-----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, A3jxATYLHuxYkezeFwgmEqw4WWPi1ON+wTzKiUx+0ZuCSSOdTbgcBj8kaDQuSeIn +oK+FXAVWOLHwBe9vHDcFQ== 0000928385-97-001048.txt : 19970624 0000928385-97-001048.hdr.sgml : 19970624 ACCESSION NUMBER: 0000928385-97-001048 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 11 CONFORMED PERIOD OF REPORT: 19970605 ITEM INFORMATION: Other events ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 19970623 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: 1934 Act SEC FILE NUMBER: 000-17973 FILM NUMBER: 97628159 BUSINESS ADDRESS: STREET 1: 3227 BENNET ST N CITY: ST PETERSBURG STATE: FL ZIP: 33713 BUSINESS PHONE: 8135211793 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): June 5, 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 On June 6, 1997, Medcross, Inc. (the "Company") entered into a term loan agreement ("Loan Agreement") and promissory note ("Note") with Winter Harbor, L.L.C. (the "Lender" or the "Investor") pursuant to which the Lender agreed to loan to the Company the principal sum of $2,000,000 (the "Loan") for capital expenditures and working capital purposes. In addition to the Loan Agreement and Note, the Company executed and delivered to Lender a pledge agreement ("Pledge Agreement") pursuant to which the Company granted to the Lender a security interest in all of the issued and outstanding capital stock of I-Link Communications, Inc., a Utah corporation ("I-Link") and Family Telecommunications, Incorporated, a Utah corporation ("FTI"), each of which is a wholly-owned subsidiary of the Company. In addition, I-Link and FTI each executed a subsidiary guaranty ("Guaranty") pursuant to which I-Link and FTI each guaranteed the obligations of the Company to Lender under the Loan Agreement and Note. Further, I-Link and FTI each executed a security agreement ("Security Agreement") pursuant to which I-Link and FTI granted to Lender a security interest in substantially all of their personal property as collateral security for their obligations under the Guaranty and for the Company's obligations under the Loan Agreement and the Note. As further consideration for Lender's commitment to make the Loan, the Company granted to Lender a warrant ("Loan Warrant") to purchase up to five hundred thousand (500,000) shares of common stock of the Company (the "Common Stock") at a purchase price of $4.97 per share, subject to adjustment, pursuant to the terms of a Warrant Agreement between the parties. The Loan Warrant expires on March 11, 2002, and contains demand and piggyback registration rights and customary anti-dilution terms. The maturity date of the Note is October 15, 1998; however, the Loan Agreement anticipates an equity investment in the Company by the Lender (the "Investment"). Upon closing of the Investment, all principal and accrued interest then due under the Note shall be credited toward payment of the Lender's purchase price for the Investment and the Note shall be cancelled. As provided in the Loan Agreement, if the Company fails to negotiate in good faith with the Lender, and as a consequence thereof the parties have not entered into a letter of intent summarizing the principal terms of the Investment by September 1, 1997, or have not executed definitive agreements with respect to the Investment by October 15, 1997, then in either such case, the Company shall be required to make a mandatory prepayment of the Loan in an amount equal to the entire outstanding principal balance of the Loan plus all accrued interest, within three days of such date. Mandatory prepayment is also required if there is a sale by the Company or any of its subsidiaries of any material assets, or if the Company issues or sells any shares of its capital stock or other equity interest or incurs any indebtedness for borrowed money. In the latter cases, the mandatory prepayment amount shall be equal to 100% of the Company's net cash proceeds of such sale, up to the total amount of principal and accrued interest then due under the Note. Also on June 6, 1997 the Company executed a letter of intent ("LOI") with the Investor as to the Investment. The LOI serves as the basis for negotiations between the parties and the -1- definitive terms of the Investment may differ from the terms set forth herein. The LOI contemplates that the Investor will invest $12,100,000 in a series of the Company's convertible preferred stock to be created (the "Series M Preferred Stock"). The Investor will purchase 4,400,000 shares of Series M Preferred Stock for $2.75 per share. The Series M Preferred Stock will be entitled to receive cumulative dividends in the amount of 10% per annum before any other class of preferred or common stock receives any dividends. Thereafter, the Series M Preferred Stock will participate with the common stock in the issuance of any dividends on a per share basis. The Series M Preferred Stock will be senior to all other series of the Company's preferred stock or Common Stock as to liquidation rights, which rights shall be deemed to include accrued or unpaid dividends relating to the Series M Preferred Stock. The Series M Preferred Stock shall be convertible at any time prior to the fifth anniversary of its issuance, at the sole option of the Investor, into shares of Common Stock on a one-to-one basis; provided, however, that the Series M Preferred Stock shall be automatically converted to Common Stock on the fifth anniversary of its issuance at no cost to the Investor. The conversion price shall be equal to the lower of $2.75 per share or 50% of the average closing bid price of the Common Stock for the ten trading days immediately preceding the fifth anniversary of issuance. The basis for discretionary conversion, or the conversion price for automatic conversion, shall be adjusted upon the occurrence of certain events, including without limitation, issuance of stock dividends, recapitalization of the Company, or the issuance of stock by the Company at less than the fair market value thereof. Conversion of the Series M Preferred Stock will be subject to approval by the Company's shareholders of an increase in the number of shares of authorized capital stock at the Company's next annual shareholders meeting. The Series M Preferred Stock will vote with the Common Stock on an as-converted basis on all matters which are submitted to a vote of the stockholders, except as may otherwise be provided by law or by the Company's Articles of Incorporation or By-laws; provided, however, that the Series M Preferred Stock will have the right to appoint two members of the Company's board of directors. As stated above, upon closing of the issuance of the Series M Preferred Stock, the Investor shall be entitled to a credit against the purchase price of the Series M Preferred Stock in the amount of principal and accrued interest under the Loan, and the Note evidencing the Loan shall be cancelled. As additional consideration for its equity financing commitments, the Investor will be issued additional 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 $9.31 (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 standard cashless exercise provisions. The LOI also provides that, in the event that certain stockholders of the Company (including key management) propose to effect a transfer to a third party of their interests in the -2- Company, then the Investor shall have the option to require such selling stockholders to provide the Investor the right to participate in such transaction on the same terms and conditions as the selling stockholders. Further, the Investor shall have (i) preemptive rights with respect to future issuances of equity interests or securities convertible into or exchangeable for equity interests of the Company in order that the Investor may maintain its proportional economic interest in the Company, (ii) a put right to cause the Company to purchase all of the equity interests then held by Investor in the Company at the fair market value of such equity interests, in the event of a change of control of the Company, (iii) the right to require holders of warrants to acquire an aggregate of 1,000,000 shares of Common Stock, which warrants have an exercise price of $2.00 or less per share, to enter into agreements with the Investor to sell such warrants to the Investor for an aggregate purchase price of $1,000,000, and (iv) the right to review and approve the existing employment, non-competition and consulting agreements of the Company's key executives. On June 5, 1997 the Company entered into a letter of agreement (the "MLOI") with MIBridge, Inc., a New Jersey corporation ("MIBridge") and Mr. Dror Nahumi, the principal shareholder of MIBridge, pursuant to which the Company will enter into negotiations with MIBridge to acquire all of the issued and outstanding stock of MIBridge (the "Acquisition"). MIBridge is the owner of patent-pending audio-conferencing technology and is a leader in creating speech-encoding and compression algorithms designed to produce superior audio quality and lower delay over low-band networks. The MLOI serves as the basis for negotiations between the parties and the definitive terms of the Acquisition may differ from the terms set forth herein. The MLOI contemplates that the Company will pay the stockholders of MIBridge (the "Selling Stockholders") consideration consisting of (i) an aggregate $2,000,000 in cash, payable in quarterly installments over three years, and (ii) an aggregate 1,000 shares of a series of the Company's convertible preferred stock to be created (the "Series D Preferred Stock"). The 1,000 shares of Series D Preferred Stock will be convertible at the option of the Selling Shareholders, at any time during the nine months following the closing of the Acquisition, into such number of shares of Common Stock as shall equal the sum of $6,250,000 divided by $9.13 (the "Conversion Price"), which price was the closing bid price of the Company's Common Stock on June 5, 1997. On the nine-month anniversary of the closing of the Acquisition, any unconverted Series D Preferred Stock shall automatically convert to Common Stock. In either case, the Series D Preferred Stock shall be converted at the lower of the Conversion Price or the average closing bid price for the five trading days immediately preceding the date the Company receives notice of conversion or the automatic conversion date, as the case may be. The Series D Preferred Stock shall be entitled to participate in any dividends which may be declared for Common Stock on an as-converted basis. The Selling Stockholders shall receive piggy-back registration rights whereby they may participate in any registration of securities the Company my undertake after the first anniversary of the closing of the Acquisition (excluding registrations of employee benefit plan securities). Conversion of the Series D Preferred Stock will be subject to approval by the Company's shareholders of an increase in the number of shares of authorized capital stock at the Company's next annual shareholders meeting. -3- The MLOI further provides that the Company shall enter into an employment contract with Mr. Nahumi providing terms, conditions and benefits similar to those provided in employment contracts with existing members of the Company's senior management, including standard confidentiality, non-competition and assignment of invention provisions. Mr. Nahumi's annual salary shall be at least $100,000, and Mr. Nahumi will devote his full time to managing the operations of MIBridge under the direction of the Company. ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS (c) Exhibits 99(a) Loan Agreement dated as of June 6, 1997, by and between the Company and Winter Harbor, L.L.C. ("Lender" or "Investor"). 99(b) Promissory Note dated June 6, 1997, in the principal amount of $2,000,000, made by Company in favor of Lender. 99(c) Warrant Agreement dated as of June 6, 1997, by and between the Company and Lender; and related Warrant Certificate. 99(d) Pledge Agreement dated as of June 6, 1997, by and between the Company and Lender. 99(e) Security Agreement dated as of June 6, 1997, by and among Family Telecommunications, Incorporated ("FTI"), I-Link Communications, Inc. ("I-Link") and Lender. 99(f) Subsidiary Guaranty dated as of June 6, 1997, by and among FTI, I-Link and Lender. 99(g) Assignment for Security dated as of June 6, 1997, by and between I-Link and Lender. 99(h) Letter of Intent dated June 6, 1997, by and between the Company and Investor. 99(i) Term Sheet for Proposed Equity Investment by Winter Harbor, L.L.C., dated June 6, 1997. 99(j) Letter of Intent dated June 5, 1997, by and among the Company, MIBridge, Inc. and Dror Nahumi. -4- 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: June 20, 1997 By: /s/ John W. Edwards ------------------------------------------- John W. Edwards, President, Chief Executive Officer Dated: June 20, 1997 By: /s/ Karl S. Ryser, Jr. ------------------------------------------- Karl S. Ryser, Jr., Chief Financial Officer -5- EX-99.1 2 EXHIBIT 99(A) - LOAN AGREEMENT Exhibit 99(a) LOAN AGREEMENT -------------- THIS LOAN AGREEMENT is made and entered into as of June 6, 1997, by and between MEDCROSS, INC., a Florida corporation (the "Borrower"), and WINTER HARBOR, L.L.C., a Delaware limited partnership (the "Lender"). RECITALS: -------- Borrower desires to borrow from Lender up to $2,000,000 on a term loan basis, the proceeds of which will be used for capital expenditures and working capital purposes in the operations of I-Link Communications, Inc., a wholly owned subsidiary of Borrower. AGREEMENTS: ---------- IN CONSIDERATION of the mutual promises and agreements herein contained, Lender and Borrower agree as follows: ARTICLE I. AMOUNT AND TERMS OF THE LOAN Section 1.1 The Loan. Lender agrees, upon the terms and conditions -------- hereinafter set forth, to make a loan or loans to Borrower in an aggregate principal amount not to exceed at any one time outstanding $2,000,000 (the "Loan"). Section 1.2 The Note. The outstanding principal amount of the Loan -------- shall be evidenced by and subject to the terms of a promissory note, dated the date of the first borrowing hereunder, substantially in the form set forth as Exhibit 1 hereto (as amended, renewed, restated, increased, consolidated or - --------- substituted from time to time, the "Note"), payable to the order of Lender. Section 1.3 Interest. The Loan shall bear interest on the unpaid -------- principal amount thereof at a rate per annum at all times equal to the sum of the rate of interest announced in the Wall Street Journal (Eastern Edition) as the prime rate from time to time (the "Prime Rate") plus 2% per annum. The prime rate functions as a reference rate index. The Prime Rate will automatically change as and when such prime rate changes. Interest shall be calculated on the basis of a year of 365 days and the actual number of days elapsed during the period for which such interest is payable. Interest shall begin to accrue on the outstanding principal amount of the Loan on the date of disbursement of all or a portion of the Loan. Accrued interest shall be paid quarterly on the last business day of each calendar quarter until all principal and interest hereunder is paid in full at the repayment or maturity of the Loan. Upon the occurrence of any Event of Default (as that term is defined in Section 7.1), the entire outstanding principal amount of the Loan and (to the extent permitted by law) unpaid interest thereon and all other amounts due hereunder shall bear interest, from the date of occurrence of such Event of Default until the earlier of the date the Loan is paid in full and the date on which such Event of Default is cured or waived in writing, at an interest rate equal to the sum of the Prime Rate plus 5% per annum, which shall be payable upon demand. Section 1.4 Principal Repayment. The outstanding principal balance of ------------------- the Loan plus any accrued and unpaid interest thereon shall be due and payable on October 15, 1998 (the "Maturity Date"). If Lender makes an Investment (as that term is defined in Section 1.6(b)(iii)) in Borrower, Lender may at its option convert the outstanding principal balance of the Loan into capital stock of Borrower or into any debt security, in either case issued to Lender pursuant to such Investment. Section 1.5 Use of Proceeds and Advancement of Funds. ---------------------------------------- (a) Each borrowing hereunder shall be made by Lender in such amount as Borrower shall request in writing three business days prior to the date of the requested borrowing, provided that each borrowing shall be in an amount which is a minimum of $500,000, and integral multiples of $100,000 in excess thereof. Borrower shall not be permitted to make more than four borrowings hereunder. The obligation of Lender to make any portion of the Loan is conditioned upon the fact that (x) no Event of Default and no event which with the lapse of any applicable grace period or the giving of notice or both would constitute an Event of Default (a "Potential Default") shall then exist or immediately after the Loan would exist; (y) all of the Loan Documents (as that term is defined in Section 4.2) shall still be in full force and effect; and (z) the representations and warranties contained herein and in the Loan Documents shall be true and correct in all material respects as if made on and as of the date of such borrowing, except to the extent that any thereof expressly relate to an earlier date. (b) Borrower shall use the proceeds of the Loan only to fund capital expenditures by I-Link Communications, Inc., a Utah corporation that is wholly owned by Borrower ("I-Link"), and for working capital purposes in the operations of I-Link. Section 1.6 Prepayments. ----------- (a) Voluntary Prepayments. By written notice to Lender no later than --------------------- 12:00 noon, Delaware time on the business day prior to such prepayment, Borrower may, at its option, prepay the Loan in whole at any time or in part from time to time without penalty or premium; provided, however, that each partial prepayment -------- ------- shall be in the aggregate - 2 - principal amount of not less than $100,000 or an integral multiple of $50,000 in excess thereof. (b) Mandatory Prepayments. --------------------- (i) Prooceeds of Asset Sales. Borrower shall make a mandatory ----------------------- prepayment of the Loan in an amount equal to the cash proceeds of any sale by it or any of its subsidiaries of any material assets, net of any reasonable costs directly incurred in connection with such sale and any taxes payable in connection with such sale. Together with any prepayment required by this Section, Borrower shall deliver to Lender a certificate executed by Borrower's chief financial officer setting forth the calculation of the net cash proceeds of such sale, including a calculation of the taxes payable in respect of such sale. Such prepayment shall be made simultaneously with the consummation of such sale. (ii) Net Equity and Debt Proceeds. If Borrower issues or sells ---------------------------- any shares of its capital stock or other equity interests or securities convertible into or exercisable for any shares of its capital stock or other equity interests or incurs any indebtedness for borrowed money, it shall, within five days of such sale, issuance or incurrence, make a mandatory prepayment of the Loan in an amount equal to 100% of the cash proceeds thereof, net of any reasonable costs directly incurred in connection with such sale, issuance or incurrence; provided, however, that no such prepayment shall be required in -------- ------- connection with any such issuance or sale (a) in connection with an acquisition (including by way of merger or consolidation or share exchange) by Borrower, which acquisition is approved by Lender, of the stock or assets of another person in a transaction pursuant to which the purchase price is paid in whole or in part by the delivery of capital stock of Borrower to the seller or (b) to employees of Borrower or any of its subsidiaries pursuant to stock option or other employee benefit plans approved by Lender. (iii) Failure to enter into Equity Documents. The parties -------------------------------------- acknowledge that Lender desires to make an equity or other investment (the "Investment") in Borrower, or in one of its subsidiaries, or in an operating venture to be owned by Borrower or one of its subsidiaries and Lender. Borrower agrees to negotiate in good faith the terms of such Investment. If Borrower fails to so negotiate in good faith and, as a consequence thereof, the parties have not entered into a letter of intent summarizing the principal terms of the Investment by September 1, 1997, or the parties have not entered into definitive agreements in respect of the Investment by October 15, 1997, then in either such case, Borrower shall make a mandatory prepayment of the Loan in an amount equal to the entire outstanding principal balance of the Loan, plus all accrued interest, within three days of such date. - 3 - (c) Application of Prepayments. All voluntary and mandatory -------------------------- prepayments of the Loan shall be applied first to accrued interest and then to the principal outstanding under the Loan. No amount so prepaid may be reborrowed. Section 1.7 Payment on Non-Business Days. Whenever any payment to be ---------------------------- made hereunder or under the Note shall be due on a Saturday, Sunday or public holiday, such payment may be made on the next succeeding business day, and such extension of time in such case shall be included in the computation of interest hereunder and under the Note. Section 1.8 Taxes. All sums payable by Borrower hereunder or under the ----- Note, whether of principal, interest, fees, expenses or otherwise, shall be paid in full, free of any deductions or withholdings for any and all present and future taxes, levies, imposts, stamps, duties, fees, assessments, deductions, withholdings, and other governmental charges and all liabilities with respect thereto. If Borrower is prohibited by law from making payments hereunder or under the Note free of such deductions or withholdings, then Borrower shall pay such additional amount as may be necessary in order that the actual amount received by Lender after such deduction or withholding shall equal the full amount stated to be payable hereunder or under the Note. Section 1.9 Warrants. As further consideration for Lender's commitment -------- to make the Loan, Borrower has granted to Lender warrants to purchase, for an aggregate value of $50,000, up to 500,000 shares of Borrower's common stock at a purchase price of $4.97 per share, pursuant to the terms of a Warrant Agreement of even date herewith (the "Warrant Agreement"). The balance of the $2,000,000 consideration paid by Lender for the Note and the Warrant Agreement, $1,950,000, based on the respective fair market values of the Note and the Warrant Agreement, shall be allocated to the Note. ARTICLE II. CLOSING Section 2.1 Closing and Closing Date. The making of the first ------------------------ disbursement of the Loan and the other transactions contemplated hereby shall take place on a date set forth in a notice delivered by Borrower to Lender at least five days before such date or at such other date and at such place as to which the parties may agree (the "Closing" and the "Closing Date"). Subject to the terms and conditions hereof, upon the fulfillment or waiver in writing of all the conditions precedent set out in Article IV below, Lender shall disburse such portion of the Loan to Borrower as Borrower may request. - 4 - ARTICLE III. SECURITY Section 3.1 Guaranty. As partial security for the Loan, Borrower shall -------- cause each of I-Link and Family Telecommunications, Incorporated, a Utah corporation that is wholly owned by Borrower ("FTI"), to execute and deliver to Lender, on or before the Closing Date, a guaranty (the "Guaranty"), in form and substance satisfactory to Lender, pursuant to which I-Link and FTI shall guarantee the obligations of Borrower to Lender hereunder and under the Note. Section 3.2 Security Interest. As further security for the Loan, ----------------- Borrower shall cause I-Link and FTI to execute and deliver to Lender, on or before the Closing Date, a security agreement in form and substance satisfactory to Lender (the "Security Agreement"), pursuant to which I-Link and FTI grant to Lender a security interest in substantially all of their personal property (other than equipment leased to I-Link or FTI and any leases which by their terms prohibit the grant of security interests in, or assignments of, I-Link's or FTI's leasehold interest therein) as collateral security for their obligations under the Guaranty and for Borrower's obligations hereunder and under the Note. In addition, Borrower shall cause I-Link to execute and deliver to Lender, on or before the Closing Date, a patent assignment in form and substance satisfactory to Lender (the "Patent Assignment"), pursuant to which I- Link collaterally assigns to Lender as security for I-Link's obligations under the Guaranty and Borrower's obligations hereunder and under the Note its interest in all patent applications it has filed with the United States Patent and Trademark Office, including without limitation Patent Application No. 08/599,238 filed February 9, 1996 and entitled "Voice Internet Transmission System" and Patent Application No. 08/585,628 filed January 16, 1996, and entitle "Facsimile Internet Transmission System." Section 3.3 Pledge Agreement. As further security for the Loan, on or ---------------- before the Closing Date, Borrower shall execute and deliver to Lender a pledge agreement in form and substance satisfactory to Lender (the "Pledge Agreement"), pursuant to which Borrower grants to Lender a security interest in all of the issued and outstanding capital stock of I-Link and FTI as collateral security for Borrower's obligations hereunder and under the Note. ARTICLE IV. CONDITIONS OF LENDING Section 4.1 Conditions Precedent to Loan. The obligation of Lender to ---------------------------- disburse from time to time any portion of the Loan hereunder is subject to the following conditions precedent: (a) Lender shall have received all of the following, on or before the Closing Date, in form and substance satisfactory to Lender: - 5 - (i) The Note, duly executed and delivered by Borrower; (ii) The Guaranty, duly executed and delivered by I-Link and FTI; (iii) The Security Agreement, together with appropriate UCC-1 financing statements duly executed and delivered by I-Link and FTI; (iv) The Pledge Agreement, duly executed and delivered by Borrower, together with stock certificates and blank stock powers; (v) Certified copies of the resolutions of the Board of Directors of each of Borrower, I-Link and FTI evidencing approval of the execution, delivery and performance of this Agreement, the Note, the Guaranty, the Security Agreement, the Pledge Agreement and other matters contemplated hereby; (vi) Certificates of Good Standing for each of Borrower, I-Link and FTI from the state of its incorporation and from each other state in which it is authorized to conduct business issued no more than ten days prior to the Closing Date; (vii) Copies of UCC, judgment and tax lien searches in each jurisdiction in which collateral covered by the Security Agreement is located, naming I-Link and FTI as debtors; (viii) Copies of the certificates evidencing the insurance required to be maintained by Borrower pursuant to Section 6.1(e); and (ix) Such other agreements, certificates, opinions of counsel and documents as Lender may reasonably require. Section 4.2 Compliance. All of the representations and warranties of ---------- Borrower, I-Link and FTI in this Agreement, the Guaranty, the Security Agreement, the Pledge Agreement, the Warrant Agreement and in each other agreement, document, or instrument executed or delivered pursuant hereto or thereto (collectively, the "Loan Documents") shall be true and accurate in all material respects on and as of the Closing Date and the date of any subsequent disbursement of any portion of the Loan, as if made on and as of such date and time. Borrower shall be in compliance with all of the applicable terms and provisions of this Agreement and no Event of Default or Potential Default shall have occurred and be continuing. Borrower shall have performed all obligations and taken all actions to be performed or taken by it hereunder on or prior to such date. On the date of each borrowing, - 6 - Borrower shall deliver to Lender a certificate, dated as of such date and signed by an executive officer of Borrower, certifying compliance with the conditions of this Section 4.2. Each disbursement of all or a portion of the Loan to Borrower shall in and of itself, constitute a representation and warranty that Borrower as of the date of such Loan, is in compliance with this Section, and if Borrower is not in compliance with this Section, Lender shall not be required to disburse such Loan to Borrower. ARTICLE V. REPRESENTATIONS AND WARRANTIES In order to induce Lender to enter into this Agreement and make the Loan, Borrower represents and warrants as follows: Section 5.1 Existence and Standing. ---------------------- (a) Borrower is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Florida, is qualified to do business and in good standing under the laws of each other jurisdiction in which it conducts its business, and has all requisite power and authority, corporate or otherwise, to conduct its business, to own its properties and to execute and deliver, and to perform all of its obligations under, this Agreement, the Note, the Pledge Agreement, the Warrant Agreement and all other Loan Documents. (b) Each of I-Link and FTI is a corporation duly incorporated, validly existing and in good standing under the laws of its state of incorporation, is qualified to do business and in good standing under the laws of each other jurisdiction in which it conducts its business, and has all requisite power and authority, corporate or otherwise, to conduct its business, to own its properties and to execute and deliver, and to perform all of its obligations under, each Loan Document to which it is a party. Section 5.2 Authorizations, Compliance with Laws. The execution, ------------------------------------ delivery and performance by each of Borrower, I-Link and FTI of each Loan Document to which it is a party, and of each other document required to be executed and delivered by it pursuant to this Agreement or any other Loan Document, have been duly authorized by all necessary corporate action and do not and will not (i) violate (A) any provision of any law, rule, regulation, order, writ, judgment, injunction, decree, determination or award presently in effect having applicability to Borrower, I-Link or FTI or (B) any provision of the Certificate of Incorporation or By-laws of Borrower, I-Link or FTI; or (ii) result in a breach of or constitute a default under any agreement or instrument to which Borrower, I-Link or FTI is a party or by which any of their properties may be affected; or (iii) result in the creation of a - 7 - lien, charge or encumbrance of any nature upon Borrower's, I-Link's or FTI's properties or assets other than as contemplated by this Agreement. Section 5.3 Financial Statements. Borrower has delivered to Lender true -------------------- and complete copies of (a) the audited consolidated financial statements of Borrower for the fiscal years ended December 31, 1996, and December 31, 1995, and (b) the unaudited consolidated financial statements of Borrower as of March 31, 1997, and for the three month period then ended (the "Financial Statements"). The Financial Statements are true and complete in all material respects (including, without limitation, a disclosure of all material contingent liabilities) and present fairly the financial condition and results of operations of Borrower and its subsidiaries, as of the dates and for the periods indicated and have been prepared in accordance with generally accepted accounting principles, consistently applied, subject in the case of statements for interim periods to normal year-end adjustments and the absence of footnotes. Section 5.4 Capitalization. All of the issued and outstanding capital -------------- stock of Borrower has been duly and validly issued, and is fully paid and nonassessable. All of the issued and outstanding capital stock of each of I- Link and FTI has been duly and validly issued, and is fully paid and nonassessable and is free and clear of any liens, security interests or other claims or encumbrances, except those granted to Lender pursuant to the terms of this Agreement and the other Loan Documents. Except as set forth on Schedule -------- 5.4 attached hereto, neither Borrower nor any other person has any commitment or - --- obligation, either firm or conditional, to issue, deliver, purchase or sell, under any offer, option agreement, bonus agreement, purchase plan, incentive plan, compensation plan, warrant, conversion rights, contingent share agreement, stockholders agreement, partnership agreement or otherwise, any capital stock or other equity securities or securities convertible into shares of capital stock or other equity securities. Section 5.5 No Consent. No authorization, consent, approval, license, ---------- exemption of or filing or registration with any court or governmental department or agency or any other person is or will be necessary for the valid execution, delivery and performance by Borrower, I-Link and FTI of this Agreement, the Note, the Pledge Agreement, the Guaranty, the Security Agreement, the Warrant Agreement or any other document required to be executed and delivered by Borrower, I-Link or FTI pursuant to this Agreement. Section 5.6 Binding Obligations. This Agreement, the Note, the Pledge ------------------- Agreement, the Guaranty, the Security Agreement, the Warrant Agreement and all other documents required to be executed and delivered by Borrower, I-Link and FTI pursuant to this Agreement have been executed and delivered by a duly authorized officer of Borrower, - 8 - I-Link or FTI and constitute legal, valid and binding obligations of Borrower, I-Link and FTI, enforceable in accordance with their respective terms. Section 5.7 Litigation. There are no actions, suits or proceedings ---------- pending, or, to the knowledge of Borrower, threatened against or affecting Borrower, I-Link or FTI or any of their properties before any court or governmental department or agency which materially adversely affects the transactions contemplated by this Agreement or which could have a material adverse effect on the business, properties, prospects, operation or condition (financial or otherwise) of Borrower, I-Link or FTI. Section 5.8 No Default. Neither Borrower nor I-Link nor FTI is in ---------- material default in the performance, observance or fulfillment of any of the obligations or conditions contained in any material agreement or instrument to which it is a party, nor with respect to any order, judgment, writ, injunction or decree of any court, governmental authority or arbitration board. Section 5.9 Compliance with Laws. Each of Borrower, I-Link and FTI has -------------------- complied and is in compliance in all material respects with all applicable federal, state and local laws. Each of Borrower, I-Link and FTI has obtained all necessary licenses and permits required for the conduct of its business and operations or such licenses and permits have been applied for and are now being diligently pursued. Section 5.10 Taxes. Except as set forth on Schedule 5.10 attached ----- ------------- hereto, each of Borrower, I-Link and FTI has filed all tax returns and reports (federal, state and local) required to be filed by it, and has paid all taxes shown thereon, including interest and penalties, and all assessments received by it (except to the extent that the same are being contested in good faith by appropriate proceedings diligently prosecuted and as to which adequate reserves have been set aside on the books of Borrower, I-Link or FTI, as appropriate, in conformity with generally accepted accounting principles). Section 5.11 Title to Properties. Each of Borrower, I-Link and FTI has ------------------- good and marketable title to all of its property and assets and valid and enforceable leasehold interests in the property which it holds under lease, all such property, assets and leasehold interests being free and clear of any and all mortgages, deeds of trust, assignments, liens, security interests, charges, encumbrances or adverse claims of any nature whatsoever, and no mortgages, deeds of trust, financing statements or other evidences of security interests covering all or any of the aforesaid property are on file among the records of any public office. Each of Borrower, I-Link and FTI owns or possesses the valid right to use all the patents, patent applications, patent and know-how licenses, inventions, technology, permits, trademark registrations and applications, trademarks, service marks, trade names, copyrights, - 9 - product designs, applications, formulae, processes, circulation, and other subscriber lists, industrial property rights and licenses and rights in respect of the foregoing used or necessary for the conduct of its business (collectively, "proprietary rights"). Borrower is not aware of any existing or threatened infringement or misappropriation of (a) any such proprietary rights of others by Borrower or any of its subsidiaries or (b) any proprietary rights of Borrower or any of its subsidiaries by others. Section 5.12 Absence of Undisclosed Liabilities. Except for (i) ---------------------------------- obligations under the Loan Documents, and (ii) liabilities incurred in the ordinary course of business (other than for borrowed money), neither Borrower, nor I-Link nor FTI has any material liabilities or obligations of any nature, whether accrued, absolute, contingent or otherwise. Section 5.13 Solvency. Each of Borrower, I-Link and FTI has received, or -------- has the right to receive, consideration which is the reasonable equivalent value of the obligations and liabilities that it has incurred to Lender. Neither Borrower, nor I-Link nor FTI is insolvent as defined in Section 101 of Title 11 of the United States Code or any applicable state insolvency statute, nor, after giving effect to the consummation of the transactions contemplated herein, will Borrower, I-Link or FTI be rendered insolvent by the execution and delivery of this Agreement, the Note or the other Loan Documents to Lender. Neither Borrower, nor I-Link nor FTI is engaged, and is not about to engage, in any business or transaction for which the assets retained by it shall be an unreasonably small capital, taking into consideration the obligations to Lender incurred hereunder and under the Loan Documents. Neither Borrower, nor I-Link nor FTI intends to, nor believes that it will, incur debts beyond its ability to pay them as they mature. Section 5.14 Material Misstatement. No statement made herein or in any --------------------- other Loan Document or information, exhibit or report furnished by Borrower, I- Link or FTI to Lender in connection with this Agreement or its negotiation, contains any material misstatement of fact or omits to state a material fact or any fact necessary to make the foregoing not misleading. ARTICLE VI. COVENANTS OF BORROWER Section 6.1 Affirmative Covenants. So long as the Note shall remain --------------------- unpaid and this Agreement shall not have been terminated, Borrower hereby agrees that it will, and that it will cause each of its subsidiaries to, unless Lender shall otherwise consent in writing: (a) Payment of Obligations. Pay punctually and discharge when due: ---------------------- (i) all indebtedness heretofore or hereafter incurred; (ii) all taxes, assessments and governmental charges or levies imposed upon it or its income or profits, or upon any - 10 - properties belonging to it; (iii) all claims or demands of materialmen, mechanics, carriers, warehousemen, landlords and other like persons which, if unpaid might become a lien or charge upon the property of Borrower or such subsidiary; provided that this covenant shall not require the payment of any of the matters set forth in (i), (ii) and (iii) above if the same shall be contested in good faith and by proper proceedings diligently pursued and as to which adequate reserves have been set aside on the books of Borrower or such subsidiary in accordance with generally accepted accounting principles. (b) Preservation of Existence. Preserve and maintain its respective ------------------------- corporate existence, and all material rights, franchises, licenses and privileges used or useful in the operation of its business. (c) Maintenance of Properties. Maintain and preserve all of its ------------------------- properties necessary or useful in the proper conduct of its business in good working order and condition, ordinary wear and tear excepted. (d) Compliance with Laws. Comply in all material respects with the -------------------- requirements of all applicable laws, rules, regulations and orders of any governmental authority. (e) Maintenance of Insurance. Maintain with responsible and reputable ------------------------ insurance companies insurance policies on all of its properties and covering such risks, including public liability and workers' compensation, in such amounts as are usually carried by companies engaged in similar businesses and owning similar properties as Borrower or its subsidiaries, and promptly upon execution thereof provide to Lender copies of all such policies and any riders or amendments thereto; the policies of insurance required hereunder shall name Lender as an additional loss payee or additional insured, as applicable, and shall provide that Lender shall receive at least thirty days written notice prior to the cancellation, termination or alteration of any such policy. (f) Operations in Ordinary Course. Continue to operate its business ----------------------------- in the ordinary course. (g) Perfection of Liens. Do all things requested by Lender to ------------------- preserve and perfect as first liens and security interests the liens and security interests of Lender arising pursuant to the Security Agreement, the Pledge Agreement or any other agreement required hereunder. (h) Governmental Approval. If counsel to Lender reasonably determines --------------------- that the consent of the Federal Communications Commission or any other federal, state or - 11 - local governmental or licensing authority is required in connection with the execution, delivery and performance of this Agreement, the Note, the Pledge Agreement, the Guaranty, the Security Agreement, the Warrant Agreement or any other document delivered to Lender in connection herewith or therewith or as a result of any action which may be taken pursuant hereto or thereto, then Borrower, at its sole cost and expense, agrees to use its best efforts to secure such consent and to cooperate with Lender in any action commenced by Lender to secure such consent. (i) Agreements. Comply with its obligations under the Loan Documents. ---------- (j) Information and Inspection. Furnish to Lender from time to time, -------------------------- upon request, full information pertaining to any covenant, provision or condition hereof, or to any matter connected with its books, records, operations, financial condition, properties, activities or business. At all reasonable times, Borrower shall permit any authorized representatives designated by Lender to visit and inspect any of the properties of Borrower or any of its subsidiaries and its books and records, and to take extracts therefrom and make copies thereof, and to discuss Borrower's and its subsidiaries' affairs, finances and accounts with the management and independent accountants of Borrower. Section 6.2 Negative Covenants. So long as the Note shall remain unpaid ------------------ and this Agreement shall not have been terminated, Borrower hereby agrees that it will not, and that it will not permit any of its subsidiaries to, without Lender's prior written approval: (a) Indebtedness. Create or incur, assume or suffer to exist any ------------ indebtedness, obligation or liability (or guaranty the indebtedness, obligation or liability of any other person), whether matured or unmatured, liquidated or unliquidated, direct or contingent, joint or several, except for: (i) indebtedness evidenced by the Note; (ii) indebtedness (other than for borrowed money) incurred in the ordinary course of business, and (iii) obligations or liabilities arising under the Loan Documents. (b) Liens. Create, assume or suffer to exist, directly or indirectly, ----- any security interest, mortgage, deed of trust, pledge, lien, charge or other encumbrance, of any nature whatsoever upon any of its properties or assets, now owned or hereafter acquired, excluding, however, from the operation of this covenant: (i) any security interest or lien created pursuant to or in connection with this Agreement or securing the Loan; - 12 - (ii) liens for taxes or assessments either not delinquent or the validity of which are being contested in good faith by appropriate legal or administrative proceedings and as to which adequate reserves shall have been set aside on its books, in conformity with generally accepted accounting principles; (iii) materialmen's, mechanics', carriers', workmen's, repairmen's, warehousemen's or other like statutory liens arising in the ordinary course of business and either not yet due and payable or being contested in good faith by appropriate legal proceedings and as to which adequate reserves shall have been set aside on its books, in conformity with generally accepted accounting principles; (iv) deposits or pledges to secure payment of workers' compensation, unemployment insurance or other social security benefits or obligations; or (v) any judgment lien, singly or aggregated with other judgment liens, in an amount less than $25,000, unless the judgment it secures shall not, within thirty days after the entry thereof, have been discharged, vacated, reversed, or execution thereof stayed pending appeal, or shall not have been discharged, vacated or reversed within thirty days after the expiration of any such stay. (c) Disposition of Assets. Sell, transfer, lease or otherwise dispose --------------------- of any of its assets or properties (including without limitation the sale or other disposition of the capital stock or other equity interests in any subsidiary) other than sales of assets in the ordinary course of business and the disposition of obsolete or other assets which the board of directors of Borrower determines in good faith are no longer useful in the operations of Borrower's or any of its subsidiaries' business. (d) Merger; Acquisition; Joint Ventures; Liquidation. Enter into any ------------------------------------------------ consolidation or merger with, or into any acquisition of all or substantially all of the properties or assets of any person or entity; or enter into any partnership or joint venture with any other person; or dissolve or liquidate. (e) Transfer or Issuance of Shares. Issue or permit the transfer of ------------------------------ any shares of the capital stock or other equity interests of Borrower or any subsidiary, or any options, warrants, convertible securities or other rights to purchase Borrower's or any subsidiary's stock or other equity interests except pursuant to the Loan Documents, other than grants of employee stock options covering less than 50,000 shares per grant and 1,000,000 shares in the aggregate pursuant to stock option or other employee benefit arrangements acceptable to Lender. - 13 - (f) Change of Business. Change, in any material respect, the nature ------------------ or character of its business as currently conducted, or engage in any activity not reasonably related to such business. (g) Remove Assets. Permit I-Link or FTI to remove any of its assets ------------- to a jurisdiction in which no financing statement on Form UCC-1 has been filed by Lender with respect to such assets. (h) Distributions or Dividends. Declare or make, directly or -------------------------- indirectly, any payment or distribution to any of the shareholders of Borrower, or incur any liability for the purchase, acquisition, redemption or retirement of any capital stock of Borrower or as a dividend, return of capital or other payment or distribution of any kind to any shareholder of Borrower or any other affiliate of Borrower (other than any stock dividend or stock split or similar distribution payable only in capital stock of Borrower) in respect of Borrower's capital stock. (i) Transactions with Affiliates. Enter into any transaction or ---------------------------- agreement, other than the Loan Documents, with any affiliate of Borrower or any affiliate of any shareholder of Borrower unless the terms of such transaction or agreement are fair and reasonable and no more onerous to Borrower or such subsidiary than could be obtained from an independent third party in an arms- length transaction. (j) Contracts. Enter into any contract or commitment except for --------- contracts involving aggregate payments of less than $50,000 individually or $250,000 in the aggregate and contracts which can be terminated without penalty on thirty days notice or less, or amend or terminate any material contract (or waive any substantial right thereunder), or incur any obligation (including obligations relating to the borrowing of money or guarantee of indebtedness). (k) Adverse Change. Suffer any material adverse change in the -------------- business, assets, properties, prospects or condition (financial or otherwise) of Borrower or any subsidiary, or any damage, destruction or loss affecting any assets used or useful in the conduct of the business of Borrower or any subsidiary. (l) Employee Compensation. Suffer any material increase in excess of --------------------- the reasonable range in the telecommunications industry for similarly situated companies in the same or similar markets in compensation payable or to become payable to any employees, or any bonus payment made or promised to any employee, or any material change in personnel policies, insurance benefits or other compensation arrangements affecting any employees, - 14 - provided that nothing in this clause shall be construed to limit or restrict the commission compensation of employees who may be participating in I-Link's multi- level marketing program. (m) Cancellation of Debts. Cancel any material debts owed to or --------------------- claims held by Borrower or any subsidiary. (n) Investments. Purchase or otherwise acquire, hold or invest in any ----------- stock or other securities or evidences of indebtedness of, or any interest or investment in, or make or permit to exist any loans or advances to, any other person, except: (i) direct obligations of the United States Government maturing within one year; (ii) certificates of deposit of a member bank of the Federal Reserve System having capital, surplus and undivided profits in excess of $2,000,000,000; (iii) any investment in commercial paper which at the time of such investment is assigned the highest quality rating in accordance with the rating systems employed by either Moody's Investors Service, Inc. or Standard & Poor's Corporation; (iv) money market funds; and (v) investments in its existing subsidiaries. (o) Write-Down. Suffer any significant write-down of the value of any ---------- assets or any significant write-off as uncollectible of any accounts receivable without the prior written consent of Lender except and as required by generally accepted accounting principles as required to present accurate financial information on Borrower and its subsidiaries. (p) Rights. Transfer or grant any right under, or enter into any ------ settlement regarding the breach or infringement of, any license, patent, copyright, trademark, service mark, trade name, franchise, or similar right, or modify any existing right relating to Borrower or any of its subsidiaries. (q) Agreements. Terminate, amend or commit any material breach or ---------- default under the Loan Documents. - 15 - (r) Subsidiaries. Create or acquire any subsidiary unless Lender ------------ shall have approved such action in advance and Borrower shall have taken all actions required by Lender to grant Lender a first priority security interest in all of the issued and outstanding stock or other equity interests of such subsidiary and caused such subsidiary to execute and deliver to Lender a guaranty and security agreement in substantially the form of the Guaranty and Security Agreement. Borrower acknowledges and agrees that until such time as such security interest is granted and perfected, Lender shall have an equitable lien in the stock of any subsidiary created or acquired by Borrower. Section 6.3 Reporting Requirements. So long as the Note shall remain ---------------------- unpaid and this Agreement shall not have been terminated, Borrower shall, unless Lender shall otherwise consent in writing, furnish to Lender: (a) Default Certificate. As soon as possible and in any event within ------------------- five business days after the occurrence of each Event of Default (as defined in Section 7.1) of which Borrower has knowledge, the statement of the President of Borrower setting forth details of such Event of Default and the action which Borrower proposes to take with respect thereto. (b) Financial Statements. Monthly unaudited, unconsolidated financial -------------------- statements for the Borrower, I-Link and FTI within thirty days after the end of each month and quarterly unaudited consolidated and consolidating financial statements of the Borrower within forty-five days after the end of each fiscal quarter (or such longer period, not to exceed five calendar days, as shall be permitted by the U.S. Securities and Exchange Commission ("SEC") for the timely filing of the quarterly report on Form 10-Q pursuant to Rule 12b-25 of the SEC), each such monthly and quarterly financial statement to be certified by the chief financial officer of Borrower; within ninety days after the end of each fiscal year of Borrower (or such longer period, not to exceed fifteen calendar days, as shall be permitted by the SEC for the timely filing of the quarterly report on Form 10-K pursuant to Rule 12b-25 of the SEC), a copy of the audited consolidated financial statements for such year for Borrower and its subsidiaries, including therein a consolidated balance sheet as of the end of such fiscal year, consolidated statements of income and expense of Borrower for such fiscal year, and a consolidated statement of cash flow of Borrower and its subsidiaries for such fiscal year, in each case prepared by an independent public accountant of recognized standing acceptable to Lender. Borrower shall deliver to Lender with each set of monthly financial statements a calculation of Adjusted Cash Flow (as that term is defined in Section 6.4(a) below) for such month. (c) Securities Filings. Copies of all reports and filings made by ------------------ Borrower or any of its subsidiaries with the Securities and Exchange Commission or any securities - 16 - exchange on which any of Borrower's or such subsidiary's securities are listed or traded and of all mailing or distributions to Borrower's shareholders. (d) Notice of Litigation. Promptly give written notice of all -------------------- actions, suits and proceedings before any court or governmental agency, domestic or foreign, which may be commenced or threatened against Borrower or any of its subsidiaries in which the claim involved is $5,000 or more and of any other matter of the type described in Section 5.7. (e) Budget. An annual budget within thirty days before the beginning ------ of each fiscal year of Borrower. Such budget shall be satisfactory in form and substance to Lender. (f) Other Information. Such other information respecting the ----------------- business, properties, operations or the condition, financial or otherwise, of Borrower or any of its subsidiaries as Lender may from time to time reasonably request. Section 6.4 Financial Covenants. ------------------- (a) Adjusted Cash Flow. Borrower shall not permit Adjusted Cash Flow, ------------------ as defined below, for any period listed in Column A below to be less than the amount listed across from such period in Column B below:
Column A Column B - -------- ------------- June 1, 1997, through June 30, 1997 ($1,500,000) July 1, 1997, through July 31, 1997 ($1,000,000) August 1, 1997, through August 31, 1997 ($900,000) September 1, 1997, through September 30, ($500,000) 1997 October 1, 1997, though December 31, $ 0 1997 January 1, 1998, through March 31, 1998 $1,000,000 April 1, 1998, through June 30, 1998 $1,000,000
- 17 -
Column A Column B - -------- ------------- July 1, 1998, through September 31, 1998 $1,000,000
"Adjusted Cash Flow", for purposes of this Section 6.4(a), means for any period total consolidated revenues of Borrower and its subsidiaries for such period minus the sum of (i) all operating expenses (excluding depreciation and amortization) incurred in such period, (ii) all capital expenditures made in such period, (iii) all payments of principal made on any indebtedness (including capital leases and financing leases) in such period, (iv) all cash interest expense paid in such period and (v) all taxes paid or accrued in such period, in each case as determined by generally accepted accounting principles, consistently applied. (b) Working Capital. Borrower shall not permit its consolidated --------------- current liabilities (not including the liability arising hereunder and evidenced by the Note) at any time to exceed its consolidated current assets by an amount in excess of $1,000,000, in each case as determined by generally accepted accounting principles, consistently applied. ARTICLE VII. EVENTS OF DEFAULT Section 7.1 Events of Default. Under this Agreement, an Event of ----------------- Default shall be any of the following: (a) Borrower shall fail to pay any installment of principal or interest on the Note, or any other obligation to Lender when due whether at the due date thereof or by acceleration or otherwise, and, in the case of any installment of interest, such default shall remain unremedied for a period of three days; or (b) The security interest or lien of Lender in any material portion of the collateral covered by the Security Agreement or Pledge Agreement or any other Loan Document shall at any time cease to be a first priority, perfected security interest or lien or shall not constitute a legal, valid and enforceable security interest or lien; or (c) Any representation or warranty made by Borrower, I-Link or FTI (or any of their officers) herein, in the Pledge Agreement, the Warrant Agreement, the Guaranty, the Security Agreement or any other Loan Document or in any certificate, agreement, instrument or statement contemplated by or made or delivered pursuant to or in connection with this Agreement or any other Loan Document shall prove to have been incorrect in any material respect when made or deemed made; or (d) Borrower, I-Link or FTI shall fail to perform or observe any other term, covenant or agreement contained in this Agreement, the Note, the Guaranty, the Security Agreement, the Pledge Agreement, the Warrant Agreement or any other Loan - 18 - Document, and any such failure remains unremedied for thirty days after the occurrence of such failure; or Borrower shall fail to amend its Articles of Incorporation by no later than July 31, 1997, to increase its authorized capital to cover the number of shares issuable upon the exercise of the warrants granted pursuant to the Warrant Agreement or, shall fail to reserve the appropriate number of shares of such capital stock for issuance upon exercise of such warrants; or (e) Borrower, I-Link or FTI shall fail to pay any indebtedness for borrowed money owing by Borrower, I-Link or FTI or any interest or premium thereon, when due, whether such indebtedness shall become due by scheduled maturity, by required prepayment, by acceleration, by demand or otherwise, or Borrower, I-Link or FTI shall fail to perform any term, covenant or agreement under any agreement or instrument evidencing or securing or relating to any such indebtedness owing by Borrower, I-Link or FTI if the effect of such failure is to accelerate, or to permit the holder of such indebtedness to accelerate, the maturity of such indebtedness; or (f) Either (i) Borrower, I-Link or FTI shall fail to pay its debts as they mature in the ordinary course of business; or (ii) Borrower, I-Link or FTI shall file a petition commencing a voluntary case concerning it under any Chapter of Title 11 of the United States Code entitled "Bankruptcy"; or (iii) Borrower, I-Link or FTI shall apply for or consent to the appointment of any receiver, trustee, custodian or similar officer for it or for all or any substantial part of its property; or (iv) such receiver, trustee, custodian or similar officer shall be appointed without the application or consent of Borrower, I-Link or FTI and such appointment shall continue undischarged for a period of thirty days; or (v) an involuntary case is commenced against Borrower, I-Link or FTI under any Chapter of the aforementioned Title 11 and an order for relief under such Title 11 is entered or the petition commencing the case is controverted but is not dismissed within thirty days after the commencement of the case; or (vi) Borrower, I-Link or FTI shall institute (by petition, application, answer, consent or otherwise) any bankruptcy, insolvency, reorganization, arrangement, readjustment of debt, dissolution, liquidation or similar proceeding relating to it under the laws of any jurisdiction; or (vii) any such proceeding shall be instituted against Borrower, I-Link or FTI and shall remain undismissed for a period of thirty days; or (viii) Borrower, I-Link or FTI shall take any action for the purpose of effectuating any of the foregoing; or (g) Any court, government, or government agency shall condemn, seize or otherwise appropriate or take custody or control of all or a substantial portion of the property or assets of Borrower, I-Link or FTI; or - 19 - (h) Any money judgment, writ or warrant of attachment, or similar process involving, either individually or in the aggregate, an amount in excess of $25,000, and in either case not adequately covered by insurance as to which the insurance company has acknowledged coverage, shall be entered or filed against Borrower or any of its subsidiaries or its assets and shall remain undischarged, unvacated, unbonded or unstayed for a period of thirty days or in any event later than five days prior to the date of any proposed sale thereunder; or (i) Any person (or group of persons) is or becomes the "beneficial owner" (within the meaning of Rules 13d-3 and 13d-5 under the federal Securities Exchange Act of 1934, as amended), directly or indirectly, of a percentage of the common voting stock of Borrower greater than 25%; or (ii) Borrower shall cease or fail to own, directly or indirectly, beneficial and legal title to all of the issued and outstanding capital stock of each of I-Link and FTI; or (iii) John W. Edwards shall cease for any reason to be the President and Chief Executive Officer of Borrower; or (j) Any material adverse effect upon or change in (i) the properties, assets, business, operations, financial condition, prospects, liabilities or capitalization of Borrower or any of its subsidiaries or on the ability of Borrower or any of its subsidiaries to conduct its business, (ii) the ability of Borrower, I-Link, FTI or any other party to a Loan Document (other than Lender) to perform its obligations hereunder or under any other Loan Document to which it is a party, (iii) the validity or enforceability of this Agreement, the Note or any other Loan Document, (iv) the rights or remedies of Lender under this Agreement, the Note, any other Loan Document or at law or in equity or (v) the value of any material collateral granted to Lender pursuant to any Loan Document shall occur. Section 7.2 Effect of Event of Default. Should any Event of Default -------------------------- occur, Lender may at its option by written notice to Borrower declare the entire unpaid principal amount of the Note, together with all unpaid interest and all other amounts payable under this Agreement and every other obligation of Borrower to Lender, immediately due and payable, whereupon the Note and all such obligations shall become and be forthwith due and payable, without presentment, demand, protest or other notice of any kind, all of which are hereby expressly waived by Borrower, anything contained herein or in the Note or in such other note or evidence of indebtedness to the contrary notwithstanding; provided, -------- however, that in case of an Event of Default under Section 7.1(f), all the - ------- obligations of Borrower under this Agreement and the Note shall become immediately due and payable as of the date of any such Event of Default regardless of the cause of such Event of Default and without any notice to Borrower required from Lender. Lender shall have, in addition to all other rights and remedies allowed by law, the rights and remedies of a secured party under the Uniform Commercial Code and, without limiting the generality of the foregoing, the rights and - 20 - remedies provided for in the Guaranty, the Security Agreement, the Pledge Agreement and any other Loan Document, which provisions are hereby incorporated by reference. ARTICLE VIII. MISCELLANEOUS Section 8.1 No Waiver; Cumulative Remedies. No failure or delay on the ------------------------------ part of Lender in exercising any right, power or remedy hereunder shall operate as a waiver, nor shall any single or partial exercise of any such right, power or remedy hereunder operate as a waiver. The remedies herein provided are cumulative and not exclusive of any remedies provided by law. Section 8.2 Amendments. No amendment, modification, termination or ---------- waiver of any provision of this Agreement, the Note or any other Loan Document, nor consent to any departure by Borrower, I-Link or FTI therefrom, shall in any event be effective unless in writing, signed by Lender and then only in the specific instance and for the specific purpose for which given. No notice to or demand on Borrower, I-Link or FTI in any case shall entitle it to any other or further notice or demand in similar or other circumstances except as expressly provided herein or in another Loan Document. Section 8.3 Address for Notices. All notices and other communications ------------------- under this Agreement shall be in writing and shall be delivered in person or by mailing a copy thereof by registered or certified U.S. mail, return receipt requested, to the applicable party at the addresses indicated below: If to Borrower: Medcross, Inc. 13751 South Wadsworth Park Drive Suite 200 Draper, Utah 84020 Attention: John W. Edwards, President If to Lender: Winter Harbor, L.L.C. 11400 Skipwith Lane Potomac, Maryland 20854 Attention: Ralph W. Hardy, Jr. or at such other address as may be designated by either party in a written notice to the other complying as to delivery with the terms of this Section. All such notices and other communications shall be effective when deposited in the mails. - 21 - Section 8.4 Expenses. Borrower agrees to pay on demand all costs and -------- expenses incurred by Lender directly in the enforcement of this Agreement, the Note, the Guaranty, the Security Agreement, the Pledge Agreement and other instruments and documents to be delivered hereunder, including, without limitation, the reasonable fees and expenses of any attorney to whom the Note is referred for collection (whether or not litigation is commenced) or for representation out of court, in trial, on appeal or in proceedings under any bankruptcy or insolvency law or otherwise. In addition, Borrower shall pay any and all taxes and fees payable or determined to be payable in connection with the execution, delivery or recordation of any instruments and documents to be delivered hereunder. In addition, Borrower agrees to pay (i) all the costs and expenses of Lender in connection with the negotiation, preparation and execution of the Loan Documents and all the costs of furnishing all opinions by counsel for Borrower, and of Borrower's performance of and compliance with all agreements and conditions contained herein and in the other Loan Documents on its part to be performed or complied with, including, without limitation, confirming compliance with environmental and insurance requirements; (ii) the fees, expenses and disbursements of counsel to Lender in connection with the negotiation, preparation, execution and administration of the Loan Documents and the Loan and any consents, amendments, waivers or other modifications hereto or thereto; and (iii) all the costs and expenses of creating and perfecting liens in favor of Lender pursuant to any Loan Document. Section 8.5 Binding Effect; Assignment. This Agreement shall become -------------------------- effective when executed and thereafter shall be binding upon and inure to the benefit of Borrower, Lender and their respective successors and assigns, except that Borrower shall not have the right to assign any rights or obligations hereunder without the prior written consent of Lender. Lender shall be permitted to assign, without Borrower's consent, all or any portion of Lender's rights and interests hereunder and under each other document executed in connection with this Agreement. Section 8.6 Governing Law. This Agreement, the Note, the Pledge ------------- Agreement, the Guaranty, the Security Agreement and related documents shall be governed by, and construed in accordance with, the laws of the State of Delaware with the exception of its conflicts of laws provisions; provided that the effect of any recordation shall be determined by the State thereof. Section 8.7 Severability of Provisions. Any provision of this -------------------------- Agreement, the Note, the Pledge Agreement, the Guaranty or the Security Agreement that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions or affecting the validity or enforceability of any provisions in any other jurisdiction. - 22 - Section 8.8 Headings. Article and Section headings in this Agreement -------- are included for convenience of reference only and shall not constitute a part of this Agreement for any other purpose. Section 8.9 Rights Affected by Extensions. The rights of Lender and its ----------------------------- assigns shall not be impaired by any indulgence, release, renewal, extension or modification which Lender may grant with respect to the indebtedness or any part thereof, or with respect to the collateral or with respect to any endorser, guarantor, or surety without notice or consent of Borrower or any endorser, guarantee or surety. Section 8.10 Survival of Representations and Warranties. All ------------------------------------------ representations and warranties made in this Agreement and in any agreements, documents or certificates delivered pursuant hereto or thereto shall survive the execution and delivery of this Agreement and the Note and the making of the Loan hereunder and continue in full force and effect, as of the respective dates as of which they were made, until all of the obligations of Borrower to Lender hereunder have been paid in full. Section 8.11 Further Assurances. From time to time, Borrower shall ------------------ execute and deliver, or cause to be executed and delivered, to Lender such additional documents as Lender may reasonably require to carry out the purposes of this Agreement or any of the documents entered into in connection herewith, or to preserve and protect the rights of Lender hereunder or thereunder. Section 8.12 Indemnification. Borrower hereby indemnifies and holds --------------- harmless Lender and its partners, directors, officers, shareholders, employees, agents, counsel, subsidiaries and affiliates (the "Indemnified Persons") from and against any and all losses, liabilities, obligations, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever which may be imposed on, incurred by, or asserted against any Indemnified Person in any way relating to or arising out of this Agreement, the other Loan Documents, the documents entered into in connection herewith or therewith, or any of them or any of the transactions contemplated hereby or thereby, the making of the Loan, the use of the proceeds of the Loan or the ownership or operation of the business or assets of Borrower or any of its subsidiaries; provided, however, that Borrower shall not be liable to any -------- ------- Indemnified Person, if there is a judicial determination that such losses, liabilities, obligations, damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting solely from the gross negligence or willful misconduct of such Indemnified Person. Section 8.13 Jury Trial Waiver. EACH OF LENDER AND BORROWER HEREBY ----------------- AGREES TO WAIVE ITS RESPECTIVE RIGHT TO A JURY TRIAL OF ANY - 23 - CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT, ANY OF THE LOAN DOCUMENTS, OR ANY DEALINGS BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THIS LOAN TRANSACTION AND THE LENDER/BORROWER RELATIONSHIP THAT IS BEING ESTABLISHED. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND THE WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, REPLACEMENTS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT, THE LOAN DOCUMENTS OR TO ANY OTHER DOCUMENTS OR AGREEMENTS RELATING TO THE LOAN. Section 8.14 Maximum Interest. Lender and Borrower intend that this ---------------- Agreement and the other Loan Documents conform to all applicable usury laws. Accordingly, no provisions of the Loan Documents shall require the payment or permit the collection of interest in excess of the maximum rate permitted by applicable law ("Maximum Rate"), or obligate Borrower to pay any taxes, assessments, charges, insurance premiums or other amounts which are held to constitute interest to the extent that such payments, when added to the other obligations under the Loan Documents, would be held to constitute contracting for, or the payment by Borrower of, interest at a rate greater than the Maximum Rate. Lender and Borrower further agree that: (i) if any excess of interest in such respect is herein or in any such other instrument provided for, or shall be adjudicated to be so provided for herein or in any such instrument, the provisions of this subsection 8.14 shall govern, and neither Borrower nor its successors or assigns shall be obligated to pay the amount of such interest to the extent it is in excess of the Maximum Rate; (ii) if at any time the amount of interest under any of the Loan Documents for a calendar year exceeds the Maximum Rate had the Maximum Rate at all times been in effect, the interest chargeable under any such Loan Document shall be limited to the amount of interest that could have been charged if the Maximum Rate had at all times been in effect, but any subsequent reductions in the interest due shall not reduce the rate of interest chargeable under any such Loan Document below the Maximum Rate until the total amount of interest accrued under any such Loan Document equals the amount of interest that would have accrued if the interest provided for in any such Loan Document had at all times been in effect and collectible; (iii) if the maturity of any Loan Document is accelerated for any reason, or in the event of any prepayment by Borrower, or in any other event, earned interest may never include more than the Maximum Rate, computed from the date of disbursement of the funds evidenced by such Loan Document until payment, and any interest - 24 - otherwise payable under such Loan Document that is in excess of the Maximum Rate shall be canceled automatically as of such acceleration or such other event and (if theretofore paid) shall be credited against principal; (iv) if it should be held that any interest payable or chargeable under any Loan Document is in excess of the Maximum Rate, the interest payable or chargeable under such Loan Document shall be reduced to the maximum amount permitted by applicable federal or state law, whichever shall permit the higher lawful interest, as construed by courts having jurisdiction thereof; and (v) the spreading, prorating and amortizing of interest over the Maturity Date of the Loan Documents shall be allowed to the fullest extent permitted by applicable law. - 25 - IN WITNESS WHEREOF, the parties hereto have caused this Loan Agreement to be executed by their respective duly authorized officers as of the date first above written. MEDCROSS, INC. By: /s/ John Edwards ---------------------------------- Name: John Edwards -------------------------------- Title: President ------------------------------- WINTER HARBOR, L.L.C. By: First Media, L.P., its member By: First Media Corporation, its sole general partner By: /s/ Ralph W. Hardy, Jr. ---------------------------------- Name: Ralph W. Hardy, Jr. -------------------------------- Title: Secretary ------------------------------- EXHIBIT 1 FORM OF NOTE PROMISSORY NOTE --------------- $2,000,000 June , 1997 -- FOR VALUE RECEIVED, the undersigned, MEDCROSS, INC., a Florida corporation (the "Maker"), promises to pay to the order of WINTER HARBOR, L.L.C., a Delaware limited partnership (the "Payee"), on or before October 15, 1998 (the "Maturity Date"), the principal sum of $2,000,000, together with interest thereon as provided herein. All capitalized terms used herein and not otherwise defined shall have the meanings ascribed to them in the Loan Agreement, as that term is defined below. ARTICLE IX. Interest. The unpaid principal balance of this Note shall bear interest at the rates determined in accordance with the provisions of that certain Loan Agreement dated as of June __, 1997, between the Maker and the Payee (as the same may be amended, modified, extended or restated, the "Loan Agreement"). Interest accrued hereunder shall be paid quarterly on the last business day of each calendar quarter until all principal and interest hereunder is paid in full at the repayment or maturity of the Loan. ARTICLE X. Principal Repayment. The aggregate principal balance of this Note shall be due and payable as provided in Section 1.4 of the Loan Agreement. ARTICLE XI. Prepayments. This Note may be voluntarily prepaid in whole or in part without premium or penalty at any time and from time to time; provided, however, that each partial prepayment shall be in the aggregate principal amount of not less than $100,000 or an integral multiple of $50,000 in excess thereof. In making a prepayment in whole, the Maker shall pay all accrued interest through the date of such prepayment. The Maker shall make a mandatory prepayment of the outstanding principal amount of the Note together with all accrued interest on and subject to the terms and conditions of the Loan Agreement. ARTICLE XII. Payment on Business Days. If any payment of principal or interest on this Note shall become due on a Saturday, Sunday or public holiday, such payment may be made on the next succeeding business day, and such extension of time in such case shall be included in the computation of interest in connection with such payment. ARTICLE XIII. Form of Payment. All payments made pursuant to the terms of this Note shall be made in lawful money of the United States of America and shall be payable to the Payee at its - 27 - principal office located at 11400 Skipwith Lane, Potomac, Maryland 20854 or at such other place as the Payee shall have designated to the Maker in writing. ARTICLE XIV. Choice of Law. This Note shall be governed by and construed in accordance with the laws of the State of Delaware with the exception of its conflicts of laws provisions thereof. ARTICLE XV. Events of Default. Upon the occurrence of any Event of Default, Lender may at its option by written notice to Borrower declare the entire unpaid principal amount of the Note, together with all unpaid interest and all other amounts payable hereunder, immediately due and payable. ARTICLE XVI. Collection Expenses. If at any time the indebtedness evidenced by this Note is collected through legal proceedings or this Note is placed in the hands of attorneys for collection, the Maker and each endorser of this Note hereby jointly and severally agree to pay all costs and expenses (including reasonable attorneys' fees) incurred by the holder of this Note in collecting or attempting to collect such indebtedness. ARTICLE XVII. Waivers. To the extent permitted by law, except as otherwise provided herein or in the Loan Agreement, the Maker and each endorser of this Note, and their respective heirs, successors, legal representatives and assigns, hereby severally waive presentment; protest and demand; notice of protest, demand, dishonor and nonpayment; diligence in collection, and any relief whatever from the valuation or appraisement laws of any state. IN WITNESS WHEREOF, the Maker has executed this Note as of the date and year first above written. MEDCROSS, INC. By: ----------------------------- Name: --------------------------- Title: -------------------------- - 28 - SCHEDULE 5.4 MEDCROSS, INC. CAPITALIZATION
Outstanding Shares & Unaffiliated Warrants/Options: - -------------------------------------------------- Common Shares Outstanding 11,607,609 Conversion of Class C Preferred 6,046,800 Wilkes & Radulovic Options (I-Link Acquisition) 2,000,000 Commonwealth Warrants 750,000 JW Charles Warrants 331,126 Warrants to Settle JW Charles Action 175,000 Conversion of Class B Preferred 183,542 Cook Option 100,000 E&M RP Trust Warrants 80,000 Mandarino Warrants 40,000 Edwards Warrants (from loan) 25,000 Flury Warrants (from loan) 5,000 ---------- 21,344,007 Management/Employee/Director Options: - ------------------------------------ 1996 John Edwards Options (Exec Mgmnt) 1,250,000 1996 Ryser, Hardy, Flury Options (Exec Mgmnt) 750,000 1996 I-Link Employee Options 408,000 1997 I-Link Exec Mgmnt & Employee Options 2,350,000 Campbell, Little, McKillip Options (MLM Mgmnt) 350,000 1997 Director Options 120,000 Medcross 1995 Director Plan Options 190,000 Medcross 1995 ESOP 75,000 Medcross 1995 Employee Stock Purchase Plan 7,711 Joseph Cohen (Director) 64,000 ---------- 5,564,711 Acquisition: - ----------- Family Telecommunications, Inc. 400,000 ---------- 400,000 TOTAL 27,308,718 ==========
SCHEDULE 5.10 TAXES Tax returns (federal, state and local) not filed, and taxes not paid, including interest and penalties include the following: 1. Sales taxes relating to long distance services provided from inception of Family Telecommunications, Inc. to current date: approximately $100,000; 2. Federal and state income tax returns for Medcross, Inc. for the year ended December 31, 1996 (properly extended): no tax due. EX-99.2 3 EXHIBIT 99(B) - PROMISSORY NOTE Exhibit 99(b) PROMISSORY NOTE --------------- $2,000,000 June 6, 1997 FOR VALUE RECEIVED, the undersigned, MEDCROSS, INC., a Florida corporation (the "Maker"), promises to pay to the order of WINTER HARBOR, L.L.C., a Delaware limited partnership (the "Payee"), on or before October 15, 1998 (the "Maturity Date"), the principal sum of $2,000,000, together with interest thereon as provided herein. All capitalized terms used herein and not otherwise defined shall have the meanings ascribed to them in the Loan Agreement, as that term is defined below. 1. Interest. The unpaid principal balance of this Note shall bear -------- interest at the rates determined in accordance with the provisions of that certain Loan Agreement dated as of June 6, 1997, between the Maker and the Payee (as the same may be amended, modified, extended or restated, the "Loan Agreement"). Interest accrued hereunder shall be paid quarterly on the last business day of each calendar quarter until all principal and interest hereunder is paid in full at the repayment or maturity of the Loan. 2. Principal Repayment. The aggregate principal balance of this Note ------------------- shall be due and payable as provided in Section 1.4 of the Loan Agreement. 3. Prepayments. This Note may be voluntarily prepaid in whole or in part ----------- without premium or penalty at any time and from time to time; provided, however, that each partial prepayment shall be in the aggregate principal amount of not less than $100,000 or an integral multiple of $50,000 in excess thereof. In making a prepayment in whole, the Maker shall pay all accrued interest through the date of such prepayment. The Maker shall make a mandatory prepayment of the outstanding principal amount of the Note together with all accrued interest on and subject to the terms and conditions of the Loan Agreement. 4. Payment on Business Days. If any payment of principal or interest on ------------------------ this Note shall become due on a Saturday, Sunday or public holiday, such payment may be made on the next succeeding business day, and such extension of time in such case shall be included in the computation of interest in connection with such payment. 5. Form of Payment. All payments made pursuant to the terms of this Note --------------- shall be made in lawful money of the United States of America and shall be payable to the Payee at its principal office located at 11400 Skipwith Lane, Potomac, Maryland 20854 or at such other place as the Payee shall have designated to the Maker in writing. 6. Choice of Law. This Note shall be governed by and construed in ------------- accordance with the laws of the State of Delaware with the exception of its conflicts of laws provisions thereof. 7. Events of Default. Upon the occurrence of any Event of Default, Lender ----------------- may at its option by written notice to Borrower declare the entire unpaid principal amount of the Note, together with all unpaid interest and all other amounts payable hereunder, immediately due and payable. 8. Collection Expenses. If at any time the indebtedness evidenced by this ------------------- Note is collected through legal proceedings or this Note is placed in the hands of attorneys for collection, the Maker and each endorser of this Note hereby jointly and severally agree to pay all costs and expenses (including reasonable attorneys' fees) incurred by the holder of this Note in collecting or attempting to collect such indebtedness. 9. Waivers. To the extent permitted by law, except as otherwise provided ------- herein or in the Loan Agreement, the Maker and each endorser of this Note, and their respective heirs, successors, legal representatives and assigns, hereby severally waive presentment; protest and demand; notice of protest, demand, dishonor and nonpayment; diligence in collection, and any relief whatever from the valuation or appraisement laws of any state. IN WITNESS WHEREOF, the Maker has executed this Note as of the date and year first above written. MEDCROSS, INC. By: /s/ John Edwards -------------------------- Name: John Edwards ------------------------ Title: President ----------------------- EX-99.3 4 EXHIBIT 99(C) - WARRANT AGREEMENT Exhibit 99(c) -------------------------------- WINTER HARBOR, L.L.C. AND MEDCROSS, INC. ------------ WARRANT AGREEMENT DATED AS OF JUNE 6, 1997 -------------------------------- WARRANT AGREEMENT dated as of June 6, 1997, between WINTER HARBOR, L.L.C., a Delaware limited partnership (hereinafter referred to as the "Initial Holder") and MEDCROSS, INC., a Florida corporation (the "Company"). W I T N E S E T H : WHEREAS, the Company proposes to issue to the Initial Holder warrants ("Warrants") to purchase up to an aggregate of 500,000 shares of Common Stock (as that term is defined in Section 8.5 below) of the Company; and WHEREAS, the Initial Holder has committed, subject to the terms of the commitment letter dated April 11, 1997 (the "Commitment Letter"), from the Initial Holder to the Company and accepted by the Company, to make a loan of up to $2,000,000 to the Company; and WHEREAS, the Warrants to be issued pursuant to this Agreement will be issued on the date of execution of the loan agreement contemplated by the Commitment Letter (the "Closing Date") in consideration for, and as part of the compensation in connection with, the Initial Holder'S commitment under the Commitment Letter; NOW, THEREFORE, in consideration of the premises, the agreements herein set forth and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: 1. Grant. The Initial Holder is hereby granted the right to purchase, at ----- any time from the date hereof until 5:30 P.M., Delaware time, on March 11, 2002 (the "Warrant Exercise Term"), up to an aggregate of 500,000 shares of the Company'S Common Stock (the "Warrant Shares") at an initial exercise price (subject to adjustment as provided in Section 8 hereof) of $4.97 per Share, subject to the terms and conditions of this Agreement. 2. Warrant Certificates. The warrant certificates (the "Warrant -------------------- Certificates") delivered and to be delivered pursuant to this Agreement shall be in the form set forth in Exhibit A, attached hereto and made a part hereof, with such appropriate insertions, omissions, substitutions, and other variations as required or permitted by this Agreement. 3. Exercise of Warrant. ------------------- 3.1 The Warrants initially are exercisable at an aggregate initial exercise price of $4.97 per share payable by certified or official bank check in New York Clearing House funds, subject to adjustment as provided in Section 8 hereof. Upon surrender of a Warrant Certificate with the annexed Form of Election to Purchase duly executed, together with payment of the Purchase Price (as hereinafter defined) for the Warrant Shares purchased at the Company'S principal offices, the registered holder of a Warrant Certificate ("Holder" or "Holders") shall be entitled to receive a certificate or certificates for the Warrant Shares so purchased. The purchase rights represented by each Warrant Certificate are exercisable at the option of the Holder thereof, in whole or in part (but not as to fractional shares of the Common Stock underlying the Warrants). In the case of the purchase of less than all the Warrant Shares purchasable under any Warrant Certificate, the Company shall cancel said Warrant Certificate upon the surrender thereof and shall execute and deliver a new Warrant Certificate of like tenor for the balance of the Warrant Shares purchasable thereunder. 3.2 Cashless Exercise. ----------------- (a) At any time during the Warrant Exercise Term, each Holder may, at its option, exchange the Warrants represented by such Holder'S Warrant Certificate, 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 3.2, by surrendering such Warrant Certificate at the principal office of the Company or at the office of its transfer agent, accompanied by a notice stating such Holder'S intent to effect such exchange, the number of Warrant Shares to be exchanged and the date on which the Holder 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 of like tenor evidencing the balance of the Warrant Shares remaining subject to the Holder'S Warrant Certificate, shall be issued as of the Exchange Date and delivered to the Holder within three days following the Exchange Date. In connection with any Warrant Exchange, the Holder'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 Holder 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 (as hereinafter defined) per Share by (ii) the Market Price (as hereafter defined) of a share of Common Stock. (b) As used in this Agreement, 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, - 2 - 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. 4. Issuance of Certificates. Upon the exercise of the Warrants, the ------------------------ issuance of certificates for Warrant Shares or other securities, properties or rights underlying such Warrants, shall be made forthwith (and in any event within three business days thereafter) without charge to the Holder thereof, including, without limitation, any tax which may be payable in respect of the issuance thereof, and such certificates shall be issued in the name of, or in such names as may be directed by, the Holder thereof; provided, however, that -------- ------- the Company shall not be required to pay any tax which may be payable in respect of any transfer involved in the issuance and delivery of any such certificates in a name other than that of the Holder, and the Company shall not be required to issue or deliver such certificates unless or until the person or persons requesting the issuance thereof shall have paid to the Company the amount of such tax or shall have established to the satisfaction of the Company that such tax has been paid. The Warrant Certificates and the certificates representing the Warrant Shares (and/or other securities, property or rights issuable upon the exercise of the Warrants) shall be executed on behalf of the Company by the manual or facsimile signature of the then present Chairman or Vice Chairman of the Board of Directors or President or Vice President of the Company under its corporate seal reproduced thereon, attested to by the manual or facsimile signature of the then present Secretary or Assistant Secretary of the Company. Warrant Certificates shall be dated the date of execution by the Company upon initial issuance, division, exchange, substitution or transfer. 5. Restriction on Transfer of Warrants. ----------------------------------- Upon exercise, in part or in whole, of the Warrants, certificates representing the Warrant Shares shall bear a legend substantially similar to the legend set forth in Section 7.1. The Holder of a Warrant Certificate, by its acceptance thereof, - 3 - agrees that the Warrants are being acquired as an investment and not with a view to the distribution thereof. 6. Exercise Price. -------------- 6.1 Initial and Adjusted Exercise Price. Except as otherwise ----------------------------------- provided in Section 8 hereof, the initial exercise price of each Warrant shall be $4.97. The adjusted exercise price shall be the price which shall result from time to time from any and all adjustments of the initial exercise price in accordance with the provisions of Section 8 hereof. 6.2 Exercise Price. The term "Exercise Price" herein shall mean the -------------- initial exercise price or the adjusted exercise price, depending upon the context. 7. Registration Rights. ------------------- 7.1 Registration Under the Securities Act of 1933. The Warrants, the --------------------------------------------- Warrant Shares and any of the other securities issuable upon exercise of the Warrants have not been registered under the Securities Act of 1933, as amended (the "Act"). Upon exercise, in part or in whole, of the Warrants, certificates representing the Warrant Shares and any of the other securities issuable upon exercise of the Warrants (collectively, the "Warrant Securities") shall bear the following legend: The securities represented by this certificate have not been registered under the Securities Act of 1933, as amended ("Act"), and may not be offered or sold except pursuant to (i) an effective registration statement under the Act, (ii) to the extent applicable, Rule 144 under the Act (or any similar rule under such Act relating to the disposition of securities), or (iii) an opinion of counsel, if such opinion shall be reasonably satisfactory to counsel to the issuer, that an exemption from registration under such Act is available. 7.2 Piggyback Registration. If at any time the Company proposes to ---------------------- register any of its securities under the Act (other than in connection with a merger or pursuant to Form S-8), it will give written notice by registered mail, at least thirty days prior to the filing of each such registration statement, to each Holder of the Warrants and/or the Warrant Securities of its intention to do so. If any Holder of the Warrants and/or Warrant Securities notifies the Company within twenty days after receipt of any such notice of its or their desire to include any such securities in such proposed registration statement, the Company shall afford each such Holder of the Warrants and/or Warrant Securities the opportunity to have any such Warrants and/or Warrant Securities registered under such registration statement. - 4 - Notwithstanding the provisions of this Section 7.2, the Company shall have the right at any time after it shall have given written notice pursuant to this Section 7.2 (irrespective of whether a written request for inclusion of any such securities shall have been made) to elect not to file any such proposed registration statement, or to withdraw the same after the filing but prior to the effective date thereof. 7.3 Demand Registration. ------------------- (a) At any time from and after the date hereof, the Holders of the Warrants and/or Warrant Securities representing a "Majority" (as hereinafter defined) of such securities (assuming the exercise of all of the Warrants) shall have the right (which right is in addition to the registration rights under Section 7.2 hereof), exercisable by written notice to the Company, to have the Company prepare and file with the Securities and Exchange Commission (the "Commission"), on one occasion, a registration statement and such other documents, including a prospectus, as may be necessary in the opinion of both counsel for the Company and counsel for such Holders, in order to comply with the provisions of the Act, so as to permit a public offering and sale of their respective Warrant Securities for nine consecutive months by such Holders and any other Holders of the Warrants and/or Warrant Securities who notify the Company within ten days after receiving notice from the Company of such request. (b) The Company agrees to give written notice of any registration request under this Section 7.3 by any Holder or Holders to all other registered Holders of the Warrants and the Warrant Securities within ten days from the date of the receipt of any such registration request. (c) Notwithstanding anything to the contrary contained herein, if the Company shall not have complied with Section 7.4(a) hereof pursuant to the written notice specified in Section 7.3(a) of a Majority of the Holders of the Warrants and/or Warrant Securities, the Company agrees that upon twenty days prior written notice of election of a Majority of the Holders of the Warrants and/or Warrant Securities, and the failure of the Company to comply with Section 7.4(a) on or before the expiration of such twenty day period, it shall repurchase (i) any and all Warrant Securities at the higher of the Market Price (as defined in Section 3.2(b)) per share of Common Stock on (x) the date of the notice sent pursuant to Section 7.3(a) or (y) the expiration of the period specified in Section 7.4(a) and (ii) any and all Warrants at such Market Price less the exercise prices of such Warrants. Such repurchase shall be in immediately available funds and shall close within two days after the later of (i) the expiration of the period specified in Section 7.4(a) or (ii) the - 5 - delivery of the written notice of election specified in this Section 7.3(c). 7.4 Covenants of the Company With Respect to Registration. In ----------------------------------------------------- connection with any registration under Section 7.2 or 7.3 hereof, the Company agrees as follows: (a) The Company shall use its best efforts to file a registration statement within ninety-five days of receipt of any demand therefor, shall use its best efforts to have any registration statements declared effective at the earliest possible time, and shall furnish each Holder desiring to sell Warrant Securities such number of prospectuses as shall reasonably be requested. Best efforts shall include the reasonable efforts to insure the availability of financial statements and other matters necessary to effectuate the filing. (b) The Company shall pay all costs (excluding fees and expenses of Holder(S) counsel and any underwriting or selling commissions), fees and expenses in connection with all registration statements filed pursuant to Sections 7.2 and 7.3(a) hereof including, without limitation, the Company'S legal and accounting fees, printing expenses, blue sky fees and expenses. If the Company shall fail to comply with the provisions of Section 7.4(a), the Company shall, in addition to any other equitable or other relief available to the Holder(S), be liable for any and all incidental, special and consequential damages and damages due to loss of profit sustained by the Holder(S) requesting registration of their Warrant Securities. Notwithstanding anything herein to the contrary, provided the Company complies with the provisions of Section 7.3(c), the Company shall have no liability under the foregoing sentence of this Section 7.4(b). (c) The Company will take all necessary action which may be required in qualifying or registering the Warrant Securities included in a registration statement for offering and sale under the securities or blue sky laws of such states as reasonably are requested by the Holder(S), provided that the Company shall not be obligated to execute or file any general consent to service of process or to qualify as a foreign corporation to do business under the laws of any such jurisdiction. (d) The Company shall indemnify the Holder(S) of the Warrant Securities to be sold pursuant to any registration statement and each person, if any, who controls such Holders within the meaning of Section 15 of the Act or Section 20(a) of the Securities Exchange Act of 1934, as amended ("Exchange Act"), against all loss, claim, damage, expense or liability (including all expenses reasonably incurred in investigating, preparing or defending against any claim whatsoever) to which any of them may - 6 - become subject under the Act, the Exchange Act or otherwise, arising from such registration statement. (e) The Holder(S) of the Warrant Securities to be sold pursuant to a registration statement, and their successors and assigns, shall severally, and not jointly, indemnify the Company, its officers and directors and each person, if any, who controls the Company within the meaning of Section 15 of the Act or Section 20(a) of the Exchange Act, against all loss, claim, damage, expense or liability (including all expenses reasonably incurred in investigating, preparing or defending against any claim whatsoever) to which they may become subject under the Act, the Exchange Act or otherwise, arising from information furnished by or on behalf of such Holders, or their successors or assigns, for specific inclusion in such registration statement. (f) Nothing contained in this Agreement shall be construed as requiring the Holder(S) to exercise their Warrants prior to the initial filing of any registration statement or the effectiveness thereof. (g) The Company shall use its best efforts not to permit the inclusion of any securities other than the Warrants and Warrant Securities to be included in any registration statement filed pursuant to Section 7.3 hereof or permit any other registration statement to be or remain effective during the effectiveness of a registration statement filed pursuant to Section 7.3 hereof (except registration statements on Form S-8 or filed pursuant to contractual commitments existing on the date hereof), without the prior written consent of the Holders of the Warrants and Warrant Securities representing a majority of such securities. In the event the Company is required to include securities other than the Warrants and Warrant Securities in a registration statement filed under Section 7.3, the Holders shall be entitled to one additional right to demand the preparation and filing of a registration under Section 7.3. (h) The Company shall furnish to each broker-dealer participating as an underwriter, if any, a signed counterpart, addressed to such broker-dealer or underwriter, of (i) an opinion of counsel to the Company, dated the effective date of such registration statement (and, if such registration includes an underwritten public offering, an opinion dated the date of the closing under the underwriting agreement), and (ii) a "cold comfort" letter dated the effective date of such registration statement (and, if such registration includes an underwritten public offering, a letter dated the date of the closing under the underwriting agreement) signed by the independent public accountants who have issued a report on the Company'S financial statements included in such registration statement, in each case covering substantially the same matters with respect to such registration statement (and the prospectus - 7 - included therein) and, in the case of such accountants' letter, with respect to events subsequent to the date of such financial statements, as are customarily covered in opinions of issuer'S counsel and in accountants' letters delivered to underwriters in underwritten public offerings of securities. (i) The Company, as soon as practicable, but in any event not later than forty-five days after the end of the twelve-month period beginning on the day after the end of the fiscal quarter of the Company during which the effective date of the Registration Statement occurs (ninety days in the event that the end of such fiscal quarter is the end of the Company'S fiscal year), shall make generally available to its security holders, in the manner specified in Rule 158(b) of the Rules and Regulations of the Commission, an earnings statement which will be in the detail required by, and will otherwise comply with, the provisions of Section 11(a) of the Act and Rule 158(a) of the Rules and Regulations of the Commission, which statement need not be audited unless required by the Act, covering a period of at least twelve consecutive months after the effective date of the Registration Statement. (j) The Company shall deliver promptly to each Holder participating in the offering and to the managing underwriters, if any, copies of all correspondence between the Commission and the Company, its counsel or auditors and all memoranda relating to discussions with the Commission or its staff with respect to the registration statement and permit each Holder and underwriter to do such investigation, upon reasonable advance notice, with respect to information contained in or omitted from the registration statement as it deems reasonably necessary to comply with applicable securities laws or rules of the NASD. Such investigation shall include access to books, records and properties and opportunities to discuss the business of the Company with its officers and independent auditors, all to such reasonable extent and at such reasonable times and as often as any such Holder shall reasonably request. (k) The Company shall enter into an underwriting agreement with the managing underwriters selected for such underwriting by Holders holding a Majority of the Warrant Securities requested to be included in such underwriting. Such agreement shall be satisfactory in form and substance to the Company, each Holder and such managing underwriters, and shall contain such representations, warranties and covenants by the Company and such other terms as are customarily contained in agreements of that type used by the managing underwriter. The Holders shall be parties to any underwriting agreement relating to an underwritten sale of their Warrant Securities and may, at their option, require that any or all the representations, warranties and covenants of the Company to or - 8 - for the benefit of such underwriters shall also be made to and for the benefit of such Holders. Such Holders shall not be required to make any representations or warranties to or agreements with the Company or the underwriters except as they may relate to such Holders and their intended methods of distribution. (1) For purposes of this Agreement, the term "Majority" in reference to the Holders of Warrants or Warrant Securities, shall mean Holders who hold in excess of fifty percent of the then outstanding Warrants or Warrant Securities that (i) are not held by the Company, an affiliate (other than a Holder), officer, employee or agent thereof or any of their respective affiliates, members of their family, persons acting as nominees or in conjunction therewith and (ii) have not been resold to the public pursuant to a registration statement filed with the Commission under the Act. 8. Adjustments to Exercise Price and Number of Securities. ------------------------------------------------------ 8.1 Computation of Adjusted Exercise Price. -------------------------------------- (a) Except as hereinafter provided, in case the Company shall at any time after the date hereof issue or sell any shares of Common Stock (other than the issuances or sales referred to in Section 8.7 hereof), including (x) shares held in the Company'S treasury, (y) shares of Common Stock issued upon the exercise of any options, rights or warrants to subscribe for shares of Common Stock and (z) shares of Common Stock issued upon the direct or indirect conversion or exchange of securities for shares of Common Stock, for a consideration per share less than the lower of the Exercise Price in effect immediately prior to the issuance or sale of such shares or the Market Price (as defined in Section 3.2(b)) per share of Common Stock on the date immediately prior to the issuance or sale of such shares or without consideration, then forthwith upon such issuance or sale, the Exercise Price shall (until another such issuance or sale) be reduced to the price (calculated to the nearest full cent) equal to the quotient derived by dividing (A) an amount equal to the sum of (X) the product of (a) the lower of (i) the Exercise Price in effect immediately prior to such issuance or sale and (ii) the Market Price per share of Common Stock on the date immediately prior to the issuance or sale of such shares, in either event, reduced, but not below the par value of the Common Stock, by the positive difference between the (u) Market Price per share of Common Stock on the date immediately prior to the issuance or sale and (v) the amount per share received in connection with such issuance or sale, multiplied by (b) the total number of shares of Common Stock outstanding immediately prior to such issuance or sale plus, (Y) the aggregate of the amount of all consideration, if any, received by the Company upon such issuance or sale, by (B) the total number of shares of Common Stock - 9 - outstanding immediately after such issuance or sale; provided, however, that in -------- ------- no event shall the Exercise Price be adjusted pursuant to this computation to an amount in excess of the Exercise Price in effect immediately prior to such computation, except in the case of a combination of outstanding shares of Common Stock, as provided by Section 8.3 hereof. (b) In addition to the foregoing, in the event the closing bid price of the Company'S Common Stock is less than $4.97 at any time during the period commencing on the date hereof and ending on March 11, 2002 (the "Adjustment Period") the Exercise Price shall be adjusted as herein provided. In the event the closing bid price of the Common Stock is less than $4.97 for five consecutive trading days during the Adjustment Period, the Exercise Price shall be reduced to the lower of the then current Exercise Price or the lowest of the average closing bid price of the Common Stock for five consecutive trading days during the Adjustment Period. In no event shall the Exercise Price be adjusted below $1.25 on account of this adjustment in this subparagraph 8(b). (c) For the purposes of this Section 8 the term "Exercise Price" shall mean the Exercise Price per share of Common Stock set forth in Section 6 hereof, as adjusted from time to time pursuant to the provisions of this Section 8. (d) For the purposes of any computation to be made in accordance with this Section 8.1, the following provisions shall be applicable: (i) In case of the issuance or sale of shares of Common Stock for a consideration part or all of which shall be cash, the amount of the cash consideration therefor shall be deemed to be the amount of cash received by the Company for such shares (or, if shares of Common Stock are offered by the Company for subscription, the subscription price, or, if shares of Common Stock shall be sold to underwriters or dealers for public offering without a subscription offering, the initial public offering price) before deducting therefrom any compensation paid or discount allowed in the sale, underwriting or purchase thereof by underwriters or dealers or others performing similar services, or any expenses incurred in connection therewith. (ii) In case of the issuance or sale (otherwise than as a dividend or other distribution on any stock of the Company) of shares of Common Stock for a consideration part or all of which shall be other than cash, the amount of the consideration therefor other than cash shall be deemed to be the value of such consideration as determined in good faith by the Board of Directors of the Company. - 10 - (iii) Shares of Common Stock issuable by way of dividend or other distribution on any stock of the Company shall be deemed to have been issued immediately after the opening of business on the day following the record date for the determination of stockholders entitled to receive such dividend or other distribution and shall be deemed to have been issued without consideration. (iv) The reclassification of securities of the Company other than shares of Common Stock into securities including shares of Common Stock shall be deemed to involve the issuance of such shares of Common Stock for a consideration other than cash immediately prior to the close of business on the date fixed for the determination of security holders entitled to receive such shares, and the value of the consideration allocable to such shares of Common Stock shall be determined as provided in subsection (d)(ii) of this Section 8.1. (v) The number of shares of Common Stock at any one time outstanding shall include the aggregate number of shares issued or issuable (subject to readjustment upon the actual issuance thereof) upon the exercise of options, rights, warrants and upon the conversion or exchange of convertible or exchangeable securities. 8.2 Options, Rights, Warrants and Convertible and Exchangeable ---------------------------------------------------------- Securities. In case the Company shall at any time after the date hereof issue - ---------- options, rights or warrants to subscribe for shares of Common Stock, or issue any securities convertible into or exchangeable for shares of Common Stock, for a consideration per share less than the Exercise Price in effect or the Market Price immediately prior to the issuance of such options, rights or warrants, or such convertible or exchangeable securities, or without consideration, the Purchase Price in effect immediately prior to the issuance of such options, rights or warrants, or such convertible or exchangeable securities, as the case may be, shall be reduced to a price determined by making a computation in accordance with the provisions of Section 8.1 hereof, provided that: (a) The aggregate maximum number of shares of Common Stock, as the case may be, issuable under such options, rights or warrants shall be deemed to be issued and outstanding at the time such options, rights or warrants were issued, and for a consideration equal to the minimum purchase price per share provided for in such options, rights or warrants at the time of issuance, plus the consideration (determined in the same manner as consideration received on the issue or sale of shares in accordance with the terms of the Warrants), if any, received by the Company for such options, rights or warrants. - 11 - (b) The aggregate maximum number of shares of Common Stock issuable upon conversion or exchange of any convertible or exchangeable securities shall be deemed to be issued and outstanding at the time of issuance of such securities, and for a consideration equal to the consideration (determined in the same manner as consideration received on the issue or sale of shares of Common Stock in accordance with the terms of the Warrants) received by the Company for such securities, plus the minimum consideration, if any, receivable by the Company upon the conversion or exchange thereof. (c) If any change shall occur in the price per share provided for in any of the options rights or warrants referred to in subsection (a) of this Section 8.2, or in the price per share at which the securities referred to in subsection (b) of this Section 8.2 are convertible or exchangeable, such options, rights or warrants or conversion or exchange rights, as the case may be, shall be deemed to have expired or terminated on the date when such price change became effective in respect of shares not theretofore issued pursuant to the exercise or conversion or exchange thereof, and the Company shall be deemed to have issued upon such date new options, rights or warrants or convertible or exchangeable securities at the new price in respect of the number of shares issuable upon the exercise of such options, rights or warrants or the conversion or exchange of such convertible or exchangeable securities. (d) Notwithstanding the foregoing, the Exercise Price shall not be adjusted to a price less than $2.00 per share as adjusted from time to time in accordance with paragraph 8.3 (the "Base Price") on account of this paragraph 8.2 unless the "consideration per share" referred to above for any such issuance or sale is less than the Base Price. 8.3 Subdivision and Combination. In case the Company shall at any --------------------------- time subdivide or combine the outstanding shares of Common Stock, the Exercise Price shall forthwith be proportionately decreased in the case of subdivision or increased in the case of combination. 8.4 Adjustment in Number of Securities. Upon each adjustment of the ---------------------------------- Exercise Price pursuant to the provisions of this Section 8, the number of Warrant Securities issuable upon the exercise of each Warrant shall be adjusted to the nearest full amount by multiplying a number equal to the Exercise Price in effect immediately prior to such adjustment by the number of Warrant Securities issuable upon exercise of the Warrants immediately prior to such adjustment and dividing the product so obtained by the adjusted Exercise Price. 8.5 Definition of Common Stock. For the purpose of this Agreement, -------------------------- the term "Common Stock" shall mean (i) the class - 12 - of stock designated as Common Stock in the Articles of Incorporation of the Company as may be amended as of the date hereof, or (ii) any other class of stock resulting from successive changes or reclassifications of such Common Stock, consisting solely of changes in par value, or from par value to no par value, or from no par value to par value. In the event that the Company shall after the date hereof issue securities with greater or superior voting rights than the shares of Common Stock outstanding as of the date hereof, the Holder, at its option, may receive upon exercise of any Warrant either shares of Common Stock or a like number of such securities with greater or superior voting rights. 8.6 Merger or Consolidation. In case of any consolidation of the ----------------------- Company with, or merger of the Company with, or merger of the Company into, another corporation (other than a consolidation or merger which does not result in any reclassification or change of the outstanding Common Stock), the corporation formed by such consolidation or merger shall execute and deliver to the Holder a supplemental warrant agreement providing that the holder of each Warrant then outstanding or to be outstanding shall have the right thereafter (until the expiration of such Warrant) to receive, upon exercise of such Warrant, the kind and amount of shares of stock and other securities and property receivable upon such consolidation or merger, by a holder of the number of shares of Common Stock of the Company for which such warrant might have been exercised immediately prior to such consolidation, merger, sale or transfer. Such supplemental warrant agreement shall provide for adjustments which shall be identical to the adjustments provided in Section 8. The above provisions of this subsection shall similarly apply to successive consolidations or mergers. 8.7 No Adjustment of Exercise Price in Certain Cases. No adjustment ------------------------------------------------ of the Exercise Price shall be made: (a) Upon the conversion or exercise of securities outstanding on the date hereof; or (b) If the amount of said adjustment shall be less than two cents ($.02) per Warrant; provided, however, that in such case any adjustment that -------- ------- would otherwise be required then to be made shall be carried forward and shall be made at the time of and together with the next subsequent adjustment which, together with any adjustment so carried forward, shall amount to at least two cents ($.02) per Warrant. 8.9 Dividends and Other Distributions. In the event that the --------------------------------- Company shall at any time prior to the exercise of all Warrants declare a dividend (other than a dividend consisting solely of shares of Common Stock) or otherwise distribute to its stockholders any assets, property, rights, evidences of - 13 - indebtedness, securities (other than shares of Common Stock), whether issued by the Company or by another, or any other thing of value, the Holders of the unexercised Warrants shall thereafter be entitled, in addition to the shares of Common Stock or other securities and property receivable upon the exercise thereof, to receive, upon the exercise of such Warrants, the same property, assets, rights, evidences of indebtedness, securities or any other thing of value that they would have been entitled to receive at the time of such dividend or distribution as if the Warrants had been exercised immediately prior to such dividend or distribution. At the time of any such dividend or distribution, the Company shall make appropriate reserves to ensure the timely performance of the provisions of this subsection 8.9. 9. Exchange and Replacement of Warrant Certificates. Each Warrant ------------------------------------------------ Certificate is exchangeable without expense, upon the surrender thereof by the registered Holder at the principal executive office of the Company, for a new Warrant Certificate of like tenor and date representing in the aggregate the right to purchase the same number of Warrant Securities in such denominations as shall be designated by the Holder thereof at the time of such surrender. Upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of any Warrant Certificate, and, in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it, and reimbursement to the Company of all reasonable expenses incidental thereto, and upon surrender and cancellation of the Warrants, if mutilated, the Company will make and deliver a new Warrant Certificate of like tenor, in lieu thereof. 10. Elimination of Fractional Interests. The Company shall not be ----------------------------------- required to issue certificates representing fractions of shares of Common Stock upon the exercise of the Warrants, nor shall it be required to issue scrip or pay cash in lieu of fractional interests, it being the intent of the parties that all fractional interests shall be eliminated by rounding any fraction up to the nearest whole number of shares of Common Stock or other securities, properties or rights. 11. Reservation and Listing of Securities. The Company shall at all times ------------------------------------- after July 31, 1997, reserve and keep available out of its authorized shares of Common Stock, solely for the purpose of issuance upon the exercise of the Warrants, such number of shares of Common Stock or other securities, properties or rights as shall be issuable upon the exercise thereof. The Company agrees that, upon exercise of the Warrants and payment of the Exercise Price therefor, all shares of Common Stock and other securities issuable upon such exercise shall be duly and validly issued, fully paid, non-assessable and not subject to the preemptive rights of any stockholder. As long as - 14 - the Warrants shall be outstanding, the Company shall use its best efforts to cause all shares of Common Stock issuable upon the exercise of the Warrants to be listed (subject to official notice of issuance) on all securities exchanges on which the Common Stock may then be listed and/or quoted. 12. Notices to Warrant Holders. Nothing contained in this Agreement shall -------------------------- be construed as conferring upon the Holders the right to vote or to consent or to receive notice as a stockholder in respect of any meetings of stockholders for the election of directors or any other matter, or as having any rights whatsoever as a stockholder of the Company. If, however, at any time prior to the expiration of the Warrants and their exercise, any of the following events shall occur: (a) the Company shall take a record of the holders of its shares of Common Stock for the purpose of entitling them to receive a dividend or distribution payable otherwise than in cash, or a cash dividend or distribution payable otherwise than out of current or retained earnings, as indicated by the accounting treatment of such dividend or distribution on the books of the Company; or (b) the Company shall offer to all the holders of its Common Stock any additional shares of capital stock of the Company or securities convertible into or exchangeable for shares of capital stock of the Company, or any option, right or warrant to subscribe therefor; or (c) a dissolution, liquidation or winding up of the Company (other than in connection with a consolidation or merger) or a sale of all or substantially all of its property assets and business as an entirety shall be proposed; then, in any one or more of said events the Company shall give written notice of such event at least fifteen days prior to the date fixed as a record date or the date of closing the transfer books for the determination of the stockholders entitled to such dividend, distribution, convertible or exchangeable securities or subscription rights, or entitled to vote on such proposed dissolution, liquidation, winding up or sale. Such notice shall specify such record date or the date of closing the transfer books, as the case may be. Failure to give such notice or any defect therein shall not affect the validity of any action taken in connection with the declaration or payment of any such dividend, or the issuance of any convertible or exchangeable securities, or subscription rights, options or warrants, or any proposed dissolution, liquidation, winding up or sale. - 15 - 13. Notices. ------- All notices requests, consents and other communications hereunder shall be in writing and shall be deemed to have been duly made when delivered, or mailed by registered or certified mail, return receipt requested: (a) If to the registered Holder of the Warrants, to the address of such Holder as shown on the books of the Company; or (b) If to the Company, to 13751 South Wadsworth Park Drive, Suite 200, Draper, Utah 84020 or to such other address as the Company may designate by notice to the Holders. 14. Successors. All the covenants and provisions of this Agreement shall ---------- be binding upon and inure to the benefit of the Company, the Holders and their respective successors and assigns hereunder. 15. Termination. This Agreement shall terminate at the close of business ----------- on March 11, 2002. Notwithstanding the foregoing, the indemnification provisions contained herein shall survive such termination. 16. Governing Law; Submission to Jurisdiction. This Agreement and each ----------------------------------------- Warrant Certificate issued hereunder shall be deemed to be a contract made under the laws of the State of Delaware and for all purposes shall be construed in accordance with the laws of said State without giving effect to the rules of said State governing the conflicts of laws. The Company and each Holder hereby agree that any action, proceeding or claim against it arising out of, or relating in any way to, this Agreement shall be brought and enforced in the State or Federal courts located in the State of Delaware, and irrevocably submits to such jurisdiction, which jurisdiction shall be exclusive. The Company and each Holder hereby irrevocably waive any objection to such exclusive jurisdiction or inconvenient forum. Any such process or summons to be served upon the Company or any Holder (at the option of the party bringing such action, proceeding or claim) may be served by transmitting a copy thereof, by registered or certified mail, return receipt requested, postage prepaid, addressed to it at the address set forth in Section 13 hereof. Such mailing shall be deemed personal service and shall be legal and binding upon the party so served in any action, proceeding or claim. The Company and each Holder agree that the prevailing party in any such action or proceeding shall be entitled to recover from the other party all of its reasonable legal costs and expenses relating to such action or proceeding and/or incurred in connection with the preparation therefor. - 16 - 17. Entire Agreement; Modification. This Agreement contains the entire ------------------------------ understanding between the parties hereto with respect to the subject matter hereof and may not be modified or amended except by a writing duly signed by the party against whom enforcement of the modification or amendment is sought. 18. Severability. If any provision of this Agreement shall be held to be ------------ invalid or unenforceable, such invalidity or unenforceability shall not affect any other provision of this Agreement. 19. Captions. The caption headings of the Sections of this Agreement are -------- for convenience of reference only and are not intended, nor should they be construed as, a part of this Agreement and shall be given no substantive effect. 20. Benefits of this Agreement. Nothing in this Agreement shall be -------------------------- construed to give to any person or corporation other than the Company and the Initial Holder and any other registered Holder(s) of the Warrant Certificates or Warrant Securities any legal or equitable right, remedy or claim under this Agreement; and this Agreement shall be for the sole and exclusive benefit of the Company and the Initial Holder and any other Holder(s) of the Warrant Certificates or Warrant Securities. 21. 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 such counterparts shall together constitute but one and the same instrument. - 17 - IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed, as of the day and year first above written. MEDCROSS, INC. By: /s/ John Edwards ------------------------------ Name: John Edwards ---------------------------- Title: President --------------------------- Winter Harbor, L.L.C. By First Media Corporation, its general partner By: /s/ Ralph W. Hardy, Jr. ------------------------------ Name: Ralph W. Hardy, Jr. ---------------------------- Title: Secretary --------------------------- - 18 - THE WARRANTS REPRESENTED BY THIS CERTIFICATE AND THE OTHER SECURITIES ISSUABLE UPON EXERCISE THEREOF MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO (i) AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, (ii) TO THE EXTENT APPLICABLE, RULE 144 UNDER SUCH ACT (OR ANY SIMILAR RULE UNDER SUCH ACT RELATING TO THE DISPOSITION OF SECURITIES), OR (iii) AN OPINION OF COUNSEL, IF SUCH OPINION SHALL BE REASONABLY SATISFACTORY TO COUNSEL FOR THE ISSUER, THAT AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT IS AVAILABLE. EXERCISABLE ON OR BEFORE 5:30 P.M., DELAWARE TIME, March 11, 2002 No. ________ 500,000 Warrants WARRANT CERTIFICATE This Warrant Certificate certifies that Winter Harbor, L.L.C., or registered assigns, is the registered holder of 500,000 Warrants to purchase initially, at any time from the date hereof until 5:30 p.m. Delaware time on March 11, 2002 ("Expiration Date"), up to 500,000 fully-paid and non-assessable shares of common stock, par value $.007 per share ("Common Stock") of Medcross, Inc., a Florida corporation (the "Company"), at the initial exercise price, subject to adjustment in certain events (the "Exercise Price"), of $4.97 per share of Common Stock upon surrender of this Warrant Certificate and payment of the Exercise Price at an office or agency of the Company, but subject to the conditions set forth herein and in the Warrant Agreement dated as of June 6, 1997 between the Company and Winter Harbor, L.L.C. (the "Warrant Agreement"). Except as otherwise provided in Section 3.2 of the Warrant Agreement, payment of the Exercise Price shall be made by certified or official bank check in New York Clearing House funds payable to the order of the Company. No Warrant may be exercised after 5:30 p.m., Delaware time, on the Expiration Date, at which time all Warrants evidenced hereby, unless exercised prior thereto, shall thereafter be void. The Warrants evidenced by this Warrant Certificate are part of a duly authorized issue of Warrants pursuant to the Warrant Agreement, which Warrant Agreement is hereby incorporated by reference in and made a part of this instrument and is hereby referred to for a description of the rights, limitation of rights, obligations, duties and immunities thereunder of the Company and the holders (the words "holders" or "holder" meaning the registered holders or registered holder) of the Warrants. The Warrant Agreement provides that upon the occurrence of certain events the Exercise Price and/or number of the Company's securities issuable thereupon may, subject to certain conditions, be adjusted. In such event, the Company will, at the request of the holder, issue a new Warrant Certificate evidencing the adjustment in the Exercise Price and the number and/or type of securities issuable upon the exercise of the Warrants; provided, however, that the failure of the Company to issue such new Warrant - -------- ------- Certificates shall not in any way change, alter or otherwise impair, the rights of the holder as set forth in the Warrant Agreement. Upon due presentment for registration of transfer of this Warrant Certificate at an office or agency of the Company, a new Warrant Certificate or Warrant Certificates of like tenor and evidencing in the aggregate a like number of Warrants shall be issued to the transferee(s) in exchange for this Warrant Certificate, subject to the limitations provided herein and in the Warrant Agreement, without any charge except for any tax or other governmental charge imposed in connection with such transfer. Upon the exercise of less than all of the Warrants evidenced by this Warrant Certificate, the Company shall forthwith issue to the holder hereof a new Warrant Certificate representing such number of unexercised Warrants. The Company may deem and treat the registered holder(s) hereof as the absolute owner(s) of this Warrant Certificate (notwithstanding any notation of ownership or other writing hereon made by anyone), for the purpose of any exercise hereof, and of any distribution to the holder(s) hereof, and for all other purposes, and the Company shall not be affected by any notice to the contrary. All terms used in this Warrant Certificate which are defined in the Warrant Agreement shall have the meanings assigned to them in the Warrant Agreement. IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to be duly executed under its corporate seal. Dated as of June 6, 1997 MEDCROSS, INC. By /s/ John Edwards ------------------------- Name: John Edwards --------------------- Title: President -------------------- [SEAL] [FORM OF ELECTION TO PURCHASE] The undersigned hereby irrevocably elects to exercise the right, represented by this Warrant Certificate, to purchase __________ shares of Common Stock and herewith tenders in payment for such securities a certified or official bank check payable in New York Clearing House Funds to the order of Medcross Inc. in the amount of $____________, all in accordance with the terms hereof. The undersigned requests that a certificate for such securities be registered in the name of _________________________ whose address is _____________________________________________ and that such Certificate be delivered to _______________________ whose address is ___________________________________________. Dated: Signature _____________________ (Signature must conform in all respects to name of holder as specified on the face of the Warrant Certificate.) _______________________________ Insert Social Security or Other Identifying Number of Holder ASSIGNMENT FORM --------------- The Holder hereby assigns and transfers unto Name ______________________________________________________________ (Please typewrite or print in block letters) Address ___________________________________________________________ ___________________________________________________________ the right to purchase Common Stock of _____________ represented by this Warrant to the extent of _______________ shares of Common Stock as to which such right is exercisable and does hereby irrevocably constitute and appoint _____________________________ Attorney, to transfer the same on the books of _____________ with full power of substitution in the premises. Date: ___________________, 199_ ______________________________ Name of Registered Holder ______________________________ Signature ______________________________ Signature, if held jointly EX-99.4 5 EXHIBIT 99(D) - PLEDGE AGREEMENT Exhibit 99(d) PLEDGE AGREEMENT ---------------- THIS PLEDGE AGREEMENT is made and entered into as of June 6, 1997, by and between MEDCROSS, INC., a Florida corporation (the "Pledgor"), and Winter Harbor, L.L.C., a Delaware limited partnership (the "Pledgee"). RECITALS -------- The Pledgor and the Pledgee have entered into that certain Loan Agreement of even date herewith (as the same may be amended, modified, extended or restated, the "Agreement"), pursuant to which the Pledgee has agreed to make a Loan to the Pledgee in the aggregate principal amount of $2,000,000. Capitalized terms used herein and not otherwise defined shall have the meanings assigned to them in the Agreement. As security for the Loan, the Pledgor has agreed to enter into this Pledge Agreement. AGREEMENTS ---------- In consideration of loans, credit or other financial accommodation extended or continued from time to time to the Pledgor by the Pledgee, the Pledgor does hereby agree as follows: 1. Pledge. ------ (a) The Pledgor hereby grants to the Pledgee a first priority security interest in, and pledges, assigns and delivers to the Pledgee, all the issued and outstanding shares of stock of each of I-Link Communications, Inc. ("I-Link") and Family Telecommunications, Incorporated ("FTI"), each a Utah corporation and a wholly owned subsidiary of the Pledgor (the "Stock"), and shall deliver to Pledgee simultaneously with the execution and delivery hereof, the stock certificates described in Exhibit A annexed hereto evidencing the Stock and stock powers relating thereto, duly executed in blank. (b) The Pledgor and the Pledgee agree that the Stock shall be held on the terms and conditions hereinafter set forth as collateral security for the obligations of the Pledgor to the Pledgee under the Agreement. 2. Representations and Warranties. The Pledgor represents and warrants ------------------------------ to the Pledgee as follows: (a) the Stock constitutes all of the issued and outstanding capital stock of each of I-Link and FTI; (b) the Stock is validly issued, fully paid and nonassessable and is not subject to any liens, charges or encumbrances whatsoever; (c) there are no existing options, warrants or other rights to purchase any of the Stock; (d) the execution, delivery and performance of this Pledge Agreement will not conflict with, result in a breach of or constitute a default under any indenture or agreement to which the Pledgor, I-Link or FTI is a party or by which any of them is bound, or result in the creation or imposition of any lien, charge or encumbrance of any nature whatsoever on any of their respective property or assets; (e) this Pledge Agreement constitutes the legal, valid and binding obligation of the Pledgor, enforceable in accordance with its terms; (f) the Pledgor has all requisite power and authority to enter into this Pledge Agreement and to carry out the transactions contemplated hereby; and (g) no consent or approval of any person or entity is or will be required in connection with the execution, delivery and performance of this Pledge Agreement. 3. Term. The Pledgee shall hold the Stock as security for the ---- performance by the Pledgor of its obligations and liabilities under the Agreement, and the Stock shall be held by the Pledgee until the principal and interest due on the Note are paid in full and the Agreement shall have terminated, at which time the Pledgee shall deliver the Stock (to the extent not otherwise disposed of pursuant hereto) to the Pledgor free and clear of this Pledge Agreement, and this Pledge Agreement shall thereupon terminate. 4. Voting. While the certificates representing the Stock continue to be ------ held by the Pledgee, such certificates shall remain in the name of the Pledgor, and the Pledgor shall have and exercise all rights of ownership, including the right to vote the Stock; provided, however, that the Pledgor shall not vote the -------- ------- Stock in any manner that is inconsistent with the provisions of the Agreement or this Pledge Agreement. If an Event of Default shall occur, the Pledgee shall be entitled to the remedies set forth in Section 6 hereof. 5. Stock Adjustments. The Pledgor agrees that in the event that during ----------------- the term of this Pledge Agreement any stock dividend, reclassification, readjustment or other change is declared or made with respect to the Stock, or any subscription, warrant or other option is exercisable with respect to the Stock, it shall cause all new, substituted or additional shares or other securities issued by reason of any such change or option to be delivered to the Pledgee and to be held by the Pledgee under the terms of this Pledge Agreement in the same manner as the shares of Stock originally pledged hereunder. There likewise shall be deposited with the Pledgee, to be added to the pledged property and subject to the pledge, any and all additional issued shares of I- Link or FTI to the Pledgor by way of stock dividend, stock splits, stock rights, new securities or otherwise, to the end that the Pledgee will at all times hold, subject to the pledge, all the issued and outstanding stock of I-Link and FTI. -2- 6. Remedies. If an Event of Default shall occur, the Pledgee may, after --------- fifteen days prior notice to the Pledgor, sell, assign and deliver the whole or, from time to time, any part of the Stock or any interest or part thereof, at any private sale or at public auction, for cash, or credit or for other property, for immediate or future delivery, and for such price or prices and on such terms as the Pledgee reasonably may determine to be commercially reasonable. The Pledgee shall give the Pledgor reasonable notice of the time and place of any public sale of the Stock or the time after which any private sale or other intended disposition thereof is to be made. The requirement of reasonable notice shall be met if notice of such sale or other intended disposition is mailed, by certified or registered mail, return receipt requested, to the Pledgor at the address set forth in Section 9 at least fifteen days prior to the time of such sale or other intended disposition. The Pledgor hereby waives and releases any and all right or equity of redemption whether before or after sale hereunder. At any such sale the Pledgee may bid for and purchase for its own account the whole or any part of the Stock so sold, free from any such right or equity of redemption. Upon completion of the sale, Pledgee shall deliver the Stock, or any portion thereof, to the purchaser or purchasers thereof. The net proceeds of any such sale shall be applied as follows: (i) First, to the expenses of the sale and enforcement of this Pledge ----- Agreement, including but not limited to, attorneys' fees and expenses, including attorneys' fees out of court, in trial, on appeal, in bankruptcy proceedings, or otherwise; (ii) Second, to the payment of the Pledgor's obligations under the ------ Agreement, including, without limitation, the payment of interest and principal under the Note; and (iii) Third, only after payment in full of the above, to the payment ----- to the Pledgor of any excess proceeds, along with any shares of the Stock remaining unsold, subject to the receipt of notice of and the provisions of any other agreement between the parties with respect to the disposition of said excess proceeds or unsold shares. Notwithstanding the sale or other disposition of the Stock by the Pledgee hereunder, the Pledgor shall remain liable for any deficiency. 7. Encumbrances. During the term of this Pledge Agreement specified in ------------ Section 3, the Pledgor shall not sell, assign, transfer or otherwise dispose of, grant any option to any individual or entity other than the Pledgee with respect to, or mortgage, pledge or otherwise encumber any of the Stock. 8. Miscellaneous. ------------- 8.1 Transfer taxes, if any, applicable to any transfer of shares of Stock upon the occurrence of an Event of Default or upon termination of this Pledge Agreement shall be payable by the person or persons to whom the shares are being transferred; provided, -------- -3- however, that the Pledgor agrees to reimburse the Pledgee promptly for all such - ------- transfer taxes which the Pledgee may be required to pay. 8.2 No single or partial exercise of any power hereunder shall preclude other or future exercise thereof or the exercise of any other power. The holder of the Note may proceed against any portion of the security held therefor in such order and in such manner as the holder may see fit, without waiver of any rights with respect to any other security. 8.3 The Pledgee may deal in any manner with the Note, the Agreement or any other agreement required thereby without notice to or the consent of the Pledgor, including, without limitation, in the following manner: (a) to modify, supplement or otherwise change any terms of the Note, the Agreement or any such other agreement (subject to any right of the Pledgor to consent to any modification of or supplement or change to any such terms); to grant any extension or renewal of the Note, the Agreement or such other agreement; to grant any other waiver or indulgence with respect to the Note, the Agreement or such other agreement; and to effect any release, compromise or settlement with respect to the Note, the Agreement or such other agreement; and (b) to consent to the substitution, exchange or release of all or any part of any other security (other than the Stock) at any time held by the Pledgee as security or surety for the obligations secured hereby. 9. Notices. All notices required to be sent hereunder shall be in ------- writing and shall be sent by registered mail, return receipt requested, to the parties as follows: To the Pledgor: Medcross, Inc. 13751 South Wadsworth Park Drive Suite 200 Draper, Utah 84020 Attention: John W. Edwards, President To the Pledgee: Winter Harbor, L.L.C. 11400 Skipwith Lane Potomac, Maryland 20854 Attention: Ralph W. Hardy, Jr. -4- Addresses may be changed by notice in writing to the other parties. 10. Choice of Law, etc. This Pledge Agreement shall be construed and ------------------- enforced under and governed by the laws of the State of Delaware, other than the conflicts of law provisions thereof. This Pledge Agreement embodies the entire agreement and understanding between the parties and supersedes all prior agreements and understandings relating to the subject matter hereof, and this Pledge Agreement may not be modified or amended or any term or provision hereof waived or discharged except in writing signed by the party against whom such amendment, modification, waiver or discharge is sought to be enforced. This Pledge Agreement shall be binding on the successors, assigns, and legal representatives of the parties hereto and shall inure to the benefit of and be enforceable by their successors, assigns, and legal representatives; provided, -------- however, that neither the Stock nor this Pledge Agreement may be assigned or - ------- transferred in whole or in part, voluntarily or involuntarily, by the Pledgor without the prior written consent of the Pledgee, and the Pledgee may assign this Pledge Agreement and all of its rights hereunder without any consent of the Pledgor. The headings of this Pledge Agreement are for the purpose of reference only and shall not limit or otherwise affect the meaning hereof. The Pledgor shall take such further actions as may be reasonably requested by the Pledgee from time to time in order to perfect the security interest of the Pledgee hereunder and to assure and confirm onto the Pledgee its rights, powers and remedies hereunder. [THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK] -5- IN WITNESS WHEREOF, the parties hereto have caused this Pledge Agreement to be executed on their behalf all as of the day and year first above mentioned. MEDCROSS, INC. By: /s/ John Edwards --------------------------------- Name: John Edwards ------------------------------- Title: President ------------------------------ WINTER HARBOR, L.L.C. By: First Media L.P. its member By: First Media Corporation, its sole general partner By: /s/ Ralph W. Hardy, Jr. --------------------------------- Name: Ralph W. Hardy, Jr. ------------------------------- Title: Secretary ------------------------------ -6- EXHIBIT A TO PLEDGE AGREEMENT DESCRIPTION OF PLEDGED SHARES The following are the shares pledged pursuant to the Pledge Agreement: 100 shares of the Common Stock of I-Link Communications, Inc. (formerly I-Link Worldwide, Inc.) represented by Certificate No. 2 and standing in the name of Medcross, Inc., on the books of I-Link Communications, Inc. 2,000 shares of the Common Stock of Family Telecommunications, Incorporated represented by Certificate No. 3 and standing in the name of Medcross, Inc., on the books of Family Telecommunications Incorporated EX-99.5 6 EXHIBIT 99(E) - SECURITY AGREEMENT Exhibit 99(e) SECURITY AGREEMENT ------------------ THIS SECURITY AGREEMENT is made and entered into as of June 6, 1997, by and among FAMILY TELECOMMUNICATIONS, INCORPORATED, a Utah corporation with its principal place of business at 13751 South Wadsworth Park Drive, Suite 200, Draper, UT 84020 ("FTI"), I-LINK COMMUNICATIONS, INC., a Utah corporation, with its principal place of business at 13751 South Wadsworth Park Drive, Suite 200, Draper, UT 84020 ("I-LINK" and together with FTI, collectively, the "Debtors" and individually, a "Debtor"), and WINTER HARBOR, L.L.C., a Delaware limited partnership with its principal place of business at 11400 Skipwith Lane, Potomac, Maryland 20854 (the "Secured Party"). RECITALS -------- A. Medcross, Inc., a Florida corporation (the "Company"), owns all of the issued and outstanding shares of the capital stock of each of the Debtors. The Company and the Secured Party have entered into a Loan Agreement dated as of even date herewith (as the same may be extended, amended, restated or modified from time to time, the "Loan Agreement"), which is hereby incorporated herein by this reference, pursuant to which the Secured Party has agreed to loan to the Company up to $2,000,000 on a term loan basis. All capitalized terms used herein and not otherwise defined herein shall have the meanings ascribed to such terms in the Loan Agreement. The proceeds of the Loan will be provided to the Debtors for the acquisition of assets, for capital expenditures and for working capital purposes. B. The Debtors have guaranteed the obligations of the Company under the Loan Agreement and the Note pursuant to the terms of a Subsidiary Guaranty of even date herewith (the "Guaranty"). It is a condition precedent to the extensions of credit to the Company under the Loan Agreement that the Debtors, among other things, shall have executed and delivered this Security Agreement. C. The Company and the Debtors share an identity of interests as members of a consolidated group of companies engaged in substantially similar businesses. The Company provides certain centralized financial, accounting and management services to the Debtors. and the making of the Loan will facilitate the expansion and enhance the overall financial strength and stability of the Company's corporate group, including the Debtors. Accordingly, the Debtors will derive substantial benefits as a result of the extensions of credit to the Company under the Loan Agreement, which benefits are hereby acknowledged by the Debtors, and the Debtors, therefore, desire to enter into this Security Agreement in order to satisfy the condition precedent described in the preceding paragraph. AGREEMENTS ---------- In consideration of the foregoing Recitals, and of the Loan to be made by the Secured Party to the Company under the Loan Agreement, which will be of material economic benefit to the Debtors, the Debtors and the Secured Party agree as follows: 1. GRANT OF SECURITY INTEREST. In order to secure the payment and -------------------------- performance of all of the obligations of FTI and I-Link under the Guaranty and the payment and performance of all of the obligations of the Company to the Secured Party under the Loan Agreement and the Note, plus interest accrued thereon (being hereinafter collectively referred to as the "Obligations"), FTI and I-Link hereby grant to the Secured Party a first priority perfected security interest in all of their respective right, title and interest in and to all of their personal property, both tangible and intangible and of every kind and description, whether now or hereafter existing, or now owned or hereafter acquired, and wherever located, and all proceeds, products, replacements, additions, accessions and/or substitutes therefor, including, without limitation, all goods, machinery, equipment, furniture, furnishings, fixtures, inventory, accounts, chattel paper, instruments and general intangibles, as such terms, may be defined in the Uniform Commercial Code in the jurisdiction in which such assets are located (other than equipment leased to I-Link or FTI and any leases which by their terms prohibit the grant of security interests in, or assignments of, I-Link's or FTI's leasehold interest therein), and the proceeds and products of any and all of the foregoing assets and properties described in this Section 1, including proceeds of insurance policies relating to any and all of the foregoing assets and properties. All of the foregoing shall be hereinafter referred to as the "Collateral." 2. WARRANTIES AND COVENANTS OF FTI AND I-LINK. Each of FTI and I- ------------------------------------------ Link represents, warrants and covenants that: (a) the Collateral (and all records pertaining thereto) will at all times be kept in their current locations and neither FTI nor I-Link will change the location at which any of the Collateral is usually kept or the location of any of their respective chief executive offices or principal places of business without giving thirty days prior written notice to the Secured Party; (b) FTI and I-Link own and have possession of the Collateral; (c) all the Collateral is genuine and enforceable and, except as permitted in the Loan Agreement, free from liens, adverse claims, charges, encumbrances, taxes or assessments, other than the liens created hereby, and FTI and I-Link shall defend the same against all claims and demands of all persons at any time claiming against the same or any interests therein adverse to the Secured Party; (d) all items of the Collateral comply with applicable laws, including, where applicable, Federal Reserve Regulations and any state consumer credit and usury laws; (e) no financing statement covering any of the Collateral, and naming any secured party other than the Secured Party, is on file in any public office; -2- (f) FTI and I-Link will, at their sole cost and expense, maintain, replace, repair, service and take other action as may be necessary from time to time to keep and preserve their inventory, machinery and equipment in general repair and good working order and any inventory, machinery or equipment which wears out or is destroyed will be replaced or restored if necessary for the operation of the businesses of FTI or I-Link in the ordinary course. FTI and I- Link will within 10 days notify the Secured Party of any event comprising significant loss or decrease in the value of the Collateral in excess of $5,000; (g) FTI and I-Link will comply with all laws, rules and regulations relating to, and shall pay prior to delinquency, all license fees, registration fees, taxes and assessments and all other charges, which may be levied upon or assessed against, or which may become security interests, liens or other encumbrances upon the ownership, operation, possession or maintenance of the Collateral; provided that neither FTI nor I-Link shall be required to comply with any such law, rule or regulation or to pay any such tax or assessment or other such charge, the validity of which is being contested by FTI or I-Link in good faith by appropriate proceedings commenced and prosecuted with due diligence and with respect to which adequate reserves have been established and are being maintained in accordance with generally accepted accounting principles; (h) FTI and I-Link will execute and at their expense file and refile such financing statements, continuation statements and other documents in such offices as the Secured Party may deem necessary or appropriate in order to protect or preserve the Secured Party's security interest in the Collateral; (i) Neither FTI nor I-Link will sell, offer to sell, hypothecate or otherwise dispose of any material part of the Collateral (including proceeds) subject hereto, or any part thereof or interest therein at any time other than in the ordinary course of business and in exchange for Collateral of like value in which the Secured Party shall have a security interest; (j) FTI and I-Link will at all times keep accurate records with respect to the Collateral which are as complete and comprehensive as those which are customarily maintained by those engaged in similar businesses, and the Secured Party will have the right to inspect such records at such times and from time to time as the Secured Party may reasonably request; (k) FTI and I-Link will provide any service and do any other acts or things necessary to keep the Collateral free and clear of all defenses, rights of offset and counterclaims; the Secured Party may, at any time prior to termination hereof, require FTI and I-Link from time to time to deliver to the Secured Party (i) schedules describing all the Collateral subject hereto and (ii) instruments and chattel paper included in the Collateral, appropriately assigned and endorsed to the Secured Party; -3- (l) FTI and I-Link will maintain insurance on the Collateral as required under Section 6.1(e) of the Loan Agreement. In the event of failure to provide and maintain insurance as herein provided, the Secured Party may, at its option, provide such insurance and FTI and I-Link hereby promise to pay the Secured Party on demand the amount of any disbursements made by the Secured Party for such purpose. Risk of loss or damage shall accrue to FTI and I-Link to the extent of any deficiency in any effective insurance. FTI and I-Link shall furnish to the Secured Party certificates or other evidence satisfactory to the Secured Party of compliance with the foregoing insurance provisions. FTI and I-Link shall give immediate written notice to the Secured Party and to the insurers of any loss or damage to the Collateral or any part thereof in excess of $5,000 and shall promptly file all necessary or appropriate proof of loss with the insurers. Any amounts collected or received under any such insurance policies may be applied by FTI and I-Link either to the replacement or restoration of the Collateral or to any of the Obligations secured hereby in the manner provided in Section 8 hereof; and (m) FTI and I-Link shall not change their respective names, identity or corporate structure, voluntarily or involuntarily. 3. AUTHORITY TO COLLECT. Except as otherwise hereinafter set forth, -------------------- unless and until the occurrence of an event which constitutes an Event of Default hereunder or which upon the giving (or receiving) of notice or the lapse of time or both would constitute such an Event of Default, FTI and I-Link shall continue to collect, and upon the occurrence of such an event, FTI and I-Link may, at the direction of the Lender, continue to collect, at their own expense, all amounts due and to become due under any accounts, chattel paper, instruments or general intangibles and in connection therewith may take such action as they may deem necessary, advisable, convenient or proper for the enforcement, collection, adjustment, settlement or compromise thereof. 4. EVENTS OF DEFAULT. The term "Event of Default" shall have the ----------------- meaning assigned to it in the Loan Agreement. 5. REMEDIES. Upon the occurrence of an Event of Default, the -------- Secured Party shall have the right to declare immediately due and payable all of the Obligations, as provided in the Loan Agreement, without other notice or demand, and to terminate any commitments to make loans or otherwise extend credit to the Company. The Secured Party shall have all the rights and remedies of a secured party under the Uniform Commercial Code and all other rights, privileges, powers and remedies provided by law or equity. Without limiting the generality of the foregoing, after the occurrence of an Event of Default: -4- (a) the Secured Party shall have the power to notify the account debtor or debtors obligated under any accounts, chattel paper, instruments and general intangibles of the assignment of such accounts, chattel paper, and general intangibles to the Secured Party and of its security interest therein and to direct such account debtor or debtors to make payment of all amounts due or to become due to FTI or I-Link thereunder directly to the Secured Party and, upon such notification to the account debtor or debtors, to enforce collection of any thereof in the same manner and to the same extent as FTI or I-Link might have done. The funds so collected shall be held as security for the payment of the Obligations secured hereby and applied in the manner provided in Section 8 hereof. FTI and I-Link hereby constitute and appoint the Secured Party as their true and lawful attorney, in the place and stead of FTI and I-Link and with full power of substitution, either in the Secured Party's own name or in the name of FTI or I-Link, to ask for, demand, collect, receive and give acquittance for any and all monies due or to become due under and by virtue of any account, chattel paper, instruments and general intangibles, to endorse checks, drafts, orders and other instruments for the repayment of monies payable to FTI or I-Link on account thereof, and to settle, compromise, prosecute or defend any action, claim or proceeding with respect thereto and to sell, assign, pledge, transfer and make any agreement respecting, or otherwise deal with, the same; provided, however, that nothing herein contained shall be construed as requiring or obligating the Secured Party to make any demand, or to make any inquiry as to the nature or sufficiency of any payment received by it, or to present or file any claim or notice or to take any action with respect to any account, chattel paper, instruments or general intangible or the monies due or to become due thereunder or the property covered thereby, and no action taken or omitted to be taken by the Secured Party with respect to any account, chattel paper, instruments or general intangible shall give rise to any defense, counterclaim or set off in favor of FTI or I-Link or to any claim or action against the Secured Party; (b) FTI and I-Link will deliver to the Secured Party from time to time, as requested by the Secured Party, current lists of the Collateral; (c) Neither FTI nor I-Link will dispose of the Collateral, except on terms approved in writing by the Secured Party; (d) FTI and I-Link will collect, assemble and deliver all of the Collateral and books and records pertaining thereto, to the Secured Party at a reasonably convenient place designated by the Secured Party; and (e) the Secured Party may, to the extent permitted by law, enter onto FTI's or I-Link's premises and take possession of the Collateral, and assign, sell, lease or otherwise dispose of FTI's or I-Link's interests in the Collateral for the account of FTI or I-Link and FTI and I-Link shall then be liable for the difference between the payments and other -5- amounts due under the Loan Agreement and amounts received pursuant to such assignment or contract of sale or lease or other disposition of FTI's or I- Link's interests in the Collateral and the amount of such difference shall then be immediately due and payable. The Secured Party may, in its sole discretion, designate a custodian or agent to take physical possession of the Collateral. The Secured Party shall give FTI and I-Link reasonable notice of the time and place of any public sale of the Collateral or the time after which any private sale or other intended disposition thereof is to be made. The requirement of reasonable notice shall be met if notice of the sale or other intended disposition is mailed, by first class mail, postage prepaid, to FTI or I-Link at their respective addresses set forth in Section 16 hereof or such other address as FTI or I-Link may by notice have furnished the Secured Party in writing for such purpose, at least fifteen days prior to the time of such sale or other intended disposition. Each purchaser at any such sale shall hold the property sold absolutely free from any claim or right on the part of FTI or I-Link, and FTI and I-Link hereby waive (to the extent permitted by law) all rights of redemption, stay and/or appraisal which they now have or may at any time in the future have under any rule of law or statute now existing or hereafter enacted. 6. POWERS OF THE SECURED PARTY. FTI and I-Link appoint the Secured --------------------------- Party their true attorney in fact to perform any of the following powers, which are coupled with an interest, and are irrevocable until termination of this Security Agreement and may be exercised by the Secured Party's officers and employees, or any of them, upon the occurrence of an Event of Default hereunder: (a) to perform any obligation of FTI or I-Link hereunder in FTI's or I-Link's respective names or otherwise; (b) to give notice of the Secured Party's rights in the Collateral, to enforce the same, and make extension agreements with respect thereto; (c) to release persons liable on the Collateral and to give receipts and acquittance and compromise disputes in connection therewith; (d) to release security; (e) to resort to security in any order; (f) to prepare, execute, file, record or deliver notes, assignments, schedules, designation statements, financing statements, continuation statements, termination statements, statements of assignment and applications or registration or like papers to perfect, preserve or release the Secured Party's interest in the Collateral; -6- (g) to verify facts concerning the Collateral by inquiry of obligors thereon, or otherwise; (h) to endorse, collect, deliver and receive payment under instruments for the payment of money constituting or relating to Collateral; (i) to prepare, adjust, execute, deliver and receive payment under insurance claims; (j) to exercise all rights, powers and remedies which FTI or I-Link would have, but for this Security Agreement, under all of the Collateral subject to this Security Agreement; and (k) to do all acts and things and execute all documents in the names of FTI or I-Link or otherwise, deemed by the Secured Party as necessary, proper and convenient in connection with the preservation, perfection or enforcement of its rights hereunder. 7. REMITTANCES. FTI and I-Link agree that upon the occurrence and ----------- during the continuance of an Event of Default or a Potential Default all cash or proceeds received by FTI or I-Link as a result of the sale, lease or other disposition of any Collateral, whether received by FTI or I-Link in the exercise of their collection rights hereunder or otherwise, shall be, at Secured Party's discretion, remitted to the Secured Party or deposited to an account for the benefit of the Secured Party (according to its instructions) in the form received (properly endorsed to the order of the Secured Party or for collection in accordance with the Secured Party's instructions) not later than the banking business day following the day of receipt, to be held as security for the payment of the Obligations secured hereby and applied by the Secured Party as provided in Section 8 hereof. FTI and I-Link agree not to commingle any such collections or proceeds with any of its other funds or property and agree to hold the same upon an express trust for the Secured Party until remitted to the Secured Party. 8. APPLICATION OF PROCEEDS. Except as expressly provided elsewhere ----------------------- in this Security Agreement, all proceeds of the sale of the Collateral by the Secured Party hereunder, and all other monies received by the Secured Party pursuant to the terms of this Security Agreement (whether through the exercise by the Secured Party of its rights of collection or otherwise), including, but not limited to, any awards or other amounts payable upon any condemnation or taking by eminent domain, shall be applied, as promptly as is practicable after the receipt thereof by the Secured Party as follows: FIRST: to the payment of all fees and expenses incurred by the Secured ----- Party or any custodian appointed hereunder, if not previously paid by FTI or I- Link, and all expenses incurred by the Secured Party in connection with any sale of the Collateral, including, but -7- not limited to, the expenses of taking, advertising, processing, preparing and storing the Collateral to be sold, all court costs and fees and expenses of counsel to the Secured Party in connection therewith, to the payment of all expenses to be paid by FTI or I-Link pursuant to Section 17 of this Security Agreement, and to the payment of all amounts for which the Secured Party is entitled to indemnification hereunder and all advances made by the Secured Party hereunder to the account of FTI or I-Link and the payment of all costs and expenses paid or incurred by the Secured Party in connection with the exercise of any right or remedy hereunder, to the extent that such advances, costs and expenses shall not theretofore have been reimbursed to the Secured Party by FTI or I-Link; SECOND: to the payment to the Secured Party of the interest then due and ------ payable on the Note; THIRD: to the payment to the Secured Party of the principal then due and ----- payable on the Note; FOURTH: to the payment to the Secured Party of any other amount owing to ------ the Secured Party under the Loan Agreement and any other documents related thereto or under any other agreement of the Company, FTI or I-Link with the Secured Party; and FIFTH: only if all of the foregoing have been paid in full, to FTI and I- ----- Link. Notwithstanding the sale or other disposition of any Collateral by the Secured Party hereunder, FTI and I-Link shall remain liable for any deficiency. 9. RIGHTS CUMULATIVE. The rights, privileges, powers and remedies ----------------- of the Secured Party shall be cumulative and no single or partial exercise of any of them shall preclude the further or other exercise of the same or any other of them. No delay or failure of the Secured Party in exercising any right, power, privilege or remedy hereunder shall affect such right, power, privilege or remedy. No single or partial exercise of any right, power, privilege or remedy or any abandonment or discontinuance of steps to enforce such right, power, privilege or remedy shall affect such right, power, privilege or remedy. Any waiver, permit, consent or approval of any kind by the Secured Party of any default hereunder, or any such waiver of any provisions or conditions hereof, must be in writing and shall be effective only to the extent set forth in writing and shall not constitute a waiver of any subsequent or other default. Failure of the Secured Party to insist upon strict performance or compliance by FTI or I-Link of any covenants, warranties or agreements in this Security Agreement shall not constitute a waiver of any subsequent or other failure to perform or comply with any covenants, warranties or agreements. 10. CONTINUING AGREEMENT. This is a continuing agreement and shall -------------------- remain in full force and effect and be binding upon FTI and I-Link and the successors -8- and assigns of FTI and I-Link until all of the Obligations shall have been fully satisfied and discharged. 11. REINSTATEMENT OF AGREEMENT. If the Secured Party shall have -------------------------- proceeded to enforce its rights under this Security Agreement and such proceedings shall have been discontinued or abandoned for any reason prior to the issuance of any judgment or award, then FTI and I-Link and the Secured Party shall be restored respectively to their positions and rights hereunder, and all rights, remedies and powers of FTI and I-Link and the Secured Party shall continue as though no such proceeding had been initiated. In the event of litigation arising under this Security Agreement, the prevailing party shall be entitled to, in addition to all other damages and remedies, reasonable attorneys' fees. 12. ASSIGNMENT. The Secured Party may assign and transfer any of the ---------- Obligations of FTI or I-Link and may deliver the Collateral, or any part thereof, to the assignee or transferee of any such obligation, who shall become vested with all the rights, remedies, powers, security interests and liens herein granted to the Secured Party in respect thereto; and the Secured Party shall thereafter be relieved and fully discharged from any liability or obligation under this Security Agreement. Neither FTI nor I-Link shall have the right to assign this Security Agreement without the prior written consent of the Secured Party. 13. DUTIES WITH RESPECT TO COLLATERAL. With respect to the --------------------------------- Collateral, the Secured Party shall be under no duty to send notices, perform services, pay for insurance, taxes or other charges or take any action of any kind in connection with the management thereof and its only duty with respect thereto shall be to use reasonable care in its custody and preservation while in its possession, which shall not include any steps necessary to preserve rights against prior parties. 14. PERFORMANCE OF OBLIGATIONS BY THE SECURED PARTY. If FTI or I-Link ----------------------------------------------- shall fail to do any act or thing which they have covenanted to do hereunder, or if any representation or warranty of FTI or I-Link shall be breached, the Secured Party may (but shall not be obligated to) perform such act or thing on behalf of FTI or I-Link or cause it to be done or remedy any such breach, and there shall be added to the liabilities of FTI or I-Link hereunder the cost or expense incurred by the Secured Party in so doing, and any and all amounts expended by the Secured Party in taking any such action shall be repayable to it upon demand being made to FTI or I-Link therefore and shall bear interest at the rate provided for in the Note, from and including the date advanced to the date of repayment. 15. MISCELLANEOUS. After due consideration and consultation with ------------- their attorneys, FTI and I-Link voluntarily and knowingly, to the extent permitted by law, agree as follows: (a) FTI and I-Link waive, except as expressly provided in the Loan -9- Agreement, presentment, protest, notice of protest, notice of dishonor and notice of nonpayment with respect to the Collateral to which the Secured Party is entitled hereunder; (b) FTI and I-Link waive any right to direct the application of payments or security for the Obligations of FTI or I-Link hereunder, or the indebtedness of customers of FTI or I-Link, and any right to require proceedings against others or to require exhaustion of the security; (c) FTI and I-Link consent to the extension or forbearance of the terms of the Obligations or indebtedness of customers, the release or substitution of security, and the release of guarantors, if any; and (d) FTI and I-Link waive notice or a judicial hearing prior to the exercise by the Secured Party of any right or remedy provided by this Security Agreement and also waive their rights, if any, to set aside or invalidate any sale duly consummated in accordance with the provisions of this Security Agreement on the grounds that the sale was consummated without a prior judicial hearing. 16. NOTICES. All notices or demands of any kind which may be ------- required or which the Secured Party desires to serve upon FTI or I-Link under the terms of this Security Agreement shall be served upon FTI or I-Link by personal service or by mailing a copy thereof by first class mail, postage prepaid, addressed to FTI or I-Link, at the respective addresses set forth in Section 8.3 of the Loan Agreement with the respective addresses of FTI and I- Link being the address of the Company in the Loan Agreement. Service by mail shall be determined to be effective when deposited in the mails. 17. EXPENSES. FTI and I-Link agree to pay on demand all fees, costs -------- and expenses of the Secured Party, or of any custodian or agent designated by the Secured Party, including the fees and out-of-pocket expenses of legal counsel, independent public accountants and other outside experts retained by the Secured Party in connection with the negotiation, administration or enforcement of this Security Agreement or any other instrument or document delivered pursuant hereto. 18. LAW APPLICABLE. This Security Agreement shall be governed by and -------------- construed in accordance with the laws of the State of Delaware other than the conflicts of law provisions thereof. 19. SEVERABILITY OF PROVISIONS. If any provision of this Security -------------------------- Agreement shall be held to be prohibited by or invalid under applicable law, such provision shall be ineffective only to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or any remaining provisions of this Security Agreement. -10- IN WITNESS WHEREOF, the parties hereto have caused this Security Agreement to be duly executed as of the day and year first written above. WINTER HARBOR, L.L.C. By: First Media, L.P., its member By: First Media Corporation, its sole general partner By: /s/ Ralph W. Hardy, Jr. --------------------------------- Name: Ralph W. Hardy, Jr. ------------------------------- Title: Secretary ------------------------------ I-LINK COMMUNICATIONS, INC. By: /s/ John Edwards --------------------------------- Name: John Edwards ------------------------------- Title: President ------------------------------ FAMILY TELECOMMUNICATIONS, INCORPORATED By: /s/ John Edwards --------------------------------- Name: John Edwards ------------------------------- Title: President ------------------------------ -11- EX-99.6 7 EXHIBIT 99(F) - SUBSIDIARY AGREEMENT Exhibit 99(f) SUBSIDIARY GUARANTY ------------------- THIS SUBSIDIARY GUARANTY is made and entered into as of June 6, 1997, by I- LINK COMMUNICATIONS, INC., a Utah corporation ("I-Link"), and FAMILY TELECOMMUNICATIONS, INCORPORATED, a Utah corporation ("FTI" and, together with I-Link, collectively the "Guarantors" and individually, a "Guarantor"), in favor of WINTER HARBOR, L.L.C., a Delaware limited partnership (the "Lender"). RECITALS -------- A. Medcross, Inc., a Florida corporation (the "Borrower"), owns all of the issued and outstanding shares of the capital stock of each of the Guarantors. The Borrower and the Lender have entered into a Loan Agreement dated as of even date herewith (as the same may be extended, amended, restated or modified from time to time, the "Loan Agreement"), which is hereby incorporated herein by this reference, pursuant to which the Lender has agreed to loan to the Borrower up to $2,000,000 on a term loan basis. All capitalized terms used herein and not otherwise defined herein shall have the meanings ascribed to such terms in the Loan Agreement. The proceeds of the Loans will be provided to the Guarantors for the acquisition of assets, for capital expenditures and for working capital purposes. B. It is a condition precedent to the extensions of credit to the Borrower under the Loan Agreement that the Guarantors, among other things, shall have executed and delivered this Guaranty. C. The Borrower and the Guarantors share an identity of interests as members of a consolidated group of companies engaged in substantially similar businesses. The Borrower provides certain centralized financial, accounting and management services to the Guarantors, and the making of the Loan will facilitate the expansion and enhance the overall financial strength and stability of the Borrower's corporate group, including the Guarantors. Accordingly, the Guarantors will derive substantial benefits as a result of the extensions of credit to the Borrower under the Loan Agreement, which benefits are hereby acknowledged by the Guarantors, and the Guarantors, therefore, desire to enter into this Guaranty in order to satisfy the condition precedent described in the preceding paragraph. AGREEMENTS ---------- In consideration of the foregoing Recitals, and of the Loan to be made by the Lender to the Borrower under the Loan Agreement, which will be of material economic benefit to the Guarantors, the Guarantors agree as follows in favor of the Lender: 1. Guaranty of Payment. The Guarantors, jointly and severally, ------------------- hereby absolutely, unconditionally and irrevocably guarantee as primary obligors, and not merely as sureties, the prompt performance and payment in full when due, whether at stated maturity, by acceleration or otherwise (including, without limitation, obligations that would become due but for the operation of the automatic stay under Section 362(a) of Title 11 of the United States Code, and including interest, fees and other charges whether or not a claim is allowed for such obligations in any such bankruptcy proceeding), of (i) all indebtedness, Obligations and liabilities of the Borrower arising at any time, now or in the future, pursuant to the Loan Agreement, the Note or any Loan Document; (ii) all reasonable costs and expenses incurred by the Lender, including, without limitation, reasonable attorneys fees and legal expenses, in the exercise, preservation or enforcement of any of the rights, powers or remedies of the Lender, or in the enforcement of the obligations of the Guarantors, hereunder and under any other Loan Document to which either Guarantor is a party; and (iii) any renewals, continuations or extensions of any of the foregoing (all of which are referred to herein as the "Guaranteed Obligations"). 2. Fraudulent Transfer Laws. Anything contained in this Guaranty to ------------------------ the contrary notwithstanding, the obligations of each Guarantor hereunder shall be limited to a maximum aggregate amount equal to the largest amount that would not render its obligations hereunder subject to avoidance as a fraudulent transfer or conveyance under Section 548 of Title 11 of the United States Code or any applicable provisions of comparable state law (collectively, the "Fraudulent Transfer Laws"), in each case after giving effect to all other liabilities of such Guarantor, contingent or otherwise, that are relevant under the Fraudulent Transfer Laws (specifically excluding, however, any liabilities of such Guarantor in respect of intercompany indebtedness to the Borrower or other affiliates of the Borrower to the extent that such indebtedness would be discharged in an amount equal to the amount paid by such Guarantor hereunder) and after giving effect as assets to the value (as determined under the applicable provisions of the Fraudulent Transfer Laws) of any rights to subrogation or contribution of such Guarantor pursuant to applicable law, this Guaranty or any other agreement providing for an equitable allocation among such Guarantor and other affiliates of the Borrower of obligations arising under guaranties by such parties. This Section 2 shall be construed with the goal of maximizing the amount payable by each Guarantor hereunder without rendering it insolvent, leaving it with an unreasonably small amount of capital with which to conduct its business or leaving it unable to pay its debts as they mature, and in determining the solvency or net worth of a Guarantor, its - 2 - right of contribution from the other Guarantors shall be taken into account to the fullest extent permitted by law. 3. Contribution. ------------ (a) The Guarantors desire to allocate among themselves in a fair and equitable manner their obligations arising under this Guaranty. Accordingly, in the event any payment or distribution is made by a Guarantor under this Guaranty (a "Funding Guarantor") that exceeds its Fair Share (as defined below), that Funding Guarantor shall be entitled to a contribution from each of the other Guarantors in the amount of such other Guarantor's Fair Share Shortfall (as defined below), with the result that all such contributions will cause each Guarantor's Aggregate Payments (as defined below) to equal its Fair Share. The amounts payable as contributions hereunder shall be determined as of the date on which the related payment or distribution is made by the applicable Funding Guarantor. The allocation among Guarantors of their obligations as set forth in this Section 3 shall not be construed in any way to limit the liability of either Guarantor hereunder. Any right of contribution which a Guarantor may have against any other Guarantor of the Guaranteed Obligations as a result of a payment pursuant to this Section 3 shall only be exercisable at such time and shall be subordinated as set forth in Section 13. (b) "Fair Share" means, with respect to a Guarantor as of any date of ---------- determination, an amount equal to (i) the ratio of (x) the Adjusted Maximum Amount (as defined below) with respect to such Guarantor to (y) the aggregate of the Adjusted Maximum Amounts with respect to both Guarantors, multiplied by (ii) the aggregate amount paid or distributed on or before such date by all Funding Guarantors under this Guaranty in respect of the Guaranteed Obligations. (c) "Fair Share Shortfall" means, with respect to a Guarantor as of -------------------- any date of determination, the excess, if any, of the Fair Share of such Guarantor over the Aggregate Payments of such Guarantor. (d) "Adjusted Maximum Amount" means, with respect to a Guarantor, the ----------------------- maximum aggregate amount of the obligations of such Guarantor under this Guaranty, determined in accordance with Section 2. (e) "Aggregate Payments" means, with respect to a Guarantor as of any ------------------ date of determination, the aggregate amount of all payments and distributions made on or before such date by such Guarantor in respect of this Guaranty (including, without limitation, in respect of this Section 3). - 3 - 4. Extension or Renewal of Guaranteed Obligations; Waiver. Each ------------------------------------------------------ Guarantor agrees that the Guaranteed Obligations may be extended or renewed, in whole or in part, without notice or further assent from it, that such Guarantor will remain bound upon this Guaranty notwithstanding any extension, renewal or other alteration of any Guaranteed Obligation and the guaranty herein made shall apply to the Guaranteed Obligations as so amended, renewed or altered. Each Guarantor waives diligence, presentment, demand of payment, filing of claims with a court in the event of insolvency or bankruptcy of the Borrower, any right to require a proceeding first against the Borrower, protest, notice and all demands whatsoever and covenants that its guaranty of the Borrower's Obligations under this Guaranty will not be discharged except by complete performance by the Borrower or another Guarantor of such Obligations. 5. Nature of Guaranty: Continuing, Absolute and Unconditional. ----------------------------------------------------------- (a) This Guaranty is and is intended to be a continuing guaranty of payment when due of the Guaranteed Obligations, and not of collection, and is independent of and in addition to any other guaranty, indorsement, collateral or other agreement held by the Lender therefor or with respect thereto, whether or not furnished by either Guarantor. Each Guarantor waives any right to require that any resort be had by the Lender to the other Guarantor or to any of the security held for payment of any of the Guaranteed Obligations or to any balance of any deposit account or credit on the books of the Lender in favor of the Borrower or any other Person. Upon the occurrence and during the continuance of any Event of Default, the Lender may, at its sole election, proceed directly and at once, without notice, against either or both of the Guarantors to collect and recover the full amount or any portion of the Guaranteed Obligations, without first proceeding against the Borrower, the other Guarantor or any other Person, or against any security or collateral for the Guaranteed Obligations. All Guaranteed Obligations shall be conclusively presumed to have been created in reliance hereon. (b) This Guaranty shall not be changed or affected by any representation, oral agreement, act or thing whatsoever, except as herein provided. This Guaranty is intended by the Guarantors to be the final, complete and exclusive expression of the agreement among the Guarantors and the Lender with respect to the subject matter hereof. (c) The obligations of the Guarantors under this Guaranty are absolute and unconditional and shall not be impaired or discharged by: - 4 - (i) the failure of the Lender to assert any claim or demand or to enforce any right or remedy against the Borrower, any other guarantor or any other party to a Loan Document under the provisions of the Loan Agreement, the Note, any Loan Document or any other agreement or otherwise; (ii) any extension, renewal or other alteration of any provision of the Loan Agreement, the Note, any Loan Document or any other agreement or otherwise; (iii) any rescission, waiver, amendment or modification of any of the terms or provisions of the Loan Agreement, the Note, any Loan Document or any other agreement or otherwise; (iv) the failure of the Lender to assert any claim or demand or to exercise or enforce any right or remedy under the Loan Agreement, any Loan Document or any other agreement or otherwise, or against any other guarantor of, or any other party which has provided security for, any of the Guaranteed Obligations; (v) the sale, exchange, release, surrender, realization of or upon or the failure to perfect with respect to or otherwise deal with in any manner and in any order any property by whomsoever at any time pledged or mortgaged to secure, or howsoever securing, the Guaranteed Obligations; (vi) the settlement or compromise of any of the Guaranteed Obligations, any security therefor or any liability (including any of those hereunder) incurred directly or indirectly in respect thereof or hereof, or any subordination of the payment of all or any part thereof to the payment of any liability (whether due or not) of the Borrower to creditors of the Borrower other than the Lender and the Guarantors; (vii) application of any sums by whomsoever paid or howsoever realized to any liability or liabilities of the Borrower to the Lender regardless of what liability or liabilities of the Borrower remain unpaid; (viii) the act or failure to act in any manner referred to in this Guaranty which may deprive either Guarantor of its right to subrogation or contribution against the Borrower or any other guarantor to recover any payments made pursuant to this Guaranty; or (ix) or any other act, agreement, thing, omission or delay to do any other act or thing that may or might in any manner or to any extent vary the risk of either Guarantor or that would otherwise operate as a discharge of a guarantor as a matter of law or equity. - 5 - (d) Each Guarantor's obligation hereunder is to pay the Guaranteed Obligations in full when due according to the Loan Agreement to the extent provided herein, and such obligation shall not be affected by any stay or extension of time for payment by the Borrower resulting from any proceeding under Title 11 of the United States Code, as now constituted or hereafter amended or replaced, or any similar federal or state law. 6. No Discharge or Diminishment of Guaranty. The obligations of the ---------------------------------------- Guarantors under this Guaranty shall not be subject to any reduction, limitation, impairment or termination for any reason (other than if the Guaranteed Obligations have been indefeasibly paid in full in cash), including, without limitation, any claim of waiver, release, surrender, alteration or compromise of any of the Guaranteed Obligations, and shall not be subject to any defense or setoff, counterclaim, recoupment or termination whatsoever by reason of the invalidity, illegality or unenforceability of any of the Guaranteed Obligations or any discharge of the Borrower from any of the Guaranteed Obligations in a bankruptcy or similar proceeding or otherwise. 7. Representations and Warranties. Each Guarantor hereby ------------------------------ represents, warrants and agrees as follows: (a) Such Guarantor (i) is a duly organized and validly existing corporation, in good standing under the laws of its state of incorporation, (ii) has the corporate power and authority to own its property and assets and to transact the business in which it is engaged and (iii) is duly qualified as a foreign corporation and in good standing in each jurisdiction where the ownership, leasing or operation of property or the conduct of its business requires such qualification, except where the failure to so qualify could not reasonably be expected to have a Material Adverse Effect. (b) Such Guarantor has the corporate power and authority to execute, deliver and perform the terms and provisions of this Guaranty, the Subsidiary Security Agreement and the other Loan Documents to which it is a party (collectively, the "Subsidiary Agreements") and has taken all necessary action to authorize the execution, delivery and performance by it of this Guaranty and the Subsidiary Agreements. Such Guarantor has duly executed and delivered this Guaranty and the Subsidiary Agreements, and this Guaranty and the Subsidiary Agreements constitute its legal, valid and binding obligations enforceable in accordance with their respective terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization or other similar laws affecting the enforcement of creditors' rights generally and by general principles of equity. - 6 - (c) Neither the execution, delivery or performance by such Guarantor of this Guaranty and the Subsidiary Agreements, nor compliance by it with the terms and provisions hereof and thereof, (i) will contravene any provision of any law, statute, rule or regulation or any order, writ, injunction or decree of any court or governmental instrumentality, (ii) will conflict or be inconsistent with or result in any breach of any of the terms, covenants, conditions or provisions of, or constitute a default under, or result in the creation or imposition of (or the obligation to create or impose) any lien, security interest or encumbrance (other than pursuant to the Loan Documents) upon any of the property or assets of such Guarantor pursuant to the terms of any indenture, mortgage, deed of trust, loan agreement or any other agreement, contract or instrument to which such Guarantor is a party or by which it or any of its property or assets is bound or to which it may be subject or (iii) will violate any provision of the organizational documents of such Guarantor. (d) No order, consent, approval, license, authorization or validation of, or filing, recording or registration with, or exemption by, any governmental or public body or authority, or any subdivision thereof, is required to authorize, or is required in connection with, the execution, delivery, performance, legality, validity, binding effect or enforceability of this Guaranty and the Subsidiary Agreements by or against such Guarantor. (e) There are no actions, suits or proceedings pending or, to the best knowledge of such Guarantor, threatened against or affecting such Guarantor. No judgment or order for the payment of money has been entered against such Guarantor which remains outstanding and unpaid. (f) There have been no changes in the business, properties, operations or condition, financial or otherwise, or prospects of such Guarantor since December 31, 1996, which could reasonably be expected to have a Material Adverse Effect. (g) Such Guarantor has received, or has the right hereunder to receive (including rights to contribution and subrogation), consideration which is the reasonably equivalent value of the obligations and liabilities that such Guarantor has incurred to the Lender. Such Guarantor is not insolvent as defined in Section 101 of Title 11 of the United States Code or any applicable state insolvency statute, nor, after giving effect to the consummation of the transactions contemplated herein, will such Guarantor be rendered insolvent by the execution and delivery of this Guaranty or any other Loan Document to which it is a party. Such Guarantor is neither engaged nor about to engage in any business or transaction for which the assets retained by it shall be an unreasonably small capital, taking into consideration the obligations to the Lender incurred - 7 - hereunder. Such Guarantor does not intend to, nor does it believe that it will, incur debts beyond its ability to pay them as they mature. (h) The representations and warranties contained in the Loan Agreement as they pertain to such Guarantor are true and correct in all material respects. 8. Covenants. --------- (a) Except as permitted in the Loan Agreement, each Guarantor will at all times preserve and keep in full force and effect its existence as a corporation, organized in its state of incorporation, and shall at all times preserve and keep in full force and effect all rights and franchises material to its business. (b) Each Guarantor shall comply in all material respects with all applicable material laws, rules, regulations and orders, such compliance to include, without limitation, paying when due all material taxes, assessments and governmental charges imposed upon it or upon any of its properties or assets or in respect of any of its franchises, businesses, income or property before any penalty or interest accrues thereon unless such taxes, assessments or governmental charges are being diligently contested by such Guarantor in good faith. (c) Each Guarantor shall keep and maintain books, records and accounts with respect to its operations sufficient to enable it to prepare its financial statements in accordance with generally accepted accounting principles, consistently applied, and shall permit the Lender and its officers, employees and authorized agents to examine, copy and make excerpts from such books and records and to inspect the properties of such Guarantor both real and personal at any reasonable time. (d) No Guarantor shall, directly or indirectly, incur, create, assume, guaranty or otherwise become or remain directly or indirectly liable with respect to, any indebtedness, except pursuant hereto or as expressly permitted in the Loan Agreement. (e) Each Guarantor shall comply with all of the covenants, agreements, terms and conditions set forth in the Loan Agreement and the other Loan Documents to the extent applicable to it. 9. Security. To secure timely payment of the Guaranteed Obligations -------- and performance in full of the obligations related thereto, each Guarantor is concurrently herewith entering into a Subsidiary Security Agreement pursuant to which such Guarantor is granting to the Lender a security interest in substantially all of such Guarantor's personal property. - 8 - 10. Information. Each Guarantor assumes all responsibility for being ----------- and keeping itself informed of the financial condition and assets of the Borrower and its subsidiaries and of all other circumstances bearing upon the risk of nonpayment of the Guaranteed Obligations and the nature, scope and extent of the risks which such Guarantor assumes and incurs hereunder, and agrees that the Lender shall not have any duty to advise such Guarantor of information known to it regarding such circumstances or risks. 11. Reinstatement. Each Guarantor agrees that this Guaranty shall ------------- continue to be effective or be reinstated, as the case may be, if at any time any payment, or any part thereof, of principal of, interest on or any other amount with respect to the Guaranteed Obligations is rescinded or must otherwise be restored by the Lender upon the bankruptcy, insolvency or reorganization of the Borrower, either Guarantor or any other Person. 12. Use of Proceeds. Each Guarantor further agrees, in furtherance --------------- of the foregoing and not in limitation of any other right that the Lender may have at law or in equity against either Guarantor by virtue hereof, upon the failure of the Borrower to pay any of the Guaranteed Obligations when and as the same shall become due, whether at stated maturity, by acceleration or otherwise (including, without limitation, amounts that would have become due but for the operation of the automatic stay under Section 362(a) of Title 11 of the United States Code), the Guarantors shall jointly and severally forthwith pay, or cause to be paid, in cash, to the Lender an amount equal to the sum of the unpaid principal amount of such Guaranteed Obligations then due as aforesaid, accrued and unpaid interest on such Guaranteed Obligations (including, without limitation, interest, fees and other charges that, but for the filing of a petition in bankruptcy with respect to the Borrower, would have accrued on such Guaranteed Obligations, whether or not a claim is allowed against the Borrower for such interest, fees or other charges in any such bankruptcy proceeding) and all other Guaranteed Obligations then owed to the Lender as aforesaid. All such payments shall be applied promptly, from time to time, by the Lender: First, to the payment of the costs and expenses of any collection or other ----- realization under this Guaranty, and all expenses, liabilities and advances made or incurred by the Lender in connection therewith; Second, after payment in full of the amounts specified in the preceding ------ subparagraph, to the payment in full of all other Guaranteed Obligations; and - 9 - Third, after payment in full of all Guaranteed Obligations, to the ----- Guarantors or to whomsoever may be lawfully entitled to receive the same or as a court of competent jurisdiction may direct, of any surplus then remaining from such payments. 13. Subrogation and Subordination. Until the indefeasible payment in ----------------------------- full in cash of the Guaranteed Obligations, each Guarantor hereby waives any claim, right or remedy, direct or indirect, that such Guarantor now has or may hereafter have against the Borrower or its assets in connection with this Guaranty or the performance by such Guarantor of its obligations hereunder, in each case whether such claim, right or remedy arises in equity, under contract, by statute, under common law or otherwise, including, without limitation (a) any right of subrogation, reimbursement or indemnification that such Guarantor now has or may hereafter have against the Borrower, (b) any right to enforce, or to participate in, any claim, right or remedy that the Lender now has or may hereafter have against the Borrower or any other guarantor, and (c) any benefit of, and any right to participate in, any collateral or security now or hereafter held by the Lender. In addition, until the Guaranteed Obligations shall have been indefeasibly paid in full in cash, each Guarantor shall withhold exercise of any right of contribution that such Guarantor may have against the other Guarantor or any other guarantor of the Guaranteed Obligations under Section 3 hereof or at law or in equity or otherwise. Each Guarantor further agrees that, to the extent the waiver of its rights of subrogation, reimbursement, indemnification and contribution as set forth herein is found by a court of competent jurisdiction to be void or voidable for any reason, such rights of subrogation, reimbursement or indemnification that such Guarantor may have against the Borrower or against any collateral or security, and any rights of contribution that such Guarantor may have against any such other guarantor, shall be junior and subordinate to any rights that the Lender may have against the Borrower, to all right, title and interest the Lender may have in any such collateral or security, and to any right the Lender may have against such other guarantor. The Lender may use, sell or dispose of any items of collateral or security as it sees fit without regard to any subrogation rights arising out of this Guaranty that either Guarantor may have and, upon any such disposition or sale, any rights of subrogation that either Guarantor may have shall, with respect to the collateral disposed of, terminate. If any amount shall be paid to either Guarantor on account of subrogation rights at any time when all Guaranteed Obligations shall not have been paid in full in cash, such amount shall be held in trust for the Lender and shall forthwith be paid over to the Lender to be credited and applied against the Guaranteed Obligations, whether matured or unmatured, in accordance with the terms of the Loan Agreement, the Note or any applicable Loan Document. - 10 - 14. Delays; Omissions. No delay or omission by the Lender in the ----------------- exercise of any right under this Guaranty shall impair any such right, nor shall it be construed to be a waiver thereof; nor shall any single or partial exercise of any right hereunder preclude any other or further exercise of any other right. 15. Modification. Any term of this Guaranty may be amended and the ------------ observance of any term of this Guaranty may be waived (either generally or in a particular instance and either retroactively or prospectively) only with the written consent of the affected Guarantor and the Lender. No waiver of any single breach or default under this Guaranty shall be deemed a waiver of any other breach or default. 16. Successors and Assigns. This Guaranty is a continuing guaranty ---------------------- and shall be binding upon the Guarantors and their successors and assigns; provided, however, that neither Guarantor may assign or transfer any of its - -------- ------- rights or obligations hereunder without the prior written consent of the Lender. This Guaranty shall inure to the benefit of the successors and assigns of the Lender. 17. GOVERNING LAW. THIS GUARANTY SHALL BE CONSTRUED IN ACCORDANCE ------------- WITH, AND GOVERNED BY, THE LAWS OF THE STATE OF DELAWARE WITHOUT REGARD TO THE CONFLICTS OF LAW PROVISIONS THEREOF. 18. ENFORCEMENT. EACH GUARANTOR (A) HEREBY IRREVOCABLY SUBMITS TO THE ----------- JURISDICTION OF THE FEDERAL AND STATE COURTS IN THE STATE OF DELAWARE FOR THE PURPOSE OF ANY SUIT, ACTION OR OTHER PROCEEDING ARISING OUT OF OR BASED UPON THIS GUARANTY OR THE SUBJECT MATTER HEREOF BROUGHT BY THE LENDER OR ITS SUCCESSORS OR ASSIGNS AND (B) HEREBY WAIVES, AND AGREES NOT TO ASSERT, BY WAY OF MOTION, AS A DEFENSE, OR OTHERWISE, IN ANY SUCH SUIT, ACTION OR PROCEEDING, ANY CLAIM THAT IT IS NOT SUBJECT PERSONALLY TO THE JURISDICTION OF THE ABOVE-NAMED COURTS, THAT ITS PROPERTY IS EXEMPT OR IMMUNE FROM ATTACHMENT OR EXECUTION, THAT THE SUIT, ACTION OR PROCEEDING IS BROUGHT IN AN INCONVENIENT FORUM, THAT THE VENUE OF THE SUIT, ACTION OR PROCEEDING IS IMPROPER OR THAT THIS GUARANTY OR THE SUBJECT MATTER HEREOF MAY NOT BE ENFORCED IN OR BY SUCH COURT, AND (C) HEREBY WAIVES AND AGREES NOT TO SEEK ANY REVIEW BY ANY COURT OF ANY OTHER JURISDICTION WHICH MAY BE CALLED UPON TO GRANT AN ENFORCEMENT OF THE JUDGMENT OF ANY SUCH DELAWARE STATE OR FEDERAL COURT. EACH GUARANTOR HEREBY CONSENTS TO SERVICE OF PROCESS BY REGISTERED MAIL AT THE ADDRESS TO WHICH NOTICES ARE TO BE GIVEN. EACH GUARANTOR AGREES THAT ITS SUBMISSION TO JURISDICTION AND ITS CONSENT TO SERVICE OF PROCESS BY MAIL IS MADE FOR THE EXPRESS BENEFIT OF THE LENDER. FINAL JUDGMENT AGAINST EACH GUARANTOR IN ANY SUCH ACTION, SUIT OR PROCEEDING MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT, ACTION OR PROCEEDING ON THE JUDGMENT, OR IN ANY OTHER MANNER PROVIDED BY - 11 - OR PURSUANT TO THE LAWS OF SUCH OTHER JURISDICTION; PROVIDED, HOWEVER, THAT THE -------- ------- LENDER MAY AT ITS OPTION BRING SUIT, OR INSTITUTE OTHER JUDICIAL PROCEEDINGS, AGAINST EACH GUARANTOR OR ANY OF ITS ASSETS IN ANY STATE OR FEDERAL COURT OF THE UNITED STATES OR OF ANY COUNTRY OR PLACE WHERE SUCH GUARANTOR, OR SUCH ASSETS, MAY BE FOUND. 19. JURY TRIAL WAIVER. EACH GUARANTOR WAIVES IRREVOCABLY, TO THE ----------------- EXTENT PERMITTED BY LAW, ALL RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE, BETWEEN THE LENDER AND SUCH GUARANTOR ARISING OUT OF, IN CONNECTION WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED BETWEEN THEM IN CONNECTION WITH THIS GUARANTY OR THE NOTE OR OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH OR THE TRANSACTIONS RELATED HERETO. 20. Notices. All notices, demands and requests required or permitted ------- to be given under the provisions of this Guaranty shall be in writing and shall be deemed to have been duly delivered and received if given in accordance with the provisions of the Loan Agreement with the address of the Guarantors being the address of the Borrower in the Loan Agreement. 21. Separability. If any one or more of the provisions contained in ------------ this Guaranty should be invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of all remaining provisions shall not in any way be affected or impaired. Any provision of this Guaranty which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof or affecting the validity or enforceability of such provision in any other jurisdiction. 22. Section Headings. The section headings contained herein are for ---------------- reference purposes only and shall not in any way affect the meaning and interpretation of this Guaranty. 23. Counterparts. This Guaranty may be executed in any number of ------------ counterparts or duplicate originals, each of which shall be deemed to be an original, but all of which together shall constitute one and the same instrument. - 12 - IN WITNESS WHEREOF, the Guarantors have caused this Subsidiary Guaranty to be duly executed as of the day and year first written above. GUARANTORS: I-LINK COMMUNICATIONS, INC. By: /s/ John Edwards --------------------------- Name: John Edwards ------------------------- Its : President ------------------------ FAMILY TELECOMMUNICATIONS, INCORPORATED By: /s/ John Edwards --------------------------- Name: John Edwards ------------------------- Its : President ------------------------ - 13 - EX-99.7 8 EXHIBIT 99(G) - ASSIGNMENT FOR SECURITY Exhibit 99(g) ASSIGNMENT FOR SECURITY ----------------------- THIS ASSIGNMENT FOR SECURITY (the "Assignment") is made and entered into as of June 6, 1997, by and between I-LINK COMMUNICATIONS, INC., a Utah corporation (the "Debtor"), and WINTER HARBOR, L.L.C., a Delaware limited partnership (the "Secured Party"). RECITALS -------- A. Medcross, Inc., a Florida corporation ("Medcross"), owns all of the issued and outstanding shares of the capital stock of the Debtor. Medcross and the Secured Party have entered into a Loan Agreement, of even date herewith (as the same may be extended, amended, restated or modified from time to time, the "Loan Agreement"), which is hereby incorporated herein by this reference, pursuant to which the Secured Party has agreed to loan to Medcross up to $2,000,000 on a term loan basis. All capitalized terms used herein and not otherwise defined shall have the meanings assigned to them in the Loan Agreement. The proceeds of the Loan will be provided to the Debtor for the acquisition of assets, for capital expenditures and for working capital purposes. B. The Debtor owns the Patents listed on Schedule A attached hereto. ---------- C. The Debtor and FAMILY TELECOMMUNICATIONS, INCORPORATED ("FTI"), each a Utah corporation and a wholly owned subsidiary of Medcross, have guaranteed the obligations of Medcross under the Loan Agreement and the Note pursuant to the terms of a Subsidiary Guaranty of even date herewith (the "Guaranty"). D. The Debtor and FTI have entered into a separate security agreement with the Secured Party of even date herewith (the "Security Agreement"), which is hereby incorporated herein by this reference, pursuant to which the Debtor and FTI have granted to the Secured Party a first priority perfected security interest in the Collateral (as such term is defined in the Security Agreement), including all of the Debtor's right, title and interest in all Patents and all proceeds thereof, including, without limitation, any and all causes of action which may exist by reason of infringement thereof (the "Intellectual Property"), to secure the payment, performance and observance of the Debtor's obligations under the Guaranty and Medcross' obligations under the Loan Agreement and under the Note. It is a condition precedent to the extensions of credit to Medcross under the Loan Agreement that the Debtor, among other things, shall have executed and delivered this Assignment. E. Medcross and the Debtor share an identity of interests as members of a consolidated group of companies engaged in substantially similar businesses. Medcross provides certain centralized financial, accounting and management services to the Debtor and the making of the Loan will facilitate the expansion and enhance the overall financial strength and stability of Medcross' corporate group, including the Debtor. Accordingly, the Debtor will derive substantial benefits as a result of the extensions of credit to Medcross under the Loan Agreement, which benefits are hereby acknowledged by the Debtor, and the Debtor, therefore, desires to enter into this Assignment in order to satisfy the condition precedent described in the preceding paragraph. AGREEMENTS ---------- In consideration of the foregoing Recitals, and of the agreements made herein, and of the Loan to be made by the Secured Party to the Debtor, the Debtor and the Secured Party agree as follows: 1. DEFINITION OF PATENT. The term "Patent" means (i) all pending -------------------- and registered patents and patent applications currently owned by the Debtor whether or not listed on Schedule A and all future patents that are filed by and ---------- issued under the ownership of the Debtor; (ii) all reissues, continuations, continuations in part, re-examinations, extensions and renewals of the Patents and all licenses of the Patents; and (iii) the right to sue for past, present and future infringements thereof. 2. GRANT OF ASSIGNMENT. The Debtor hereby grants to the Secured ------------------- Party a security interest in, and mortgage on the Patent to secure the prompt payment, performance and observance of the Obligations (as such term is defined in the Security Agreement). 3. SPECIAL REPRESENTATIONS AND COVENANTS OF THE DEBTOR. The Debtor, --------------------------------------------------- in addition to the representations, warranties and covenants contained in the Security Agreement, hereby represents to and covenants with the Secured Party as follows: (a) The Debtor has the full and clear ownership of the Patents, in each case, free and clear of any security interest, pledge, mortgage, charge or encumbrance, including, without limitation, any assignments, licenses or covenants not to sue third parties, except for Permitted Liens and the security interest granted hereby, and such registrations are valid and subsisting and in full force and effect. (b) Except to the extent that the Secured Party shall consent in writing, the Debtor will not do any act or knowingly omit to do any act whereby the Patents may become invalidated or subject to any claim of abandonment for non-use. (c) As of the date of this Assignment, the Debtor owns no Patent and has no Patent registered in, or the subject of pending applications in, the United States Patent and Trademark Office, the United States Copyright Office, or any similar office or agency in any state or country, any political subdivision thereof, other than those Patents described in Schedule A. ---------- -2- (d) The Debtor has not granted any license, sublicense or other right whatsoever to any third party for the use by such party of the Patents on any product or in any other manner. (e) The Debtor agrees that until the Obligations (as such term is defined in the Security Agreement) are fully satisfied, the Debtor will not enter into any agreement which is inconsistent with the Debtor's obligations under this Assignment without the Secured Party's prior written consent. 4. ATTORNEY-IN-FACT. The Debtor hereby appoints the Secured Party ---------------- as its attorney-in-fact, with full power of substitution, for the purpose of carrying out the provisions of this Assignment and taking any action and executing any instruments with respect to the Patents (including, without limitation, filings, renewals, conveyances, assignments, and transfers) which the Secured Party may deem necessary or advisable to accomplish the purposes hereof, which appointment as attorney-in-fact is coupled with an interest and is irrevocable. The Debtor shall indemnify and hold harmless the Secured Party from and against any liability or damage which it may incur in the exercise and performance, in good faith, of the Secured Party's powers and duties under this Assignment. 5. SECURITY AGREEMENT. Notwithstanding any other provision of this ------------------ Assignment, the rights and responsibilities of the parties hereunder are subject to the provisions of the Security Agreement. -3- IN WITNESS WHEREOF, the undersigned have executed this Assignment for Security on the day and year first above written. SECURED PARTY: WINTER HARBOR, L.L.C. By: First Media, L.P., its member By: First Media Corporation, its sole general partner By: /s/ Ralph W. Hardy, Jr. --------------------------------- Name: Ralph W. Hardy, Jr. ------------------------------- Title: Secretary ------------------------------- Washington ) ) ss: District of Columbia ) Subscribed to and sworn before me this 9th day of June, 1997 --- ---- /s/ Laurel Starkey ------------------------------------- Laurel Starkey NOTARY PUBLIC My Commission Expires: March 31, 2001 -------------- DEBTOR: I-LINK COMMUNICATIONS, INC. By: /s/ John Edwards ---------------------------------- Name: John Edwards -------------------------------- Title: President ------------------------------- State of Utah ) ------------- ) ss: County of Salt Lake ) ------------ Subscribed to and sworn before me this 5th day of June, 1997 --- ---- /s/ Lynne Lybbert -------------------------------------- Lynne Lybbert NOTARY PUBLIC My Commission Expires: April 26, 1999 -------------- -4- SCHEDULE A ---------- PATENTS ------- All patent applications the Debtor has filed with the United States Patent and Trademark Office, including without limitation, Patent Application No. 08/599,238 filed February 9, 1996 and entitled "Voice Internet Transmission System" and Patent Application No. 08/585,628 filed January 16, 1996, and entitled "Facsimile Internet Transmission System". EX-99.8 9 EXHIBIT 99(H) - LETTER OF INTENT Exhibit 99(h) WINTER HARBOR, LLC 11400 SKIPWITH LANE TELEPHONE: (301) 983-2424 POTOMAC, MARYLAND 20854 FACSIMILE: (301) 983-2425 June 6, 1997 Medcross, Inc. 13751 South Wadsworth Park Drive Suite 200 Draper, Utah 84020 Attention: John W. Edwards, President - --------- Re: Proposed Purchase of Series M Preferred Stock --------------------------------------------- Ladies and Gentlemen: This letter is intended to set forth the basic terms of a purchase by Winter Harbor, L.L.C., a Delaware limited liability company, or an affiliate thereof ("Purchaser"), of Series M Preferred Stock (the "Stock") of Medcross, Inc., a Florida corporation ("Medcross"). This letter expresses only the interest of Purchaser in exploring a purchase of the Stock on terms substantially as described in the Term Sheet, of even date, attached hereto as Exhibit A, and shall not be construed to create any legally binding obligation on the part of Purchaser or Medcross; provided, however, that the provisions of -------- ------- the second to last paragraph of this letter shall be binding upon Medcross and shall survive the execution of this letter and the execution of any definitive documentation pursuant hereto. The parties will undertake to negotiate a definitive securities purchase agreement, setting forth the terms and conditions of the purchase, which would supersede all prior agreements, if any, between Purchaser and Medcross relating to the contemplated acquisition of the Stock. Neither party would have any obligation or liability to the other prior to the execution of such a securities purchase agreement (except for the obligations of Medcross pursuant to the second to last paragraph of this letter), nor would either party have any obligation or liability to the other party for failure of such securities purchase agreement to be executed for any reason whatsoever. Medcross, Inc. June 6, 1997 Page 2 For a period of ninety (90) days after the date hereof, Medcross agrees, in consideration of the expenses to be incurred by Purchaser in pursuing the purchase of the Stock, that it will not discuss or negotiate with any other person or entity or entertain or consider any proposals relating to the possible financing of Medcross or the sale or issuance of any material portion of its capital stock. If the foregoing is acceptable, please countersign below to confirm your intent to proceed with negotiations consistent with the terms of this letter. Very truly yours, WINTER HARBOR, L.L.C. By: First Media, L.P., its General Manager/Member By: First Media Corporation, its sole general partner By: /s/ Ralph W. Hardy, Jr. ------------------------- Ralph W. Hardy, Jr. Secretary The foregoing is hereby ACCEPTED and AGREED to: MEDCROSS, INC. By: /s/ John Edwards ------------------------- Name: John Edwards ----------------------- Title: President ---------------------- - 2 - EX-99.9 10 EXHIBIT 99(I) - TERM SHEET FOR PROPOSED EQUITY Exhibit 99(i) MEDCROSS, INC. (I-LINK) ----------------------- June 6, 1997 Term Sheet for Proposed Equity Investment by Winter Harbor, L.L.C. Issuer.............................. Medcross, Inc. (to be renamed "I-Link Communications, Inc."), a Florida corporation ("I-Link"). Investor............................ Winter Harbor, L.L.C., a Delaware limited liability company, or an affiliate of First Media, L.P., its sole member, controlled by the controlling stockholder of First Media's sole general partner ("Winter Harbor") Debt Investment..................... Winter Harbor will extend to I-Link a $2,000,000 Senior Secured Term Loan (the "Loan"), and in connection therewith I-Link will issue to Winter Harbor warrants to acquire 500,000 shares of the common stock of I-Link at an exercise price of $4.97 per share, subject to adjustment, all on the terms and subject to the conditions specified in the April 11, 1997 commitment letter (including Exhibit A thereto) between Winter Harbor and I-Link, as the same may be modified from time to time. Equity Investment................... Winter Harbor will invest $12,100,000 in a new series of I-Link convertible, participating preferred stock to be created (the "Series M Preferred Stock"). Price per Share of Series M Preferred Stock.................... $ 2.75. Number of Shares of Series M Preferred Stock to be Issued....... 4,400,000. Dividends........................... The Series M Preferred Stock will be entitled to receive cumulative dividends in the amount of 10% per annum before any other class of preferred or common stock receives any dividends. Thereafter, the Series M Preferred Stock will participate with the common stock in the issuance of any dividends on a per share basis. Liquidation Preference.............. Upon any liquidation, dissolution or winding up of I-Link, Winter Harbor shall be entitled to receive from assets available for distribution to shareholders, before any payment or distribution to any other class of the capital stock of I-Link, an amount in cash (and, to the extent sufficient cash is not available for such payment, property at its fair market value), equal to such amount as, when combined with the aggregate of all other distributions made by I-Link to Winter Harbor, is sufficient to effect a return to Winter Harbor of its purchase price for the Series M Preferred Stock plus a cumulative preferred return of 10% per annum compounded annually from the closing date on its purchase of the Series M Preferred Stock. Thereafter, any remaining cash or assets available for distribution to the shareholders of I-Link would be distributed first to the holders of any other preferred stock of I-Link in accordance with the terms of I-Link's Articles of Incorporation, and then to the holders of the Series M Preferred Stock and the holders of the Common Stock on a per share basis. A merger or consolidation of I-Link as a result of which the shareholders of I-Link do not continue to hold more than a 50% interest in the successor entity or a transaction or series of related transactions in which I-Link's shareholders transfer more than 50% of the voting power of I-Link, or a sale of all or substantially all of its assets shall be deemed to be a -2- "liquidation, dissolution or winding up of I-Link" for purposes of the liquidation preference. Voluntary Conversion................ Each share of the Series M Preferred Stock will be convertible at any time prior to the fifth anniversary of the issuance thereof at the sole option of Winter Harbor into one share of I-Link common stock at any time at no cost. The one-to-one conversion factor will be appropriately adjusted upon the happening of certain events, such as, but not limited to, the issuance of stock dividends, the recapitalization of I-Link, and the issuance of stock at less than the fair market value thereof. Automatic Conversion................ The Series M Preferred Stock will be automatically converted on the fifth anniversary of the issuance thereof into I-Link common stock at no cost. The conversion price shall be equal to the lower of $2.75 per share or 50% of the average closing bid price of the Common Stock for the ten trading days immediately preceding the fifth anniversary of such issuance. The conversion price will be appropriately adjusted upon the happening of certain events, such as, but not limited to, the issuance of stock dividends, the recapitalization of I-Link, and the issuance of stock at less than the fair market value thereof. Voting Rights....................... The Series M Preferred Stock will vote with the Common Stock on an as-converted basis on all matters which are submitted to a vote of the stockholders, except those matters as to which, by law or by the Articles of Incorporation or By-Laws of I-Link, the Series M Preferred Stock is to vote as a separate class. Appointment of Directors............ The Series M Preferred Stock will have the right to appoint two -3- directors to the I-Link Board of Directors. Consummation of Equity Upon the closing of the issuance of Offering............................ the Series M Preferred Stock, Winter Harbor shall be entitled to a credit against the purchase price of the Series M Preferred Stock in the amount of principal and accrued interest under the Loan; and the notes evidencing the Loan shall be cancelled. Additional Warrants................. As additional consideration for its equity financing commitments, Winter Harbor will be issued additional warrants by I-Link to acquire (a) 2,500,000 shares of the common stock of I-Link at an exercise price of $2.75 per share, subject to adjustment (the "Series A Warrants"), (b) 2,500,000 shares of the common stock of I-Link at an exercise price of $4.00 per share, subject to adjustment (the "Series B Warrants") and (c) 5,000,000 shares of the common stock of I-Link at an exercise price of $9.31, subject to adjustment (the "Series C Warrants" and, together with the Series A Warrants and the Series B Warrants, collectively, the "Warrants"). The Series A Warrants will be exercisable at any time during the thirty month period following the date of issuance, and the Series B Warrants and the Series C Warrants will be exercisable at any time during the five-year period following the date of issuance. All of the Warrants (i) will have registration rights and anti-dilution protection as summarized below, and (ii) will contain a standard cashless exercise provision. Antidilution The exercise price of the Warrants Provisions.......................... and the number of shares of I-Link common stock to be issued upon conversion of the Series M Preferred -4- Stock and upon exercise of the Warrants shall be subject to adjustment to prevent dilution (i) in the event that I-Link issues additional shares of common stock (except for the issuance of common stock upon the conversion of existing shares of I-Link Class B or Class C preferred stock, and except for the issuance of shares pursuant to existing warrants or employee stock benefit programs); (ii) in the event that I-Link issues other securities convertible into or exchangeable for shares of I-Link's common stock; and (iii) upon stock splits, stock dividends, combinations, recapitalizations, reclassifications or other similar events; provided, however, that if I-Link issues common stock in connection with an acquisition or other transaction, in either case approved in writing by Winter Harbor, then the adjustment required by this paragraph shall not be made unless I-Link agrees to such adjustment in connection with obtaining Winter Harbor's consent to such acquisition or other transaction. The exercise price for each of the Warrants shall be adjusted on a "full ratchet" basis in the cases of (i) and (ii) above when the issuance of the securities described therein occurs at a price per share that is less than the exercise price of such Warrant (as such exercise price amount may be further adjusted). In addition, if, as of the time of exercise of any Series B Warrant or Series C Warrant, the average closing bid price of the I-Link common stock for the five trading days immediately preceding the date of exercise is less than the stated exercise price of such Warrant, then the exercise price of such Warrant shall be reduced to such average closing bid price; provided, however, that in no event will the -5- exercise price of the Series B Warrants or the Series C Warrants fall below $2.75 as a result of the application of this sentence. Covenants........................... The purchase agreement for the Series M Preferred Stock, or the designation of the terms of the Series M Preferred Stock or other documents or instruments acceptable to Winter Harbor, shall provide that neither I-Link nor any of its subsidiaries shall take any of the following actions without the prior written consent of Winter Harbor: (i) the creation, authorization, designation or issuance of any class or series of equity securities; (ii) any merger, recapitalization or consolidation with or into any other entity, or the sale, lease or other disposition of all or substantially all of its assets; (iii) any liquidation or dissolution; (iv) any sale, lease or other disposition of assets with a value in excess of $250,000; (v) any acquisition of assets with a value in excess of $250,000; (vi) the incurrence or prepayment of any indebtedness (or the entry into any guarantee arrangement); (vii) the making of any dividend, distribution or redemption payment with respect to any of its equity interests; (viii) the creation of any subsidiary or any investment in equity of another entity; -6- (ix) the entry into or amendment of any contract or other arrangement or transaction with any affiliate of I-Link or of any of its shareholders; (x) the entry into any business other than the business as presently proposed to be conducted by I-Link and its subsidiaries; (xi) the adoption or amendment of the annual budget for I-Link and its subsidiaries; (xii) the hiring of executive officers, managers and key employees; (xiii) the initiation or settlement of litigation involving amounts in controversy in excess of $250,000; (xiv) the engagement or change of independent certified public accountants; (xv) the adoption or amendment of any employee benefit plan or program; (xvi) the making of any assignment for the benefit of creditors or the application for the appointment of a receiver or the filing of any petition initiating (or consenting to the initiation of) any bankruptcy or insolvency proceeding or the taking of any similar action; and (xvii) the entry into any commitment or series of related commitments involving a payment or payments by I- Link or any of its subsidiaries of an aggregate amount in excess of $500,000. Tag-Along Rights.................... If certain stockholders or group of such stockholders to be specified (which shall include the key I-Link management group)(the "Selling Stockholders") propose to effect a transfer to a third party (a "third -7- party") of their interests in I-Link, Winter Harbor shall have the option to require such Selling Stockholders to provide, as part of such transfer, that the third party shall grant Winter Harbor the right to participate in such transaction on the same terms and conditions as the Selling Stockholders and transfer to such third party the same proportion of Winter Harbor's common stock interest in I-Link (determined on an "as converted" basis with respect to its equity interest in I-Link and its Warrants relating to I-Link common stock), in accordance with customary "tag-along" terms and conditions and, if such option is exercised by Winter Harbor, the Selling Stockholders shall not proceed with such transaction unless Winter Harbor is given the right to so participate. The foregoing tag-along rights shall not apply to (a) pledges of stock to financial institutions by any officer of I-Link to secure personal borrowings, (b) the foreclosure by any such financial institution on any such pledged stock, (c) transfers from an officer of I-Link to a person who is currently an executive officer of I-Link or (d) other transfers or series of related transfers of fewer than 250,000 shares in the aggregate of I-Link stock not involving a change of control of management of I-Link. Registration Rights................... Winter Harbor shall be entitled to request that I-Link file a registration statement with respect to any shares of I-Link held by Winter Harbor, and I-Link will use its best efforts to cause such shares to be registered. Winter Harbor shall be permitted to effect three registrations under the foregoing demand right provisions. In addition, Winter Harbor shall be entitled to "piggyback" registration -8- rights on all registrations (other than registrations on Form S-8 with respect to employee stock plans or registrations on Form S-4 with respect to Rule 145 transactions), subject to the right of I-Link's managing underwriters to reduce or exclude shares proposed to be registered based on market conditions. Winter Harbor also shall be entitled to unlimited registrations on Form S-3 (assuming I-Link qualifies for Form S- 3), provided aggregate proceeds exceed $500,000 and subject to certain delay provisions. I-Link shall pay for the fees and expenses associated with all such registrations (including, without limitation, the fees and expenses of one special counsel, if any, for Winter Harbor), exclusive of underwriting discounts and commissions. Winter Harbor (and its affiliates and underwriters) shall be entitled to indemnification by I-Link pursuant to customary cross- indemnification provisions, with the indemnification obligations of any selling stockholder to be limited to the net proceeds received by such selling stockholder pursuant to such registration and public offering. Preemptive Rights..................... Winter Harbor shall have preemptive rights with respect to future issuances of equity interests or securities convertible into or exchangeable for equity interests of I-Link in order that Winter Harbor may purchase a number of such shares (or other securities) sufficient to permit Winter Harbor to maintain its proportional economic interest in I-Link. Reports............................... I-Link shall deliver to Winter Harbor: (i) monthly unaudited financial reports; -9- (ii) monthly operating reports; (iii) an annual audited financial report; and (iv) its annual financial plan and budget and such other information concerning the business and operations of I-Link or its financial condition as Winter Harbor may reasonably request. In addition, I-Link will permit Winter Harbor to visit and inspect I-Link's and its subsidiaries' properties, to examine its books of account and records and to discuss its affairs with management and its independent accountants, all at such reasonable times as shall be requested by Winter Harbor. Put Right........................... At any time beginning on or after a Change of Control (as shall be defined), Winter Harbor shall have the right (the "Put Right") to cause I-Link to purchase all, but not less than all, of the equity interests then held by Winter Harbor in I-Link at a price equal to the fair market value of such equity interests (the "Put Price"), as determined in accordance with procedures to be mutually agreed upon by Winter Harbor and I-Link and incorporated in the definitive documents for this transaction. Such procedures shall include provisions for an independent appraisal of the value of Winter Harbor's equity interests, with no discount for a minority position or illiquidity (i.e., treated as on the same basis as selling I-Link as a going concern). After the Put Price is established in accordance with such procedures, I-Link shall purchase the equity interests then held by Winter Harbor in I-Link, in accordance with -10- procedures to be mutually agreed upon by Winter Harbor and I-Link. If the purchase of such equity interests pursuant to the exercise of the Put Right would result in a breach or a default under any material credit agreement or other contractual obligation of I-Link, or if I-Link would thereby be rendered insolvent, I-Link will take all reasonable and lawful actions to avoid or cure such breach or default and enable I-Link to make such purchase to the fullest extent possible without thereby being rendered insolvent, including without limitation (i) the sale of additional equity securities, (ii) any necessary action under applicable law to reduce I-Link's stated capital or otherwise increase I- Link's surplus or other funds legally available, (iii) additional borrowings by, or a refinancing of, I-Link, and (iv) asset sales. Additional Closing Condition........ As a condition to Winter Harbor's obligation to purchase the Series M Preferred Stock, holders of warrants to acquire an aggregate of 1,000,000 shares of I-Link common stock, which warrants have an exercise price of not to exceed $2.00 per share, shall have entered into agreements with Winter Harbor to sell such warrants to Winter Harbor for an aggregate purchase price of $1,000,000, and the acquisition of such warrants shall be consummated simultaneously with the acquisition of the Series M Preferred Stock. Employment Agreements............... Winter Harbor will review the existing employment, non-competition and consulting agreements of I-Link's key executives. As a condition to Winter Harbor's investment in I-Link, the substance of all such agreements shall be satisfactory to Winter Harbor and not otherwise inconsistent with the terms set forth herein. -11- Key Person Insurance................ I-Link shall have made arrangements for key-man life insurance with respect to such executive officers as may be designated by Winter Harbor, and in such amount and upon such terms as otherwise shall be reasonably satisfactory to Winter Harbor. Expenses............................ I-Link shall pay all reasonable expenses of Winter Harbor incurred by it in connection with the equity financing described herein (including but not limited to attorney and other professional fees and expenses), without regard to whether or not the investment is consummated. Other Terms and Conditions.......... The Securities Purchase Agreement giving effect to the terms set forth herein shall contain such other representations, warranties, covenants and conditions as are customary for an investment of this nature and otherwise as may be required to give effect to the terms set forth herein. The agreements shall be governed by Delaware law, without regard to its provisions as to conflicts of law. -12- EX-99.10 11 EXHIBIT 99(J) - LETTER OF INTENT Exhibit 99(j) June 5, 1997 Mr. Dror Nahumi MIBridge, Inc. 1 Main Street, Suite 510 Eatontown, New Jersey 07724 Re: Letter of Intent Dear Mr. Nahumi: This letter shall express and confirm the intent of MEDCROSS, INC. (to be renamed I-Link Incorporated) ("I-Link"), MIBRIDGE, INC. ("MIBridge"), and DROR NAHUMI ("Nahumi") regarding the proposed acquisition of MIBridge by I-Link (the "Acquisition"). Other than the stand-still and confidentiality agreements set forth in the next to last paragraph of this letter, this letter of itself shall create no legally binding or enforceable agreement between the parties, but is intended to create a framework within which the parties can work together in good faith to bring about the Acquisition. The parties shall negotiate in good faith to finalize a written agreement (the "Agreement") of Acquisition. The Agreement shall include, in addition to general terms and conditions that are standard and customary in such transactions, the following terms and conditions: 1. I-Link shall acquire 100% of the issued and outstanding capital stock of MIBridge from Nahumi and any MIBridge employees who shall own any MIBridge shares (the "MIBridge Employees") in exchange for a purchase price consisting of the following: (a) A cash payment equal to $2,000,000 payable to Nahumi/MIBridge Employees in equal quarterly installments over a period of three years; (b) 1,000 shares of Series D Preferred Stock (the "Preferred Shares"). The Preferred Shares shall be convertible at the option of Nahumi/MIBridge Employees at any time during the nine months following the closing of the Acquisition ("Closing") into such number of Common Shares (the "Conversion Shares") as shall equal the sum of $6,250,000 divided by today's closing bid price of the Company's publicly-traded shares (the "Conversion Price"). The Preferred Shares shall automatically convert on the nine-month anniversary of the Closing, unless earlier converted by you. The Mr. Dror Nahumi June 5, 1997 Page 2 Preferred Shares shall be converted at the lower of (a) the Conversion Price, or (b) the average closing bid price for the five trading days immediately preceding the date of the Company received notice of conversion from you, or the date of automatic conversion, whichever the case may be. The Preferred Shares shall be entitled to receive dividends if and when dividends are declared on the Common Shares, and in an amount proportionate to the underlying Conversion Shares. The Conversion Shares shall carry piggyback registration rights permitting the holder(s) to include the Conversion Shares in any registration of securities with the U.S. Securities and Exchange Commission that I-Link shall undertake after the first anniversary of the Closing (excluding S-8 registration of employee stock options). Conversion into Common Shares is subject to Medcross shareholders increasing the authorized capital stock from 20,000,000 Common Shares to 50,000,000 Common Shares at annual shareholders meeting scheduled to take place in July 1997. 2. I-Link shall enter into an employment contract with Nahumi providing terms, conditions and benefits similar to those provided for in employment contracts existing with members of I-Link management, except that the Preferred Shares provided for under Section 1(b) above shall take the place of the stock option grant provided in other I-Link management employment agreements. Any future employee stock option grants to you or MIBridge employees shall be at the discretion of the Company's board of directors. Nahumi shall be appointed to manage the operations of MIBridge under the direction of I-Link, and shall devote his full-time to the operations of MIBridge. Nahumi shall have a title at least equal to the most senior executives reporting directly to the President of the Company. Nahumi's annual salary shall be at least $100,000. The employment contract shall contain standard confidentiality, non-competition and assignment of invention provisions similar to those contained in other I-Link employment contracts. 3. Until such time as the cash payment provided for in Section 1(a) above is paid in full, Nahumi shall have a perfected security interest in the MIBridge shares and/or assets. 4. There shall be no brokerage or finder fees payable to any party resulting from the Acquisition. For a period of thirty (30) days from the date of this letter, MIBridge and Nahumi shall not engage in discussions or negotiations with other parties for the acquisition of any portion of MIBridge or its assets without the consent of I-Link, which consent shall not be unreasonably withheld. The parties agree to keep both the existence and terms of this Letter of Intent confidential, and not to make any public announcement of the same without the prior written consent of the other; provided, however, the parties acknowledge that it is their intent to make a public announcement of this Letter of Intent as soon as is practicable. 2 Mr. Dror Nahumi June 5, 1997 Page 3 We look forward to working together to accomplish the Acquisition and greatly enhancing the values of our two companies. If you are in agreement with the provisions of this Letter of Intent, please sign where indicated below. Sincerely, MEDCROSS, INC. By: /s/ John W. Edwards -------------------------- John W. Edwards, President MIBRIDGE, INC. By: /s/ Dror Nahumi -------------------------- Dror Nahumi, President /s/ Dror Nahumi -------------------------- Dror Nahumi 3 -----END PRIVACY-ENHANCED MESSAGE-----