EXHIBIT 10.1
February 21, 2002
America Online, Inc.
00000 XXX Xxx
Xxxxxx, Xxxxxxxx 20166
Attention: General Counsel
Re: Waiver of Rights under Restructuring Agreement
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Ladies and Gentlemen:
We are writing to confirm our agreement and understanding regarding the
waiver of certain rights by America Online, Inc. ("AOL") under Section 5.3 of
the Restructuring and Note Agreement, dated September 19, 2001 (the
"Restructuring Agreement"), between you and us. As we have discussed, we are
proposing to restructure our existing 4-1/2% Convertible Subordinated Notes due
2002 and 5% Convertible Subordinated Notes due 2004 (collectively, the "Existing
Notes") by offering in exchange for each such Existing Note (the "Exchange
Offer") either (a) a new senior subordinated note (the "New Note") of Talk
America Holdings, Inc. (the "Company"); or (b) a combination of cash and a new
senior subordinated convertible note (the "Convertible Note") of the Company.
Each of the New Note and the Convertible Note would (a) be subordinated in all
respects to the 8% Secured Convertible Note Due 2011 issued to AOL on September
19, 2001 (the "AOL Note"); (b) have an initial maturity date after (and not be
subject to mandatory redemption on or prior to) September 19, 2006; and (c) in
the case of the Convertible Note, be convertible at a rate of not less than
$5.00 per share. The documentation through which the Company shall make the
Exchange Offer to the holders of the Existing Notes shall be referred to in this
letter as the "Exchange Offer Documentation."
We understand that under Section 5.3 of the Restructuring Agreement,
AOL has the right to prepayment of the AOL Note in an amount equal to the
principal amount of Subordinated Indebtedness (as defined in the Restructuring
Agreement) redeemed, repurchased or repaid, unless the cash used to redeem,
repurchase or repay the Subordinated Indebtedness has been raised solely for
such purpose through the issuance of additional Subordinated Indebtedness or
equity of the Company. Pursuant to this letter agreement, AOL hereby agrees to
waive this right solely with respect to the Exchange Offer provided that: (a)
the Company shall in connection with and no later than the date on which any
cash payment is made in the Exchange Offer prepay in cash a principal amount of
the AOL Note equal to forty percent of the amount of cash (excluding accrued
interest) to be paid by the Company to holders of the Existing Notes in the
Exchange
Offer, (b) AOL has pre-approved in writing the Exchange Offer Documentation as
consistent with the terms of this letter (which approval shall not be
unreasonably withheld and such approval shall be deemed to be granted if AOL has
not notified the Company in writing as to the specific objections to the
proposed Exchange Offer Documentation by 11:59 p.m. eastern time on the second
business day following receipt by AOL of proposed Exchange Offer Documentation
identified by the Company as the final draft of such documentation), (c) the
Exchange Offer is completed under the circumstances described in this letter
prior to April 30, 2002 and (d) the aggregate amount of cash paid or payable
pursuant to the Exchange Offer and to AOL pursuant to clause (a) above does not
exceed $10,000,000.
In addition, AOL acknowledges receipt of a cash payment of $1,226,960
(all of which is prepayment of the AOL Note and $736,176 of which will be
credited against any amounts owed by the Company pursuant to clause (a) of the
preceding paragraph) and hereby agrees to waive its rights under Section 5.3 of
the Restructuring Agreement with respect to the Company's purchase on December
4, 2001 of $5,008,000 principal amount of Company's 4-1/2% Convertible
Subordinated Notes due 2002 for an aggregate amount of $1,226,960 plus accrued
interest of $49,454. The Company represents and warrants that, except as set
forth in the preceding sentence, it has not redeemed, repurchased or otherwise
pre-paid any Subordinated Indebtedness (as that term is defined in the
Restructuring Agreement) since September 19, 2001.
Any waivers by AOL are limited to the circumstances described in this
letter and will not be deemed to be a waiver of any other provision of the
Restructuring Agreement, or a waiver of AOL's rights under Section 5.3 under any
other circumstances. The Company hereby expressly acknowledges that failure by
AOL to enforce its rights under Section 5.3 of the Restructuring Agreement in
this instance or in the past does not entitle the Company to any such waiver
under this or any other section of the Restructuring Agreement in the future.
If you are in agreement with the foregoing agreement and understanding
regarding the Restructuring Agreement, please so confirm by signing the enclosed
copy of this letter as provided below and returning the signed copy to us,
whereupon this letter agreement shall be a binding agreement between us. This
letter may be executed in counterparts, each of which shall be deemed an
original with the same effect as if the signatures were on the same instrument.
Very truly yours,
TALK AMERICA HOLDINGS, INC.
By: /s/ Xxxxxxxx X. Xxxx XX
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Name: Xxxxxxxx X. Xxxx XX
Title: EVP-General Counsel
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The undersigned, America Online, Inc., hereby acknowledges the
foregoing letter and consents and agrees to its terms.
AMERICA ONLINE, INC.
By: /s/ Xxxxx Xxxxxxxx
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Name: Xxxxx Xxxxxxxx
Title: Senior Vice President
Date: February 21, 2002
cc: Senior Vice President,
Head of Business Affairs
America Online, Inc.
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