Exhibit 99(2)
MODIFICATION AGREEMENT
THIS MODIFICATION AGREEMENT (the "Agreement") is made effective as of
June 1, 2001 (the "Effective Date"), by and among Leasing Technologies
International, Inc. ("LTI") and EasyLink Services Corporation ("EasyLink").
W I T N E S S E T H:
A. LTI and EasyLink entered into one or more lease agreements (all of
which lease agreements and all amendments and lease schedules thereto are
collectively referred to herein as the "Lease").
B. Pursuant to the Lease, EasyLink leased certain equipment from LTI
(the "Leased Equipment) as more fully described in the Lease.
C. EasyLink has requested that LTI modify certain terms and conditions
of the Lease as set forth herein and forbear from exercising its rights and
remedies under the Lease, and LTI has agreed to do so for the period provided
herein and subject to EasyLink's strict compliance with the terms and conditions
set forth herein; and
D. LTI has agreed to a modification of the payment terms of the Lease
as set forth herein.
NOW, THEREFORE, for and in consideration of the mutual covenants set
forth herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. Recitals. The foregoing recitals are true and correct and are hereby
incorporated into the text of this Agreement by this reference.
2. Ratification, Reaffirmation and Acknowledgement. EasyLink
acknowledges, ratifies, reaffirms, confirms and agrees to all of the terms,
covenants, conditions set forth in the Lease and confirms that $802,000
(hereinafter collectively referred to as the "Indebtedness") is due and payable
by EasyLink to LTI as of June 30, 2001 pursuant to the terms of the Lease
without offset, counterclaim or defenses.
3. Representations of EasyLink. EasyLink hereby represents and warrants
to LTI the following:
(a) Neither the execution of this Agreement, nor the
consummation of the terms thereof by EasyLink will constitute a violation of, or
will conflict with, any agreement entered into by any of said parties, or any
order, decree or judgment made against any of the parties.
(b) There is no pending action or proceeding against or
involving the Leased Equipment.
(c) With the exception of the payment terms in the Lease, LTI
may under the terms of the Lease exercise all rights and remedies under the
Lease.
(d) EasyLink, recognizing that LTI has changed its position
and will change its position in reliance on the foregoing representations,
acknowledgments, and warranties of EasyLink, further agrees that:
(i) If EasyLink should default under the terms of this
Agreement and the default is not cured within 7 days after notice from
LTI, LTI may exercise its rights and remedies as provided for in the
Lease; and
(ii) EasyLink will not attempt to delay or frustrate LTI's
exercise its rights and remedies under the Lease, nor raise any
defenses to same.
(e) The Lease is in full force and effect as of the date
hereof, is enforceable according to its terms, and there are no defenses or
offsets to the collection by LTI of sums due thereunder.
4. Representations, Covenants and Warranties of LTI and EasyLink. LTI
and EasyLink hereby jointly and severally represent and warrant as follows:
(a) All terms and conditions of the Lease not otherwise
modified herein shall continue in full force and effect during the term of this
Agreement.
(b) References in this Agreement to the exercise of rights and
remedies provided for in the Lease shall mean those rights and remedies in the
Lease with the exception of the Indebtedness, which shall be governed by the
Forbearance Note described below.
(c) The execution, delivery and performance by EasyLink of
this Agreement and the documents contemplated hereby or delivered in connection
herewith (i) are within EasyLink's corporate powers, have been duly authorized
by all necessary corporate action, and do not contravene (A) any documents,
contracts or agreements to which EasyLink is a party or by which it is bound or
affected, or (B) any requirements of any law or regulation to which EasyLink is
bound.
(d) This Agreement and each of the documents contemplated
hereby or delivered in connection herewith to which EasyLink is a party
constitute, and each of such documents to which EasyLink is to be a party when
delivered hereunder will constitute, the legal, valid, and binding obligations
of EasyLink enforceable against EasyLink in accordance with their respective
terms.
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5. Forbearance Note. On the date hereof, EasyLink shall execute and
deliver to LTI a promissory note in the principal amount of $802,000 (the
"Forbearance Note). The Forbearance Note shall be payable on demand after
November 30, 2001, and shall accrue interest at the rate of 12% per annum
beginning from August 1, 2001. A copy of the form of the Forbearance Note is
attached as Exhibit A. The Forbearance Note shall continue to be secured by the
Leased Equipment pursuant to the Lease, provided that LTI shall release such
security interest in any Leased Equipment that LTI sells to EasyLink pursuant to
Section 6 or otherwise.
6. Terms and Conditions.
(a) EasyLink will purchase, for $210,000 (the "Equipment
Purchase Payment"), all of the Leased Equipment on or before November 30, 2001.
The Equipment Purchase Payment shall be credited against the principal of the
Forbearance Note. EasyLink shall satisfy its obligations under this paragraph
(a) by paying to LTI promptly after the execution and delivery of this Agreement
cash in the amount of $210,000 by wire transfer in accordance with instructions
provided by LTI.
(b) On or before the closing of the issuance of the Note and
the Shares (as defined below), EasyLink shall grant and assign to the collateral
agent under a security agreement in the form attached hereto as Exhibit B, as
such agreement may be further modified by comments of the collateral agent and
the other restructure creditors (the "Security Agreement"), a lien on EasyLink's
assets, other than the assets excluded therefrom as set forth in the Security
Agreement, to secure the obligations under the Forbearance Note.
7. Forbearance and Waiver. Provided that (i) EasyLink executes the
Forbearance Note, (ii) EasyLink complies with all terms and conditions of this
Agreement, and (iii) no additional default occurs under the Lease, then LTI
agrees that it shall forbear from exercising its remedies under the Lease until
November 30, 2001 (the "Forbearance Period"). In the event EasyLink at any time
fails to comply with clause (i), (ii) or (iii) hereinabove, LTI shall be
entitled to immediately exercise any and all rights it may have under this
Agreement and the Lease and may declare the Forebearance Note to be immediately
due and payable.
Nothing in this paragraph or in any other provision of this Agreement
shall be deemed to be a waiver of any of LTI's rights under the Lease or
otherwise available to LTI at law or in equity. In addition, nothing in this
Agreement shall be construed to release EasyLink from any liability under the
Lease. LTI hereby expressly reserves all such remedies.
8. Anti-Novation. It is the intent of the parties that this Agreement
shall not constitute a novation, and shall in no way adversely affect the lien
priority of the Lease, to the extent applicable. In the event that this
Agreement, or any part hereof, shall be construed by a court of competent
jurisdiction as operating to affect the lien priority of the Lease over the
claim which would otherwise be subordinate thereto, then to the extent that
third parties acquiring an interest in such property between the time of
execution of the Lease and the execution hereof are hereby prejudiced, this
Agreement or such portion hereof as shall be so construed, shall be void and of
no force and effect and this Agreement shall constitute, as to that portion, a
subordinate lien on the collateral incorporating by reference the terms of the
Lease, and which Lease shall then be enforced pursuant to the terms therein
contained, independent of this Agreement; provided, however, that
notwithstanding the foregoing, the parties hereto as between themselves shall be
bound by all terms and conditions hereof until all indebtedness evidenced by the
Lease has been satisfied.
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9. Default. EasyLink acknowledges that but for this Agreement it would
be in default under the Lease and that, upon default under this Agreement or
upon further default under the Lease, LTI may immediately exercise any and all
rights provided to LTI under the Lease and applicable law, including, without
limitation, an action on the Forbearance Note against EasyLink. EasyLink hereby
acknowledges and admits that in any action on the Forebearance Note commenced
after November 30, 2001, LTI shall be entitled to a judgment as a matter of law,
and EasyLink hereby waives, abandons and relinquishes all defenses thereto and
agrees not to seek or to prevent either the entry of a final judgment against
EasyLink for payment of the indebtedness due under the Lease, or any
post-judgment remedy allowed by law. EasyLink hereby releases LTI and its
officers, directors, shareholders, agents, attorneys, successors and assigns,
from any and all claims, actions, demands, and causes of actions, whether in
contract, tort or otherwise, existing as of the date of this Agreement which
relate to or arise from the Lease, or pertaining directly or indirectly thereto.
Further, upon the occurrence of a Default under this Agreement, LTI shall be
entitled to exercise any and all rights and remedies against EasyLink by virtue
of the defaults under the Lease existing as of the date hereof, EasyLink
acknowledging and agreeing that LTI shall not be deemed to have waived or
relinquished such rights or remedies by reason of entering into this Agreement.
10. Restructure. Upon the consummation on or before November 30, 2001
of a restructuring arrangement with AT&T Corp. with respect to its outstanding
note in the original principal amount of $35 million, Xxxxxx Xxx Xxxx with
respect to his outstanding note in the original principal amount of $9.2 million
and lessors holding at least 90% of its equipment lease obligations on terms and
conditions taken as a whole that are not more favorable to such parties than the
terms hereof (the "Other Creditor's Condition"), then the Lease shall be
terminated and LTI will convert the Forbearance Note into the Note, the Shares
and the other rights provided below and EasyLink shall upon such consummation
enter into the Registration Rights Agreement on the following terms and
conditions and deliver the instruments set forth in paragraphs (a), (b) and (c)
of this Section 10:
(a) EasyLink shall execute and deliver to LTI a convertible
promissory note in the principal amount of $234,184 ("Note"). The Note shall be
in the form of Exhibit C attached hereto. The initial conversion price of the
Note shall be appropriately adjusted in the event the Company shall effect a
stock split, stock dividend or stock combination on or before the closing. The
Equipment Purchase Payment shall continue to be secured by the Leased Equipment
pursuant to the Lease, provided that LTI shall release such security interest in
any Leased Equipment that LTI sells to EasyLink pursuant to Section 6 or
otherwise. The Note shall be secured by the lien under the security agreement
entered into pursuant to Section 6(d) above on the same terms and conditions. In
addition to the payments on the Note, on the third anniversary of the date of
issuance of the Note, EasyLink shall make a balloon payment to LTI in the amount
of $144,000.
(b) EasyLink shall deliver 351,276 shares of EasyLink's Class
A common stock ("Shares") to LTI. Such number of Shares shall be appropriately
adjusted in the event the Company shall effect a stock split, stock dividend or
stock combination on or before the closing.
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(c) EasyLink and LTI will execute an Accession Agreement
pursuant to which LTI shall become a party to the registration rights agreement
which will obligate EasyLink to file a registration statement covering the
resale of the Shares within 45 days from the closing of the restructuring and to
use all reasonable commercial efforts to cause such registration statement to
become effective as soon as practicable thereafter. A copy of the form of
Registration Rights Agreement is attached as Exhibit D.
(d) LTI has the right to examine all other agreements with
other creditors and to ensure that the Other Creditors Condition has been
satisfied. EasyLink shall deliver any agreement with another creditor to LTI
within two (2) business days of LTI having made request for the agreement. LTI
acknowledges that the restructuring arrangements set forth in the documents
furnished to LTI prior to the execution and delivery hereof satisfy the Other
Creditor's Condition.
11. Compliance with Act; Disposition of Shares of Common Stock.
(a) Compliance with Act. The holder of the Note and the Shares
(collectively, the "Securities"), by acceptance thereof, agrees that the
Securities, and the shares to be issued upon conversion of the Note (the
"Conversion Shares") are being acquired for investment and that such holder will
not offer, sell or otherwise dispose of the Securities or the Conversion Shares
except under circumstances which will not result in a violation of the
Securities Act of 1933, as amended (the "Act") or any applicable state
securities laws. Upon conversion of the Note, unless the Conversion Shares being
acquired are registered under the Act and any applicable state securities laws
or an exemption from such registration is available, the holder hereof shall
confirm in writing that the Conversion Shares so purchased are being acquired
for investment and not with a view toward distribution or resale in violation of
the Act and shall confirm such other matters related thereto as may be
reasonably requested by the Company. The Securities and the Conversion Shares
(unless registered under the Act and any applicable state securities laws) shall
be stamped or imprinted with a legend in substantially the following form:
"THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS. NO
SALE OR DISPOSITION MAY BE EFFECTED WITHOUT (i) EFFECTIVE REGISTRATION
STATEMENTS RELATED THERETO, (ii) AN OPINION OF COUNSEL OR OTHER
EVIDENCE, REASONABLY SATISFACTORY TO THE COMPANY, THAT SUCH
REGISTRATIONS ARE NOT REQUIRED, OR (iii) RECEIPT OF NO-ACTION LETTERS
FROM THE APPROPRIATE GOVERNMENTAL AUTHORITIES."
Said legend shall be removed by the Company, upon the request of a
holder, at such time as the restrictions on the transfer of the applicable
security shall have terminated. In addition, in connection with the issuance of
the Securities, the holder specifically represents to the Company, as of the
date hereof and upon the date of issuance of the Securities, by acceptance of
the Securities as follows:
(1) The holder is aware of the Company's business
affairs and financial condition, and has acquired information
about the Company sufficient to reach an informed and
knowledgeable decision to acquire the Securities. The holder
is acquiring the Securities for its own account for investment
purposes only and not with a view to, or for the resale in
connection with, any "distribution" thereof in violation of
the Act.
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(2) The holder understands that the Securities have
not been registered under the Act in reliance upon a specific
exemption therefrom, which exemption depends upon, among other
things, the bona fide nature of the holder's investment intent
as expressed herein.
(3) The holder further understands that the
Securities must be held indefinitely unless subsequently
registered under the Act and qualified under any applicable
state securities laws, or unless exemptions from registration
and qualification are otherwise available. The holder is aware
of the provisions of Rule 144, promulgated under the Act.
(4) The holder is an "accredited investor" as such
term is defined in Rule 501 of Regulation D promulgated under
the Act.
(b) Disposition of Securities or Conversion Shares. With
respect to any offer, sale or other disposition of any of the Securities or the
Conversion Shares prior to registration thereof, the holder hereof agrees to
give written notice to the Company prior thereto, describing briefly the manner
thereof, together with a written opinion of such holder's counsel, or other
evidence, if reasonably satisfactory to the Company, to the effect that such
offer, sale or other disposition may be effected without registration or
qualification (under the Act as then in effect or any federal or state
securities law then in effect) thereof and indicating whether or not under the
Act certificates for the Securities or the Conversion Shares to be sold or
otherwise disposed of require any restrictive legend as to applicable
restrictions on transferability in order to ensure compliance with such law.
Upon receiving such written notice and reasonably satisfactory opinion or other
evidence, the Company, as promptly as practicable but no later than fifteen (15)
days after receipt of the written notice, shall notify such holder that such
holder may sell or otherwise dispose of such Securities or Conversion Shares,
all in accordance with the terms of the notice delivered to the Company. If a
determination has been made pursuant to this Section 11(b) that the opinion of
counsel for the holder or other evidence is not reasonably satisfactory to the
Company, the Company shall so notify the holder promptly with details thereof
after such determination has been made. Notwithstanding the foregoing, the
Securities or the Conversion Shares may, as to such federal laws, be offered,
sold or otherwise disposed of in accordance with Rule 144 under the Act,
provided that the Company shall have been furnished with such information as the
Company may reasonably request to provide a reasonable assurance that the
provisions of Rule 144 have been satisfied. Each certificate representing
Securities or the Conversion Shares thus transferred (except a transfer pursuant
to Rule 144) shall bear a legend as to the applicable restrictions on
transferability in order to ensure compliance with such laws, unless in the
aforesaid opinion of counsel for the holder, such legend is not required in
order to ensure compliance with such laws. The Company may issue stop transfer
instructions to its transfer agent in connection with such restrictions.
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(c) Applicability of Restrictions. Neither any restrictions of
any legend described in the Securities or the Conversion Shares nor the
requirements of Section 11(b) above shall apply to any transfer of, or grant of
a security interest in, the Securities or the Conversion Shares or any part
hereof (i) to a partner of the holder if the holder is a partnership or to a
member of the holder if the holder is a limited liability company, (ii) to a
partnership of which the holder is a partner or to a limited liability company
of which the holder is a member, or (iii) to any affiliate of the holder if the
holder is a corporation; provided, however, in any such transfer, if applicable,
the transferee shall on the Company's request agree in writing to be bound by
the terms of this Agreement as if an original holder hereof.
12. Expenses. EasyLink agrees to pay all costs, fees, and expenses of
LTI in the enforcement of this Agreement.
13. Integration. This Agreement, together with the Lease, constitutes
the entire agreement and understanding among the parties relating to the subject
matter hereof, and supersedes all prior proposals, negotiations, agreements, and
understandings related to this matter.
14. Severability. The provisions of this Agreement are intended to be
severable. If any of the provisions of this initial Agreement shall be held
invalid or unenforceable in whole or in part in any jurisdiction, such provision
shall, as to such jurisdiction, be ineffective to the extent of such invalidity
or enforceability without in any matter affecting the validity or enforceability
of such provision in any other jurisdiction or the remaining provisions of this
Agreement in any jurisdiction.
15. Governing Law. This Agreement shall be governed and construed in
accordance with the subsequent laws of the State of New York, without regard to
the choice of law or principles of such state.
16. Survival. All representations, warranties, covenants, agreements,
undertakings, waivers and releases contained herein shall survive the
termination of the forbearance period and payment in full of the obligations of
EasyLink.
17. Amendment. No amendment, modification, rescission, waiver or
release of any provision of this Agreement shall be effective unless the same
shall be in writing and signed by the parties hereto.
18. Venue; Jurisdiction; Jury Trial Waiver. EasyLink and LTI each
hereby irrevocably: (1) consent to the jurisdiction of any state or federal
court sitting in the City of New York, Borough of Manhattan, State of New York;
(2) agree that venue shall be proper in any court of competent jurisdiction
located in the City of New York, Borough of Manhattan, State of New York; and
(3) waive the right to trial by jury on any controversy arising out of or
relating to this Agreement or the Lease.
[REST OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties hereto have signed this Agreement as of
the effective date.
Attest: Leasing Technologies International, Inc.
By: /s/ Xxxx X. Xxxx
------------------------
/s/ Xxxxxx X Xxxxxx Print Name: Xxxx X. Xxxx
----------------------------
Print Name: Xxxxxx X. Xxxxxx Its: Secretary
Attest: EasyLink Services Corporation
By: /s/ Xxxxxx Xxxxxxxx
------------------------
/s/ Xxxxxxx Xxxxx Print Name: Xxxxxx Xxxxxxxx
----------------------------
Print Name: Xxxxxxx Xxxxx Its: Chief Executive Officer
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EXHIBIT A
PROMISSORY NOTE
Date of Note: June 30, 2001
Amount of Note: $802,000
FOR VALUE RECEIVED, the undersigned ("Maker") does hereby covenant and promise
to pay to the order of LEASING TECHNOLOGIES INTERNATIONAL, INC., or its
successors or assigns, ("Lender"), at 000 Xxxxxxx Xxxx, Xxxxxx, Xxxxxxxxxxx
00000, or at such other place as Lender may designate to Maker in writing from
time to time, in legal tender of the United States, the sum of EIGHT HUNDRED TWO
THOUSAND DOLLARS ($802,000), together with all accrued interest, which shall be
due and payable upon the following terms and conditions contained in this Note.
1. Interest Rate: This Note shall bear interest commencing June 30,
2001 computed at the rate of twelve percent (12%) per annum on the outstanding
principal balance. In all cases, interest shall be calculated on the basis of a
year of 360 days with twelve 30-day months (i.e., interest will accrue and be
paid for each full calendar month based on 1/12 of the annual interest and on
the actual number of calendar days elapsed for any partial month). Interest
shall be due and payable on the date when principal of the Note is due and
payable.
2. Term: The Note shall be due and payable in full on demand from
Lender to Maker (the "Maturity Date"), which demand may be made at any time
after November 30, 2001.
3. Payment Terms The entire outstanding principal balance plus any
accrued but unpaid interest thereon shall be due and payable in full on the
Maturity Date.
4. Prepayment: This Note may be prepaid, in whole or in part, at any
time during the term hereof.
5. Default Interest Rate: All delinquent principal and installments of
interest shall bear interest from the date that said payments are due at a rate
equal to seventeen percent (17%) per annum calculated in the same manner as set
forth in Section 1.
6. Acceleration: Should any default occur in the payment as stipulated
above of either the interest or principal, or should a default occur under that
certain Modification Agreement executed by and between Lender and Maker dated of
even date herewith (the "Modification Agreement"), and such default is not cured
with fifteen (15) days after Lender provides notice to Maker, then in either
event, the principal of this Note or any unpaid part thereof and all accrued
interest thereon shall, in the sole discretion of Lender, at once become due and
payable and may be collected forthwith without notice to the undersigned,
regardless of the stipulated date of maturity. However, Lender may, in the sole
discretion of Lender, accept payments made by Maker after any default has
occurred, without waiving any of Lender's rights herein.
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7. Costs: In the event that this Note is collected by law or through
attorneys at law, or under advice therefrom (whether such attorneys are
employees of Lender or an affiliate of Lender or are outside counsel), Maker and
any endorser, guarantor or other person primarily or secondarily liable for
payment hereof hereby, severally and jointly agree to pay all costs of
collection, including reasonable attorneys' fees including charges for
paralegals and others working under the direction or supervision of Lender's
attorneys, whether or not suit is brought, and whether incurred in connection
with collection, trial, appeal, bankruptcy or other creditors' proceedings or
otherwise.
8. Documentary Stamp Tax Liability. The Maker shall pay any and all
documentary stamp tax and/or any other excise tax due and payable on this Note.
The Maker shall further indemnify and save harmless Lender from any documentary
stamp tax or intangibles tax assessed by the State of New York, including,
without limitation, any penalties and interest (the "Taxes"). The Maker hereby
waives any right that it may have now or in the future to raise nonpayment of
the Taxes as a defense to the collection of this Note.
9. Usury: Nothing herein contained, nor any transaction related
thereto, shall be construed or so operate as to require Maker or any person
liable for the repayment of same, to pay interest in an amount or at a rate
greater than the maximum allowed by applicable law. Should any interest or other
charges paid by Maker, or any parties liable for the payment of the loan made
pursuant to this Note, result in the computation or earning of interest in
excess of the maximum legal rate of interest permitted under the law in effect
while said interest is being earned, then any and all of that excess shall be
and is waived by Lender, and all that excess shall be automatically credited
against and in reduction of the principal balance, and any portion of the excess
that exceeds the principal balance shall be paid by Lender to Maker or any
parties liable for the payment of the loan made pursuant to this Note so that
under no circumstances shall the Maker, or any parties liable for the payment of
the loan hereunder, be required to pay interest in excess of the maximum rate
allowed by applicable law.
10. Continuing Security Interest: This Note shall continue to be
secured by the Leased Equipment pursuant to the Lease (as such terms are defined
in the Modification Agreement).
11. Jurisdiction: The laws of the State of New York shall govern the
interpretation and enforcement of this Note. In the event that legal action is
instituted to collect any amounts due under, or to enforce any provision of,
this instrument, Maker and any endorser, guarantor or other person primarily or
secondarily liable for payment hereof consent to, and by execution hereof submit
themselves to, the jurisdiction of the courts of the Borough of Manhattan, City
and State of New York, and, notwithstanding the place of residence of any of
them or the place of execution of this instrument, such litigation may be
brought in or transferred to a court of competent jurisdiction in and for the
Borough of Manhattan, City and State of New York.
12. Miscellaneous:
a. TIME IS OF THE ESSENCE OF THIS NOTE.
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b. It is agreed that the granting to Maker or any other party
of an extension or extensions of time for the payment of any sum or
sums due under this Note or for the performance of any covenant or
stipulation thereof or the taking of other or additional security shall
not in any way release or affect the liability of Maker under this
Note.
c. This Note may not be changed orally, but only by an
agreement in writing, signed by the party against whom enforcement of
any waiver, change, modification or discharge is sought.
d. All parties to this Note, whether Maker, principal, surety,
guarantor or endorser, hereby waive presentment for payment, demand,
notice, protest, notice of protest and notice of dishonor.
e. Anything herein to the contrary notwithstanding, the
obligations of Maker under this Note shall be subject to the limitation
that payments of interest shall not be required to the extent that
receipt of any such payment by Lender would be contrary to provisions
of law applicable to Lender limiting the maximum rate of interest which
may be charged or collected by Lender.
f. Maker acknowledges that Lender shall have no obligation
whatsoever to renew, modify or extend this Note or to refinance the
indebtedness under this Note upon the maturity thereof, except as
specifically provided herein.
g. Lender shall have the right to accept and apply to the
outstanding balance of this Note any and all payments or partial
payments received from Maker after the due date therefor, whether this
Note has been accelerated or not, without waiver of any of Lender's
rights to continue to enforce the terms of this Note and to seek any
and all remedies provided for herein or in any instrument securing the
same, including, but not limited to, the right to foreclose on such
security.
h. The term "Maker" as used herein, in every instance shall
include the makers of this Note, and its heirs, executors,
administrators, successors, legal representatives and assigns, and
shall denote the singular and/or plural, the masculine and/or feminine,
and natural and/or artificial persons whenever and wherever the context
so requires or admits.
i. If more than one party executes this Note, all such parties
shall be jointly and severally liable for the payment of this Note.
13. Waiver of Jury Trial: MAKER AND LENDER HEREBY KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT EITHER MAY HAVE TO A TRIAL BY JURY
IN RESPECT OF ANY LITIGATION BASED HEREON OR ARISING OUT OF, UNDER OR IN
CONNECTION WITH THIS NOTE AND ANY AGREEMENT CONTEMPLATED TO BE EXECUTED IN
CONJUNCTION HEREWITH, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS
(WHETHER VERBAL OR WRITTEN) OR ACTIONS OF EITHER PARTY. THIS PROVISION IS A
MATERIAL INDUCEMENT FOR LENDER ENTERING INTO THIS AGREEMENT.
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IN WITNESS WHEREOF, Maker has duly executed this Note effective the day
and year first above written.
MAKER:
EASYLINK SERVICES CORPORATION
By:
-----------------------------------
Print Name:
----------------------------
Title:
---------------------------------
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Exhibit B
SECURITY AGREEMENT
SECURITY AGREEMENT, dated as of November _, 2001 made by EasyLink
Services Corporation, a Delaware corporation ("Grantor"), in favor of The Bank
of New York acting in its capacity as the collateral agent for and
representative (within the meaning of Section 9-102(a)(72)(E) of the Uniform
Commercial Code) of the Holders as defined herein (in such capacity, the
"Collateral Agent").
WHEREAS, Grantor has entered into the Modification Agreements listed on
Annex A hereto (the Modification Agreements") pursuant to which certain
creditors of Grantor (the "Restructure Creditors") have agreed to restructure
certain debt and other obligations owed to them by Grantor;
WHEREAS, pursuant to the Modification Agreements, Grantor agreed to
grant a security interest in its assets subject to the terms and conditions set
forth therein to secure certain obligations owed or to be owed by Grantor to the
Restructure Creditors and certain other obligations as set forth herein;
NOW, THEREFORE, in consideration of the premises and in exchange for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, Grantor hereby agrees with Collateral Agent as follows:
1. Definitions
All capitalized terms used in this Agreement which are not otherwise
defined herein shall have the meanings ascribed to them in the Modification
Agreements or, if no definition is so provided, Article 9 of the Uniform
Commercial Code currently in effect in the State of New York, as applicable.
As used in this Security Agreement, the following capitalized terms
have the following meanings:
"Affiliate," with respect to any Person, means (i) any director,
officer or employee of such Person, (ii) any Person directly or indirectly
controlling or controlled by or under direct or indirect common control with
such Person, and (iii) any Person beneficially owning or holding 5% or more of
any class of voting securities of such Person or any corporation of which such
Person beneficially owns or holds, in the aggregate, 5% or more of any class of
voting securities. The term "control" means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of a Person, whether through the ownership of voting securities, by
contract or otherwise. The term "Affiliate," when used herein without reference
to any Person shall mean an Affiliate of Company.
"Capital Lease" means, at any time, a lease with respect to which the
lessee is required concurrently to recognize the acquisition of an asset and the
incurrence of a liability in accordance with GAAP.
"Capital Lease Obligation" means, as to any Person, the obligations of
such Person under a lease that are required to be classified and accounted for
as capital lease obligations under GAAP and, for purposes of this definition,
the amount of such obligations at the time any determination thereof is to be
made shall be the amount of the liability in respect of a capital lease that
would at such time be so required to be capitalized on a balance sheet in
accordance with GAAP.
"Collateral" has the meaning ascribed to such term in Section 2.
"Excluded Property" has the meaning ascribed to such term in Section 2.
"Forbearance Obligations" has the meaning ascribed to such term in
Section 3.
"GAAP" means generally accepted accounting principles as in effect
from time to time in the United States of America.
"Guaranty" means, with respect to any Person, any obligation (except
the endorsement in the ordinary course of business of negotiable instruments for
deposit or collection) of such Person guaranteeing or in effect guaranteeing any
indebtedness, dividend or other obligation of any other Person in any manner,
whether directly or indirectly, including (without limitation) obligations
incurred through an agreement, contingent or otherwise, by such Person:
(a) to purchase such indebtedness or obligation or any
property constituting security therefor;
(b) to advance or supply funds (i) for the purchase or payment
of such indebtedness or obligation, or (ii) to maintain any working
capital or other balance sheet condition or any income statement
condition of any other Person or otherwise to advance or make available
funds for the purchase or payment of such indebtedness or obligation;
(c) to lease properties or to purchase properties or services
primarily for the purpose of assuring the owner of such indebtedness or
obligation of the ability of any other Person to make payment of the
indebtedness or obligation; or
(d) otherwise to assure the owner of such indebtedness or
obligation against loss in respect thereof.
In any computation of the indebtedness or other liabilities of the obligor under
any Guaranty, the indebtedness or other obligations that are the subject of such
Guaranty shall be assumed to be direct obligations of such obligor.
"Holder" or "Holders" means a holder or holders of Obligations.
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"Indebtedness" with respect to any Person means, at any time, without
duplication,
(a) its liabilities for borrowed money and its redemption
obligations in respect of mandatorily redeemable Preferred Stock;
(b) its liabilities for the deferred purchase price of
property acquired by such Person (excluding accounts payable arising in
the ordinary course of business but including all liabilities created
or arising under any conditional sale or other title retention
agreement with respect to any such property);
(c) all liabilities appearing on its balance sheet in
accordance with GAAP in respect of Capital Leases;
(d) all liabilities for borrowed money secured by any Lien
with respect to any property owned by such Person (whether or not it
has assumed or otherwise become liable for such liabilities);
(e) all its liabilities in respect of letters of credit or
instruments serving a similar function issued or accepted for its
account by banks and other financial institutions (whether or not
representing obligations for borrowed money);
(f) Swaps of such Person; and
(g) any Guaranty of such Person with respect to liabilities of
a type described in any of clauses (a) through (f) hereof.
Indebtedness of any Person shall include all obligations of such Person
of the character described in clauses (a) through (g) to the extent such Person
remains legally liable in respect thereof notwithstanding that any such
obligation is deemed to be extinguished under GAAP.
"Lien" means, with respect to any Person, any mortgage, lien, pledge,
charge, security interest or other encumbrance, or any interest or title of any
vendor, lessor, lender or other secured party to or of such Person under any
conditional sale or other title retention agreement or Capital Lease, upon or
with respect to any property or asset of such Person.
"Obligations" has the meaning ascribed to such term in Section 3.
"Permitted Liens" means:
(1) Liens in effect on the date hereof securing the
Obligations;
(2) Liens securing Purchase Money Indebtedness, provided such
Liens do not extend to any assets of Grantor other than the assets so acquired;
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(3) Liens on property of a Person existing at the time such
Person is merged into or consolidated with any of Grantor, provided, that such
Liens were not incurred in connection with, or in contemplation of, such merger
or consolidation;
(4) Liens on property existing at the time of acquisition
thereof by Grantor; provided that such Liens were not incurred in connection
with, or in contemplation of, such acquisition and do not extend to any assets
of Grantor other than the property so acquired;
(5) Liens to secure the performance of statutory obligations,
surety or appeal bonds or performance bonds, or landlords', carriers',
warehousemen's, mechanics', suppliers', materialmen's or other like Liens, in
any case incurred in the ordinary course of business and with respect to amounts
for which an adequate reserve or other appropriate provision, if any, as is
required by GAAP shall have been made therefor;
(6) Liens existing on the date of this Agreement;
(7) Liens for taxes, assessments or governmental charges or
claims that are not yet delinquent or that are being contested in good faith by
appropriate proceedings promptly instituted and diligently concluded; provided
that any reserve or other appropriate provision as shall be required in
conformity with GAAP shall have been made therefor;
(8) Liens incurred in the ordinary course of business of
Grantor with respect to obligations that do not exceed $5 million in principal
amount in the aggregate at any one time outstanding;
(9) Liens securing Indebtedness issued in exchange for, or the
proceeds of which are used to extend, refinance, renew, replace, substitute or
refund in whole or in part Indebtedness that is secured by such Liens; provided
that such Liens shall not extend to assets other than the assets that secure
such Indebtedness being refinanced;
(10) any interest or title of a lessor under any Capital Lease
Obligation; and
(11) extensions, renewals or refundings of any Liens referred
to in clauses (1) through (10) above or this clause (11), provided that any such
extension, renewal or refunding does not extend to any assets or secure any
Indebtedness not securing or secured by the Liens being extended, renewed or
refinanced.
"Person" means an individual, partnership, corporation, limited
liability company, association, trust, unincorporated organization, or a
government or agency or political subdivision thereof.
"Preferred Stock" means any class of capital stock of a corporation
that is preferred over any other class of capital stock of such corporation as
to the payment of dividends or the payment of any amount upon liquidation or
dissolution of such corporation.
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"Purchase Money Indebtedness" means:
(1) Indebtedness of Grantor incurred (within 180 days of such purchase)
to finance the purchase of any assets (including the purchase of equity
interests of Persons that are not Affiliates of Grantor) of Grantor, provided
that the amount of Indebtedness thereunder does not exceed 100% of the purchase
cost of such assets; or
(2) Indebtedness of Grantor which refinances indebtedness referred to
in clause (1) of this definition, provided that such refinancing satisfies the
proviso of such clause (1).
"Restructure Obligations" has the meaning ascribed to such term in
Section 3.
"Required Lenders" means at any time the holders of a majority in
principal amount of the Restructure Obligations then outstanding.
"Swaps" means, with respect to any Person, payment obligations with
respect to interest rate swaps, currency swaps and similar obligations
obligating such Person to make payments, whether periodically or upon the
happening of a contingency. For the purposes of this Agreement, the amount of
the obligation under any Swap shall be the amount determined in respect thereof
as of the end of the then most recently ended fiscal quarter of such Person,
based on the assumption that such Swap had terminated at the end of such fiscal
quarter, and in making such determination, if any agreement relating to such
Swap provides for the netting of amounts payable by and to such Person
thereunder or if any such agreement provides for the simultaneous payment of
amounts by and to such Person, then in each such case, the amount of such
obligation shall be the net amount so determined.
"Working Capital" has the meaning ascribed to such term in Section 2.
2. Grant of Security Interest
As collateral security for the prompt payment in full and performance
of the Obligations (as defined in Section 3 hereof) when due (whether at stated
maturity, by acceleration or otherwise), Grantor hereby pledges and assigns to
Collateral Agent, and grants to Collateral Agent, a continuing security interest
in all of Grantor's property, whether currently owned or hereafter created,
acquired or reacquired by Grantor, wherever located, of every kind and
description, tangible or intangible, but excluding all Excluded Property, as
defined below (such property, other than Excluded Property, the "Collateral"),
including, without limitation, all of Grantor's right, title and interest in and
to the property described below and all substitutions therefor, accessions
thereto and improvements thereon:
5
(a) all equipment of any kind, including, without limitation, all
furniture, fixtures and machinery and all equipment, tools, supplies,
instruments and other like property (installed or uninstalled) not included in
Inventory (as defined below), whether or not title thereto is governed by a
certificate of title or ownership, and all parts, accessories and attachments
used in connection therewith, including, without limitation, motor vehicles and
all accretions and accessions thereto and any other equipment used in connection
with Grantor's business or otherwise owned by Grantor (hereinafter collectively
referred to as the "Equipment");
(b) (i) all trademarks, service marks, tradenames, business names,
trade styles, designs, logos, internet domain names and other source or business
identifiers, and all general intangibles of like nature, owned, adopted,
acquired or used by Grantor, all pending applications, registrations and
recordings thereof (including, without limitation, applications, registrations
and recordings in the United States Patent and Trademark Office or in any
similar office or agency of the United States, any state thereof of any other
country or any political subdivision thereof), and all reissues, extensions or
renewals thereof, together with all goodwill of the business symbolized by such
marks and all customer lists, formulae and other records of Grantor relating to
the distribution of products and services in connection with which any of such
marks are used and all income, royalties, damages and payments due and/or
payable under and with respect thereto, including, without limitation, payments
under all licenses entered into in connection therewith and damages and payments
for all infringements or dilutions thereof and the right to xxx for all
infringements or dilutions thereof (hereinafter referred to collectively as the
"Trademarks"), and (ii) all licenses, contracts or other agreements, whether
written or oral, naming Grantor as licensor or licensee and providing for the
grant of any right to use any Trademark, together with any goodwill connected
with and symbolized by any such trademark licenses or agreements and the right
to prepare for sale and sell any and all Inventory owned by Grantor and covered
by such licenses (hereinafter referred to collectively as the "Trademark
Licenses");
(c) (i) all letters patent, design patents and utility patents, and all
copyrights, inventions, trade secrets, proprietary information and technology,
know-how, formulae and other general intangibles of like nature owned by the
Grantor, all applications, registrations and recording thereof (including,
without limitation, applications, registrations and recordings in the United
States Patent and Trademark Office or in any similar office or agency of the
United States or any other country or any political subdivision thereof), and
all reissues, divisions, continuations in part and extensions or renewals
thereof (hereinafter referred to collectively as the "Patents"), and (ii) all
licenses, contracts or other agreements, whether written or oral, naming Grantor
as licensee or licensor and providing for the grant of any right to manufacture,
use or sell any invention covered by any patent (hereinafter referred to
collectively as the "Patent Licenses" and together with the Trademark Licenses,
the "Licenses");
6
(d) (i) all shares of capital stock of, membership interests in, or
other equity interests in, subsidiaries of Grantor; (ii) all computer programs,
codes, software, printouts and other computer materials, customer lists,
correspondence and advertising materials; (iii) all customer and supplier
contracts, sale orders, rights under license and franchise agreements, and other
contracts and contract rights; (iv) all interests in partnerships and joint
ventures; (v) all right, title and interest under leases, easements, rights of
way, subleases, licenses and concessions and other agreements relating to
personal property; (vi) all instruments, files, records, ledger sheets and
documents covering or relating to any of the Collateral; and (vii) all other
general intangibles, whether or not similar to the foregoing;
(e) the books and records of Grantor relating to any of the foregoing
Collateral, including, without limitation, all customer contracts, sale orders,
minute books, ledgers, records, computer programs, software, printouts and other
computer materials, customer lists, credit files, correspondence and advertising
materials, in each case indicating, summarizing or evidencing any of the
Collateral;
(f) to the extent permitted under applicable law, all franchises,
operating rights, licenses and permits issued by the FCC or any other
governmental or regulatory body or agency, held by Grantor; and
(g) (i) all cash and non-cash proceeds and products of any and all of
the foregoing Collateral (including, without limitation, (A) damages and
payments for past or future infringements of the Trademarks or the Patents and
(B) the right to xxx for past, present and future infringements of the
Trademarks or the Patents), (ii) all proceeds of any sale, lease or other
disposition of any Collateral, (iii) the proceeds of any award in condemnation
with respect to any of the Collateral, (iv) any proceeds of any such proceeds,
and, (v) to the extent not otherwise included, all payments under insurance
(whether or not Collateral Agent is the loss payee thereof), and any indemnity,
warranty or guaranty, payable by reason of loss or damage to or otherwise with
respect to any of the foregoing Collateral;
in each case howsoever Grantor's interests therein may arise or appear (whether
by ownership, security interest, claim or otherwise).
Notwithstanding the foregoing, "Collateral" shall not include any
Excluded Property.
"Excluded Property" means (i) any and all Working Capital Assets (as
defined below) and (ii) any property existing on the date hereof which is
subject to a prohibition in effect on the date hereof on Grantor's ability to
xxxxx x xxxx on such property, and any property acquired after the date hereof
which is subject to a prohibition in existence or created on the date of
acquisition thereof by Grantor on Grantor's ability to xxxxx x xxxx on such
property.
"Working Capital" means cash and cash equivalents, marketable
securities, inventory, receivables and any assets of Grantor that would be
classified as a current asset as determined in accordance with United States
generally accepted accounting principles.
7
3. Security for Obligations
This Agreement and the security interest created hereby in the
Collateral constitutes continuing collateral security for all of the following
obligations, whether now existing or hereafter incurred (the "Obligations"):
(a) all obligations from time to time owing by Grantor under this
Agreement;
(b) all obligations from time to time owing by Grantor under the
Forbearance Notes (as such terms are defined in the Modification Agreements) or,
in the case of any Restructure Creditor that has not received a Forbearance Note
in exchange for all present and future obligations under such Restructure
Creditor's Lease Agreement(s) (as defined in the Modification Agreement), all
obligations from time to time owing by Grantor under the Lease Agreements (such
obligations described in this clause (b) of this Section 3 being referred to
collectively as the "Forbearance Obligations");
(c) all obligations from time to time owing by Grantor under the
convertible promissory notes to be issued pursuant to the Modification
Agreements (such obligations described in this clause (c) of this Section 3
being referred to collectively as the "Restructure Obligations");
(d) all obligations from time to time owing by Grantor under Grantor's
outstanding 10% senior convertible notes due 2006; and
(e) all other obligations of Grantor, whether now existing or hereafter
arising, that Grantor may designate from time to time in a written notice to the
Collateral Agent as being within the term "Obligations".
Each Holder shall have the right at any time to terminate its interest
under this Agreement by sending a written notice to the Collateral Agent and
Grantor. Effective upon the giving of such notice, such Holder shall no longer
be deemed to be a Holder hereunder or to be a beneficiary of the security
interest created hereby.
4. Representations and Warranties
Grantor represents and warrants to Collateral Agent as follows:
(a) No authorization or approval or other action by, and no notice to
or filing with, any Governmental Authority, or any other Person, is required for
(i) the grant by Grantor and perfection of the security interest purported to be
created hereby in the Collateral (other than the filing of appropriate financing
or other statements) or (ii) the exercise by Collateral Agent of any of its
rights and remedies hereunder.
(b) This Agreement creates and, upon filing of all appropriate
financing or other statements, will continue to create valid and perfected liens
on, and security interests in, the Collateral, in favor of Collateral Agent as
security for the Obligations.
8
(c) The correct corporate name of Grantor is set forth in the preamble
to this Agreement, the principal place of business and chief executive office of
Grantor, and the place where Grantor's books and records concerning the
Collateral are currently kept, is the address for notice pursuant to Section 16
hereof.
(d) The business conducted by Grantor is not being conducted under any
corporate, trade or fictitious name other than the name of Grantor set forth in
the preamble to this Agreement.
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5. Further Assurances
Grantor agrees that at any time and from time to time, it will promptly
execute and deliver all further instruments and documents, and take all further
action, that may be necessary, or that Collateral Agent may at any time
reasonably request, in order to (i) more fully perfect and protect any security
interest granted or purported to be granted hereby, (ii) preserve and defend
against any person its title to the Collateral and the rights purported to be
granted therein by this Agreement to Collateral Agent, (iii) enable Collateral
Agent to exercise and enforce its rights and remedies hereunder with respect to
any Collateral, or (iv) otherwise to effect the purposes of this Agreement,
including, without limitation executing and filing such financing or
continuation statements, or amendments thereto, as may be necessary in order to
perfect and preserve the security interest purported to be created hereby. If
any Equipment is stored with any third party, Grantor will cause all documents,
instruments and certificates as Collateral Agent may from time to time
reasonably require related to such Equipment to be delivered to Collateral
Agent, and Grantor will take or cause to be taken all such other reasonable
actions as Collateral Agent may from time to time require in connection with its
security interest in such Equipment.
6. Additional Provisions Concerning the Collateral
Grantor hereby authorizes Collateral Agent to file, without the
signature of Grantor where permitted by law, such financing or continuation
statements and such other documents as Collateral Agent may deem necessary or
desirable to protect and perfect the interest of Collateral Agent in the
Collateral. Grantor further irrevocably appoints Collateral Agent Grantor's
attorney-in-fact, with power of attorney to execute on behalf of Grantor such
UCC financing statement amendment forms as Collateral Agent may from time to
time deem necessary or desirable to protect or perfect and protect such
interests. Such power of attorney is coupled with an interest and shall be
irrevocable for so long as the Obligations remain unpaid or underperformed.
7. Collateral Agent Appointed Attorney in Fact
Grantor hereby irrevocably appoints Collateral Agent or its designee on
behalf of Collateral Agent Grantor's attorney-in-fact and proxy, with full
authority in the place and stead of Grantor and in the name of Grantor or
otherwise, from time to time in Collateral Agent's discretion, to take any
action and to execute any instrument which Collateral Agent deems to be
necessary or advisable for accomplishing the purposes of this Agreement
including, without limitation, (i) to obtain and adjust insurance required to be
paid to Collateral Agent, (ii) to ask, demand, collect, xxx for, recover,
compound, receive and give acquittance and receipts for moneys due and to become
due under or in respect of any Collateral, (iii) to receive, endorse, assign and
collect any drafts or other instruments, documents and chattel paper in
connection with clause (i) or (ii) above, (iv) to prepare and file all
applications and other documents necessary to maintain the items described in
Section 2(f) in full force and effect and Grantor the authorized legal holder
thereof and (v) to file any claims or take any action or institute any
proceedings which Collateral Agent may deem necessary or desirable for the
collection of any Collateral or otherwise to enforce the rights of Collateral
Agent with respect to any Collateral. All acts of such attorney or designee are
hereby ratified and approved, and such attorney or designee shall not be liable
for any acts of omission or commission (other than acts or omissions
constituting gross negligence or willful misconduct as determined by a final
judgment or a court of competent jurisdiction). This power of attorney is
coupled with an interest and is irrevocable until all of the Obligations are
paid in full.
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8. Collateral Agent May Perform
If Grantor fails to perform any agreement or obligation contained
herein, Collateral Agent may (without obligation to do so and without releasing
Grantor from its obligation to do so) itself perform, or cause performance of,
such agreement or obligation, in the name of Grantor or Collateral Agent, and
the expenses of Collateral Agent incurred in connection therewith, together with
interest on such amounts from the date of payment or incurrence, at a rate of
interest per annum equal to the interest rate then in effect under the Note,
shall constitute additional Obligations secured by this Agreement and shall be
payable by Grantor, including, without limitation, any costs or expenses of
litigation associated therewith.
9. Collateral Agent's Duties
The powers conferred on Collateral Agent hereunder are solely to
protect its interest in the Collateral and shall not impose any duty upon it to
exercise any such powers. Collateral Agent shall have no duty as to any
Collateral, as to ascertaining or taking action with respect to calls,
conversions, exchanges, maturities, tenders or other matters relative to any
Collateral, whether or not Collateral Agent has or is deemed to have knowledge
of such matters, or as to the taking of any necessary steps to preserve rights
against any parties or any other rights pertaining to any Collateral.
10. Remedies Upon Default
In the event that an Event of Default (as defined in the
Obligations)shall have occurred and be continuing, upon the direction of the
Required Lenders:
(a) Collateral Agent may exercise in respect of the Collateral, or any
part thereof, in addition to other rights and remedies provided for herein or
otherwise available to it, all of the rights and remedies of a secured party in
default under the Code in effect in the State of New York (or such other
applicable jurisdiction as Collateral Agent may determine) at that time (the
"Code"), and may also, without demand of performance or other demand,
advertisement or notice, except as specified below (all of which demands,
advertisements, and/or notices are hereby expressly waived by Grantor) (i) take
absolute control of the Collateral, including without limitation transfer into
the name of Collateral Agent or into the name of its nominee or nominees (to the
extent Collateral Agent has not theretofore done so) and thereafter receive, for
the benefit of Collateral Agent, all payments made thereon, give all consents,
waivers and ratifications in respect thereof and otherwise act with respect
thereto as though it were the outright owner thereof, (ii) require Grantor to,
and Grantor hereby agrees that it will at its expense and upon request of
Collateral Agent forthwith, assemble all or part of the Collateral as directed
by Collateral Agent and make it available to Collateral Agent at a place or
places to be designated by Collateral Agent which is reasonably convenient to
both parties, and Collateral Agent may enter into and occupy any premises owned
or leased by Grantor where the Collateral of any part thereof is located or
assembled for a reasonable period in order to effectuate the rights and remedies
of Collateral Agent hereunder, without obligation to Grantor in respect of such
occupation, and (iii) without notice, except as specified below, sell the
Collateral or any part thereof in one or more parcels at public or private sale,
at any of the offices of Collateral Agent or elsewhere, for cash, on credit or
for future delivery, and at such price or prices and upon such other terms as
Collateral Agent may deem commercially reasonable. Grantor agrees that, to the
extent notice of sale shall be required by law, at least 10 days' notice to
Grantor of the time and place of any public sale or the time after which any
private sale is to be made shall constitute reasonable notification. Collateral
Agent shall not be obligated to make any sale of Collateral regardless of notice
of sale having been given. Collateral Agent may adjourn any public or private
sale from time to time by announcement at the time and place fixed therefor, and
such sale may, without further notice, be made at the time and place to which it
was so adjourned. Grantor hereby waives any claims against Collateral Agent
arising by reason of the fact that the price at which the Collateral may have
been sold at a private sale was less than the price which might have been
obtained at a public sale or was less than the aggregate amount of the
Obligations, even if Collateral Agent accepts the first offer received and does
not offer the Collateral to more than one offeree and waives all rights which a
Grantor may have to require that all or any part of the Collateral be marshaled
upon any sale (public or private) thereof.
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(b) Any cash held by Collateral Agent as Collateral and all cash
proceeds received by Collateral Agent in respect of any sale or collection from,
or other realization upon, all or any part of the Collateral, after payment from
such proceeds of Collateral Agent's out-of-pocket costs and expenses in
connection with such sale, including, without limitation, reasonable attorneys'
fees and expenses, may, in the discretion of Collateral Agent, be held by
Collateral Agent as collateral for, and/or then or at any time thereafter be
applied in whole or in part by Collateral Agent against, the Obligations in a
pro rata manner.
In the event that the proceeds of any such sale, collection or
realization are insufficient to pay all amounts to which Collateral Agent is
legally entitled, Grantor shall be liable for the deficiency, together with
interest thereon at the applicable interest rate under the Obligations or such
other rate as shall be fixed by applicable law, together with the costs of
collection and the reasonable fees, costs, expenses and other client charges of
any attorneys employed by Collateral Agent to collect such deficiency. In the
event that the proceeds of any such sale, collection or realization are
sufficient to pay all amounts to which Collateral Agent is legally entitled,
Grantor shall be entitled to receive any such proceeds over and above such
amounts.
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11. Expenses
Grantor will upon demand pay to Collateral Agent the amount of any and
all costs and expenses, including the fees, costs, expenses and other client
charges of counsel for Collateral Agent and of any experts and agents
(including, without limitation, any Person which may act as agent of Collateral
Agent), that Collateral Agent may incur in connection with (i) the custody or
preservation of, use or operation of, or the sale of, collection from, or other
realization upon, any of the Collateral, (ii) the exercise or enforcement of any
of the rights of Collateral Agent hereunder, or (iii) the failure by Grantor to
perform or observe any of the provisions hereof. Any amounts payable under this
Section 11 shall be included in the Obligations.
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12. Security Interest Absolute; Subordination of Security Interest;
Termination
(a) All rights of Collateral Agent, all security interests and all
obligations of Grantor hereunder shall be absolute and unconditional
irrespective of: (i) any lack of validity or enforceability of the Loan
Documents or any other agreement or instrument relating thereto, (ii) any change
in the time, manner or place of payment of, or in any other term in respect of,
all or any of the Obligations, or any other amendment or waiver of or consent to
any departure from the Loan Documents or any other agreement or instrument
relating thereto, (iii) any exchange or release of, or non-perfection of any
lien on any collateral, or any release or amendment or waiver of or consent to
departure from any guaranty, for all or any of the Obligations, or (iv) any
other circumstance which might otherwise constitute a defense available to, or a
discharge of, Grantor in respect of the Obligations.
(b) The security interest created hereby shall be junior and
subordinate to all Permitted Liens and Liens securing up to $25 million of
Indebtedness (which $25 million shall be in connection with new funding coming
into Grantor). For purposes of determining whether a Lien is a Permitted Lien or
is a Lien securing up to $25 million of Indebtedness as contemplated by this
Section 12(b), in the event that a Lien meets the criteria of more than one of
the categories described in the definition of Permitted Lien or is a Lien
securing up to $25 million of Indebtedness as so contemplated and also meets the
criteria of one or more of the other categories of Permitted Liens or also is a
Lien securing up to $25 million of Indebtedness, Grantor shall, in its sole
discretion, classify such Lien in any manner, and may from time to time
reclassify such Lien in any manner, in which such item could be incurred at the
time of such reclassification. Upon receipt of a certificate from an officer of
Grantor that a Lien is either a Permitted Lien or is a Lien securing up to $25
million of Indebtedness and that the security interest created hereby is
required to be junior and subordinate thereto pursuant to the terms of this
Section 12(b), the Collateral Agent shall enter into such additional
subordination and inter-creditor agreements as may be requested by the holder of
the Lien to which the security interest created hereby is junior and
subordinate.
(c) This Agreement shall create a continuing security interest in the
Collateral and shall (i) remain in full force and effect until the date Grantor
has indefeasibly paid in full in cash either (A) until the Restructure
Obligations have been issued, all of the Forbearance Obligations or (B) after
the Restructure Obligations have been issued, all of the Restructure
Obligations, (ii) be binding upon Grantor and its successors and assigns, and
(iii) inure, together with the rights and remedies of Collateral Agent
hereunder, to the benefit of, and be enforceable by, Collateral Agent and its
successors and assigns. Upon the satisfaction in full of either (A) until the
Restructure Obligations have been issued, all of the Forbearance Obligations or
(B) after the Restructure Obligations have been issued, all of the Restructure
Obligations, (i) this Agreement and the security interests created hereby shall
terminate and all rights to the Collateral shall revert to Grantor and (ii)
Collateral Agent will, upon Grantor's request and at Grantor's expense, (A)
return to Grantor such of the Collateral as shall not have been sold or
otherwise disposed of or applied pursuant to the terms hereof and (B) execute
and deliver to Grantor such documents as Grantor shall reasonably request to
evidence such termination, all without any representation, warranty or recourse
whatsoever.
14
13. Collateral Agent.
(a) Collateral Agent. The Collateral Agent shall act as agent, bailee
and custodian for the benefit of the Holders with respect to the Collateral. The
Collateral Agent shall maintain and hold all Collateral at any time delivered to
it as agent, bailee and custodian for the benefit of the Holders. The Collateral
Agent is acting and will act with respect to the Collateral for the benefit of
the Holders and is not, and shall not at any time in the future be, subject,
with respect to the Collateral, in any manner or to any extent, to the direction
or control of Grantor. The Collateral Agent agrees to act in accordance with
this Agreement and in accordance with any written instructions from the Required
Lenders. Under no circumstances shall the Collateral Agent deliver possession of
Collateral to Grantor or any other person, or otherwise release any Collateral
from the security interest created hereby, except in accordance with the terms
of this Agreement or the written instruction of the Required Lenders.
(b) Books and Records. The Collateral Agent shall make appropriate
notations in its books and records to reflect that the Collateral is held by the
Collateral Agent for the benefit of the Holders.
(c) Fees and Expenses of Collateral Agent. The Collateral Agent shall
notify Grantor of all fees, expenses and charges of the Collateral Agent arising
out of the Collateral Agent's execution and performance of its duties and
obligations under this Agreement, which shall be as set forth on Schedule II
attached hereto, and such reasonable fees, expenses and charges shall be paid
promptly by Grantor or, if already paid by the Collateral Agent, Grantor
promptly shall reimburse the Collateral Agent therefor. The Collateral Agent may
employ, upon notice to Grantor at Grantor's expense, such legal counsel and
other experts as it reasonably deems necessary in connection with performing its
duties and obligations under this Agreement, and shall be fully protected in
relying upon the advice of such counsel and other experts as are reasonably
selected by it.
(d) Removal or Resignation of Collateral Agent. Grantor may, at any
time, remove and discharge the Collateral Agent from the performance of its
duties under this Agreement. In addition, the Collateral Agent may, at any time,
effective upon 90 days' prior written notice to Grantor and the Holders and the
appointment of a successor Collateral Agent, terminate its agreement to act as
the Collateral Agent hereunder. Upon the effective date of any such termination,
the Collateral Agent shall promptly deliver the Collateral then held by it or
its agents to the successor Collateral Agent and shall execute and deliver such
notices, instructions and assignments as may be reasonably necessary or
desirable to transfer the rights of the Collateral Agent with respect to the
Collateral to the successor Collateral Agent. Any successor Collateral Agent
shall be a bank or other financial institution or trust company designated by
Grantor.
15
(e) Exculpation; Indemnification. (1) The Collateral Agent hereby
accepts the agency created in this Agreement. Except as otherwise expressly
required by this Section 13(e), the Collateral Agent shall not have any duty or
liability with respect to the administration or investment of any property or
the payment of income or principal to the Holders or Grantor, and no implied
obligations shall be inferred from this Agreement.
The Collateral Agent shall not be personally liable under any
circumstances, except for its own willful misconduct or gross negligence. In
particular, but not by way of limitation:
(i) The Collateral Agent shall not be personally liable for any error
of judgment made in good faith by an officer of the Collateral Agent;
(ii) No provision of this Agreement shall require the Collateral Agent
to expend or risk its personal funds or otherwise incur any financial liability
in the performance of its rights or powers hereunder, if the Collateral Agent
shall have reasonable grounds for believing that repayment of such funds or
adequate indemnity against such risk or liability is not reasonably assured or
provided to it;
(iii) Under no circumstances shall the Collateral Agent be personally
liable for the payment of any interest on any money or the Collateral held by it
hereunder, except as otherwise agreed by the Collateral Agent;
(iv) The Collateral Agent shall not be personally responsible for or in
respect of the validity, value, genuineness or collectability of the Collateral
or any other property, the validity or sufficiency of this Agreement, the
correctness of the recitals contained herein or for the due execution hereof by
Grantor or the Holders;
(v) The Collateral Agent shall incur no liability to anyone in acting
upon any signature, instrument, notice, resolution, request, consent, order,
certificate, report, opinion, bond or other document or paper believed by it to
be genuine and believed by it to be signed by the proper party or parties. The
Collateral Agent may accept a certified copy of a resolution of the board of
directors or other governing body of any corporate party as conclusive evidence
that such resolution has been duly adopted by such body and that the same is in
full force and effect. As to any fact or matter the manner of ascertainment of
which is not specifically prescribed herein, the Collateral Agent may for all
purposes hereof rely on a certificate, signed by Grantor or the Holders, as to
such fact or matter, and such certificate shall constitute full protection to
the Collateral Agent for any action taken or omitted to be taken by it in good
faith in reliance thereon;
(vi) In the exercise or administration of the agency hereunder, the
Collateral Agent (A) may act directly or through agents or attorneys pursuant to
agreements entered into with any of them, and the Collateral Agent shall not be
liable for the default or misconduct of such agents or attorneys if such agents
or attorneys shall have been selected by the Collateral Agent in good faith and
(B) may consult with counsel, accountants and other skilled persons to be
selected in good faith and employed by it, and it shall not be liable for
anything done, suffered or omitted in good faith by it in accordance with the
advice or opinion of any such counsel, accountants or other skilled persons;
16
(vii) The Collateral Agent's sole duty with respect to the custody,
safekeeping and physical preservation of the Collateral shall be to deal with
them in a similar manner as the Collateral Agent deals with similar property for
its own account, subject to the protections and limitations on liability
afforded to the Collateral Agent under this Agreement;
(viii) At any time the Collateral Agent may request instructions in
writing from Grantor or the Holders, as applicable, and the Collateral Agent
shall not be liable with respect to any act or omission in accordance with the
instructions of the Holders or for refusing to take any action without such
instructions;
(ix) The Collateral Agent shall not be deemed to have knowledge or
notice of the occurrence or nonoccurrence of any act or event unless the
Collateral Agent shall have actual knowledge thereof; and
(x) Except as expressly provided in this Section 13(e), in accepting
and performing the agency hereby created the Collateral Agent acts solely as
agent hereunder and not in its individual capacity.
(f) Grantor shall indemnify and hold the Collateral Agent harmless from
and against any and all loss, liability, damage or expense (including, without
limitation, reasonable attorneys' fees and expenses) that the Collateral Agent
may suffer or incur in connection with the entering into and performance of its
obligations under this Agreement, except to the extent such loss, liability,
damage or expense arises from the gross negligence or willful misconduct of the
Collateral Agent. If Grantor fails to perform its obligations under this Section
13(e), the Collateral Agent may, upon request by the Required Lenders, perform
such obligations, and all expenses incurred by the Collateral Agent in
connection therewith shall be payable by Grantor under and constitute
Obligations secured hereby.
14. Amendments, etc.
No amendment of this Agreement or waiver of any provision of this
Agreement, and no consent to any departure by Grantor herefrom, shall in any
event be effective unless the same shall be in writing and signed by Grantor,
the Collateral Agent and the Required Lenders, and any such waiver or consent
shall be effective only in the specific instance and for the specific purpose
for which given. Notwithstanding anything to the contrary, the foregoing shall
not limit Grantor's rights to designate Obligations pursuant to Section 3 hereof
and Grantor may amend this Agreement by written notice to the Collateral Agent
to add or amend any provision of this Agreement to the extent that such
additional provision or amendment is for the benefit of the Holders or to
correct any mistake or ambiguity contained herein.
17
15. Notices, Etc.
All notices and other communications under this Agreement shall be in
writing and shall be deemed given when delivered personally, mailed by
registered or certified mail, return receipt requested, sent by recognized
overnight delivery service (signature of receipt requested) or, to the extent
receipt is confirmed, by telecopy or telefax (provided that such party also
sends a copy by personal delivery or registered or certified mail, return
receipt requested, or recognized overnight delivery service, signature of
receipt requested), to the following addresses (or to such other address as a
party may have specified by notice given to the other party pursuant to this
provision):
Grantor:
c/o EasyLink Services Corporation
000 Xxxxxxxx Xxxxxx
Xxxxxx, XX 00000
Fax Number: 000-000-0000
Attention: Chief Executive Officer
With a copy to:
Xxxxx Xxxxxxxx at the same address
Collateral Agent:
The Bank of New York [insert address for notices]
Attention:
Fax Number:
The Collateral Agent shall send to each of the Holders in effect from
time to time a copy of each written notice received from Grantor at such time.
The Collateral Agent shall send such notices to each such Holder in accordance
with instructions given to the Collateral Agent by such Holder and in effect at
such time.
16. Governing Law; Choice of Forum; Waiver of Jury Trial
(a) THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO ITS
CONFLICT OF LAW PRINCIPLES, EXCEPT AS REQUIRED BY MANDATORY PROVISIONS OF LAW
AND EXCEPT TO THE EXTENT THAT THE VALIDITY AND PERFECTION OF THE SECURITY
INTEREST CREATED HEREBY, OR REMEDIES HEREUNDER, IN RESPECT OF ANY PARTICULAR
COLLATERAL ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF
NEW YORK.
18
(b) ANY LEGAL ACTION, SUIT OR PROCEEDING ARISING OUT OF OR RELATING TO
THIS AGREEMENT MAY BE INSTITUTED IN ANY STATE OR FEDERAL COURT LOCATED IN NEW
YORK COUNTY, STATE OF NEW YORK, AND EACH PARTY AGREES NOT TO ASSERT, BY WAY OF
MOTION, AS A DEFENSE, OR OTHERWISE, IN ANY SUCH ACTION, SUIT OR PROCEEDING, ANY
CLAIM THAT IT IS NOT SUBJECT PERSONALLY TO THE JURISDICTION OF SUCH COURTS, THAT
ITS PROPERTY IS EXEMPT OR IMMUNE FROM ATTACHMENT OR EXECUTION, THAT THE ACTION,
SUIT OR PROCEEDING IS BROUGHT IN AN INCONVENIENT FORUM, THAT THE VENUE OF THE
ACTION, SUIT OR PROCEEDING IS IMPROPER OR THAT THIS AGREEMENT OR THE SUBJECT
MATTER HEREOF MAY NOT BE ENFORCED IN OR BY SUCH COURT, AND HEREBY WAIVES ANY
OFFSETS IN ANY SUCH ACTION, SUIT OR PROCEEDING. EACH PARTY FURTHER IRREVOCABLY
SUBMITS TO THE JURISDICTION OF ANY SUCH COURT IN ANY SUCH ACTION, SUIT OR
PROCEEDING. ANY AND ALL SERVICE OF PROCESS AND ANY OTHER NOTICE IN ANY SUCH
ACTION, SUIT OR PROCEEDING SHALL BE EFFECTIVE AGAINST ANY PARTY IF GIVEN
PERSONALLY OR BY REGISTERED OR CERTIFIED MAIL, RETURN RECEIPT REQUESTED, OR BY
ANY OTHER MEANS OF MAIL THAT REQUIRES A SIGNED RECEIPT, POSTAGE PREPAID, MAILED
TO SUCH PARTY AS HEREIN PROVIDED, OR BY PERSONAL SERVICE ON SUCH PARTY WITH A
COPY OF SUCH PROCESS MAILED TO SUCH PARTY BY REGISTERED OR CERTIFIED MAIL,
RETURN RECEIPT REQUESTED, POSTAGE PREPAID. NOTHING HEREIN CONTAINED SHALL BE
DEEMED TO AFFECT THE RIGHT OF ANY PARTY TO SERVE PROCESS IN ANY MANNER PERMITTED
BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST ANY OTHER
PARTY IN ANY JURISDICTION OTHER THAN NEW YORK IN CONNECTION WITH ACTIONS
INITIATED BY THIRD PARTIES IN SUCH OTHER JURISDICTIONS.
(c) JURY TRIAL WAIVER. GRANTOR WAIVES ANY RIGHT TO A TRIAL BY JURY
WHICH IT MAY HAVE IN ANY ACTION OR PROCEEDING IN LAW OR EQUITY IN CONNECTION
WITH THIS AGREEMENT. GRANTOR ACKNOWLEDGES THAT THIS WAIVER IS KNOWINGLY AND
FREELY GIVEN.
17. Waiver
Grantor hereby waives promptness, diligence, notice of acceptance and
any other notice with respect to any Obligations or Grantor's obligations
hereunder and any requirement that Collateral Agent protect, secure, perfect or
insure any security interest or Lien, or any property subject thereto, or
exhaust any right or take any action against Grantor or any other Person.
18. Rights Cumulative
No failure on the part of Collateral Agent to exercise, and no delay in
exercising, any right or power hereunder shall operate as a waiver thereof; nor
shall any single or partial exercise of any such right or power preclude any
other or further exercise thereof or the exercise of any other right or power.
The rights and remedies of Collateral Agent provided herein are cumulative and
are in addition to, and not exclusive of, any rights or remedies provided by
law. No provision for a specific remedy shall be deemed to limit Collateral
Agent's remedies at law or in equity. The rights of Collateral Agent hereunder
are not conditional or contingent on any attempt by Collateral Agent to exercise
any of its rights under any other document against Grantor or against any other
Person.
19
19. Assignment
This Agreement shall be binding on Grantor and its successors and
permitted assigns (including any trustee succeeding to the rights of Grantor
pursuant to Chapter 11 of the Bankruptcy Code or pursuant to any conversion to a
case or cases under Chapter 7 of the Bankruptcy Code), and shall inure, together
with all rights and remedies of Collateral Agent hereunder, to the benefit of
Collateral Agent and its successors and assigns and to the Holders and their
respective successors and assigns, provided that Grantor may not assign any of
its rights or obligations hereunder without the prior written consent of
Collateral Agent and any purported assignment without such consent shall be null
and void.
20. Survival of Representations and Warranties
All representations and warranties of Grantor contained herein or made
in connection herewith shall survive the making of and shall not be waived by
the execution and delivery of this Agreement or any other Loan Document or any
investigation by Collateral Agent. All covenants and agreements of Grantor
contained herein shall continue in full force and effect from and after the date
hereof until the indefeasible payment in full of (A) until the Restructure
Obligations have been issued, the Forbearance Obligations, and (B) after the
Restructure Obligations have been issued, the Restructure Obligations.
21. Severability
Whenever possible each provision of this Agreement shall be interpreted
in such manner as to be effective and valid under applicable law, but if any
provision of this Agreement shall be prohibited by, illegal, unenforceable or
invalid under applicable law, such provision shall be ineffective to the extent
of such prohibition, illegality, unenforceability or invalidity under such law,
without invalidating the remainder of such provision or the remaining provisions
of this Agreement.
22. Interpretation
Grantor and Collateral Agent have participated jointly in the
negotiation and drafting of this Agreement. In the event that any ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the parties hereto and no presumption or burden of
proof shall arise favoring or disfavoring any party by virtue of authorship of
any provisions of this Agreement.
20
23. Headings
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.
24. Counterparts
This Agreement may be executed in counterparts (and by different
parties hereto on different counterparts), each of which shall constitute an
original, but all of which, when taken together, shall constitute a single
contract. Delivery of an executed counterpart of a signature page to this
Agreement by telecopy shall be as effective as delivery of a manually executed
counterpart of this Agreement.
25. Entire Agreement
This Agreement embodies the entire agreement between the parties hereto
relating to the transactions provided for herein and supersede all prior
understandings and agreements, whether written or oral, between the parties
hereto with respect to such transactions.
[Signature page follows]
21
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
EASYLINK SERVICES CORPORATION
By:
----------------------------
Name:
Title:
ACKNOWLEDGED AND AGREED:
THE BANK OF NEW YORK, as COLLATERAL AGENT
By:
-----------------------------
Name:
Title:
Annex A
Modification Agreements
1. Modification Agreement, effective as of June 1, 2001, by and among GATX
Technology Services Corporation and EasyLink Services Corporation.
2. Modification Agreement, effective as of June 1, 2001, by and between
GATX Technology Services Corporation, as successor in interest to
Pacific Atlantic Systems Leasing, and EasyLink Services Corporation.
3. Modification Agreement, effective as of June 1, 2001, between EasyLink
Services Corporation, as successor to Xxxx.xxx, Inc., and Associates
Leasing, Inc.
4. Modification Agreement, effective as of June 1, 2001, by and among
Xxxxxxxx XxXxxxxx Associates, Inc. and EasyLink Services Corporation.
5. Modification Agreement, effective as of June 1, 2001, by and among
Pentech Financial Services, Inc. and EasyLink Services Corporation.
6. Modification Agreement, effective as of June 1, 2001, by and among
Phoenix Leasing Incorporated, EasyLink Services USA, Inc. and EasyLink
Services Corporation.
7. Modification Agreement, effective as of June 1, 2001, by and among
MicroTech Leasing Corp. and EasyLink Services Corporation.
8. Modification, effective as of June 1, 2001, by and between AT&T Corp.
and EasyLink Services Corporation.
9. Modification Agreement, effective as of June 1, 2001, by and between
Xxxxxx Xxx Xxxx and EasyLink Services Corporation.
10. [Modification Agreement, by and between Transamerica Business Credit
Corporation and EasyLink Services Corporation] [subject to execution
and delivery].
11. [Modification Agreement, by and between Leasing Technologies
International, Inc. and EasyLink Services Corporation] [subject to
execution and delivery].
12. Modification Agreement, effective as of June 1, 2001, by and among
Fleet Business Credit, LLC, formerly Fleet Business Credit Corporation
and EasyLink Services Corporation., formerly Xxxx.xxx, Inc.
EXHIBIT C
THIS NOTE AND THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED. THEY MAY NOT BE SOLD, OFFERED FOR SALE,
PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS
TO THE SECURITIES UNDER SAID ACT OR AN OPINION OF COUNSEL SATISFACTORY TO THE
CORPORATION THAT SUCH REGISTRATION IS NOT REQUIRED.
EASYLINK SERVICES CORPORATION
CONVERTIBLE PROMISSORY NOTE
$234,184 Effective: June 1, 2001
FOR VALUE RECEIVED EASYLINK SERVICES CORPORATION, a Delaware
corporation ("Company") promises to pay to LEASING TECHNOLOGIES INTERNATIONAL,
INC.. ("Holder"), or its registered assigns, the principal sum of TWO HUNDRED
THIRTY FOUR THOUSAND ONE HUNDRED EIGHTY FOUR DOLLARS ($234,184.00), or such
lesser amount as shall equal the outstanding principal amount hereof, together
with interest from June 1, 2001 on the unpaid principal balance at a rate equal
to 12.0% per annum, computed on the basis of twelve 30 day months, payable as
provided herein.
The following is a statement of the rights of Holder and the conditions
to which this Note is subject, and to which Holder, by the acceptance of this
Note, agrees:
1. Definitions. As used in this Note, the following capitalized terms
have the following meanings:
"Affiliate," with respect to any Person, means (i) any director,
officer or employee of such Person, (ii) any Person directly or indirectly
controlling or controlled by or under direct or indirect common control with
such Person, and (iii) any Person beneficially owning or holding 5% or more of
any class of voting securities of such Person or any corporation of which such
Person beneficially owns or holds, in the aggregate, 5% or more of any class of
voting securities. The term "control" means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of a Person, whether through the ownership of voting securities, by
contract or otherwise. The term "Affiliate," when used herein without reference
to any Person shall mean an Affiliate of Company.
"Bankruptcy Law" shall mean Title 11, U.S. Code or any similar federal,
state or foreign bankruptcy, insolvency or similar law.
"Business Day" means any day other than a Saturday, a Sunday or a day
on which commercial banks in New York City are required or authorized to be
closed.
"Capital Lease" means, at any time, a lease with respect to which the
lessee is required concurrently to recognize the acquisition of an asset and the
incurrence of a liability in accordance with GAAP.
"Capital Lease Obligation" means, as to any Person, the obligations of
such Person under a lease that are required to be classified and accounted for
as capital lease obligations under GAAP and, for purposes of this definition,
the amount of such obligations at the time any determination thereof is to be
made shall be the amount of the liability in respect of a capital lease that
would at such time be so required to be capitalized on a balance sheet in
accordance with GAAP.
"Common Stock" means Class A common stock, par value $.01 per share, of
Company or any shares into which such shares have been changed pursuant to any
recapitalization, merger, consolidation or similar event.
"Company" includes the corporation initially executing this Note and
any Person which shall succeed to or assume the obligations of Company as
permitted under this Note.
"Conversion Price" has the meaning given in Section 9.1 hereof.
"Conversion Shares" has the meaning given in Section 9.6 (c) hereof.
"Custodian" shall mean any custodian, receiver, trustee, assignee,
sequester, liquidator or similar official under any Bankruptcy Law.
"Daily Market Price" means the last reported per share sale price,
regular way on such day, or, if no sale takes place on such day, the average of
the reported closing per share bid and asked prices on such day, regular way, in
either case as reported on the NASDAQ National Market or, if such Class A common
stock is not quoted or admitted to trading on such quotation system, on the
principal national securities exchange or quotation system on which such Class A
common stock may be listed or admitted to trading or quoted, or, if not listed
or admitted to trading or quoted on any national securities exchange or
quotation system, the average of the closing per share bid and asked prices of
such Class A common stock on the over-the-counter market on the day in question
as reported by the National Quotation Bureau Incorporated, or similar generally
accepted reporting service, or, if not so available in such manner, as furnished
by any NASDAQ member firm selected from time to time by the Board of Directors
of Company for that purpose, or, if not so available in such manner, as
otherwise determined in good faith by the Board of Directors of Company.
"Default Rate" has the meaning given in Section 16 hereof.
"Event of Default" has the meaning given in Section 6 hereof.
2
"GAAP" means generally accepted accounting principles as in effect from
time to time in the United States of America.
"Guaranty" means, with respect to any Person, any obligation (except
the endorsement in the ordinary course of business of negotiable instruments for
deposit or collection) of such Person guaranteeing or in effect guaranteeing any
indebtedness, dividend or other obligation of any other Person in any manner,
whether directly or indirectly, including (without limitation) obligations
incurred through an agreement, contingent or otherwise, by such Person:
(a) to purchase such indebtedness or obligation or any
property constituting security therefor;
(b) to advance or supply funds (i) for the purchase or payment
of such indebtedness or obligation, or (ii) to maintain any working
capital or other balance sheet condition or any income statement
condition of any other Person or otherwise to advance or make available
funds for the purchase or payment of such indebtedness or obligation;
(c) to lease properties or to purchase properties or services
primarily for the purpose of assuring the owner of such indebtedness or
obligation of the ability of any other Person to make payment of the
indebtedness or obligation; or
(d) otherwise to assure the owner of such indebtedness or
obligation against loss in respect thereof.
In any computation of the indebtedness or other liabilities of the
obligor under any Guaranty, the indebtedness or other obligations that are the
subject of such Guaranty shall be assumed to be direct obligations of such
obligor.
"Holder" shall mean the Person specified in the introductory paragraph
of this Note or any Person who shall at the time be the registered holder of
this Note.
"Indebtedness" with respect to any Person means, at any time, without
duplication,
(a) its liabilities for borrowed money and its redemption
obligations in respect of mandatorily redeemable Preferred Stock;
(b) its liabilities for the deferred purchase price of
property acquired by such Person (excluding accounts payable arising in
the ordinary course of business but including all liabilities created
or arising under any conditional sale or other title retention
agreement with respect to any such property);
(c) all liabilities appearing on its balance sheet in
accordance with GAAP in respect of Capital Leases;
3
(d) all liabilities for borrowed money secured by any Lien
with respect to any property owned by such Person (whether or not it
has assumed or otherwise become liable for such liabilities);
(e) all its liabilities in respect of letters of credit or
instruments serving a similar function issued or accepted for its
account by banks and other financial institutions (whether or not
representing obligations for borrowed money);
(f) Swaps of such Person; and
(g) any Guaranty of such Person with respect to liabilities of
a type described in any of clauses (a) through (f) hereof.
Indebtedness of any Person shall include all obligations of such Person
of the character described in clauses (a) through (g) to the extent such Person
remains legally liable in respect thereof notwithstanding that any such
obligation is deemed to be extinguished under GAAP.
"Lien" means, with respect to any Person, any mortgage, lien, pledge,
charge, security interest or other encumbrance, or any interest or title of any
vendor, lessor, lender or other secured party to or of such Person under any
conditional sale or other title retention agreement or Capital Lease, upon or
with respect to any property or asset of such Person.
"Material Subsidiary" means any Subsidiary of Company which at the date
of determination is a "significant subsidiary" as defined in Rule 1-02(w) of
Regulation S-X under the Securities Act and the Exchange Act (as such Regulation
is in effect on the date hereof).
"Obligations" shall mean and include all loans, advances, debts,
liabilities and obligations, howsoever arising, owed by Company to Holder of
every kind and description (whether or not evidenced by any note or instrument
and whether or not for the payment of money), now existing or hereafter arising
under or pursuant to the terms of this Note and the other Operative Agreements,
including, all interest, fees, charges, expenses, attorneys' fees and costs and
accountants' fees and costs chargeable to and payable by Company hereunder and
thereunder, in each case, whether direct or indirect, absolute or contingent,
due or to become due, and whether or not arising after the commencement of a
proceeding under Title 11 of the United States Code (11 U. S. C. Section 101 et
seq.), as amended from time to time (including post-petition interest) and
whether or not allowed or allowable as a claim in any such proceeding.
"Operative Agreements" shall mean that certain Modification Agreement
dated as of June 1, 2001 by and between Holder and Company and any and all
agreements and documents to be executed and delivered in connection therewith.
"Person" means an individual, partnership, corporation, limited
liability company, association, trust, unincorporated organization, or a
government or agency or political subdivision thereof.
4
"Preferred Stock" means any class of capital stock of a corporation
that is preferred over any other class of capital stock of such corporation as
to the payment of dividends or the payment of any amount upon liquidation or
dissolution of such corporation.
"Prepayment Notice" has the meaning given in Section 3 hereof.
"Subsidiary" means, as to any Person, any corporation, association or
other business entity in which such Person or one or more of its Subsidiaries or
such Person and one or more of its Subsidiaries owns sufficient equity or voting
interests to enable it or them (as a group) ordinarily, in the absence of
contingencies, to elect a majority of the directors (or Persons performing
similar functions) of such entity, and any partnership or joint venture if a 50%
or more interest in the profits or capital thereof is owned by such Person or
one or more of its Subsidiaries or such Person and one or more of its
Subsidiaries (unless such partnership can and does ordinarily take major
business actions without the prior approval of such Person or one or more of its
Subsidiaries). Unless the context otherwise clearly requires, any reference to a
"Subsidiary" is a reference to a Subsidiary of Company.
"Swaps" means, with respect to any Person, payment obligations with
respect to interest rate swaps, currency swaps and similar obligations
obligating such Person to make payments, whether periodically or upon the
happening of a contingency. For the purposes of this Agreement, the amount of
the obligation under any Swap shall be the amount determined in respect thereof
as of the end of the then most recently ended fiscal quarter of such Person,
based on the assumption that such Swap had terminated at the end of such fiscal
quarter, and in making such determination, if any agreement relating to such
Swap provides for the netting of amounts payable by and to such Person
thereunder or if any such agreement provides for the simultaneous payment of
amounts by and to such Person, then in each such case, the amount of such
obligation shall be the net amount so determined.
"Trading Day" shall mean (a) if the applicable security is quoted on
the NASDAQ National Market, a day on which trades may be made thereon, (b) if
the applicable security is listed or admitted for trading on the NYSE or another
national securities exchange, a day on which the NYSE or such other national
securities exchange is open for business or (c) if the applicable security is
not so listed, admitted for trading or quoted, any day that is a Business Day.
2. Interest. Accrued interest on this Note shall be due and payable
quarterly, commencing on the first business day of the month immediately
following 90 days after the date of issuance hereof. Interest on any portion of
the principal hereof that is prepaid shall be paid on the date of such
prepayment as provided herein. EasyLink may make interest payments in cash or
shares of Common Stock, provided that (i) if paid in Common Stock, the Fair
Market Value of the Common Stock must be equal to 120% of the cash interest
payment due and (ii) payment in shares of Common Stock will not be permitted if
Company's free cash balance on the interest payment date is in excess of $20
million. The "Fair Market Value" of a share of Common Stock, for purposes of
this Section 2, shall be equal to the average of the closing market prices of
the Common Stock during the 10 trading days ending one week before the interest
payment date (or, if there shall be no such closing price on any day, the
closing market price on such day shall be deemed to be the average of the
closing bid and asked prices on such day). Unless already included in a
previously filed registration statement, EasyLink shall file as promptly as
reasonably practicable a registration statement with the SEC covering the shares
issued in payment of interest after the issuance of such shares..
5
3. Scheduled Installments of Principal; Mandatory Prepayment. (a)
Company shall make equal semi-annual installment payments of principal in the
amount of $33,455 (subject to proportionate reduction as a result of a
prepayment) commencing on June 1, 2003 and semi-annually thereafter until paid
in full (7 semi-annual payments in all).
(b) On or before June 30, 2002, up to 100% of the principal hereof and
accrued interest hereon shall be subject to mandatory prepayment upon the 5th
business day after the closing of one or more equity or equity-linked financings
in which Company raises cash in an aggregate cumulative amount in excess of $10
million ("Eligible Financings"). In such event, Company shall prepay this Note
with (i) cash in an amount (up to 50% of principal hereof plus accrued interest
hereon) equal to 0.47 % of the net proceeds in excess of $10 million received in
one or more Eligible Financings and (ii) Common Stock having a Fair Market Value
equal to the cash payment. For example, if the Holder's share of the cash
proceeds is $100,000, then Company would be obligated to prepay $200,000 of the
note, $100,000 in cash and $100,000 in stock having a Fair Market value equal to
$100,000. The "Fair Market Value" of the shares of Common Stock, for purposes of
this Section 3, shall be equal to the average of the closing market prices of
the Common Stock during the 10 trading days ending one week before the
prepayment date (or, if there shall be no such closing price on any day, the
closing market price on such day shall be deemed to be the average of the
closing bid and asked prices on such day). Unless already included in a
previously filed registration statement, EasyLink shall file as promptly as
reasonably practicable a registration statement with the SEC covering the shares
issued in payment of interest after the issuance of such shares.
4. Optional Prepayment. At any time and from time to time on or before
June 30, 2002, Company may prepay all or a portion of the outstanding principal
hereof and accrued interest hereon upon the same terms and conditions (that is,
cash and Common Stock) as set forth in Section 3 above for mandatory prepayment,
so long as Company gives the Holder at least 30 days irrevocable written notice
in advance of such prepayment. At any time and from time to time, Company may
prepay all or a portion of the outstanding principal hereof, together with
accrued interest hereon, so long as Company gives the Holder at least 30 days
irrevocable written notice in advance of such prepayment. The Company's decision
to prepay this Note will not, in any way, affect the Holder's right of
conversion on or before the prepayment as provided in Section 9 herein.
5. Representations and Warranties of Company. The Company hereby
represents and warrants to the Holder that:
(a) This Note, when issued, sold and delivered for the
consideration provided for herein, will be duly and validly issued, fully paid
and nonassessable.
6
(b) The offer and sale of this Note solely to Holder is exempt
from the registration and prospectus delivery requirements of the Securities Act
of 1933, as amended (the "Securities Act") and the securities registration and
qualification requirements of the currently effective provisions of the
securities laws of all applicable states.
(c) The Conversion Shares have been duly authorized and
reserved and, if and when issued upon conversion of the Note, in accordance with
the terms hereof, will be validly issued, fully paid and non-assessable, and the
issuance of the Conversion Shares will not be subject to any preemptive or
similar rights.
6. Events of Default. An "Event of Default" shall exist if any of the
following conditions or events shall occur and be continuing:
(a) Company defaults in the payment of any interest on the
Note when the same becomes due and payable and the default continues for a
period of 30 days; or
(b) Company defaults in the payment of any principal or
premium, if any, on the Note when the same becomes due and payable, whether at
maturity or otherwise; or
(c) Company breaches in any material respect any
representation or warranty contained in this Note or the any of the Operative
Agreements, or fails to observe or perform any other covenant or agreement
contained in this Note or the Operative Agreements required to be performed by
any of them, and such breach is not cured or such failure continues for a period
of 60 days after the receipt of written notice by Company from the Holder
stating that such notice is a "Notice of Default"; or
(d) a default under any credit agreement, mortgage, indenture
or instrument under which there may be issued or by which there may be secured
or evidenced any Indebtedness for money borrowed by Company or any Material
Subsidiary (or the payment of which is Guaranteed by Company or any of Company's
Material Subsidiaries), whether such Indebtedness or Guarantee exists on the
date of this Agreement or is created hereafter, which default (i) is caused by a
failure to pay when due any principal of or interest on such Indebtedness within
the grace period, if any, provided for in such Indebtedness (which failure
continues beyond any applicable grace period) (a "Payment Default") or (ii)
results in the acceleration of such Indebtedness prior to its express maturity
(without such acceleration being rescinded or annulled) and, in each case, the
principal amount of such Indebtedness, together with the principal amount of any
other such Indebtedness under which there is a Payment Default or the maturity
of which has been so accelerated, aggregates $15,000,000 or more and after
written receipt by Company from the Holder stating that such notice is a "Notice
of Default"; or
(e) a final, non-appealable judgment or final non-appealable
judgments (other than any judgment as to which a reputable insurance company has
accepted full liability) for the payment of money are entered by a court or
courts of competent jurisdiction against Company or any Material Subsidiary and
remain unstayed, unbonded or undischarged for a period (during which execution
shall not be effectively stayed) of 60 days, provided that the aggregate of all
such judgments exceeds $5,000,000; or
7
(f) Company or any Material Subsidiary pursuant to or within
the meaning of any Bankruptcy Law: (i) commences a voluntary case or proceeding;
or (ii) consents to the entry of an order for relief against such company or any
Material Subsidiary in an involuntary case or proceeding; or (iii) consents to
the appointment of a Custodian of such company or any Material Subsidiary or for
all or any substantial part of its property; or (iv) makes a general assignment
for the benefit of its creditors; or (v) take corporate or similar action to
effect any of the foregoing; or
(g) a court of competent jurisdiction enters an order or
decree under any Bankruptcy Law that: (i) is for relief against Company or any
Material Subsidiary in an involuntary case or proceeding; or (ii) appoints a
Custodian of such company or any Material Subsidiary or for all or any
substantial part of the property of such company or any Material Subsidiary; or
(iii) orders the liquidation of such company or any Material Subsidiary; and in
each case referred to in this subsection (g) the order or decree remains
unstayed and in effect for 60 days.
7. Rights of Holder upon Default.
(a) If an Event of Default with respect to Company described in Section
6(f) or (g) has occurred (other than an Event of Default described in clause (i)
of Section 6(f) or described in clause (v) of Section 6(f) by virtue of the fact
that such clause encompasses clause (i) of Section 6(f)), the Note then
outstanding shall automatically become immediately due and payable. If any other
Event of Default has occurred and is continuing, the Holder may at any time at
its option, by notice or notices to Company, declare the Note to be immediately
due and payable.
(b) Notwithstanding the foregoing, if (i) any Event of Default
described in Section 6 (a) or (b) has occurred and is continuing, the Holder of
the Note may at any time, at its option, by notice or notices to Company,
declare the Note to be immediately due and payable; or (ii) any Event of Default
described in Section 6 (d) has occurred and is continuing and the Payment
Default giving rise to such Event of Default is cured or the acceleration giving
rise to such Event of Default is annulled or rescinded within 30 days after
receipt of written notice of such Event of Default by Company from the Holder of
the Note stating that such notice is a "Notice of Default," then such Event of
Default and any declaration under Section 7 (a) above shall be deemed
automatically annulled and rescinded. Upon the Note becoming due and payable
under Section 7, whether automatically or by declaration, the Note will
forthwith mature and the entire unpaid principal amount hereof, plus all accrued
and unpaid interest thereon, shall all be immediately due and payable, in each
and every case without presentment, demand, protest or further notice, all of
which are hereby waived.
(c) If any Default or Event of Default has occurred and is continuing,
and irrespective of whether the Note has become or has been declared immediately
due and payable under Section 7, the holder of the Note at the time outstanding
may proceed to protect and enforce its rights by an action at law, suit in
equity or other appropriate proceeding, whether for the specific performance of
any agreement contained herein or in the Operative Agreements, or for an
injunction against a violation of any of the terms hereof or thereof, or in aid
of the exercise of any power granted hereby or thereby or by law or otherwise.
8
8. Representations and Warranties of Holder. By its acceptance of this
Note, the Holder makes the following representations and warranties:
(a) The Holder is aware of Company's business affairs and
financial condition, and has acquired information about Company sufficient to
reach an informed and knowledgeable decision to acquire this Note. The Holder is
acquiring this Note for its own account for investment purposes only and not
with a view to, or for the resale in connection with, any "distribution" thereof
in violation of the Act.
(b) The Holder understands that this Note, and the securities
into which it is convertible, have not been registered under the Act in reliance
upon a specific exemption therefrom, which exemption depends upon, among other
things, the bona fide nature of the Holder's investment intent as expressed
herein.
(c) The Holder further understands that this Note, and the
securities into which it is convertible, must be held indefinitely unless
subsequently registered under the Act and qualified under any applicable state
securities laws, or unless exemptions from registration and qualification are
otherwise available. The Holder is aware of the provisions of Rule 144,
promulgated under the Act.
(d) The Holder is an "accredited investor" as such term is
defined in Rule 501 of Regulation D promulgated under the Securities Act.
9. Conversion.
9.1 Conversion Privilege. The holder of this Note may convert
the principal amount thereof (or any portion thereof that is an
integral multiple of $1,000) into fully paid and nonassessable shares
of Class A common stock, par value $.01 per share, of Company at any
time prior to the close of business on the Business Day immediately
preceding the final maturity date of the Note at the Conversion Price
then in effect, except that, with respect to the principal amount of
the Note that is subject to optional or mandatory prepayment, such
conversion right shall terminate at the close of business on the
Business Day immediately preceding the prepayment date (unless Company
shall default in making the prepayment, including interest, when it
becomes due, in which case the conversion right shall terminate at the
close of business on the date on which such default is cured).
The number of shares of Class A common stock issuable upon
conversion of a Note is determined by dividing the principal amount of
the Note so converted by the Conversion Price in effect on the
Conversion Date.
9
"Conversion Price" means ONE UNITED STATES DOLLAR ($1.00)
[subject to appropriate adjustment in the event of a stock split, stock
dividend or stock combination prior to closing], as the same may be
adjusted from time to time as provided in this Section.
Provisions of this Agreement that apply to conversion of all
of a Note also apply to conversion of a portion of it. A holder of a
Note is not entitled to any rights of a holder of Class A common stock
until such holder has converted such Note into Class A common stock,
and only to the extent that such Note is deemed to have been converted
into Class A common stock under this Section 9.1.
9.2 Conversion Procedure
To convert the Note, the Holder must (1) complete and sign a notice of
election to convert substantially in the form attached hereto (or
complete and manually sign a facsimile thereof) and deliver such notice
to Company, (2) surrender the Note to Company, (3) furnish appropriate
endorsements or transfer documents if required by Company and (4) pay
any transfer or similar tax, if required by Company in accordance with
Section 9.4 hereof. The date on which the holder satisfies all of those
requirements is the conversion date (the "Conversion Date"). As
promptly as practicable on or after the Conversion Date, Company shall
issue and deliver to the holder a certificate or certificates for the
number of whole shares of Class A common stock issuable upon the
conversion and a check or other payment for any fractional share in an
amount determined pursuant to Section 9.3. The Person in whose name the
certificate is registered shall become the stockholder of record on the
Conversion Date and, as of such date, such Person's rights as a holder
of a Note with respect to the converted Note shall cease and such
converted Note shall no longer be deemed outstanding; provided,
however, that, except as otherwise provided in this Section 9.2, no
surrender of a Note on any date when the stock transfer books of
Company shall be closed shall be effective to constitute the Person
entitled to receive the shares of Class A common stock upon such
conversion as the stockholder of record of such shares of Class A
common stock on such date, but such surrender shall be effective to
constitute the Person entitled to receive such shares of Class A common
stock as the stockholder of record thereof for all purposes at the
close of business on the next succeeding day on which such stock
transfer books are open; provided further, however, that such
conversion shall be at the Conversion Price in effect on the date that
such Note shall have been surrendered for conversion, as if the stock
transfer books of Company had not been closed.
No payment or adjustment will be made for accrued and unpaid
interest on a converted Note or for dividends or distributions on
shares of Class A common stock issued upon conversion of a Note, except
that, if the Holder surrenders the Note for conversion after the close
of business on any record date for the payment of an installment of
interest and prior to the opening of business on the next succeeding
interest payment date, then, notwithstanding such conversion, accrued
and unpaid interest payable on the Note on such interest payment date
shall be paid on such interest payment date to the person who was the
holder of the Note (or one or more predecessor Notes) at the close of
business on such record date. Holders of Class A common stock issued
upon conversion will not be entitled to receive any dividends payable
to holders of Class A common stock as of any record time before the
close of business on the Conversion Date.
10
If a holder converts more than one Note at the same time, the
number of whole shares of Class A common stock issuable upon the
conversion shall be based on the total principal amount of Notes
converted.
Upon surrender of a Note that is converted in part, Company
shall issue to the holder a new Note equal in principal amount to the
unconverted portion of the Note surrendered.
9.3 Fractional Shares. Company will not issue fractional
shares of Class A common stock upon conversion of a Note. In lieu
thereof, Company will pay an amount in cash based upon the Daily Market
Price of the Class A common stock on the Trading Day prior to the
Conversion Date.
9.4. Taxes on Conversion. The issuance of certificates for
shares of Class A common stock upon the conversion of the Note shall be
made without charge to the converting Noteholder for such certificates
or for any tax in respect of the issuance of such certificates, and
such certificates shall be issued in the respective names of, or in
such names as may be directed by, the holder or holders of the
converted Note; provided, however, that in the event that certificates
for shares of Class A common stock are to be issued in a name other
than the name of the holder of the Note converted, such Note, when
surrendered for conversion, shall be accompanied by an instrument of
assignment or transfer, in form satisfactory to Company, duly executed
by the registered holder thereof or his duly authorized attorney; and
provided further, however, that 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 of the converted Note, and 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
Company the amount of such tax or shall have established to the
satisfaction of Company that such tax has been paid or is not
applicable.
9.5. Company to Provide Stock. The Company shall at all times
reserve and keep available, free from preemptive rights, out of its
authorized but unissued Class A common stock, solely for the purpose of
issuance upon conversion of the Note as herein provided, a sufficient
number of shares of Class A common stock to permit the conversion of
the Note for shares of Class A common stock.
All shares of Class A common stock which may be issued upon
conversion of the Note shall be duly authorized, validly issued, fully
paid and nonassessable when so issued. The Company shall take such
action from time to time as shall be necessary so that par value of the
Class A common stock shall at all times be equal to or less than the
Conversion Price then in effect.
11
The Company shall from time to time take all action necessary
so that the Class A common stock which may be issued upon conversion of
the Note, immediately upon their issuance (or, if such Class A common
stock is subject to restrictions on transfer under the Act, upon their
resale pursuant to an effective registration statement or in a
transaction pursuant to which the certificate evidencing such Class A
common stock shall no longer bear a restrictive common stock legend),
will be listed on the Nasdaq National Market or such other interdealer
quotation system and market or principal securities exchanges, if any,
on which other shares of Class A common stock of Company are then
listed or quoted.
9.6. Adjustment of Conversion Price. The Conversion Price
shall be subject to adjustment from time to time as follows:
(a) In case Company shall (i) pay a dividend in
shares of Class A common stock to holders of Class A common stock (or
any event treated as such for U.S. Federal income tax purposes), (ii)
make a distribution in shares of Class A common stock to holders of
Class A common stock (or any event treated as such for U.S. Federal
income tax purposes), (iii) subdivide its outstanding shares of Class A
common stock into a greater number of shares of Class A common stock or
(iv) combine its outstanding shares of Class A common stock into a
smaller number of shares of Class A common stock, the Conversion Price
in effect immediately prior to such action shall be adjusted so that
the holder of this Note thereafter surrendered for conversion shall be
entitled to receive the number of shares of Class A common stock which
he would have owned immediately following such action had the Note been
converted immediately prior thereto. Any adjustment made pursuant to
this subsection (a) shall become effective immediately after the record
date in the case of a dividend or distribution and shall become
effective immediately after the effective date in the case of a
subdivision or combination.
(b) In case Company shall issue rights, options or
warrants to all holders of Class A common stock entitling them to
subscribe for or purchase shares of Class A common stock (or securities
convertible into Class A common stock) at a price per share (or having
a conversion price per share) less than the Current Market Price per
share (as determined pursuant to subsection (f) below) of the Class A
common stock on the record date for determining the holders of the
Class A common stock entitled to receive such rights, options or
warrants, the Conversion Price shall be adjusted so that the same shall
equal the price determined by multiplying the Conversion Price in
effect immediately prior to such record date by a fraction of which the
numerator shall be the number of shares of Class A common stock
outstanding as of the close of business on such record date plus the
number of shares of Class A common stock which the aggregate offering
price of the total number of shares of Class A common stock so offered
(to the holders of outstanding Class A common stock) for subscription
or purchase (or the aggregate conversion price of the convertible
securities so offered) would purchase at such Current Market Price (as
determined pursuant to subsection (f) below), and of which the
denominator shall be the number of shares of Class A common stock
outstanding on such record date plus the number of additional shares of
Class A common stock so offered for subscription or purchase (or into
which the convertible securities so offered are convertible). Such
adjustments shall become effective immediately after such record date.
For the purposes of this subsection (b), the number of shares of Class
A common stock at any time outstanding shall not include shares held in
the treasury of Company but shall include shares issuable in respect of
scrip certificates issued in lieu of fractions of shares of such Class
A common stock. The Company shall not issue any rights, options or
warrants in respect of shares of Class A common stock held in the
treasury of Company. In determining whether any rights, options or
warrants entitle the holders to subscribe for or purchase shares of
Class A common stock at less than the Current Market Price, and in
determining the aggregate offering price of such shares of Class A
common stock, there shall be taken into account any consideration
received by Company for such rights, warrants, or options, the value of
such consideration, if any, other than cash, to be determined by the
Board of Directors.
12
(c) In case Company shall distribute to all holders
of Class A common stock shares of capital stock of Company (other than
Class A common stock), evidences of indebtedness, cash, rights, options
or warrants entitling the holders thereof to subscribe for or purchase
securities (other than rights, options or warrants described in
subsection (b) above) or other assets (including securities of Persons
other than Company but excluding (i) dividends or distributions paid
exclusively in cash except as described in subsection (d) below, (ii)
dividends and distributions described in subsection (a) above and (iii)
distributions in connection with the consolidation, merger or transfer
of assets covered by Section 9.11), then in each such case the
Conversion Price shall be adjusted so that the same shall equal the
price determined by multiplying the Conversion Price in effect
immediately prior to the date of such distribution by a fraction of
which the numerator shall be the Current Market Price (determined as
provided in subsection (f) below) of the Class A common stock on the
record date mentioned below less the fair market value on such record
date (as determined by the Board of Directors, whose determination
shall be conclusive evidence of such fair market value and described in
a board resolution) of the portion of the evidences of indebtedness,
shares of capital stock, cash, rights, options, warrants or other
assets so distributed applicable to one share of Class A common stock
(determined on the basis of the number of shares of the Class A common
stock outstanding on the record date), and of which the denominator
shall be such Current Market Price of the Class A common stock. Such
adjustment shall become effective immediately after the record date for
the determination of the holders of Class A common stock entitled to
receive such distribution. Notwithstanding the foregoing, in case
Company shall distribute rights, options or warrants to subscribe for
additional shares of Company's capital stock (other than rights,
options or warrants referred to in subsection (b) above) ("Rights") to
all holders of Class A common stock, Company may, in lieu of making any
adjustment pursuant to the foregoing provisions of this subsection (c)
of Section 9.6 make proper provision so that the holder of the Note who
converts the Note (or any portion thereof) after the record date for
such distribution and prior to the expiration or redemption of the
Rights shall be entitled to receive upon such conversion, in addition
to the shares of Class A common stock issuable upon such conversion
(the "Conversion Shares"), a number of Rights to be determined as
follows: (i) if such conversion occurs on or prior to the date for the
distribution to the holders of Rights of separate certificates
evidencing such Rights (the "Distribution Date"), the same number of
Rights to which a holder of a number of shares of Class A common stock
equal to the number of Conversion Shares is entitled at the time of
such conversion in accordance with the terms and provisions of and
applicable to the Rights; and (ii) if such conversion occurs after the
Distribution Date, the same number of Rights to which a holder of the
number of shares of Class A common stock into which the principal
amount of the Note so converted was convertible immediately prior to
the Distribution Date would have been entitled on the Distribution Date
in accordance with the terms and provisions of and applicable to the
Rights.
13
(d) In case Company shall, by dividend or otherwise,
at any time make a distribution to all holders of its Class A common
stock exclusively in cash (including any distributions of cash out of
current or retained earnings of Company but excluding any cash that is
distributed as part of a distribution requiring a Conversion Price
adjustment pursuant to subsection (c) of this Section) in an aggregate
amount that, together with the sum of (x) the aggregate amount of any
other distributions made exclusively in cash to all holders of Class A
common stock within the 12 months preceding the date fixed for
determining the stockholders entitled to such distribution (the
"Distribution Record Date") and in respect of which no Conversion Price
adjustment pursuant to subsection (c) or (e) of this Section or this
subsection (d) has been made plus (y) the aggregate amount of all
Excess Payments in respect of any tender offers or other negotiated
transactions by Company or any of its Subsidiaries for Class A common
stock concluded within the 12 months preceding the Distribution Record
Date and in respect of which no Conversion Price adjustment pursuant to
subsections (c) or (e) of this Section or this subsection (d) has been
made, exceeds 12 1/2% of the product of the Current Market Price per
share (determined as provided in subsection (f) of this Section) of the
Class A common stock on the Distribution Record Date multiplied by the
number of shares of Class A common stock outstanding on the
Distribution Record Date (excluding shares held in the treasury of
Company), the Conversion Price shall be reduced so that the same shall
equal the price determined by multiplying such Conversion Price in
effect immediately prior to the effectiveness of the Conversion Price
reduction contemplated by this subsection (d) by a fraction of which
the numerator shall be the Current Market Price per share (determined
as provided in subsection (f) of this Section) of the Class A common
stock on the Distribution Record Date less the sum of the aggregate
amount of cash and the aggregate Excess Payments so distributed, paid
or payable within such 12-month period (including, without limitation,
the distribution in respect of which such adjustment is being made)
applicable to one share of Class A common stock (which shall be
determined by dividing the sum of the aggregate amount of cash and the
aggregate Excess Payments so distributed, paid or payable with respect
to outstanding shares of Class A common stock within such 12 months
(including, without limitation, the distribution in respect of which
such adjustment is being made) by the number of shares of Class A
common stock outstanding on the Distribution Record Date) and the
denominator shall be such Current Market Price per share (determined as
provided in subsection (f) of this Section) of the Class A common stock
on the Distribution Record Date, such reduction to become effective
immediately prior to the opening of business on the day following the
Distribution Record Date.
14
(e) In case a tender offer or other negotiated
transaction made by Company or any Subsidiary of Company for all or any
portion of the Class A common stock shall be consummated, if an Excess
Payment is made in respect of such tender offer or other negotiated
transaction and the aggregate amount of such Excess Payment, together
with the sum of (x) the aggregate amount of any distributions, by
dividend or otherwise, to all holders of the Class A common stock made
in cash (including any distributions of cash out of current or retained
earnings of Company) within the 12 months preceding the date of payment
of such current negotiated transaction consideration or expiration of
such current tender offer, as the case may be (the "Purchase Date"),
and as to which no adjustment in the Conversion Price pursuant to
subsection (c) or (d) of this Section or this subsection (e) has been
made plus (y) the aggregate amount of all Excess Payments in respect of
any other tender offers or other negotiated transactions by Company or
any of its Subsidiaries for Class A common stock concluded within the
12 months preceding the Purchase Date and in respect of which no
adjustment in the Conversion Price pursuant to subsection (c) or (d) of
this Section or this subsection (e) has been made, exceeds 12 1/2% of
the product of the Current Market Price per share (determined as
provided in subsection (f) of this Section) of the Class A common stock
on the Purchase Date multiplied by the number of shares of Class A
common stock outstanding on the Purchase Date (including any tendered
shares but excluding any shares held in the treasury of Company), the
Conversion Price shall be reduced so that the same shall equal the
price determined by multiplying such Conversion Price in effect
immediately prior to the effectiveness of the Conversion Price
reduction contemplated by this subsection (e) by a fraction of which
the numerator shall be the Current Market Price per share (determined
as provided in subsection (f) of this Section) of the Class A common
stock on the Purchase Date less the sum of the aggregate amount of cash
and the aggregate Excess Payments so distributed, paid or payable
within such 12 month period (including, without limitation, the Excess
Payment in respect of which such adjustment is being made) applicable
to one share of Class A common stock (which shall be determined by
dividing the sum of the aggregate amount of cash and the aggregate
Excess Payments so distributed, paid or payable with respect to
outstanding shares of Class A common stock within such 12 months
(including, without limitation, the Excess Payment in respect of which
such adjustment is being made) by the number of shares of Class A
common stock outstanding on the Purchase Date) and the denominator
shall be such Current Market Price per share (determined as provided in
subsection (f) of this Section) of the Class A common stock on the
Purchase Date, such reduction to become effective immediately prior to
the opening of business on the day following the Purchase Date.
15
(f) The "Current Market Price" per share of Class A
common stock on any date shall be deemed to be the average of the Daily
Market Prices for the shorter of (i) 30 consecutive Business Days
ending on the last full Trading Day on the exchange or market referred
to in determining such Daily Market Prices prior to the time of
determination or (ii) the period commencing on the date next succeeding
the first public announcement of the issuance of such rights or such
warrants or such other distribution or such tender offer or other
negotiated transaction through such last full Trading Day on the
exchange or market referred to in determining such Daily Market Prices
prior to the time of determination.
(g) "Excess Payment" means the excess of (i) the
aggregate of the cash and fair market value (as determined by the Board
of Directors, whose determination shall be conclusive evidence of such
fair market value and described in a board resolution) of other
consideration paid by Company or any of its Subsidiaries with respect
to the shares acquired in a tender offer or other negotiated
transaction over (ii) the Daily Market Price on the Trading Day
immediately following the completion of the tender offer or other
negotiated transaction multiplied by the number of acquired shares.
(h) The Company reserves the right to make such
reductions in the Conversion Price in addition to those required in the
foregoing provisions as it considers to be advisable in order that any
event treated for United States federal income tax purposes as a
dividend of stock or stock rights will not be taxable to the
recipients.
(i) The Company from time to time may decrease the
Conversion Price by any amount for any period of at least 20 days
(which decrease is irrevocable during such period), in which case
Company shall give at least 15 days' notice of such decrease, if the
Board of Directors has made a determination that such decrease would be
in the best interests of Company, which determination shall be
conclusive; provided however that in no case shall Company decrease the
Conversion Price to less than 80% of the Current Market Price.
(j) In any case in which this Section 9.6 shall
require that an adjustment be made immediately following a record date
for an event, Company may elect to defer, until such event, issuing to
the holder of the Note converted after such record date the shares of
Class A common stock and other capital stock of Company issuable upon
such conversion over and above the shares of Class A common stock and
other capital stock of Company issuable upon such conversion on the
basis of the Conversion Price prior to adjustment; and, in lieu of the
shares the issuance of which is so deferred, Company shall issue or
cause its transfer agents to issue due bills or other appropriate
evidence of the right to receive such shares.
9.7. No Adjustment. No adjustment in the Conversion Price
shall be required until cumulative adjustments amount to 1.0% or more
of the Conversion Price as last adjusted; provided, however, that any
adjustments which by reason of this Section 9.7 are not required to be
made shall be carried forward and taken into account in any subsequent
adjustment. All calculations under this Section 9 shall be made to the
nearest cent or to the nearest one-hundredth of a share, as the case
may be. No adjustment need be made for rights to purchase Class A
common stock pursuant to a Company plan for reinvestment of dividends
or interest. No adjustment need be made for a change in the par value
or no par value of the Class A common stock.
16
9.8. Other Adjustments. (a) In the event that, as a result of
an adjustment made pursuant to Section 9.6 above, the holder of the
Note thereafter surrendered for conversion shall become entitled to
receive any shares of capital stock of Company other than shares of its
Class A common stock, thereafter the Conversion Price of such other
shares so receivable upon conversion of the Note shall be subject to
adjustment from time to time in a manner and on terms as nearly
equivalent as practicable to the provisions with respect to Class A
common stock contained in this Section 9.
(b) In the event that any shares of Class A common
stock issuable upon exercise of any of the rights, options or warrants
referred to in Section 9.6(b) and Section 9.6(c) hereof are not
delivered prior to the expiration of such rights, options, or warrants,
the Conversion Price shall be readjusted to the Conversion Price which
would otherwise have been in effect had the adjustment made upon the
issuance of such rights, options or warrants been made on the basis of
delivery of only the number of such rights, options and warrants which
were actually exercised.
(c) In any case in which Section 9.6 shall require
that an adjustment be made immediately following a record date for a
dividend or distribution and the dividend or distribution does not
occur, the Conversion Price shall again be adjusted to the Conversion
Price that would then be in effect if such dividend or distribution had
not been declared.
9.9. Notice of Adjustment. Whenever the Conversion Price is
adjusted, Company shall promptly mail to the Holder a notice of the
adjustment. Such notice shall briefly state the facts requiring the
adjustment and the manner of computing it and shall be signed by a
Senior Financial Officer.
9.10. Notice of Certain Xxxxxxxxxxxx.Xx the event that: (a)
Company takes any action which would require an adjustment in the
Conversion Price; (b) Company takes any action described in Section
9.11; or (c) there is a dissolution or liquidation of Company; Company
shall mail to the Holder a notice stating the proposed record or
effective date, as the case may be. The Company shall mail the notice
at least 15 days before such date; however, failure to mail such notice
or any defect therein shall not affect the validity of any transaction
referred to in clause (a), (b) or (c) of this Section 9.10.
17
9.11. Effect of Reclassifications, Consolidations, Mergers,
Continuances or Sales on Conversion Privilege. If any of the following
shall occur, namely: (i) any reclassification or change of outstanding
shares of Class A common stock issuable upon conversion of the Note
(other than a change in par value, or from par value to no par value,
or from no par value to par value, or as a result of a subdivision or
combination), (ii) any consolidation or merger to which Company is a
party other than a merger in which Company is the continuing
corporation and which does not result in any reclassification of, or
change (other than a change in name, or par value, or from par value to
no par value, or from no par value to par value or as a result of a
subdivision or combination) in, outstanding shares of Class A common
stock, (iii) any continuance in a new jurisdiction which does not
result in any reclassification of, or change (other than a change in
name, or par value, or from par value to no par value, or from no par
value to par value) in, outstanding shares of Class A common stock, or
(iv) any sale or conveyance of all or substantially all of the property
of Company (determined on a consolidated basis), then Company, or such
successor or purchasing corporation, as the case may be, shall, as a
condition precedent to such reclassification, change, consolidation,
merger, continuance, sale or conveyance, execute and deliver to the
Holder a written notice providing that the Holder shall have the right
to convert the Note into the kind and amount of shares of stock and
other securities and property (including cash) receivable upon such
reclassification, change, consolidation, merger, continuance, sale or
conveyance by a holder of the number of shares of Class A common stock
deliverable upon conversion of such Note immediately prior to such
reclassification, change, consolidation, merger, continuance, sale or
conveyance. Such notice shall provide for adjustments of the Conversion
Price which shall be as nearly equivalent as may be practicable to the
adjustments of the Conversion Price provided for in this Section 9. The
foregoing, however, shall not in any way affect the right a holder of a
Note may otherwise have, pursuant to clause (ii) of the last sentence
of subsection (c) of Section 9.6, to receive Rights upon conversion of
a Note. If, in the case of any such reclassification, change,
consolidation, merger, continuance, sale or conveyance, the stock or
other securities and property (including cash) receivable thereupon by
a holder of Class A common stock includes shares of stock or other
securities and property of a corporation or other business entity other
than the successor or purchasing corporation, as the case may be, in
such reclassification, change, consolidation, merger, continuance, sale
or conveyance, then such notice shall also be executed by such other
corporation or other business entity and shall contain such additional
provisions to protect the interests of the holder of the Note as the
Board of Directors of Company shall reasonably consider necessary by
reason of the foregoing. The provision of this Section 9.11 shall
similarly apply to successive reclassifications, changes,
consolidations, mergers, continuances, sales or conveyances.
9.12. Cancellation of Converted Notes. All Notes delivered for
conversion shall be delivered to Company to be canceled.
10. Successors and Assigns. Subject to the restrictions on transfer
described in Sections 12 and 13 below, the rights and obligations of Company and
Holder of this Note shall be binding upon and benefit the successors, assigns,
heirs, administrators and transferees of the parties.
11. Waiver and Amendment. Any provision of this Note may be amended,
waived or modified upon the written consent of Company and Holder.
18
12. Transfer of this Note or Securities Issuable on Conversion Hereof.
With respect to any offer, sale or other disposition of this Note or securities
into which such Note may be converted, Holder will give written notice to
Company prior thereto, describing briefly the manner thereof, together with, if
requested by Company, a written opinion of Holder's counsel, to the effect that
such offer, sale or other distribution may be effected without registration or
qualification (under any federal or state law then in effect). Upon receiving
such written notice and reasonably satisfactory opinion, if so requested,
Company, as promptly as practicable, shall notify Holder that Holder may sell or
otherwise dispose of this Note or such securities, all in accordance with the
terms of the notice delivered to Company. If a determination has been made
pursuant to this Section 12 that the opinion of counsel for Holder is not
reasonably satisfactory to Company, Company shall so notify Holder promptly
after such determination has been made. Each Note thus transferred and each
certificate representing the securities thus transferred shall bear a legend as
to the applicable restrictions on transferability in order to ensure compliance
with the Act, unless in the opinion of counsel for Company such legend is not
required in order to ensure compliance with the Act. Company may issue stop
transfer instructions to its transfer agent in connection with such
restrictions. Subject to the foregoing transfers of this Note shall be
registered upon registration books maintained for such purpose by or on behalf
of Company. Prior to presentation of this Note for registration of transfer,
Company shall treat the registered holder hereof as the owner and holder of this
Note for the purpose of receiving all payments of principal and interest hereon
and for all other purposes whatsoever, whether or not this Note shall be overdue
and Company shall not be affected by notice to the contrary.
13. Assignment by Company. Neither this Note nor any of the rights,
interests or obligations hereunder may be assigned, by operation of law or
otherwise, in whole or in part, by Company without the prior written consent of
Holder except in connection with an assignment in whole to a successor
corporation to Company in connection with a reincorporation of Company in
another state of the United States.
14. Notices. Any notice, request or other communication required or
permitted hereunder shall be in writing and shall be deemed to have been duly
given if personally delivered or mailed by registered or certified mail, postage
prepaid, or by recognized overnight courier or personal delivery at the
respective addresses of the parties as set forth in the Modification Agreement
or on the register maintained by Company. Any party hereto may by notice so
given change its address for future notice hereunder. Notice shall conclusively
be deemed to have been given when received.
15. Payment. Payment shall be made in lawful tender of the United
States.
16. Default Rate; Usury. During any period in which an Event of Default
has occurred and is continuing, Company shall pay interest on the unpaid
principal balance hereof at a rate per annum equal to the rate otherwise
applicable hereunder plus four percent (4%). In the event any interest is paid
on this Note which is deemed to be in excess of the then legal maximum rate,
then that portion of the interest payment representing an amount in excess of
the then legal maximum rate shall be deemed a payment of principal and applied
against the principal of this Note.
19
17. Expenses; Waivers. If action is instituted to collect this Note,
Company promises to pay all costs and expenses, including, without limitation,
reasonable attorneys' fees and costs, incurred in connection with such action.
Company hereby waives notice of default, presentment or demand for payment,
protest or notice of nonpayment or dishonor and all other notices or demands
relative to this instrument.
18. No Impairment. The Company will not, by amendment of its Articles
and/or Certificate of Incorporation or Bylaws, or through reorganization,
consolidation, merger, dissolution, issue or sale of securities, sale of assets
or any other voluntary action, willfully avoid or seek to avoid the observance
or performance of any of the terms of this Note, but will at all times and in
good faith assist in the carrying out of all such terms and in the taking of all
such action as may be necessary or appropriate in order to protect the rights of
the holder under this Note against wrongful impairment. Without limiting the
generality of the foregoing, Company will take all such action as may be
necessary or appropriate in order that Company may duly and validly issue fully
paid and nonassessble Conversion Shares upon the conversion of this Note.
19. Severablity. If one or more provisions of this Note are held to be
unenforceable under applicable law, such provision(s) shall be excluded from
this Note and the balance of the Note shall be interpreted as if such
provision(s) were so excluded and shall be enforceable in accordance with its
terms.
20
20. Governing Law. This Note and all actions arising out of or in
connection with this Note shall be governed by and construed in accordance with
the laws of the State of New York, without regard to the conflicts of law
provisions of the State of New York, or of any other state.
IN WITNESS WHEREOF, Company has caused this Note to be issued as of the
date first written above.
EASYLINK SERVICES CORPORATION,
a Delaware corporation
By:
------------------------------------------
Title:
---------------------------------------
21
ELECTION TO CONVERT
To EasyLink Services Corporation:
The undersigned owner of the Convertible Promissory Note dated _______
(the "Note") hereby irrevocably exercises the option to convert the Note, or the
portion below designated, into Class A common stock of EasyLink Services
Corporation in accordance with the terms of the Note, and directs that the
shares issuable and deliverable upon conversion, together with any check in
payment for fractional shares, be issued in the name of and delivered to the
undersigned, unless a different name has been indicated below. If shares are to
be issued in the name of a person other than the undersigned, the undersigned
will pay all transfer taxes payable with respect thereto.
The undersigned agrees to be bound by the terms of the Note relating to
the Class A common stock issued upon conversion of the Note. If you want to
convert the Note in whole, check the box below. If you want to convert the Note
in part, indicate the portion of the Note to be converted in the space provided
below.
In whole / /
or
Portion of Note to be converted ($1,000 or any integral multiple
thereof): $______________
Date: ______________
Name of Holder:
Signature of Authorized Representative of Holder
______________________________________ (Sign exactly as your name
appears on the other side of this Note)
Medallion Signature Guarantee:_____________________________________
Please print or typewrite your name and address, including zip code,
and social security or other identifying number:
If the Class A common stock is to be issued and delivered to someone
other than you, please print or typewrite the name and address, including zip
code, and social security or other identifying number of that person:
22
EXHIBIT D
EASYLINK SERVICES CORPORATION
REGISTRATION RIGHTS AGREEMENT
Dated as of June 1, 2001
EASYLINK SERVICES CORPORATION
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement is made as of June 1, 2001 (the
"Agreement") by and between EasyLink Services Corporation, a Delaware
corporation ("EasyLink") and GATX Technology Services Corporation, a Delaware
corporation ("GATX"). One or more additional securityholders of EasyLink may
become a party to this Agreement by signing an Accession Agreement agreeing to
bound by the terms and conditions hereof; in such case the securities specified
therein shall be deemed to be Registrable Securities (as defined below)
hereunder. As used herein, "Holders" shall mean GATX and such securityholders
who enter into an Accession Agreement with EasyLink, and "Holder" shall mean any
one of such Holders.
RECITALS
A. EasyLink desires to sell and issue to GATX and to the other Holders
and GATX and such other Holders desire to purchase from EasyLink shares (the
"Shares") of Class A common stock, par value $.01 per share ("Class A Common
Stock"), Convertible Notes (the "Notes") and warrants ("Warrants"; the Shares,
the Warrants and the Notes are sometimes collectively referred to herein as the
"Securities") to purchase Class A common stock pursuant to one or more
modification and/or restructuring agreements (the "Restructuring Agreements").
B. In order to induce GATX to purchase the Securities pursuant to the
Restructuring Agreements, EasyLink desires to grant to GATX and the other
Holders certain registration rights with respect to the Shares and all of the
shares of Class A common stock issuable upon conversion of the Notes or upon
exercise of the Warrants (the "Conversion Shares"), all on the terms and
conditions set forth herein.
In consideration of the foregoing and the promises and covenants
contained herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
As used in this Agreement, the following terms shall have the
following respective meanings:
"Act" means the U.S. Securities Act of 1933, as amended from
time to time.
"Agreement" means this Agreement, as the same may be amended
or supplemented from time to time in accordance with the terms hereof.
2
"Class A Common Stock" has the meaning set forth in the
recitals above.
"Conversion Shares" has the meaning set forth in the recitals
above.
"Mandatory Registration" has the meaning set forth in Section
2.01(a) of this Agreement.
"Holders" has the meaning set forth in the preface above.
"Indemnified Party" and "Indemnifying Party" have the meanings
set forth in Section 2.07(c) of this Agreement.
"Piggyback Registration" has the meaning set forth in Section
2.02 of this Agreement.
"Registrable Securities" means (i) the Shares and the
Conversion Shares, (ii) any Class A common stock of EasyLink issued as (or
issuable upon the conversion or exercise of any warrant, right or other security
that is issued as) a dividend or other distribution with respect to, or in
exchange for or in replacement of the securities referenced in clause (i) and
this clause (ii), and (iii) any other shares of capital stock of EasyLink into
or for which the securities referenced in clauses (i) and (ii) may be converted
into or exchanged pursuant to a recapitalization or reclassification of
EasyLink's capital stock; provided, however, that Registrable Securities shall
not include any securities that (w) have been registered and sold pursuant to
the Act, (x) have been distributed to the public through a broker, dealer or
market maker pursuant to Rule 144 under the Act, (y) are eligible for public
resale under Rule 144(k) under the Securities Act or in accordance with the law
governing any non-U.S. exchange where the Common Stock is publicly listed or (z)
have been sold in a transaction exempt from registration under the Act so that
all transfer restriction and restrictive legends with respect thereto are
removed upon consummation of such sale.
"Registration Expenses" means all expenses incident to EasyLink's
performance of or compliance with this Agreement, including, without limitation,
(i) all registration, filing, securities exchange listing, rating agency and
National Association of Securities Dealers fees, (ii) all registration, filing,
qualification and other fees and expenses of complying with securities or blue
sky laws of all jurisdictions in which the securities are to be registered and
any legal fees and expenses incurred in connection with the blue sky
qualification of the Registrable Securities and the determination of their
eligibility for investment under the laws of all such jurisdictions, (iii) all
word processing, duplicating, printing, messenger and delivery expenses, (iv)
the fees and disbursements of counsel for EasyLink and of its independent public
accountants, including, without limitation, the expenses of any special audits
or "cold comfort" letter required by or incident to such performance and
compliance, (v) in connection with any firm commitment, underwritten offering,
the reasonable fees and disbursements of any one counsel or one accounting firm
retained by GATX, not to exceed $15,000 in the aggregate for all of such fees
and disbursements, (vi) premiums and other costs of policies of insurance of
EasyLink against liabilities arising out of the public offering of the
Registrable Securities being registered to the extent EasyLink elects to obtain
such insurance, and (vii) any fees and disbursements of underwriters customarily
paid by issuers or sellers of securities (but excluding underwriting discounts
and commissions), if any, relating to the Registrable Securities.
3
"SEC" means the U.S. Securities and Exchange Commission.
Other capitalized terms that are used herein that are not defined herein shall
have the respective meanings ascribed to such terms in the Restructuring
Agreements.
ARTICLE II
REGISTRATION RIGHTS
EasyLink, GATX and the other Holders covenant and agree as
follows:
SECTION 2.01 Mandatory Registration
(a) Registration Obligation. Within 45 days from the Closing of the
Restructuring Agreements, EasyLink agrees to prepare and file a registration
statement on Form S-3 or such other form that EasyLink may then use for an
offering to be made on a continuous basis pursuant to Rule 415 (the
"Registration Statement") covering all of the Registrable Securities and to use
reasonable commercial efforts to cause the Registration Statement to become
effective as soon as practicable thereafter (the "Mandatory Registration");
provided, however, in no event, however, shall EasyLink be required to file more
than one registration statement unless the offering of Registrable Securities
pursuant thereto is suspended, blocked by any stop order, injunction or other
order of the SEC or any governmental agency or court, or withdrawn after the
Mandatory Registration has become effective, in which event such Mandatory
Registration will be deemed not to have been effected pursuant to this Section
2.01.
SECTION 2.02 Piggyback Registration.
(a) Right to Piggyback. If EasyLink proposes to register any of its
securities under the Act in connection with a firm commitment underwritten
offering (other than registrations solely for the registration of shares in
connection with an employee benefit plan or a merger or consolidation and other
than pursuant to Section 2.01) at any time before all of the Registrable
Securities are eligible for public resale by Holders pursuant to Rule 144(k)
under the Act, whether or not for sale for EasyLink's own account, and the
registration form to be used may be used for the registration of Registrable
Securities (a "Piggyback Registration"), EasyLink will at each such time give
prompt written notice to Holders of its intention to do so and of Holders's
rights under this Section 2.02. Upon the written request of any Holders made
within 30 days after the receipt of any such notice (which request shall specify
the Registrable Securities intended to be disposed of by Holders and the
intended method of distribution thereof), EasyLink will use its reasonable
commercial efforts to effect the registration under the Act of all Registrable
Securities which EasyLink has been so requested to register by Holders, to the
extent required to permit the disposition (in accordance with such intended
methods thereof) of the Registrable Securities so to be registered, provided
that if, at any time after giving written notice of its intention to register
any securities and prior to the effective date of the registration statement
filed in connection with such registration, EasyLink shall determine for any
reason not to register or to delay registration of such securities, EasyLink
may, at its election, give written notice of such determination to Holders and,
thereupon, (i) in the case of a determination not to register, shall be relieved
of its obligation to register any Registrable Securities in connection with such
registration (but not from its obligation to pay the registration expenses under
Section 2.05 in connection therewith), without prejudice, however, to the rights
of Holders to request that such registration be effected as a Mandatory
Registration under Section 2.01, and (ii) in the case of a determination to
delay registering, shall be permitted to delay registering any Registrable
Securities, for the same period as the delay in registering such other
securities. No registration effected under this Section 2.02 shall relieve
EasyLink of its obligation to effect any Mandatory Registration upon request
under Section 2.01.
4
(b) Priority in Piggyback Registrations. If the managing underwriter of
a Piggyback Registration advises EasyLink in writing that, in its opinion, the
number of shares of Registrable Securities requested or proposed to be included
in such offering exceeds the number that can be sold in such offering without
materially affecting the offering price of any such securities, EasyLink shall
include in such registration (i) first, to the extent that securities of
EasyLink are included in such registration, (A) such securities proposed to be
sold by EasyLink and (B) the securities of EasyLink held by persons who have
preferential registration rights to include such securities in such Piggyback
Registration in accordance with the agreements with respect to such registration
rights between EasyLink and Holders; and (ii) second, to the extent that such
Registrable Securities may be included in such registration without materially
affecting the offering price of the securities referred to in clause (i), in the
opinion of such managing underwriter, the Registrable Securities requested by
Holders to be included in such Piggyback Registration pursuant to Section
2.02(a) and any other securities of EasyLink held by persons other than Holders
having rights to participate in such Piggyback Registration that are
non-preferential to Holders of the Registrable Securities, pro rata among all
such holders on the basis of the total number of securities of EasyLink,
including Registrable Securities, requested to be included therein.
(c) Selection of Underwriters. EasyLink shall select the investment
banker(s) and manager(s) for the offering under Section 2.02.
(d) Underwritten Piggyback Registrations. If EasyLink at any time
proposes to register any of its securities under the Act as to which rights
under this Section 2.02 have been exercised and such securities are to be
distributed by or through one or more underwriters, EasyLink will, if requested
by Holders as provided in Section 2.02(a) and subject to the provisions of
Section 2.02 (a) and (b), use its reasonable commercial efforts to arrange for
such underwriters to include all the Registrable Securities to be offered and
sold by Holders among the securities to be distributed by such underwriters.
Holders shall be a party to the underwriting agreement between EasyLink and such
underwriters and may, at its option, require that any or all of the
representations and warranties by, and the other agreements on the part of,
EasyLink to and for the benefit of such underwriters shall also be made to and
for the benefit of Holders and that any or all of the conditions precedent to
the obligations of such underwriters under such underwriting agreement be
conditions precedent to the obligations of Holders. Holders shall not be
required to make any representations or warranties to or agreements with
EasyLink or the underwriters other than representations, warranties or
agreements regarding Holders, Holders's title to Registrable Securities and
Holders's intended method of distribution and any other representation required
by law.
5
SECTION 2.03 Obligations of EasyLink. In furtherance of its obligations
under Section 2.01 or 2.02 to use its commercially reasonable efforts to effect
the registration of the Registrable Securities, EasyLink shall, as expeditiously
as reasonably possible,
(a) Prepare and file with the SEC a registration statement
with respect to such Registrable Securities and use its commercially reasonable
efforts to cause such registration statement to become effective and keep such
registration statement effective until (i) in the case of a Mandatory
Registration, the time when all Registrable Securities are eligible for sale by
Holders pursuant to Rule 144(k) and (ii) in the case of a Piggyback
Registration, until 90 days after the effectiveness of such registration
statement;
(b) Prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in connection
therewith as may be necessary to comply with the provisions of the Act with
respect to the disposition of all securities covered by such registration until
the earlier of the time periods specified in Section 2.03(a) and such time as
all of such securities have been disposed of in accordance with the intended
methods of disposition by Holders set forth in such registration statement;
(c) Furnish to Holders such numbers of copies of such
registration statement and of each amendment and supplement thereto (in each
case including all exhibits) and prospectus, including any preliminary
prospectus, in conformity with the requirements of the Act, and such other
documents as Holders may reasonably request in order to facilitate the
disposition of the Registrable Securities;
(d) Use its commercially reasonable efforts to register and
qualify the securities covered by such registration statement under such other
securities or blue sky laws of such jurisdictions (domestic or foreign) as
Holders shall reasonably request, to keep such registration or qualification in
effect for so long as such registration statement remains in effect, and to take
any other action which may be reasonably necessary or advisable to enable
Holders to consummate the disposition in such jurisdictions of the securities
owned by Holders, except that EasyLink shall not for any such purpose be
required to qualify generally to do business as a foreign corporation in any
jurisdiction wherein it would not but for the requirements of this Section
2.03(d) be obligated to be so qualified, to subject itself to taxation in any
such jurisdiction or to consent to general service of process in any such
jurisdiction;
(e) Use its reasonable commercial efforts to (i) obtain the
withdrawal of any order suspending the effectiveness of such registration
statement or sales thereunder at the earliest possible time and (ii) cause all
Registrable Securities covered by such registration statement to be registered
with or approved by such other governmental agencies or authorities as may be
necessary to enable Holders to consummate the disposition of such Registrable
Securities;
6
(f) In connection with any firm commitment underwritten
offering, furnish to Holders a signed counterpart, addressed to Holders (and the
underwriters, if any) of
(i) an opinion of counsel for EasyLink dated the date
of the closing under the underwriting agreement, reasonably
satisfactory in form and substance to such underwriter, and
(ii) a "comfort" letter, dated the effective date of
such registration statement (and dated the date of the closing under
the underwriting agreement), signed by the independent public
accountants who have certified EasyLink's financial statements included
in such registration statement,
covering substantially the same matters with respect to such registration
statement (and the prospectus included therein) and, in the case of the
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 the underwriters in underwritten public
offerings of securities;
(g) Notify in writing Holders, at any time when a prospectus
relating thereto is required to be delivered under the Act, (a) upon discovery
that, or upon the happening of any event as a result of which, the prospectus
included in such registration statement, as then in effect, includes an untrue
statement of a material fact or omits to state any material fact required to be
stated therein or necessary to make the statements therein not misleading in the
light of the circumstances under which they were made, and (b) of any request
for any amendment of or supplement to any registration statement or other
document relating to such offering promptly after receipt of such request from
the SEC or any other regulatory body or other body having jurisdiction and, in
either case, at the request of Holders promptly prepare and furnish to Holders a
reasonable number of copies of a supplement to or an amendment of such
prospectus as may be necessary so that, as thereafter delivered to the
purchasers of such securities, such prospectus shall not include an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading in the
light of the circumstances under which they were made;
(h) Otherwise comply with all applicable federal and state
securities laws and rules and regulations of the SEC, and will furnish to
Holders draft and final versions of each registration statement and prospectus
used in connection therewith prior to the filing thereof, and any amendment or
supplement to such registration statement or prospectus and shall not file any
thereof to which Holders shall have reasonably objected on the grounds that such
registration statement, prospectus, amendment or supplement does not comply in
all material respects with the requirements of the Act or the rules or
regulations thereunder;
(i) Provide and cause to be maintained a transfer agent and
registrar for all Registrable Securities covered by such registration statement
from and after a date not later than the effective date of such registration
statement; and
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(j) Use its reasonable commercial efforts to list all
Registrable Securities covered by such registration statement on each securities
exchange and inter-dealer quotation system on which similar securities issued by
EasyLink are then listed.
(k) EasyLink may require Holders as to which any registration
is being effected to furnish EasyLink such information regarding Holders and the
distribution of such securities as EasyLink may from time to time reasonably
request in writing to the extent necessary to comply with applicable securities
laws in connection with the preparation and filing of such registration
statement.
Section 2.04 Furnish Information.
It shall be a condition precedent to the obligations of
EasyLink to take any action pursuant to Article 2 that Holders shall furnish to
EasyLink such information regarding Holders, the Registrable Securities held by
Holders and the intended method of disposition thereof as EasyLink or its
appointed agents shall reasonably request and as shall be required in connection
with the action to be taken by EasyLink.
Section 2.05 Registration Expenses.
In the case of any registration effected pursuant to Section
2.01 or 2.02, EasyLink shall bear all Registration Expenses; provided, however,
that Holders shall bear the fees and costs of its own counsel (other than to the
extent provided in the definition of "Registration Expenses" in connection with
a firm commitment, underwritten offering) and all brokers' discounts and
commissions with respect to the Registrable Securities sold by such Person.
Section 2.06 Use of Prospectus. Each of the Holders agrees that if
EasyLink notifies Holders in writing of the happening of any event as a result
of which the prospectus included in such registration statement contains an
untrue statement of a material fact or omits any fact necessary to make the
statements therein not misleading, Holders will discontinue immediately its
disposition of securities pursuant to the registration statement until Holders
receives copies of an amended or supplemented prospectus, and if so directed by
EasyLink, will deliver to EasyLink all copies then in Holders's possession of
the prospectus relating to such Registrable Securities current at the time of
receipt of such notice.
Section 2.07 Indemnification. If any Registrable Securities
are included in a registration statement pursuant to Section 2.01 or 2.02, then,
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(a) EasyLink shall indemnify and hold harmless Holders, agents
for and officers and directors of Holders, any underwriter of the Registrable
Securities and each Person, if any, who controls any such Person within the
meaning of the Act, against any losses, claims, damages or liabilities, joint or
several (or actions in respect thereof), to which they may become subject under
the Act or otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon any untrue statement
or alleged untrue statement of material fact contained in such registration
statement, including any preliminary prospectus or final prospectus contained in
the registration statement, or any amendments or supplements to the registration
statement, or arise out of or are based upon the omission or alleged omission to
state therein a material fact required to be stated therein, or necessary to
make the statements therein not misleading, or any violation by EasyLink of any
rule or regulation promulgated under the Act or any state securities law or rule
or regulation applicable to EasyLink, and will reimburse Holders, the agents
for, and officers and directors of Holders, any underwriter of the Registrable
Securities or any such controlling Person for any legal or other expenses
reasonably incurred by them in connection with investigating or defending any
such loss, claim, damage, liability or action; provided, however, that EasyLink
shall not be liable to Holders or any such person in any such case to the extent
that any such loss, claim, damage or liability arises out of or is based upon
any untrue statement or omission based upon and in conformity with information
furnished to EasyLink in writing by Holders expressly for use in such
registration statement or prospectus.
(b) Holders shall indemnify and hold harmless EasyLink, each
of its directors and each of its officers who have signed such registration
statement against any losses, claims, damages or liabilities to which EasyLink
or any such director or officer may become subject, under the Act or otherwise,
insofar as such losses, claims, damages or liabilities arise out of or are based
upon any untrue or alleged untrue statement of any material fact contained in
such registration statement, including any preliminary prospectus or final
prospectus contained in the registration statement or any amendments or
supplements to the registration statement, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, in
each case to the extent, but only to the extent, that such untrue statement or
alleged untrue statement or omission or alleged omission was made in such
registration statement, preliminary prospectus, or amendments or supplement
thereto, in reliance upon and in conformity with information furnished by
Holders in writing expressly for the purpose of inclusion in such registration
statement, preliminary prospectus or amendments or supplements, and Holders will
reimburse any legal or other expenses actually and reasonably incurred by
EasyLink or any such director, officer or controlling Person in connection with
investigating or defending any such loss, claim, damage, liability or action;
provided, that Holders's liability under this Section 2.06(b) shall not exceed
the amount of the gross proceeds of the offering of Holders's Registrable
Securities included therein.
(c) Each party entitled to indemnification (the "Indemnified
Party") shall give notice to the party required to provide indemnification
("Indemnifying Party") promptly after such Indemnified Party has knowledge of
any claim as to which indemnity may be sought, and shall permit the Indemnifying
Party (at its expense) to assume the defense of any such claim or any litigation
resulting therefrom; provided, however, that counsel for the Indemnifying Party,
who shall conduct the defense of such claim or litigation, shall be reasonably
satisfactory to the Indemnified Party, and the Indemnified Party may participate
in such defense at such party's expense; provided, further, that the failure by
any Indemnified Party to give notice as provided herein shall not relieve the
Indemnifying Party of its obligations under this Section 2.06, except to the
extent that the failure results in an omission of actual notice to the
Indemnifying Party and such Indemnifying Party is materially damaged as a result
of the failure to give notice. No Indemnifying Party, in the defense of any such
claim or litigation, shall, except with the consent of each Indemnified Party,
consent to the entry of any judgment or enter into any settlement that does not
include as an unconditional term the giving by the claimant or plaintiff to such
Indemnified Party of a release from all liability with respect to such claim or
litigation.
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SECTION 2.08 Contribution. (a) If the indemnification provided for in
Section 2.07 is unavailable to the Indemnified Party in respect of any losses,
claims, damages or liabilities (or actions in respect thereof) referred to
therein, then each such Indemnifying Party, in lieu of indemnifying such
Indemnified Party, shall contribute to the amount paid or payable by such
Indemnified Party as a result of such losses, claims, damages or liabilities (or
actions in respect thereof) in such proportion as is appropriate to reflect the
relative fault of the Indemnifying Party on the one hand and the Indemnified
Party on the other in connection with the statement or omission which resulted
in such losses, claims, damages or liabilities (or actions in respect thereof),
as well as any other relevant equitable considerations. The relative fault shall
be determined by reference to, among other things, whether the untrue statement
(or alleged untrue statement) of a material fact or the omission (or alleged
omission) to state a material fact relates to information supplied by the
Indemnifying Party or the Indemnified Party and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The Company and Holders agree that it would not be just
and equitable if contribution pursuant to this Section 2.08 were determined by
pro rata allocation or by any other method of allocation which does not take
account of the equitable considerations referred to above. The amount paid or
payable by an Indemnified Party as a result of the losses, claims, damages or
liabilities (or actions in respect thereof) referred to in this Article 2 shall
be deemed to include any legal or other expenses reasonably incurred by such
Indemnified Party in connection with investigating or defending any such action
or claim.
(b) No person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation.
SECTION 2.09 Transfer of Registration Rights. The registration rights
of Holders under this Article 2 may be assigned and transferred (i) by Holders
to any Affiliate of Holders to whom any of the Securities or Conversion Shares
owned by Holders are transferred, and (ii) by Holders to any transferee who
acquires a majority of the Registrable Securities (adjusted to reflect
subsequent stock splits, combinations, stock dividends and recapitalizations)
initially issued to Holders; provided, however, that EasyLink is given written
notice by Holders at the time of such assignment and transfer stating the name
and address of the transferee and identifying the securities with respect to
which the rights under this Article 2 are being assigned and transferred. For
the purposes of this Section 2.09, a change in control of an Affiliate of
Holders holding shares entitling such Affiliate to the registration rights
hereunder, such that such Affiliate is subsequent to such change of control no
longer an Affiliate of Holders, shall be deemed an attempted transfer of the
registration rights hereunder and such former Affiliate of Holders shall not be
entitled to such registration rights except to the extent such transfer would be
permitted under clause (ii) above.
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ARTICLE III
MISCELLANEOUS
SECTION 3 Successors and Assigns. Except as otherwise provided herein,
the terms and conditions of this Agreement shall inure to the benefit of and be
binding upon the respective successors and assigns of the parties hereto
(including permitted transferees of any shares of Registrable Securities).
Nothing in this Agreement is intended to confer upon any party other than the
parties hereto or their respective successors and assigns any rights, remedies,
obligations or liability under or by reason of this Agreement, except as
expressly provided in this Agreement.
Section 3.01 Notices. All notices and other communications required or
permitted hereunder shall be in writing, shall be effective when given, and
shall in any event be deemed to be given upon receipt or, if earlier, (a) five
(5) days after deposit with the U.S. Postal Service or other applicable postal
service, if delivered by first class mail, postage prepaid, (b) upon delivery,
if delivered by hand or transmitted via facsimile (confirmed by letter sent by
first class mail, postage prepaid with the U.S. Postal Service or other
applicable postal service), or (c) one business day after the business day of
deposit with Federal Express or similar reputable, international overnight
courier, freight prepaid. Such notices, demands and other communications shall
be sent to EasyLink at the address set forth below and to Holders at such
address set forth on Schedule A to the Restructuring Agreements or at such
address or to the attention of such other person as the recipient party has
specified by prior written notice to the sending party. The address for EasyLink
is:
EasyLink Services Corporation
000 Xxxxxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Xxxxxx Xxxxxxxx, Chief Executive Officer
Fax No.: ________________
with a copy at the same address (Fax number 000-000-0000) to:
Xxxxx X. Xxxxxxxx, Esq.
or at such other address as a party may designate by ten (10) days advance
written notice to the other party pursuant to the provisions above.
Section 3.02 Enforcement. The parties agree that each Holder has an
independent right to enforce EasyLink's performance of the provisions of this
Agreement and that any Holder may bring an action or proceeding against EasyLink
in connection with this Agreement without notice to any other Holder. Each
Holder further agrees that they are neither necessary nor indispensable parties
in an action brought by another Holder against EasyLink in connection with this
Agreement.
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Section 3.03 Governing Law; Forum and Consent to Jurisdiction.
(a) Governing Law. This Agreement shall be construed and
enforced in accordance with, and the rights of the parties shall be governed by,
the law of the State of Florida.
(b) Submission to Jurisdiction; Service of Process. (i)
EasyLink and Holders agree that any action or proceeding brought by Holders in
connection with this Agreement may be brought (and any action or proceeding
brought by EasyLink against Holders in connection herewith shall exclusively be
brought) in the courts of the State of New York sitting in the Borough of
Manhattan or of the United States of America for the Southern District of New
York and, by execution and delivery of this Agreement, EasyLink and Holders
hereby irrevocably waive any objection, including, without limitation, any
objection to the laying of venue or based on the grounds of forum non
conveniens, which it may now or hereafter have to the bringing of any such
action or proceeding by EasyLink or Holders in such non-exclusive jurisdictions.
(ii) EasyLink hereby irrevocably appoint CT Corporation System (the
"Process Agent"), with an office on the date hereof at 0000 Xxxxxxxx, Xxx Xxxx,
XX 00000, Xxxxxx Xxxxxx of America, as their agent to receive on their behalf
service of copies of the summons and complaint and any other process that may be
served in any such action or proceeding. EasyLink irrevocably consents to the
service of process of any of the aforesaid courts in any such action or
proceeding by the mailing of copies thereof by registered mail, postage prepaid,
to it at its address set forth in this Agreement or to the Process Agent at its
address specified above.
Section 3.04 Waivers; Amendments. The waiver by the undersigned of any
of the provisions of this Agreement shall not operate or be construed as a
waiver of any subsequent breach. This Agreement may be amended, and any
provision of this Agreement may be waived, only by a written amendment executed
by (i) in the case of any amendment affecting the rights or obligations of
EasyLink, EasyLink and (ii) in the case of any amendment affecting the rights or
obligations of Holders, holders of a majority of the Registrable Securities then
outstanding (including Conversion Shares issuable upon conversion of then
outstanding Notes and Warrants).
Section 3.05 Headings. The section headings contained in this Agreement
are for reference purposes only and shall not affect the construction and
interpretation of this Agreement.
Section 3.06 Severability. Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is 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 this Agreement.
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Section 3.07 Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original but all of which
shall constitute one and the same instrument. This Agreement may contain more
than one counterpart of the signature page and may be executed by the affixing
of the signatures of each of the parties hereto to one of these counterpart
signature pages. All of the counterpart signature pages shall be read as though
one, and they shall have the same force and effect as though all of the signers
had signed a single signature page.
Section 3.08 Aggregation of Stock. All shares of Registrable Securities
held or acquired by affiliated entities or persons shall be aggregated together
for the purpose of determining the availability of any rights under this
Agreement.
Section 3.09 Construction. The parties hereto have participated jointly
in the negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the parties hereto and no presumption or burden of
proof shall arise favoring or disfavoring any party hereto by virtue of the
authorship of any of the provisions of this Agreement.
Section 3.10 Entire Agreement. This Agreement contains the entire
agreement of the parties hereto. The parties hereto are not bound by any oral
statements that are made outside of this Agreement.
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WHEREAS, the parties hereto have executed this Agreement as of
the date first above written.
EASYLINK SERVICES CORPORATION
By:
---------------------------------
Xxxxxx Xxxxxxxx
Chief Executive Officer
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