (S)(S) 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 - 16 - rendered by the arbitrators may be entered in any court having jurisdiction thereof. 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 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. In the event of any controversy, claim or dispute that is subject to arbitration under this Section 6.1, 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, (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 (iii) are experienced in matters involving the telecommunications industry. 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 - 17 - 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 6.1 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 6.1, that such rules shall be modified in all respects necessary to accord with the provisions of this Section 6.1 (and the arbitrators shall be so instructed by the parties). 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 6.2 Survival. The representations, warranties, obligations, undertakings and agreements contained in this Agreement shall survive the execution and delivery of this Agreement, the issuance of and payment for the Series M Preferred Stock and any disposition of the Series M Preferred Stock. SECTION 6.3 Entire Agreement; Amendment. This Agreement embodies the entire agreement of the parties hereto with respect to the subject matter hereof. Any provision of this Agreement may be amended, waived or modified if, but only if, such amendment, waiver or modification is in writing and is signed by each of the parties hereto; whenever any provision of this Agreement requires action or approval by the holders of a specified number of shares of any class or series of Stock, such action or approval may be evidenced by a written consent executed - 18 - by the requisite holders of such class or series, without any requirement of a meeting or prior notice to the other holders of such class or series. SECTION 6.4 Binding Effect; Benefits. This Agreement and all the provisions hereof shall be binding upon and inure to the benefit of the parties hereto and their respective heirs, legal representatives, successors and permitted assigns. Except as expressly provided herein, nothing in this Agreement is intended to confer on any Persons, other than the parties hereto or their respective successors and assigns, any rights, remedies, obligations or liabilities under or by reason of this Agreement. Nothing in this Agreement shall be construed to give the Shareholders or any other Person any claim against the Company or its assets, other than as a shareholder of the Company. SECTION 6.5 Recapitalization and Exchanges Affecting the Common stock. All the provisions of this Agreement shall apply, to the full extent set forth herein with respect to any and all securities of the Company or any successor or assign of the Company (whether by merger, consolidation, sale of assets or otherwise) which may be issued in respect of, in exchange for, or in substitution of any class or series of Stock or by reason of any stock dividend, split, reverse split, combination, recapitalization, reclassification, merger, consolidation or otherwise. SECTION 6.6 Notices. All notices, requests, consents, and other communications hereunder shall be in writing and shall be deemed effectively given and received when delivered in person or by national overnight courier service or by certified or registered mail, return receipt requested, or by telecopier, addressed as follows: (a) if to the Company, at Medcross, Inc. 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 - 19 - (b) if to the New Investor, 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 copy to: Ralph W. Hardy, Jr., Esq. Dow, Lohnes & Albertson, PLLC 1200 New Hampshire Avenue, N.W. Washington, D.C. 20036 Telecopier: (202) 776-2222 (c) if to any other holder of Common Stock and any other Shareholder at its address reflected on the records of the Company; or, in any such case, at such other address or addresses as shall have been furnished in writing by such party to the others. SECTION 6.7 Severability. The invalidity, illegality or unenforceability of one or more of the provisions of this Agreement in any jurisdiction shall not affect the validity, legality or enforceability of the remainder of this Agreement in such jurisdiction or the validity, legality or enforceability of this Agreement, including any such provision, in any other jurisdiction, it being intended that all rights and obligations of the parties hereunder shall be enforceable to the fullest extent permitted by law. SECTION 6.8 Headings. The headings of the sections of this Agreement are inserted for convenience only and shall not constitute a part of this Agreement. SECTION 6.9 Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed to be an original, but all of which shall constitute one and the same instrument. SECTION 6.10 APPLICABLE LAW. THE LAWS OF THE STATE OF DELAWARE SHALL GOVERN THE INTERPRETATION, VALIDITY AND PERFORMANCE OF THE TERMS OF THIS AGREEMENT, REGARDLESS OF THE LAW THAT MIGHT BE APPLIED UNDER PRINCIPLES OF CONFLICTS OF LAW. - 20 - SECTION 6.11 Further Assurances. Each party hereto shall do and perform or cause to be done and performed all such further acts and things and shall execute and deliver all such other agreements, certificates, instruments and documents as any other party hereto reasonably may request in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated hereby. SECTION 6.12 Specific Performance. Each of the parties hereto acknowledges and agrees that in the event of any breach of this Agreement, the non-breaching party would be irreparably harmed and could not be made whole by monetary damages. It is accordingly agreed (a) that the parties hereto will waive the defense in any action for specific performance that a remedy at law would be adequate and (b) that the parties hereto, in addition to any other remedy to which they may be entitled at law or in equity, shall be entitled to compel specific performance of this Agreement in any arbitration conducted in accordance with Section 6.1 of this Agreement or in any action instituted in any court of the United States or any state thereof having subject matter jurisdiction of such action. SECTION 6.13 Rights Cumulative; Waiver. The rights and remedies of the Shareholders and the Company under this Agreement shall be cumulative and not exclusive of any rights or remedies which any party hereto would otherwise have hereunder or at law or in equity or by statute, and no failure or delay by any such party in exercising any right or remedy shall impair any such right or remedy or operate as a waiver of such right or remedy, nor shall any single or partial exercise of any power or right preclude such party's other or further exercise or the exercise of any other power or right. The waiver by any party hereto of a breach of any provision of this Agreement shall not operate or be construed as a waiver of any preceding or succeeding breach and no failure by any party hereto to exercise any right or privilege hereunder shall be deemed a waiver of such party's rights or privileges hereunder or shall be deemed a waiver of such party's rights to exercise the same at any subsequent time or times hereunder. SECTION 6.14 Construction. The use of the singular or plural or masculine, feminine or neuter gender shall not be given an exclusionary meaning and, where applicable, shall be intended to include the appropriate number or gender, as the case may be. - 21 - IN WITNESS WHEREOF, the parties have executed this Shareholders Agreement as of the day and year first above written. COMPANY: MEDCROSS, INC. By: ------------------------------------ John W. Edwards, President NEW INVESTOR: WINTER HARBOR, L.L.C. By: First Media, L.P., its General Manager/Member By: First Media Corporation, sole General Partner By: Name: ---------------------------------- Title: --------------------------------- EXISTING INVESTORS: --------------------------------------- John W. Edwards --------------------------------------- Karl S. Ryser, Jr. --------------------------------------- David E. Hardy EX-4.X 5 EXHIBIT 4(X) Exhibit 4(x) WARRANT AGREEMENT THIS WARRANT AGREEMENT (this "Agreement"), dated as of October __, 1997, by and between MEDCROSS, INC., a Florida corporation (the "Company"), and WINTER HARBOR, L.L.C., a Delaware limited liability company (the "Investor"). R E C I T A L S: WHEREAS, concurrently with the execution and delivery of this Agreement, the Company is issuing and selling to the Investor Series A Warrants, Series B Warrants and Series C 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 WHEREAS, 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: ARTICLE 1 DEFINITIONS SECTION 1.1 Certain Definitions. As used in this Agreement, the following terms have the meanings specified below: "Amended Articles" means the Amended and Restated Articles of Incorporation of the Company as amended to include the Articles of Amendment setting forth the rights, preferences and privileges of the Series M Preferred Stock. "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. "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 Investor, dated as of September 30, 1997. "Series M Preferred Stock" means the Series M Participating Convertible Preferred Stock issued to the Investor. 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 issuance of Series M Preferred Stock pursuant to the Securities Purchase 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) 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 Exhibits A-1, A-2 and A-3 attached hereto, shall be dated the date on which signed by the Company and may have such letters, - 2 - 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 the Securities Purchase 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 - 3 - 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 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. - 4 - 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 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) - 5 - 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 A Warrants, the Series B Warrants, and the Series C 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) (being referred to herein as the "Exercise Price"): (a) $2.75 per Warrant Share for Series A Warrants; (b) $4.00 per Warrant Share for Series B Warrants; and (c) $4.69 per Warrant Share for Series C Warrants. SECTION 5.4 Exercise Period. The right to exercise the Series A Warrants shall terminate on the date which is thirty months from the date of issuance of the Series A Warrants, and the right to exercise the Series B Warrants and the Series C Warrants shall terminate on the date which is five years from the date of issuance of the Series B Warrants or Series C Warrants, respectively (each such respective date in the case of the Series A Warrants, Series B Warrants and Series C Warrants being referred to herein as the "Expiration Date"). A Warrantholder may exercise any Warrant from the date of issuance up to and including the applicable Expiration Date. The Company shall record the applicable 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. - 6 - 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. 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. - 7 - 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 Investor, 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 Investor 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 - 8 - Purchase Agreement, or (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 Investor after the date hereof. (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 - 9 - (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 Adjustments of Exercise Price Upon Issuance of Additional Shares of Common Stock. In the event 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, then and in such event, such Exercise Price shall be reduced, concurrently with such issuance, to such lower price per share at which such Additional Shares of Common Stock are being 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. - 10 - (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 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 - 11 - 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 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 - 12 - 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 Series B Warrants and Series C 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 Series B Warrants or Series C 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 Series B Warrants or the Series C Warrants, or both, as the case may be, 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 $2.75, the Exercise Price for the Series B Warrants, or the Series C Warrants, or both, as the case may be, shall be deemed to be equal to $2.75. 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 - 13 - 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 Amended Articles 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 Investor 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; 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 - 14 - 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 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: Medcross, Inc. 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. - 15 - 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. (S)(S)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 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, (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 (iii) are experienced in matters involving the telecommunications industry. - 16 - (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 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 - 17 - 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 applicable to the Series B Warrants and the Series C Warrants. 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. 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 - 18 - 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 Investor 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 Investor'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. - 19 - IN WITNESS WHEREOF, the parties hereto have caused this Warrant Agreement to be duly executed, as of the date first above written. MEDCROSS, INC. By: ----------------------------------------------- Name: --------------------------------------------- Title: -------------------------------------------- WINTER HARBOR, L.L.C. By: First Media, L.P., its General Manager/Member By: First Media Corporation, its sole General Partner By: Name: ------------------------------------ Title: ----------------------------------- - 20 - EXHIBIT A-1 Medcross, Inc. Common Stock Purchase Warrant Number ____ Series A Warrant Certificate Evidencing Right to Purchase ______ 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 Medcross, Inc., a Florida corporation (the "Company"), for the Exercise Price for the Series A Warrants specified in the Warrant Agreement, dated as of October __, 1997, 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 March 31, 2000. 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 this ___ day of October, 1997 in Draper, Utah by its proper corporate officers thereunto duly authorized. MEDCROSS, INC. a Florida corporation By: ---------------------------------- Name: -------------------------------- Title: ------------------------------- Attest: -------------------------------- Name: ---------------------------------- Title: --------------------------------- - 2 - Exhibit A-2 Medcross, Inc. Common Stock Purchase Warrant Number ____ Series B Warrant Certificate Evidencing Right to Purchase ______ 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 Medcross, Inc., a Florida corporation (the "Company"), for the Exercise Price for the Series B Warrants specified in the Warrant Agreement, dated as of October __, 1997, 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 September 30, 2002. 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 this ___ day of October, 1997 in Draper, Utah by its proper corporate officers thereunto duly authorized. MEDCROSS, INC. a Florida corporation By: ------------------------------ Name: ---------------------------- Title: --------------------------- Attest: --------------------------------- Name: ----------------------------------- Title: ---------------------------------- - 2 - Exhibit A-3 Medcross, Inc. Common Stock Purchase Warrant Number ____ Series C Warrant Certificate Evidencing Right to Purchase ______ 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 Medcross, Inc., a Florida corporation (the "Company"), for the Exercise Price for the Series C Warrants specified in the Warrant Agreement, dated as of October __, 1997, 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 September 30, 2002. 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 this ___ day of October, 1997 in Draper, Utah by its proper corporate officers thereunto duly authorized. MEDCROSS, INC. a Florida corporation By: ------------------------------- Name: ----------------------------- Title: ---------------------------- Attest: --------------------------------- Name: ----------------------------------- Title: ---------------------------------- - 2 - 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 Medcross, Inc., 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.) EX-4.Y 6 EXHIBIT 4(Y) Exhibit 4(y) ARTICLES OF AMENDMENT TO THE AMENDED AND RESTATED ARTICLES OF INCORPORATION OF MEDCROSS, INC. Pursuant to Article III of the Amended and Restated Articles of Incorporation of the Corporation (the "Articles of Incorporation"), and the provisions of Section 607.0602 of the Florida Business Corporation Act, the board of directors of the Corporation (the "Board of Directors") has resolved to amend Article III of the Articles of Incorporation. 1. The name of the corporation is Medcross, Inc. 2. Article III is hereby amended by adding Section III(g), which shall read in its entirety as follows: "(g) Of the 500,000 shares of Preferred Stock authorized hereunder, 29,000 shares of Preferred Stock shall be designated as Series M Participating Convertible Preferred Stock (the "Series M Preferred Stock"), shall have a par value of $10.00 per share, and shall have the following rights and preferences: 1. Dividends. (a) Priority of Dividends. No dividends shall be declared or set aside for the Corporation's Common Stock, 12% Cumulative Convertible Preferred Stock, Class A Preferred Stock, Class B Preferred Stock, Class C Preferred Stock, Series D Preferred Stock or, except as permitted pursuant to Section III(g)(3)(b), any other class of capital stock of the Corporation (such Common Stock, 12% Cumulative Convertible Preferred Stock, Class A Preferred Stock, Class B Preferred Stock, Class C Preferred Stock, Series D Preferred Stock or, except as permitted pursuant to Section III(g)(3)(b), other class of capital stock of the Corporation being collectively referred to as "Junior Stock"), unless at the same time or prior thereto all accrued and unpaid dividends on the Series M Preferred Stock shall be declared, set aside and paid on all the then outstanding shares of Series M Preferred Stock. In the event that funds legally available for distribution on any Dividend Payment Date (as defined as Section 1(b)) are insufficient to fully pay the cash dividend due and payable on such Dividend Payment Date to all holders of outstanding Series M Preferred Stock, then all funds legally available for distribution shall be paid in cash to holders of Series M Preferred Stock pro rata in accordance with the number of shares of Series M Preferred Stock held by such holder. Any remaining dividend amount owed to holders of the Series M Preferred Stock shall be accrued in accordance with Section 1(b). After the payment of all accrued and unpaid dividends on the Series M Preferred Stock in accordance with this Section 1, the holders of the shares of Series M Preferred Stock shall be entitled to participate with the Common Stock in the issuance of any dividends on the Common Stock on a per share basis. (b) Dividend Rate; Dividend Payment Dates. Each holder of the Series M Preferred Stock shall be entitled to receive when and as declared by the Board of Directors, out of funds legally available therefor, cumulative cash dividends, in preference and priority to dividends on any Junior Stock, that shall accrue on the Liquidation Price (as defined in Section 2(a)) of each share of the Series M Preferred Stock at the rate of ten percent (10%) per annum, from and including the Original Issue Date of such share (as defined in Section 4(f)(i)(B)) to and including the date on which such share ceases to be outstanding. The accrued dividends will be adjusted for stock splits, stock dividends, combinations, recapitalizations, reclassifications and similar events (together referred to as "Recapitalization Events") which affect the number of outstanding shares of the Series M Preferred Stock. Accrued dividends on the Series M Preferred Stock shall be payable out of funds legally available therefor on January 1, 1998 and thereafter quarterly on April 1, July 1, October 1, and January 1 of each year (each a "Dividend Payment Date"), to the holders of record of the Series M Preferred Stock as of the close of business on the applicable record date. Dividends shall be fully cumulative and shall accrue on a daily basis based on a 365-day or 366-day year, as the case may be, without regard to the occurrence of a Dividend Payment Date and whether or not such dividends have been declared and whether or not there are any unrestricted funds of the Corporation legally available for the payment of dividends. The amount of dividends "accrued" with respect to any share of Series M Preferred Stock as of the first Dividend Payment Date after the Original Issue Date, or as of any other date after the Original Issue Date that is not a Dividend Payment Date, shall be calculated on the basis of the actual number of days elapsed from and including the Original Issue Date, in the case of the first Dividend Payment Date and any date of determination prior to the first Dividend Payment, or from and including the last preceding Dividend Payment Date, in the case of any other date of determination, to and including such date of determination which is to be made, in each case based on a year of 365 or 366 days, as the case may be (the "Dividend Period"). Whenever the Board of Directors of the Corporation declares any dividend pursuant to this Section 1, notice of the applicable record date and related -2- Dividend Payment Date shall be given in accordance with Section 4(n). (c) Compounding of Dividends; Addition to Conversion Value and to Liquidation Price. On each Dividend Payment Date, all dividends that have accrued on each share of Series M Preferred Stock during the immediately preceding Dividend Period shall, to the extent not paid on such Dividend Payment Date for any reason (whether or not such unpaid dividends have been earned or declared or there are any unrestricted funds of the Corporation legally available for the payment of dividends), be added to the Conversion Value (as defined in Section 4(b)) of such share effective as of such Dividend Payment Date and shall remain a part thereof. All dividends that have accrued on each share of Series M Preferred Stock during any Dividend Period shall, to the extent not paid in full on the first Dividend Payment Date after the end of such Dividend Period for any reason (whether or not such unpaid dividends have been earned or declared or there are any unrestricted funds of the Corporation legally available for the payment of dividends), be added to the Liquidation Price of such share effective as of the first Dividend Payment Date after the last day of such Dividend Period and shall remain a part thereof to and including the date on which the Liquidation Price or Redemption Price of such share is paid in full to the holder of such share pursuant to Sections 2 or 6, respectively. No accrued dividends (or dividends accrued thereon) which have been added to the Liquidation Price or Conversion Value of any Series M Preferred Stock may be subsequently declared or, except in accordance with Section 2 or 6, paid by the Corporation without the consent of the holders of a majority of the shares of Series M Preferred Stock. (d) Pro Rata Declaration and Payment of Dividends. All dividends paid with respect to shares of the Series M Preferred Stock pursuant to this Section 1 shall be declared and paid pro rata to all the holders of the shares of Series M Preferred Stock outstanding as of the applicable record date. 2. Liquidation, Dissolution or Winding Up. (a) In the event of any voluntary or involuntary liquidation, dissolution or winding up of the Corporation, the sale of all or substantially all of its assets, or the merger or consolidation of the Corporation as a result of which the then shareholders of the Corporation do not continue to hold more than a 50% interest in the successor entity or a transaction or series of related transactions in which the Corporation's shareholders transfer more than 50% of the voting power of the Corporation (each such event, a "Liquidation"), except as provided in Section 2(b) below, the holder of each share of Series M Preferred Stock -3- then outstanding shall be entitled to be paid out of the assets of the Corporation available for distribution to its shareholders before payment to the holders of Common Stock by reason of their ownership thereof, an amount (the "Liquidation Price"), payable in cash (and, to the extent sufficient cash is not available for such payment, property at its fair market value), equal to (i) $2,750.00 per share, plus (ii) an amount equal to all dividends accrued on such share of Series M Preferred Stock since the Original Issue Date thereof which, pursuant to Section 1(c), have been added to and remain part of the Liquidation Price as of such time of determination, whether or not such unpaid dividends have been earned or declared or there are any unrestricted funds of the Corporation legally available for the payment of dividends (the "Accrued Dividend Amount"), plus (iii) the difference in amount, if any, between the Accrued Dividend Amount and the amount necessary to effect a cumulative preferred return at the rate of ten percent (10%) per annum compounded annually since the Original Issue Date thereof. (b) If upon any such Liquidation the remaining assets of the Corporation available for distribution to its shareholders shall be insufficient to pay the holders of shares of Series M Preferred Stock and the holders of shares of the Class B Preferred Stock, Class C Preferred Stock and Series D Preferred Stock the full amount to which they shall be entitled, then the entire assets of the Corporation shall be distributed among the holders of shares of Series M Preferred Stock and the holders of shares of the Class B Preferred Stock, the Class C Preferred Stock and the Series D Preferred Stock ratably in proportion to the full amount to which such holders are entitled. (c) After the payment of all preferential amounts required to be paid to the holders of Series M Preferred Stock and the holders of Preferred Stock, other than the Series M Preferred Stock, upon the Liquidation of the Corporation, the holders of the shares of Series M Preferred Stock shall be entitled to participate with the Common Stock in the distribution of all remaining assets and funds of the corporation available for distribution to its shareholders. 3. Voting Rights. (a) Each holder of shares of Series M Preferred Stock shall be entitled to votes equal in the aggregate to the number of votes to which the number of whole shares of Common Stock into which the shares of Series M Preferred Stock held by such holder are convertible would be entitled (as adjusted from time to time pursuant to Section 4 hereof), at each meeting of the shareholders of the Corporation (and for purposes of written actions of shareholders in lieu of meetings) with respect to any -4- and all matters presented to the shareholders of the Corporation for their action or consideration. Except as otherwise provided herein or required by law, holders of shares of Series M Preferred Stock shall vote with the holders of shares of Common Stock and any other class of stock entitled to vote and not as a separate class. Any class vote pursuant to this Section 3 or required by law shall be determined by the holders of a majority of the shares of Series M Preferred Stock as of the applicable record date. (b) The Corporation shall not amend, alter or repeal the preferences, privileges, special rights or other powers of the Series M Preferred Stock so as to affect adversely the Series M Preferred Stock, without the written consent or affirmative vote of the holders of a majority of the then outstanding shares of Series M Preferred Stock, given in writing or by vote at a meeting, consenting or voting (as the case may be) separately as a class. For this purpose, without limiting the generality of the foregoing, the authorization or issuance of any Preferred Stock having an equal right or a preference or priority over the Series M Preferred Stock as to the right to receive dividends or amounts distributable upon Liquidation of the Corporation shall be deemed to affect adversely the Series M Preferred Stock. In addition, the holders of the Series M Preferred Stock shall have the right to vote as a class on all matters requiring their vote or approval under, and in the manner set forth in, the Florida Business Corporation Act. (c) After the Original Issue Date, the Corporation shall not, and shall not permit any of its subsidiaries to, without the consent or affirmative vote of the holders a majority of the then outstanding shares of the Series M Preferred Stock given in writing or by vote at a meeting, consenting or voting (as the case may be) as a separate class: (i) amend, modify or repeal the Articles of Incorporation or Bylaws of the Corporation or the Articles of Incorporation, Bylaws, Operating Agreement or other organizational document of any subsidiary, or take any action with respect to the creation, authorization, designation or issuance of any class or series of equity securities of the Corporation or any subsidiary or any option, warrants or other rights to receive any class or series of equity securities of the Corporation or any subsidiary (other than pursuant to employee benefit or incentive plans in effect as of the date hereof or described in the Corporation's definitive proxy statement for its 1997 annual shareholders meeting); -5- (ii) effect any merger, recapitalization or consolidation with or into another entity, or enter into any binding share exchange or similar transaction with any entity; (iii) sell, transfer, lease or dispose of all or substantially all of its assets in one transaction or a series of related transactions, or liquidate, dissolve or wind-up its affairs; (iv) sell, transfer, dispose of, lease, pledge or encumber (a "disposition"), or engage in a series of related dispositions, of any assets (including rights) having a value, in the aggregate for such transaction or series of transactions, in excess of $250,000; (v) lease or otherwise acquire any assets having a value, in the aggregate, in excess of $250,000; (vi) incur or prepay any indebtedness (or guarantee obligations of others or enter into any other guarantee or credit support arrangement) other than trade debt incurred in the ordinary course of business; (vii) pay any dividend, or make other distributions or redemption payments with respect to any of its equity interests; (viii) conduct or engage in any business other than the business in which it is presently engaged (and such other businesses as are reasonably ancillary thereto); (ix) form and own, in whole or in part, one or more corporations, trusts, partnerships or other subsidiary entity; (x) acquire, own or hold for investment any equity interests in another entity or any option, warrant, or other debt or equity interest convertible into or evidencing the right to acquire (whether or not for additional consideration) any equity interest in such entity; (xi) enter into any transaction or agreement (or amend any agreement) with any affiliate of the Corporation or any of the Corporation's shareholders; (xii) adopt or amend its annual budget; (xiii) hire, employ or discharge any of its executive officers, managers or key employees; -6- (xiv) engage or discharge its independent certified public accountants; (xv) initiate or settle any litigation involving an amount in controversy in excess of $250,000; (xvi) adopt or amend any employee benefit plan or program; (xvii) enter into any commitment or series of related commitments involving a payment or payments of an aggregate amount in excess of $500,000; (xviii) file for voluntary or involuntary protection under federal or state bankruptcy or insolvency laws or make any assignment for the benefit of creditors; or (xix) take any action that would make it impossible for the Corporation or any of its subsidiaries to carry on its ordinary business or take any action that is in contravention of these Articles of Incorporation. (d) In addition to and distinct from the matters described in Sections 3(b) and 3(c) above, holders of Series M Preferred Stock, voting as a separate class, shall have the right to elect two individuals to be members of the Corporation's Board of Directors. Each director duly elected to the Board of Director of the Corporation in accordance with this Section 3(d) shall be subject to removal only at the request of the holders of a majority of the shares of Series M Preferred Stock. 4. Conversion at the Option of a Holder. The holders of the Series M Preferred Stock shall have conversion rights as follows (the "Conversion Rights"): (a) Right to Convert. Each share of Series M Preferred Stock shall be convertible, at the option of the holder thereof, at any time and from time to time prior to the fifth anniversary of the Original Issue Date, into such number of fully paid and non-assessable shares of Common Stock as is determined by dividing (i) the Conversion Value (as defined below) of such share determined as of such time by (ii) the Conversion Price (as defined below) determined as of such time. In the event of a Liquidation of the Corporation, the Conversion Rights shall terminate at the close of business on the last full day preceding the date fixed for the payment of any amounts distributable on Liquidation to the holders of Series M Preferred Stock. (b) Conversion Value. The "Conversion Value" measured per share of the Series M Preferred Stock shall be the sum of (A) -7- $2,750.00, plus (B) an amount equal to all dividends accrued on such share of Series M Preferred Stock since the Original Issue Date which, pursuant to Section 1(c), have been added to and remain part of the Conversion Value at such time, whether or not such unpaid dividends have been earned or declared or there are any unrestricted funds of the Corporation legally available for the payment of dividends, plus (C) an amount equal to all dividends accrued on such share of Series M Preferred Stock since the most recent Dividend Payment Date through and including such time, whether or not such unpaid dividends have been earned or declared or there are any unrestricted funds of the Corporation legally available for the payment of dividends. (c) Conversion Price. The Conversion Price at which shares of Common Stock shall be deliverable upon conversion of Series M Preferred Stock without the payment of additional consideration by the holder thereof shall initially be $2.75 or, in the case of an automatic conversion pursuant to Section 5 below, the lower of $2.75 or 50% of the average closing bid price of the Common Stock for the ten trading days immediately preceding the fifth anniversary of the Original Issue Date (the "Conversion Price"). Such initial Conversion Price, and the rate at which shares of Series M Preferred Stock may be converted into shares of Common Stock, shall be subject to adjustment as provided in this Section 4. (d) Fractional Shares. No fractional shares of Common Stock shall be issued upon conversion of the Series M Preferred Stock pursuant to this Section 4 or Section 5. In lieu of any fractional shares to which the holder would otherwise be entitled, the Corporation shall pay cash equal to such fraction multiplied by the then effective Conversion Price. (e) Mechanics of Conversion. (i) In order for a holder of Series M Preferred Stock to convert shares of Series M Preferred Stock into shares of Common Stock, such holder shall surrender the certificate or certificates for such shares of Series M Preferred Stock, at the office of the transfer agent for the Series M Preferred Stock (or at the principal office of the Corporation if the Corporation serves as its own transfer agent), together with written notice that such holder elects to convert all or any number of the shares of Series M Preferred Stock represented by such certificate or certificates. If required by the Corporation, certificates surrendered for conversion shall be endorsed or accompanied by a written instrument or instruments of transfer, in form satisfactory to the Corporation, duly executed by the registered holder or its attorney duly authorized in writing. The date of receipt of such certificates and notice by the -8- transfer agent (or by the Corporation if the Corporation serves as its own transfer agent) shall be the conversion date ("Conversion Date"). The Corporation shall, as soon as practicable after the Conversion Date, issue and deliver at such office to such holder of Series M Preferred Stock a certificate or certificates for the number of shares of Common Stock to which such holder shall be entitled, together with cash in lieu of any fraction of a share. As of the Conversion Date, the person entitled to receive certificates of Common Stock shall be regarded for all corporate purposes as the holder of the number of shares of Common Stock to which it is entitled upon the conversion. (ii) The Corporation shall at all times when the Series M Preferred Stock shall be outstanding, reserve and keep available out of its authorized but unissued stock, for the purpose of effecting the conversion of the Series M Preferred Stock, such number of its duly authorized shares of Common Stock as shall from time to time be sufficient to effect the conversion of all outstanding Series M Preferred Stock. (iii) All shares of Series M Preferred Stock which shall have been surrendered for conversion as herein provided in this Section 4 or which shall have been automatically converted pursuant to Section 5 shall no longer be deemed to be outstanding and all rights with respect to such shares shall immediately cease and terminate on the Conversion Date, in the case of conversions pursuant to this Section 4, or the fifth anniversary of the Original Issue Date, in the case of automatic conversions pursuant to Section 5, except only the right of the holders thereof to receive shares of Common Stock in exchange therefor. Any shares of Series M Preferred Stock so converted shall be retired and canceled and shall not be reissued, and the Corporation may from time to time take such appropriate action as may be necessary to reduce the authorized Series M Preferred Stock accordingly. (f) Adjustments to Conversion Price for Diluting Issues. (i) Special Definitions. For purposes of this Section 4(f), the following definitions shall apply: (A) "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 Corporation or warrants which, in each such case, are outstanding as of the Original Issue Date, (II) any warrants issued in connection with or as a direct result of the issuance of Series M Preferred Stock -9- pursuant to the Securities Purchase Agreement dated as of September 30, 1997, by and between the Corporation and Winter Harbor, L.L.C. (the "Securities Purchase Agreement"), or (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 after the Original Issue Date. (B) "Original Issue Date" shall mean the date on which a share of Series M Preferred Stock was first issued. (C) "Convertible Securities" shall mean any evidences of indebtedness, shares or other securities directly or indirectly convertible into or exchangeable for Common Stock. (D) "Additional Shares of Common Stock" shall mean all shares of Common Stock issued (or, pursuant to Section 4(f)(iii) below, deemed to be issued) by the Corporation after the Original Issue Date, other than shares of Common Stock issued or issuable: (I) upon conversion of shares of 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 Class B Preferred Stock, Class C Preferred Stock, Series D Preferred Stock or Series M Preferred Stock; (IV) in connection with an acquisition or other transaction by the Corporation, in either case approved by the holders of at least a majority of the then outstanding shares of the Series M Preferred Stock, unless the Corporation agrees to include such issuance in the definition of Additional Shares of Common Stock in connection with obtaining the approval of the holders of at least a majority of the then outstanding shares of the Series M Preferred Stock 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 -10- (VI) upon the exercise of options excluded from the definition of "Option" in Section 4(f)(i)(A). (ii) Adjustment of Conversion Price. If the consideration per share (determined pursuant to Section 4(f)(v)) for an Additional Share of Common Stock issued or deemed to be issued by the Corporation is less than the Conversion Price in effect on the date of, and immediately prior to, the issuance of such Additional Shares of Common Stock, the Conversion Price shall be adjusted to such lower price per share at which such Additional Shares of Common Stock are being issued or deemed issued. (iii) Issue of Securities Deemed Issue of Additional Shares of Common Stock. If the Corporation 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 4(f)(v) hereof) of such Additional Shares of Common Stock would be less than the Conversion 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 Conversion 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 Corporation, or decrease in the number of shares of Common Stock issuable, upon the exercise, conversion or exchange thereof, the Conversion Price computed upon the original issuance thereof (or upon the occurrence of a record date with respect thereto), and -11- 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 Conversion Price to an amount which exceeds the Conversion 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 Conversion Price then in effect shall forthwith be readjusted to such Conversion 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. (iv) Adjustment of Conversion Price Upon Issuance of Additional Shares of Common Stock. In the event the Corporation 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 4(f)(iii), but excluding shares issued as a dividend or distribution as provided in Section 4(h) or upon a stock split or combination as provided in Section 4(g)), without consideration or for a consideration per share (determined pursuant to Section 4(f)(v) hereof) less than the Conversion Price in effect on the date of and immediately prior to such issuance, then and in such event, the Conversion Price shall be reduced, concurrently with such issuance, to such lower consideration per share at which such Additional Shares of Common Stock are being issued (or deemed issued). (v) Determination of Consideration. For purposes of this Section 4(f), the consideration received by the Corporation 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 Corporation, -12- 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 Corporation's 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 Corporation 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 Corporation's Board of Directors. (B) Options and Convertible Securities. The consideration per share received by the Corporation for Additional Shares of Common Stock deemed to have been issued pursuant to Section 4(f)(iii), relating to Options and Convertible Securities, shall be determined by dividing: (I) the total amount, if any, received or receivable by the Corporation 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 Corporation 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. (g) Adjustment for Stock Splits and Combinations. If the Corporation shall at any time or from time to time after the Original Issue Date for the Series M Preferred Stock effect a subdivision of the outstanding Common Stock, the Conversion Price then in effect immediately before that subdivision shall be proportionately decreased and the number of shares of Common Stock issuable upon conversion of a share of the Series M Preferred Stock shall be proportionately increased. If the Corporation shall at any time or from time to time after the Original Issue Date for the Series M Preferred Stock combine the -13- outstanding shares of Common Stock, the Conversion Price then in effect immediately before the combination shall be proportionately increased and the number of shares of Common Stock issuable upon conversion of a share of the Series M Preferred Stock shall be proportionately decreased. Any adjustment under this paragraph shall become effective at the close of business on the date the subdivision or combination becomes effective. (h) Adjustment for Certain Dividends and Distributions. In the event the Corporation at any time or from time to time after the Original Issue Date for the Series M Preferred Stock 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 Conversion Price for the Series M Preferred Stock 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 Conversion Price for the Series M Preferred Stock then in effect by a fraction: (i) 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 (ii) 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 Conversion Price for the Series M Preferred Stock shall be recomputed accordingly as of the close of business on such record date and thereafter the Conversion Price for the Series M Preferred Stock shall be adjusted pursuant to this paragraph as of the time of actual payment of such dividends or distributions. (i) Adjustments for Other Dividends and Distributions. In the event the Corporation at any time or from time to time after the Original Issue Date for the Series M Preferred Stock 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 Corporation other than shares of Common Stock, then and in each such event provision shall be made so that the holders of the Series M Preferred Stock shall receive upon conversion thereof in addition -14- to the number of shares of Common Stock receivable thereupon, the amount of securities of the Corporation that they would have received had their Series M Preferred Stock been converted 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 M Preferred Stock. (j) Adjustment for Reclassification, Exchange, or Substitution. If the Common Stock issuable upon the conversion of the Series M Preferred Stock 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 each holder of the Series M Preferred Stock shall have the right thereafter to convert each such share of Common Stock issuable upon the conversion of the Series M Preferred Stock 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 into which such shares of Series M Preferred Stock might have been converted immediately prior to such reorganization, reclassification, or change, all subject to further adjustment as provided herein. (k) Adjustment for Merger or Reorganization. In case of any consolidation or merger of the Corporation with or into another corporation, each share of Series M Preferred Stock shall thereafter be convertible into 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 Corporation deliverable upon conversion of such Series M Preferred Stock 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 Section 4 set forth with respect to the rights and interest thereafter of the holders of the Series M Preferred Stock, to the end that the provisions set forth in this Section 4 (including provisions with respect to changes in and other adjustments of the Conversion 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 conversion of the Series M Preferred Stock. (l) No Impairment. The Corporation will not, by amendment of its Articles of Incorporation or through any -15- 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 Corporation, but will at all times in good faith assist in the carrying out of all the provisions of this Section 4 and in the taking of all such action as may be necessary or appropriate in order to protect the Conversion Rights of the holders of the Series M Preferred Stock against impairment. (m) Certificate as to Adjustments. Upon the occurrence of each adjustment or readjustment of the Conversion Price pursuant to this Section 4, the Corporation at its expense shall promptly compute such adjustment or readjustment in accordance with the terms hereof and furnish to each holder of Series M Preferred Stock a certificate setting forth such adjustment or readjustment and showing in detail the facts upon which such adjustment or readjustment is based. The Corporation shall, upon the written request at any time of any holder of Series M Preferred Stock, furnish or cause to be furnished to such holder a similar certificate setting forth (i) such adjustments and readjustments; (ii) the Conversion Price then in effect; and (iii) the number of shares of Common Stock and the amount, if any, of other property which then would be received upon the conversion of Series M Preferred Stock. (n) Notice of Record Date. In the event: (i) that the Corporation declares a dividend (or any other distribution) on its Common Stock payable in Common Stock or other securities of the Corporation; (ii) that the Corporation subdivides or combines its outstanding shares of Common Stock; (iii) of any reclassification of the Common Stock of the Corporation (other than a subdivision or combination of its outstanding shares of Common Stock or a stock dividend or stock distribution thereon), or of any consolidation or merger of the Corporation into or with another corporation; or (iv) of the Liquidation of the Corporation; then the Corporation shall cause to be filed at its principal office or at the office of the transfer agent of the Series M Preferred Stock, and shall cause to be mailed to the holders of the Series M Preferred Stock at their last addresses as shown on the records of the Corporation or such transfer agent, at least ten days prior to the record date specified in (A) below or -16- twenty days before the date specified in (B) below, a notice stating: (A) the record date of such dividend, distribution, subdivision or combination, or, if a record is not to be taken, the date as of which the holders of Common Stock of record to be entitled to such dividend, distribution, subdivision or combination are to be determined, or (B) the date on which such reclassification, consolidation, merger, or Liquidation is expected to become effective, and the date as of which it is expected that holders of Common Stock of record shall be entitled to exchange their shares of Common Stock for securities or other property deliverable upon such reclassification, consolidation, merger, or Liquidation. 5. Automatic Conversion. (a) Immediately upon the fifth anniversary of the Original Issue Date, each share of the Series M Preferred Stock then outstanding shall be automatically converted into such number of fully paid and non-assessable shares of Common Stock as is determined by dividing (i) the Conversion Value (as defined in Section 4) determined as of such time by (ii) the Conversion Price (as defined in Section 4) determined as of such time. (b) On the date fixed for conversion, all rights with respect to the Series M Preferred Stock so converted will terminate. If so required by the Corporation, certificates surrendered for conversion shall be endorsed or accompanied by written instrument or instruments of transfer, in form satisfactory to the Corporation, duly executed by the registered holder or by its attorney duly authorized in writing. As soon as practicable after the date of such mandatory conversion and the surrender of the certificate or certificates for Series M Preferred Stock, the Corporation shall cause to be issued and delivered to such holder, or on its written order, a certificate or certificates for the number of full shares of Common Stock issuable on such conversion in accordance with the provisions hereof and cash as provided in Section 4(d) in respect of any fraction of a share of Common Stock otherwise issuable upon such conversion. (c) All certificates evidencing shares of Series M Preferred Stock which are required to be surrendered for conversion in accordance with the provisions hereof shall, from and after the date such certificates are so required to be surrendered, be deemed to have been retired and canceled and the shares of Series M Preferred Stock represented thereby converted -17- into Common Stock for all purposes as of the date of conversion set forth in Section 5(a) above, notwithstanding the failure of the holder or holders thereof to surrender such certificates. 6. Optional Redemption. (a) At any time on or after a Change in Control (as such term is defined herein), each holder of Series M Preferred Stock may tender all (but not less than all) of its shares of Series M Preferred Stock to the Corporation, and thereupon the Corporation shall pay to such holder, in cash, an amount equal to the Fair Market Value of such shares, as determined in accordance with the procedure set forth herein payable with respect to such shares. The Corporation shall provide each holder of Series M Preferred Stock with a written notice of the occurrence of a Change in Control (addressed to the holder at its address as it appears on the stock transfer books of the Corporation), not earlier than sixty nor later than twenty days before the date of such occurrence. Any holder of shares of Series M Preferred Stock that elects to have such shares redeemed shall notify the Corporation of such election in writing. Such notice shall specify a date for optional redemption payments to be made, which shall be a date not earlier than the date of the occurrence of the Change in Control (the "Redemption Date"). If on the Redemption Date sufficient funds of the Corporation are not legally available to redeem all outstanding shares of Series M Preferred Stock so tendered for redemption, then funds to the extent legally available shall be used for such redemption pro rata according to the number of shares of Series M Preferred Stock so tendered (a "Partial Redemption") as of the Redemption Date. The Corporation shall make additional Partial Redemptions beginning thirty days after the Redemption Date and each thirty days thereafter until all tendered shares of Series M Preferred Stock have been redeemed. (b) For purposes of this Section 6, a "Change in Control" shall be deemed to have occurred at such time as (i) a "person" or "group" (within the meaning of Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934, as amended (the "Exchange Act")) becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act) of more than 50% of the total voting power required to elect or designate for election a majority of the Corporation's Board of Directors, or (ii) during any period of twenty-four consecutive months, individuals who at the beginning of such period constituted the Corporation's Board of Directors (together with any new directors whose election by the Board of Directors or whose nomination for election by the stockholders of the Corporation was approved by a majority of the directors then still in office who were either directors at the beginning of such period or whose election or nomination for -18- election was previously so approved or who have been elected by the holders, as of the date hereof, of the Corporation's Common Stock) cease for any reason to constitute a majority of the Board of Directors then in office. (c) For purposes of the provisions of this Section 6, the Fair Market Value of the shares of the Series M Preferred Stock shall be determined in accordance with the procedures set forth in this Section 6(c). (i) The Fair Market Value of the shares of the Series M Preferred Stock shall be equal to the price that would be payable with respect to the shares if all of the assets of the Corporation were sold to a third party in a transaction structured to maximize cash sale proceeds, treating the business of the Corporation as a going concern, and the Corporation then had been dissolved and liquidated and its remaining assets distributed to its shareholders in accordance with their equity interests in the Corporation (and without any discount for a minority position or illiquidity), after first deducting from the cash proceeds resulting from such sale and any other cash on hand held by the Corporation all liabilities of the Corporation (determined in accordance with generally accepted accounting principles, and giving effect to any brokerage fees that would be required to be paid in connection with any such sale). Within the thirty-day period following the delivery of the holder's election to have its shares of Series M Preferred Stock redeemed, the Corporation and such holder shall negotiate in good faith in an effort to reach mutual agreement as to the Fair Market Value of the shares. (ii) If the Corporation and such holder are unable to reach agreement as to the Fair Market Value of the shares within such thirty-day period, the Fair Market Value of the shares shall be determined by an appraisal process as set forth herein. Each of the Corporation and such holder shall designate, within fifteen days after the conclusion of the thirty-day negotiation period referred to above, an independent and experienced telecommunications industry appraiser (each individually an "Appraiser" and collectively the "Appraisers"). The Appraisers shall be instructed to complete their appraisals of the Fair Market Value of the shares by no later than thirty days after their appointment. If the determination of the Appraiser with the higher determination is not greater than 110% of the determination of the other Appraiser, the Fair Market Value shall be equal to the average of the determinations of the two Appraisers; provided, however, if the higher determination is greater than 110% of the lower determination, then the two Appraisers shall jointly select a third Appraiser within ten days after the first date on which both of such two Appraisers have -19- delivered their reports. Such third Appraiser shall deliver its report of its good faith determination of the Fair Market Value of the shares within thirty days after such appointment, and in such case the Fair Market Value shall be equal to the average of the closest determinations; provided, however that if the highest and lowest of such three determinations differ from the middle determination by an equal amount, the Fair Market Value shall be equal to such middle determination. The cost of all such appraisals shall be borne by the Corporation. 7. Preemptive Rights. (a) Each holder of the Series M Preferred Stock shall be entitled to a preemptive right to purchase its pro rata share of all or any part of any New Securities (as defined below) which the Corporation may, from time to time, propose to sell and issue. Such holder's pro rata share, for purposes of this preemptive right, is the ratio that the number of whole shares of Common Stock into which the shares of Series M Preferred Stock held by such holder are convertible plus the number of shares of any other class of Common Stock or Preferred Stock (on a fully diluted basis) then held by the holder bears to the total number of shares of Common Stock of the Corporation on a fully-diluted basis then outstanding. (b) Except as set forth in the next succeeding sentence, "New Securities" shall mean any shares of capital stock of the Corporation, including Common Stock, whether now authorized or not, and rights, options or warrants to purchase said shares of capital stock, and securities of any type whatsoever that are, or may become, convertible into said shares of capital stock. Notwithstanding the foregoing, "New Securities" does not include (i) securities offered to the public generally pursuant to a registration statement filed with the Securities and Exchange Commission and declared effective under the Securities Act of 1933, as amended, (ii) securities issued in the acquisition of another corporation by the Corporation by merger, purchase of substantially all of the assets or other reorganization or in a transaction governed by Rule 145 under the Exchange Act, (iii) options exercisable for Common Stock issued to employees or consultants of the Corporation outstanding as of the Original Issue Date or options issued to employees pursuant to a stock option plan adopted by the Board of Directors and approved by the holders of Series M Preferred Stock after the Original Issue Date, (iv) shares of Common Stock issued on conversion of outstanding Class B Preferred Stock, Class C Preferred Stock, Series D Preferred Stock or Series M Preferred Stock; (v) shares of Common Stock issued upon exercise of warrants (A) outstanding as of the Original Issue Date or (B) issued in connection with the sale of Series M Preferred under -20- the Securities Purchase Agreement, (vi) stock issued pursuant to any rights or agreements, including without limitation convertible securities, options and warrants, provided that the preemptive rights established by this Section 7 shall apply with respect to the initial sale or grant by the Corporation of interests in its capital stock pursuant to such rights or agreements, or (vii) stock issued in connection with any stock split, stock dividend or recapitalization by the Corporation. (c) In the event the Corporation proposes to undertake an issuance of New Securities, it shall give the holders of the Series M Preferred Stock written notice of its intention, describing the type of New Securities, and the price and terms upon which the Corporation proposes to issue the same. Each holder of Series M Preferred Stock shall have thirty days from the date of receipt of any such notice to agree to purchase up to its respective pro rata share of such New Securities for the price and upon the terms specified in the notice by giving written notice to the Corporation and stating therein the quantity of New Securities to be purchased. (d) If any holder fails to exercise such preemptive right within said thirty-day period, the Corporation shall have ninety days thereafter to sell or enter into an agreement (pursuant to which the sale of New Securities covered thereby shall be closed, if at all, within sixty days from the date of said agreement) to sell the New Securities not elected to be purchased by holders of the Series M Preferred Stock at the price and upon the terms no more favorable to the purchasers of such securities than specified in the Corporation's notice. In the event the Corporation has not sold the New Securities or entered into an agreement to sell the New Securities within said ninety-day period (or sold and issued New Securities in accordance with the foregoing within sixty days from the date of said agreement), the Corporation shall not thereafter issue or sell any of such New Securities, without first offering such securities in the manner provided above." 3. The foregoing amendment was duly adopted by the Board of Directors without the requirement of shareholder action by unanimous written consent on September 22, 1997, pursuant to the provisions of the Florida Business Corporation Act. -21- IN WITNESS WHEREOF, Medcross, Inc. has caused these Articles of Amendment to the Amended and Restated Articles of Incorporation to be executed by its President and attested to by its Secretary this ___ day of ___________, 1997. MEDCROSS, INC. By: --------------------------- John E. Edwards, President ATTEST: - ------------------------- David E. Hardy, Secretary -----END PRIVACY-ENHANCED MESSAGE-----