Exhibit 10.29


 


THIS
CONVERTIBLE PROMISSORY NOTE AND THE SECURITIES OF THE COMPANY ISSUABLE IN
CERTAIN CIRCUMSTANCES ON CONVERSION OF THIS NOTE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED. NEITHER THIS CONVERTIBLE PROMISSORY
NOTE NOR THE SECURITIES OF THE COMPANY ISSUABLE HEREUNDER MAY BE TRANSFERRED IN
THE ABSENCE OF REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR AN
EXEMPTION THEREFROM.


 


I-LINK INCORPORATED

CONVERTIBLE PROMISSORY NOTE


 


	
  $7,500,000

  	
   

  	
  December 10, 2002

  



 


FOR VALUE RECEIVED, I-Link Incorporated (the “Maker”) promises to pay
to Counsel Corporation (US), a Delaware corporation, or its assigns (the
“Payee”), in the lawful money of the United States of America (“Dollars” or
“$”) the principal sum of Seven Million Five Hundred ThousandDollars
($7,500,000) (the “Loan”) on March 1, 2004 the “Maturity Date”), together with
interest thereon from the date hereof to the Maturity Date as provided below.


 


1. Interest.  The
outstanding principal amount of this Note, together with unpaid interest, shall
bear interest at the rate of ten percent (10%) per annum, compounded
quarterly.  Interest on the outstanding
principal amount of this Note shall be calculated on the basis of a year of 360
days and actual days elapsed.  Interest
shall be payable on the last day of each quarter, commencing on March 31, 2003,
and on the Maturity Date (each an “Interest Payment Date”), provided that the
Payee may, in its sole discretion, elect to allow interest to accrue and become
payable on the Maturity Date.


 


2. Time and Place of Payments. 
The Maker may, from time to time, in its discretion, make one or more
periodic payments of principal or interest to the Payee.  All principal and interest due hereunder is
payable in Dollars in immediately payable funds at the Payee’s principal office
(or at such other office of the Payee as may be designated from time to time in
writing by the Payee) for the account of the Payee, not later than 11:00 a.m.,
New York City time, on the due date therefor. If any payment of principal or
interest on or with respect to this Note becomes due and payable on a Saturday,
Sunday or any other day on which commercial banks are required or authorized by
law or regulation to be closed in New York City, such amount shall be payable
on the next succeeding day which is not a Saturday, Sunday or other day on
which commercial banks are so required or authorized to be closed and, with
respect to any such payment of principal, interest shall continue to accrue
during any such extension period at the applicable rate of interest in effect
immediately prior to such extension.


 


3. Defaults and Remedies.


 


a.               The following
events shall be “Events of Default” hereunder:


 


(i)                                     the
Maker defaults on the Maturity Date in the payment of the principal amount of
this Note;


 

















 


(ii)                                  the
Maker defaults on any Interest Payment Date in the payment of interest on this
Note and such default continues for five (5) days;


 


(iii)                               the
Maker defaults under any other written agreement between the Maker and the
Payee or any affiliate of the Payee;


 


(iv)                              a
court of competent jurisdiction enters a decree or order in an involuntary case
under any present or future federal or state bankruptcy, insolvency or similar
law or appoints a conservator or receiver or liquidator in any insolvency,
readjustment of debt, marshalling of assets and liabilities or similar
proceedings, or for the winding-up or liquidation of the affairs of the Maker,
which decree or order shall have remained in force undischarged or unstayed for
a period of 30 days;


 


(v)                                 the
Maker consents to the appointment of a conservator or receiver or liquidator in
any insolvency, readjustment of debt, marshalling of assets and liabilities or
similar proceedings of or relating to it or of or relating to all or
substantially all of its property; or


 


(vi)                              the
Maker admits in writing its inability to pay its debts generally as they become
due, files a petition to take advantage of any applicable insolvency or
reorganization statue, makes an assignment for the benefit of its creditors, or
voluntarily suspends payment of its obligations;


 


b.              if an Event of Default, other than the
Event of Default specified in Sections 3(a)(iv), (v) or (vi), occurs and is
continuing, the Payee may, at its option and in addition to any right, power or
remedy permitted by law or equity or herein granted, by notice to the Maker
declare to be due and payable immediately the principal amount of this Note,
and upon any such declaration the same shall become and shall be immediately
due and payable, together with all accrued and unpaid interest thereon.  If an Event of Default specified in Sections
3(a)(iv), (v) or (vi) hereof occurs, the principal amount of this Note shall
automatically become and be immediately due and payable, without any declaration
or other act on the part of the Payee, together with all accrued and unpaid
interest thereon.  The Payee by notice
to the Maker may rescind an acceleration and its consequences if all existing
Events of Default have been cured or waived.


 


4. Conversion.


 


a.                                       The
Payee shall have the right, at its option, at any time, subject to the terms
and conditions hereof, to convert the unpaid principal amount of this Note or
any portion hereof (together with interest accrued on the principal amount of
this Note or portion thereof to be converted) into shares of the Maker’s common
stock, par value $.007 per share (the “Common Stock”), at the price of $0.08375
per share (the “Conversion Price”).


 


b.                                      As
a condition to its right to receive any securities into which this Note is
convertible, the Payee shall surrender this Note at the office of the Company,
and shall give written notice to the Company at such office that the Payee
elects to 


 

















 


convert all or part of this Note and shall
state therein the amount of this Note that the Payee is converting.  The Company shall, as soon as practicable
thereafter, issue and deliver at such office to the Payee, (i) a certificate or
certificates for the number of shares the Company’s common stock to which such
Payee shall be entitled as aforesaid, and (ii) to the extent the Payee has
converted this Note in part and not in full, a new convertible note, identical
in terms to this Note except that the principal amount thereof shall equal the
principal amount hereof less the amount converted by the Payee.  Such conversion shall be deemed to have been
made immediately prior to the close of business on the date of surrender of
this Note for conversion, in whole or in part, and the Payee shall be treated
for all purposes as the record Payee of such shares of common stock, as the
case may be, that the Payee is entitled to receive upon such conversion on such
date pursuant hereto.


 


c.                                       The
Conversion Price shall be subject to adjustment from time to time as set forth
below.


 


(i)            If the Maker shall issue, after the
date of this Note (the “Issue Date”), any Additional Stock (as defined below)
without consideration or for a consideration per share less than the higher of
the Conversion Price in effect immediately prior to the issuance of such
Additional Stock or the Fair Marker Value of the Common Stock (as defined
below), the Conversion Price in effect immediately prior to each such issuance
shall forthwith be reduced to whichever of the following Conversion Prices is
lower:


 


(x)            the
Conversion Price (calculated to the nearest 1/100 of a cent) determined by
dividing (1) the sum of (A) the product derived by multiplying the Conversion
Price in effect immediately prior to such issuance by total number of shares of
Common Stock issued and outstanding on a fully-diluted basis immediately prior
to such issuance, plus (B) the consideration, if any, received by the Maker
upon such issuance of Additional Stock by (2) the total number of shares of
Common Stock issued and outstanding on a fully-diluted basis immediately after
such issuance; or


 


(y)           the
Conversion Price (calculated to the nearest 1/100 of a cent) determined by
multiplying the Conversion Price in effect immediately prior to such issuance
by a fraction, the numerator of which shall be (1) the sum of (A) the total
number of shares of Common Stock issued and outstanding on a fully-diluted
basis immediately prior to such issuance, multiplied by the Fair Market Value
of the Common Stock determined as of the date of such issuance plus (B) the amount
of consideration, if any, received by the Maker upon such issuance of
Additional Stock and the denominator of which shall be (2) the product of the
Fair Market Value of the Common Stock, multiplied by the total number of shares
of Common Stock issued and outstanding on a fully-diluted basis immediately
after such issuance.


 


(A)          In
the case of the issuance of Common Stock for cash, the consideration shall be
deemed to be the amount of cash paid therefor before deducting any reasonable
discounts, commissions or other expenses allowed, paid or incurred by the Maker
for any underwriting or otherwise in connection with the issuance and sale
thereof.


 


(B)           In
the case of the issuance of the Common Stock for a consideration in whole or in
part other than cash, the consideration other than cash shall be 


 

















 


deemed to be
the fair value thereof as determined in good faith by the Board of Directors of
the Maker.


 


(C)           In
the case of the issuance of options to purchase or rights to subscribe for
Common Stock, securities by their terms convertible into or exchangeable for
Common Stock or options to purchase or rights to subscribe for such convertible
or exchangeable securities, the following provisions shall apply for all
purposes of this subparagraph 4(c)(i)(C) and subparagraph 4(c)(i)(D)):


 


(1)           The
aggregate maximum number of shares of Common Stock deliverable upon exercise
(assuming the satisfaction of any conditions to exercisability, including
without limitation, the passage of time, but without taking into account
potential antidilution adjustments) of such options to purchase or rights to
subscribe for Common Stock shall be deemed to have been issued at the time such
options or rights were issued and for a consideration equal to the
consideration (determined in the manner provided in subparagraphs 4(c)(i)(A)
and (B)), if any, received by the Maker upon the issuance of such options or
rights plus the minimum exercise price provided in such options or rights
(without taking into account potential antidilution adjustments) for the Common
Stock covered thereby.


 


(2)           The
aggregate maximum number of shares of Common Stock deliverable upon conversion
of or in exchange (assuming the satisfaction of any conditions to
convertibility or exchangeability, including, without limitation, the passage
of time, but without taking into account potential antidilution adjustments)
for any such convertible or exchangeable securities or upon the exercise of
options to purchase or rights to subscribe for such convertible or exchangeable
securities and subsequent conversion or exchange thereof, shall be deemed to
have been issued at the time such securities were issued or such options or
rights were issued and for a consideration equal to the consideration, if any,
received by the Maker for any such securities and related options or rights
(excluding any cash received on account of accrued interest or accrued
dividends), plus the minimum additional consideration, if any, to be received
by the Maker (without taking into account potential antidilution adjustments)
upon the conversion or exchange of such securities or the exercise of any
related options or rights (the consideration in each case to be determined in
the manner provided in subparagraphs 4(c)(i)(A) and (B)).


 


(3)           In
the event of any change in the number of shares of Common Stock deliverable or
in the consideration payable to the Maker upon exercise of such options or
rights or upon conversion of or in exchange for such convertible or
exchangeable securities, (excluding a change resulting solely from the
antidilution provisions thereof if such change results from an event which
gives rise to an antidilution adjustment under this paragraph 4(c)), the
Conversion Price, to the extent in any way affected by or computed using such
options, rights or securities, shall be recomputed to reflect such change, but
no further adjustment shall be made for the actual issuance of Common Stock or
any payment of such consideration upon the exercise of any such options or
rights or the conversion or exchange of such securities.


 


(4)           Upon
the expiration of any such options or rights, the termination of any such
rights to convert or exchange or the expiration of any options or rights
related to such convertible or exchangeable securities, the Conversion Price,
to the extent in any way affected by or computed using such options, rights or
securities or options or rights related to such securities, shall be recomputed
to reflect the issuance of only the number of shares of Common Stock (and
convertible or exchangeable securities which remain in effect) actually issued
upon the exercise of such options or rights, upon the conversion or exchange of
such securities or upon the exercise of the options or rights related to such
securities.


 

















 


(5)           The
number of shares of Common Stock deemed issued and the consideration deemed
paid therefor pursuant to subparagraphs 4(c)(i)(C)(1) and (2) shall be
appropriately adjusted to reflect any change, termination or expiration of the
type described in either subparagraphs 4(c)(i)(C)(3) and (4).


 


(D)          “Additional
Stock” shall mean any shares of Common Stock issued (or deemed to have been
issued pursuant to subparagraphs 4(c)(i)(C)) by the Maker after the Issue Date
other than


 


(1)           Common
Stock issued pursuant to a transaction described in subparagraphs 4(c)(i)(E)
hereof; or


 


(2)           shares
of Common Stock issuable or issued pursuant to a stock option, warrant,
conversion right, or purchase right outstanding as of the Issue Date.


 


(E)           “Fair
Market Value of the Common Stock” shall mean the average of the closing prices
of the Common Stock on all securities exchanges on which the Common Stock may
at the time be listed, or, if there has been no sales on any such exchange on
any day, the average of the highest bid and lowest asked prices on all such
exchanges at the end of such day, or, if on any day such security is not so
listed, the average of the representative bid and asked prices quoted in the
NASDAQ System as of 4:00 P.M., New York time, or, if on any day such security
is not quoted in the NASDAQ System, the average of the highest bid and lowest
asked prices on such day in the domestic over-the-counter market as reported by
the National Quotation Bureau, Incorporated, or any similar successor
organization, in each such case averaged over a period of 21 days consisting of
the day as of which “Fair Market Value” is being determined and the 20
consecutive Business Days prior to such day. 
If at any time such security is not listed on any securities exchange or
quoted in the NASDAQ System or the over-the-counter market, the “Fair Market
Value” shall be the fair value thereof determined in good faith by the Board of
Directors of the Maker.


 


(F)           In
the event the Maker should at any time or from time to time after the Issue
Date fix a record date for the effectuation of a split or subdivision of the
outstanding shares of Common Stock or the determination of holders of Common
Stock entitled to receive a dividend or other distribution payable in
additional shares of Common Stock or other securities or rights convertible
into, or entitling the holder thereof to receive directly or indirectly,
additional shares of Common Stock (hereinafter referred to as “Common Stock
Equivalents”) without payment of any consideration by such holder for the
additional shares of Common Stock or the Common Stock Equivalents (including
the additional shares of Common Stock issuable upon conversion or exercise
thereof), then, as of such record date (or the date of such dividend
distribution, split or subdivision if no record date is fixed), the Conversion
Price shall be appropriately decreased so that the number of shares of Common
Stock issuable on conversion of this Note shall be increased in proportion to
such increase in the aggregate of shares of Common Stock outstanding and those
issuable with respect to such Common Stock Equivalents.


 


(G)           If
the number of shares of Common Stock outstanding at any time after the Issue
Date is decreased by a combination of the outstanding shares of Common Stock,
then, following the record date of such combination, the Conversion Price shall
be appropriately increased so that the number of shares of Common Stock
issuable on conversion of this Note shall be decreased in proportion to such
decrease in outstanding shares.


 

















 


(ii)           In
the event the Maker shall declare a distribution payable in securities of other
persons, evidences of indebtedness issued by the Maker or other persons, assets
(excluding cash dividends) or options or rights not referred to in subparagraph
4(c)(i), then, in each such case for the purpose of this subparagraph 4(c)(ii),
the Payee shall be entitled to a proportionate share of any such distribution
as though it was the holder of the number of shares of Common Stock of the
Maker into which this Note is convertible as of the record date fixed for the
determination of the holders of Common Stock of the Maker entitled to receive
such distribution.


 


(iii)          If
at any time or from time to time there shall be a recapitalization of the
Common Stock (other than a subdivision, combination or merger or sale of assets
transaction provided for elsewhere in this paragraph 4(c)) provision shall be
made so that the Payee shall thereafter be entitled to receive upon conversion
of this Note the number of shares of stock or other securities or property of
the Maker or otherwise, to which a holder of Common Stock deliverable upon
conversion would have been entitled on such recapitalization.  In any such case, appropriate adjustment
shall be made in the application of the provisions of this paragraph 4(c) with
respect to the rights of the Payee after the recapitalization so that the
provisions of this paragraph 4(c) (including adjustment of the Conversion Price
then in effect and the number of shares issuable upon conversion of this Note) shall
be applicable after that event as nearly equivalent as may be practicable.


 


(iv)          The
Maker will not, by amendment of its Certificate of Incorporation or through any
reorganization, recapitalization, transfer of assets, consolidation, merger,
dissolution, issue or sale of securities or any other voluntary action, avoid
or seek to avoid the observance or performance of any of the terms to be
observed or performed hereunder by the Maker, but will at all times in good
faith assist in the carrying out of all the provisions of this paragraph 4(c)
and in the taking of all such action as may be necessary or appropriate in
order to protect the Conversion Rights of the Payee against impairment.


 


(v)           No
fractional shares shall be issued upon the conversion of this Note, and the
number of shares of Common Stock to be issued shall be rounded to the nearest
whole share.


 


(vi)          Upon
the occurrence of each adjustment or readjustment of the Conversion Price
pursuant to this paragraph 4(c), the Maker, at its expense, shall promptly
compute such adjustment or readjustment in accordance with the terms hereof and
prepare and furnish to the Payee a certificate setting forth such adjustment or
readjustment and showing in detail the facts upon which such adjustment or
readjustment is based.  The Maker shall,
upon the written request at any time of the Payee, furnish or cause to be
furnished to the Payee a like certificate setting forth (a) such adjustment and
readjustment, (b) the Conversion Price at the time in effect, and (c) the
number of shares of Common Stock and the amount, if any, of other property
which at the time would be received upon the conversion of this Note.


 


(vii)         In
the event of any taking by the Maker of a record of the holders of any class of
securities for the purpose of determining the holders thereof who are entitled
to receive any dividend (other than a cash dividend) or other distribution, any
right to subscribe for, purchase or otherwise acquire any shares of stock of
any class or any other securities or property, or to receive any other right,
the Maker shall mail to Payee, at least twenty (20) days prior to the date
specified therein, a notice specifying the date on which any such record is to
be taken for the purpose of such dividend, distribution or right, and the
amount and character of such dividend, distribution or right.


 

















 


(viii)        The
Maker shall at all times reserve and keep available out of its authorized but
unissued shares of Common Stock, solely for the purpose of effecting the
conversion of this Note, such number of its shares of Common Stock as shall
from time to time be sufficient to effect the conversion of the outstanding
principal amount of this Note and all accrued and unpaid interest; and if at
any time the number of authorized but unissued shares of Common Stock shall not
be sufficient to effect the conversion of the outstanding principal amount of
this Note and all accrued and unpaid interest, in addition to such other
remedies as shall be available to the Payee, the Maker will take such corporate
action as may, in the opinion of its counsel, be necessary to increase its
authorized but unissued shares of Common Stock to such number of shares as
shall be sufficient for such purposes, including, without limitation, engaging
in best efforts to obtain the requisite stockholder approval of any necessary
amendment to these provisions.


 


5. Restrictions.  The
Payee hereby acknowledges that the shares of the Company’s common stock
issuable upon conversion of this Note will constitute “restricted securities”
under the Securities Act of 1933, as amended. Each certificate representing
shares of the Company’s common stock issued upon conversion of this Note shall
be stamped or otherwise imprinted with a legend reading substantially as
follows:


 


“THE SHARES OF COMMON STOCK REPRESENTED BY
THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED.  THESE SHARES HAVE BEEN
ACQUIRED FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO DISTRIBUTION OR RESALE,
AND MAY NOT BE SOLD, ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED
WITHOUT AN EFFECTIVE REGISTRATION STATEMENT FOR SUCH SHARES UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND APPLICABLE STATE SECURITIES LAWS OR AN
OPINION OF COUNSEL SATISFACTORY TO THE ISSUER OF THESE SHARES TO THE EFFECT
THAT REGISTRATION IS NOT REQUIRED UNDER SUCH ACT AND SUCH STATE SECURITIES
LAWS.”


 


6. Stock Fully Paid.  The
Company covenants and agrees that all shares of capital stock which may be
issued pursuant to the terms hereof will, upon issuance in accordance with the
terms hereof (or upon exercise of any warrant issuable hereunder), be duly
authorized, validly issued, fully paid and nonassessable, free and clear of any
and all encumbrances (other than encumbrances created or granted by the Payee),
and of all taxes and charges with respect to the issue thereof, and that the
issuance thereof shall not give rise to any preemptive rights on the part of
any other person or entity.


 


7. Par Value.  Before
taking any action which would cause an adjustment reducing the Conversion Price
below the then par value of the shares of Common Stock issuable upon conversion
of the Note, the Company will take any corporate action which may, in the
opinion of its counsel, be necessary in order that the Company may validly and
legally issue fully paid and nonassessable shares of Common Stock at such
adjusted Conversion Price.


 


8. Taxes.  The Company
shall pay all documentary, stamp or other transactional taxes attributable to
the issuance or delivery of shares of the Company’s common stock pursuant to
the terms hereof.


 

















 


9. Reservation of Shares. 
The Company shall reserve, free from preemptive rights, out of its
treasury stock or its authorized but unissued shares of common stock,
sufficient shares of common stock to provide for the conversion of this Note.


 


10. Fractional Shares. 
No fractional shares of common stock of the Company will be issued in
connection with the conversion of this Note, but in lieu of such fractional
shares, the Maker shall make a cash payment therefor equal in amount to the
product of the applicable fraction multiplied by the Conversion Price then in
effect.


 


11. Waivers.  The Maker
hereby waives presentment, demand for payment, notice of dishonor and any and
all other notices or demands in connection with the delivery, acceptance,
performance, default or enforcement of this Note and hereby consents to any
waivers or modifications that may be granted or consented to by the Payee of
this Note.  No waiver by the Payee of
any breach of any covenant of the Maker herein contained or any term or
condition hereof shall be construed as a waiver of any subsequent breach of the
same or of any other covenant, term or condition herein.


 


12. Enforcement.  In the
event that any Payee of this Note shall institute any action for the
enforcement or the collection of this Note, there shall be immediately due and
payable, in addition to the unpaid balance of this Note, all late charges, and
all costs and expenses of such action, including reasonable attorneys’ fees.  The Maker waives the right to interpose any
setoff, counterclaim or defense of any nature or description whatsoever.


 


13. Replacement of Note. 
Upon receipt by the Maker of evidence satisfactory to them of the loss,
theft, destruction or mutilation of this Note, and (in case of loss, theft or
destruction) of an indemnity reasonably satisfactory to it, and upon
reimbursement to the Maker of all reasonable expenses incidental thereto, and
upon surrender and cancellation of this Note if mutilated, the Maker will make
and delivery a new Note of like tenor in lieu of this Note.


 


14. Amendments.  This
Note may not be changed, modified, amended, or terminated except by a writing
duly executed by the Maker and the Payee.


 


15. Governing Law.  This
Note shall be governed by, construed in accordance with, the laws of the State
of New York.


 


16. Assignment.  This
Note may not be assigned, in whole or in part, by operation of law or
otherwise, by the Maker without the prior written consent of the Payee in its
sole and absolute discretion, and any purported assignment without the express
prior written consent of the Payee shall be void ab initio.  The Payee may assign any or all of its
rights and interests hereunder to any party. 
Subject to the foregoing, this Note shall be binding upon, and inure to
the benefit of, the successors and assigns of the Payee and the Maker.


 


IN WITNESS WHEREOF, the Maker has executed this Note by its duly
authorized officers as of the day and year first above written.


 


	
  I-LINK INCORPORATED

  
	
   

  
	
  By:

  	
   

  	
   

  
	
  Name:

  
	
  Title: