Document:

exv10w39

 

Exhibit 10.39

AMENDED AND RESTATED

LOAN AGREEMENT

     This Amended and Restated Loan Agreement dated as of January 30, 2004
(“Loan Agreement”) is entered into by Acceris Communications Inc., formerly
known as I-Link Incorporated, a Florida corporation (“Acceris”) and Counsel
Corporation (US), a Delaware corporation (“CCUS”).

     WHEREAS, pursuant to the terms of the Settlement Agreement dated August
29, 2003 (the “Settlement Agreement”), between Counsel Communications, LLC, a
Delaware limited liability company (“CCOM”) and Winter Harbor, LLC (“Winter
Harbor”) as supplemented and amended by Agreement dated as of October 23, 2003
(the “Supplemental Agreement”) Winter Harbor assigned as of August 29, 2003
(the “Effective Date”) to CCOM (the “Assignment”) all of its rights with
respect to the One Million Nine Hundred Ninety-Eight Thousand Six Hundred
Thirty One and 24/100ths ($1,998,631.24) drawn down pursuant to the Letter of
Credit issued November 3, 1998 to secure certain obligations of Acceris
together with any accrued interest thereon (the “Assigned LC Debt”); and

     WHEREAS, CCOM has assigned all of its rights in respect of the
Indebtedness (as hereinafter defined) to CCUS as of the Effective Date; and

     WHEREAS, CCUS has provided financing in the form of the Assigned LC Debt
and desires to provide additional financing to Acceris from time to time and
both CCUS and Acceris believe that it is in their mutual interest to enter into
this Loan Agreement; and

     In consideration of the mutual covenants set forth herein and other good
and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties agree as follows:

     1. Periodic Loans. From and after the Effective Date through and until
the termination of the Term (as hereinafter defined) CCUS may make periodic
loans to Acceris hereunder. However, nothing contained herein shall be
construed as an obligation on the part of CCUS to make any future advances.
Similarly, nothing contained herein alters any obligation on the part of CCUS
and/or understanding of the parties pursuant to any other arrangement. Acceris
agrees to execute and deliver a promissory note substantially in the form
attached hereto as Exhibit A, evidencing its obligation to repay advances
hereunder (any such promissory note, the “Note”). Any funds advanced by CCUS
to Acceris hereunder during the Term or otherwise subject hereof, including the
assigned LC Debt (the “Indebtedness”) shall bear interest at a rate equal to
ten percent (10%) per annum from the date thereof and shall be governed by this
Agreement. Interest shall accrue and be compounded quarterly and shall result
in a corresponding increase in the principal amount of the Indebtedness.

     CCUS and Acceris acknowledge and agree that (a) as of the Effective Date
Acceris owed to CCUS the Assigned LC Debt in the principal sum of Two Million
Five Hundred Seventy-

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Seven Thousand Seventy and 00/l00ths Dollars ($2,577,070.00), including
interest thereon at a rate equal to ten percent (10%) per annum to and
including August 29, 2003 evidenced by the Promissory Note issued by Acceris as
of the Effective Date, and (b) that on December 3, 2003 CCUS advanced the sum
of One Hundred Thousand Dollars ($100,000) to Acceris evidenced by the
Promissory Note issued by Acceris as of the date hereof.

     2. Payments of Principal and Interest. All borrowings hereunder, together
with any interest thereon, shall be due and payable to CCUS in one installment
on June 30, 2005 (the “Maturity Date”). Interest shall accrue and be
compounded quarterly and shall result in a corresponding increase in the
principal amount of the Indebtedness.

     3. Prepayments. The Indebtedness may be voluntarily prepaid in whole or
in part without premium or penalty at any time and from time to time. In
making a prepayment in whole, Acceris shall pay all accrued interest through
the date of such prepayment.

     4. Payment on Business Days. If any payment of principal or interest on
the 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 Loan
Agreement shall be made in lawful money of the United States of America and
shall be payable to CCUS in Toronto, Ontario or at such other place as CCUS
shall have designated to Acceris in writing.

     6. Term. The term of this Agreement (the “Term”) shall commence on the
Effective Date and shall terminate on the Maturity Date.

     7. Events of Default. When any of the following events or conditions
(each an “Event of Default”), other than the Event of Default in Section 7(d)
occurs and is continuing, Payee may give written notice of Event of Default
thereof to Acceris and Acceris shall have thirty (30) days after receipt of
such written notice within which to cure such Event of Default. If the Event
of Default is not cured within the thirty (30) days, then CCUS may, at its
option, elect to declare Acceris to be in default (a “Default”):

     (a) Acceris shall fail to pay any of the Indebtedness pursuant to terms of
this Loan Agreement;

     (b) Acceris fails to comply with any term, obligation, covenant, or
condition contained in this Loan Agreement;

     (c) Any warranty or representation made to CCUS by Acceris under this Loan
Agreement or proves to have been false when made or furnished;

     (d) If Acceris voluntarily files a petition under the federal Bankruptcy
Act, as such Act may from time to time be amended, or under any similar or
successor federal statute relating to bankruptcy, insolvency, arrangements or
reorganizations, or under any state bankruptcy or insolvency act, or files an
answer in an involuntary proceeding admitting insolvency or inability

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to pay debts, or if Acceris is adjudged a bankrupt, or if a trustee or
receiver is appointed for Acceris’ property, or if Acceris makes an assignment
for the benefit of its creditors, or if there is an attachment, receivership,
execution or other judicial seizure, then CCUS may, at CCUS’s option, declare
all of the Indebtedness to be immediately due and payable without prior notice
to Acceris, and CCUS may invoke any remedies permitted by this Agreement. Any
attorneys’ fees and other expenses incurred by CCUS in connection with Acceris’
bankruptcy or any of the other events described in this Section shall be
additional Indebtedness of Acceris secured by this Agreement.

     (e) There exists a material breach by Acceris under (or a termination by
any party of) a material contract of Acceris (for purposes of this Section 7 a
material contract shall mean any contract resulting in revenues or in excess of
$10,000 per annum);

     (f) Acceris is in default under any funded indebtedness, including but not
limited to indebtedness evidenced by notes or capital leases, of Acceris other
than the amounts loaned pursuant to this Loan Agreement; or

     (g) If Acceris’ business undergoes a material adverse change in CCUS’s
reasonable opinion.

     If an Event of Default specified in Section 7(d) hereof occurs and is
continuing, the principal amount of the Indebtedness, together with all accrued
and unpaid interest thereon, shall automatically become and be immediately due
and payable, without any declaration or other act on the part of CCUS.

     Any written notification from CCUS to Acceris hereunder shall be deemed to
be written notification of an Event of Default, or Default, or rescission of
acceleration (as provided below), respectively, only if such notification,
communication or other election shall (a) be clearly and distinctly identified
as such a Notice of Event of Default, Notice of Default, or Notice of
Rescission of Acceleration, respectively, and (b) be given by certified mail,
return receipt requested or overnight delivery requiring acknowledgement of
receipt, and any communication between the parties not so designated and
delivered shall not be construed or deemed to be effective notice under this
Section 7.

     8. Acceleration. At the option of CCUS, upon a Default, all sums due
hereunder shall become immediately due and payable. CCUS, by notice thereof to
Acceris, may rescind an acceleration and its consequences if all existing
Events of Default have been cured or waived in writing.

     9. Forbearance by CCUS. Any forbearance by CCUS in exercising any right
or remedy hereunder, or otherwise afforded by applicable law, shall not be a
waiver of or preclude the exercise of any right or remedy.

     10. Collection Expenses. If at any time the Indebtedness evidenced by
this Loan Agreement is collected through legal proceedings or the Note, or any
such Note, is placed in the hands of attorneys for collection, Acceris and each
endorser hereof hereby jointly and severally agree to pay all costs and
expenses (including reasonable attorneys’ fees) incurred by the holder of this
Loan Agreement in collecting or attempting to collect such Indebtedness.

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     11. Waivers. To the extent permitted by law, except as otherwise provided
herein, Acceris, and its respective successors and assigns, hereby severally
waives 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.

     12. Choice of Law. This Loan Agreement shall be governed by and construed
in accordance with the laws of the State of New York with the exception of the
conflicts of laws provisions thereof.

     13. Assignment. This Agreement shall inure to the benefit of, and be
binding upon, the parties and their respective successors and assigns. This
Agreement may not be assigned by Acceris without the prior written consent of
CCUS.

     14. Headings. The headings and captions in this Agreement are included
for purposes of convenience only and shall not affect the construction or
interpretation of any of its provisions.

     15. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute on and the same instrument.

[See attached signature page]

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Signature page

to

Amended and Restated Loan Agreement

dated as of January 30, 2004

     IN WITNESS WHEREOF, Acceris and CCUS have executed this Amended and
Restated Loan Agreement as of the date and year first above written.

	 	 	 	 	 	 	 
	 	 	ACCERIS COMMUNICATIONS INC.
	 
	 	 	 	 	 	 
	

	 	By:	 	 	 	 
	 	 	 	 	
 
	

	 	 	 	        Name:	 	 
	

	 	 	 	 	 	
 
	

	 	 	 	        Its	 	 
	

	 	 	 	 	 	
 
	 
	 	 	 	 	 	 
	 	 	COUNSEL CORPORATION (US)
	 
	 	 	 	 	 	 
	

	 	By:	 	 	 	 
	 	 	 	 	
 
	

	 	 	 	        Name:	 	 
	

	 	 	 	 	 	
 
	

	 	 	 	        Its	 	 
	

	 	 	 	 	 	
 

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EXHIBIT A

NOTE

	 	 	 
	

	 	                         , 2004
	$                   

	 	San Diego, California

     FOR VALUE RECEIVED, ACCERIS COMMUNICATIONS INC., a Florida corporation
formerly known as I-Link Incorporated (the “Maker”) hereby promises to pay to
the order of COUNSEL CORPORATION (US), a Delaware corporation (the “Payee”) in
immediately available funds, on or before the Maturity Date, the principal sum
of          Dollars ($                   ), pursuant to the Loan
Agreement, as that term is defined below, together with interest thereon as
provided herein. All capitalized terms used herein and not otherwise defined
shall have the meanings ascribed to them in the Loan Agreement (as defined
below).

     1. Loan Agreement. The unpaid principal balance of this Note shall bear
interest at the rate and in the manner determined in accordance with the
provisions of that certain Amended and Restated Loan Agreement dated as of
January 23, 2004, between the Maker and the Payee (as the same may be amended,
modified, extended or restated, the “Loan Agreement”), the terms of which are
incorporated herein by reference.

     2. Address for Payments. All payments made hereunder shall be paid in
lawful money of the United States of America at Payee’s business address, or at
such other place as the Payee may at any time or from time to time designate
in writing to the Maker.

     3. Severability. If any part of this Note is declared invalid or
unenforceable, such invalidity or unenforceability shall not affect the
remainder of this Note, which shall continue in full force and effect. Any
provision that is invalid or unenforceable in any application shall remain in
full force and effect as to valid applications.

     4. Notices. All notices which are required or permitted hereunder shall
be given by first class mail, to be confirmed by telephone.

     5. Governing Law. This Note shall be governed by and construed in
accordance with the laws of the State of New York with the exception of the
conflicts of laws provisions thereof.

     6. Authority. The party executing this Note for and on behalf of Maker
warrants and represents that he has full power and authority to bind Maker for
the uses and purposes as in this Note contained.

     7. Waivers.

          (a) Maker hereby waives and renounces, for itself and all its successors
and assigns, all right to the benefit of any moratorium, reinstatement,
marshalling, forbearance, valuation, stay, extension, redemption, appraisement,
exemption and homestead now provided or which hereafter may be provided by the
Constitution and laws of the United States of America and of any state thereof,
as to itself and in and to all of its property, real and personal, against the
enforcement and collection of the Indebtedness evidenced by this Note.

          (b) Presentment for payment, demand, protest and notice of demand, notice
of dishonor and notice of nonpayment and all other notices are hereby waived by
Maker.

     8. Prohibition on Assignment. Maker shall not give, grant, bargain, sell,
transfer, assign, convey or deliver this Note or any of its obligations
hereunder.

     IN WITNESS WHEREOF, the Maker has executed this Note as of the date and
year first above written.

	 	 	 	 	 	 	 
	 	 	ACCERIS COMMUNICATIONS INC.
	 
	 	 	 	 	 	 
	

	 	By:	 	 	 	 
	 	 	 	 	
 
	

	 	 	 	        Itsexv10w40

 

Exhibit 10.40

THIRD AMENDMENT

TO

SENIOR CONVERTIBLE LOAN AND SECURITY AGREEMENT

     THIS THIRD AMENDMENT TO SENIOR CONVERTIBLE LOAN AND SECURITY AGREEMENT is
made and entered into as of November 19, 2003, by and between I-Link
Incorporated, a Florida corporation (the “Borrower”) and Counsel Corporation,
an Ontario corporation (“Counsel Corp”), and Counsel Capital Corporation, an
Ontario corporation (“Counsel Capital”), (collectively hereinafter referred to
as the “Parties”).

     WHEREAS, Counsel Communications, LLC, a Delaware limited liability company
(“CCOM”) having assigned ninety percent (90%) of its right title and interests
in the Loan Agreement (as hereinafter defined) subject to the Amended Debt
Restructuring Agreement (as hereinafter defined) on October 31, 2001, to
Counsel Corp and ten percent (10%) of its right, title and interests to Counsel
Capital (hereinafter Counsel Corp and Counsel Capital collectively referred to
as the “Lender"); and

     WHEREAS, the Borrower and the Lender are Parties to a Senior Convertible
Loan and Security Agreement, dated March 1, 2001 as amended by the First and
Second Amendments to Senior Convertible Loan and Security Agreement, dated May
8, 2001 and March 1, 2003 (collectively the “Loan Agreement”) and subject of
the Amended and Restated Debt Restructuring Agreement dated October 15, 2002
between Borrower, Counsel Corporation (US), a Delaware corporation, and CCOM
(the “Amended Debt Restructuring Agreement”); and

     WHEREAS, the Parties, inter alia, desire to amend the Loan Agreement
effective as of July 1, 2003 (the “Effective Date”) as provided herein.

     NOW, THEREFORE, for good and valuable consideration, the receipt and
adequacy of which is hereby acknowledged, the Parties agree as follows:

     1.     Extension of Maturity Date. Effective as of the Effective Date,
Section 4 of the Loan Agreement is hereby amended and restated in its entirety
to read as follows:

	 	 	“Section 4. Term. This Agreement shall be effective from the
date hereof and shall terminate on June 30, 2005, unless terminated
earlier pursuant to the default provisions of this Agreement (the
“Maturity Date”). Principal and interest shall be due and payable on the
Maturity Date.”

     2.     Modification of Periodic Finance Charges. Effective as of the
Effective Date, Section 2 of the Loan Agreement is hereby amended and restated
in its entirety to read as follows:

	 	 	“Section 2. Periodic Finance Charges. All principal and interest
then outstanding shall bear interest as a rate of 9.0% per annum (based
on a 360 day year), compounded quarterly and shall result in a
corresponding increase in the principal amount of the Note. All past due
principal and accrued interest on this Note shall bear interest from the
Maturity Date (whether at scheduled maturity, upon acceleration of
maturity following a Default (as defined below) or otherwise) until paid
at the lesser of (i) the rate of 18% per annum or (ii) the highest rate
for which Borrower may legally contract under applicable

 

	 	 	 law.All payments hereunder shall be payable in lawful money of the
United States of America which shall be legal tender for public and
private debts at the time of payments.”

     3.     Modification of Default. Effective as of the Effective Date,
Section 19 of the Loan Agreement is amended and restated in its entirety to
read as follows:

     “Section 19. Events of Default. When any of the following events
or conditions (each an “Event of Default”) occurs, Payee may give written
notice of Event of Default to Maker and Maker shall have thirty (30) days after
receipt of such written notice within which to cure such Event of Default. If
the Event of Default is not cured within the thirty (30) days, then the Lender
may, at its option, elect to declare Borrower to be in default (a “Default”):

     (a)  The Borrower shall fail to pay any of the Secured Obligations pursuant
to terms of this Agreement;

     (b)  The Borrower fails to comply with any term, obligation, covenant, or
condition contained in this Agreement;

     (c)  Any warranty or representation made to the Lender by the Borrower
under this Agreement or the Ancillary Documents proves to have been false when
made or furnished;

     (d)  If the Borrower voluntarily files a petition under the federal
Bankruptcy Act, as such Act may from time to time be amended, or under any
similar or successor federal statute relating to bankruptcy, insolvency,
arrangements or reorganizations, or under any state bankruptcy or insolvency
act, or files an answer in an involuntary proceeding admitting insolvency or
inability to pay debts, or if the Borrower is adjudged a bankrupt, or if a
trustee or receiver is appointed for the Borrower’s property, or if the
Collateral becomes subject to the jurisdiction of a federal bankruptcy court or
similar state court, or if the Borrower makes an assignment for the benefit of
its creditors, or if there is an attachment, receivership, execution or other
judicial seizer, then the Lender may, at the Lender’s option, declare all of
the sums secured by this Agreement to be immediately due and payable without
prior notice to the Borrower, and the Lender may invoke any remedies permitted
by this Agreement. Any attorneys’ fees and other expenses incurred by the
Lender in connection with the Borrower’s bankruptcy or any of the other events
described in this Section shall be additional indebtedness of the Borrower
secured by this Agreement.

     (e)  There exists a material breach by the Borrower under (or a termination
by any party of) a material contract of the Borrower with the exception of that
certain Cooperation and Framework Agreement with Red Cube International AG (for
purposes of this Section 19(e) a material contract shall mean any contract
resulting in revenues or in excess of $10,000 per annum);

     (f)  Borrower is in default under any funded indebtedness, including but
not limited to indebtedness evidenced by notes or capital leases, of Borrower
other than the amounts loaned pursuant to this Agreement;

     (g)  If Borrower breaches any material terms contained in any of the
Ancillary Documents, including, but not limited to, Borrower’s obligation to
perform any of its covenants respecting board representation and corporate
governance;

     (h)  If Borrower’s business undergoes a material adverse change in Lender’s
reasonable opinion;

     (i)  Any levy, seizure, attachment, lien, or encumbrance of or on the
collateral which is not discharged by the Borrower within 10 days or, any sale,
transfer, or disposition of any interest in the Collateral, other than in the
ordinary course of business, without the written consent of the Lender; or

     (j)  If at the end of any month (beginning with the calculation at the end
of April 2001), Cumulative Negative Cash Flow (as defined herein) exceeds 120%
of the forecasted

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amount for such month, as revised from time to time to reflect events
outside of the ordinary course of business. For purposes of this Agreement,
Cumulative Negative Cash Flow means the cumulative negative cash flow for such
month as set forth in the base financial model made available to Lender (such
model to be amended from time to time hereafter upon mutual agreement of
Borrower and Lender).

     Any written notification from Lender to Borrower hereunder shall be deemed
to be written notification of an Event of Default, or Default, or rescission of
Acceleration (as provided below), respectively, only if such notification,
communication or other election shall (a) be clearly and distinctly identified
as such a Notice of Event of Default, Notice of Default, or Notice of
Rescission of Acceleration, respectively, and (b) be given by certified mail,
return receipt requested or overnight delivery requiring acknowledgement of
receipt, and any communication between the parties not so designated and
delivered shall not be construed or deemed to be notice under this Section 19.”

     4.     Acceleration. Section 20 of the Loan Agreement is amended and
restated in its entirety to read as follows:

	 	 	“Section 20. Acceleration. At the option of the Lender, upon a
Default, all sums due hereunder shall become immediately due and
payable. Lender, by notice thereof (a “Notice of Rescission of
Acceleration”) to the Borrower, may rescind an acceleration and
its consequences if all existing Events of Default have been cured
or waived in writing.”

     5.     Rights of Secured Parties. References in Section 21 of the Loan
Agreement to “Event of Default” are hereby modified to read “Default.”

     6.     Effect on Loan Agreement and Loan Note. This Third Amendment is
not intended, nor shall it be construed, as a modification or termination of
the Amended Debt Restructuring Agreement. Except as expressly provided herein,
the Loan Agreement and the Loan Note annexed thereto are hereby ratified and
confirmed and remain in full force and effect in accordance with their
respective terms. Lender and CCOM confirm that no Default under the Loan
Agreement or Loan Note has occurred from October 15, 2002 to the date hereof
and in the interest of specificity and clarity, Lender and CCOM agree with
Borrower that they and each of them waive forever any prior Event of Default
which may have occurred during such period.

[See attached signature page]

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Signature page

to

Third Amendment to Senior Convertible Loan and Security Agreement

dated as of November 19, 2003

     IN WITNESS WHEREOF, the Borrower and the Lender have executed this Third
Amendment as the date first set forth above.

	 	 	 	 	 
	 	 	I-LINK INCORPORATED
	 	 	 	 	 
	 	 	
By:	 	 
	 	 	 	 	

	 	 	 	 	Name:
	 	 	 	 	Title:
	 	 	 	 	 
	 	 	COUNSEL CORPORATION
	 	 	 	 	 
	 	 	
By:	 	 
	 	 	 	 	

	 	 	 	 	Name:
	 	 	 	 	Title:
	 	 	 	 	 
	 	 	COUNSEL CAPITAL CORPORATION
	 	 	 	 	 
	 	 	
By:	 	 
	 	 	 	 	

	 	 	 	 	Name:
	 	 	 	 	Title:

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