MODIFICATION AGREEMENT
THIS MODIFICATION AGREEMENT (the "Agreement") is made effective as of
June 1, 2001 (the "Effective Date"), by and between AT&T Corp. ("ATT"), and
EasyLink Services Corporation ("EasyLink").
W I T N E S S E T H:
A. ATT is the holder of a promissory note issued by EasyLink in the original
principal amount of $35 million (the " Original Note").
B. The Note is secured by certain security interests and guarantees (the
"Security Interests") as more fully described in the Note and the security
documents relating thereto (the "Security Documents").
C. EasyLink has requested that ATT modify the Original Note as set forth herein
and forbear from exercising its rights and remedies under the Original Note and
the Security Documents, and, subject to the terms and conditions contained
herein, ATT has agreed to do so for the period provided 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. Representations of EasyLink. EasyLink hereby represents and
warrants to ATT as follows:
(a) Neither the execution of this Agreement, nor the consummation
of the transactions contemplated thereby, will constitute a violation of,
or will conflict with, any agreement entered into by EasyLink, or any order,
decree or judgment made against EasyLink.
(b) This Agreement has been duly authorized by all requisite
corporate action on the part of EasyLink, has been duly executed and delivered
by EasyLink and constitutes the valid and binding obligation of EasyLink
enforceable in accordance with its terms.
2. Forbearance and Waiver. Provided, that EasyLink complies with all
terms and conditions of this Agreement, then ATT hereby waives of all current
defaults under the Original Note and defers all payments under the Original Note
and a portion of the 2001 second quarter payments under the Transition Services
Agreement dated as of January 31, 2001 (the "Transition Services Agreement") as
previously agreed until October 31, 2001, subject to AT&T's right to revoke this
waiver and deferral at any time by giving written notice to Easylink that the
waiver is being terminated in the event that EasyLink fails to comply with its
obligations hereunder. All deferred payments under the Original Note will
continue to accrue interest at the late payment interest rate specified in the
Original Note. Upon termination of the waiver and deferral, all deferred
payments, including applicable interest, will 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 ATT's rights under the Original Note,
the Security Documents or the Transition Agreement or otherwise available to ATT
at law or in equity. In addition, nothing in this Agreement shall be construed
to release EasyLink from any liability under the Original Note, the Security
Documents or the Transition Agreement. ATT hereby expressly reserves all such
remedies.
3. Restructure. If EasyLink (a) successfully raises a minimum of
$10,000,000.00 of capital by no later than October 31, 2001 (the "Financing
Condition"); and (b) enters into a restructuring arrangement with Xxxxxx Xxx
Xxxx with respect to his outstanding $9.2 million note and lessors holding the
outstanding obligations under EasyLink's existing equipment leases (other than
exceptions agreed to by ATT) on terms and conditions, taken as a whole, that are
not more favorable to any of such creditors than the terms hereof (the "Other
Creditor's Condition"), then the Original Note shall be amended and restated in
the form of the Note (as defined below) and converted into the right to receive
the Shares and the Warrants and EasyLink shall enter the Registration Rights
Agreement on the following terms and conditions:
(a) EasyLink shall execute and deliver to ATT a promissory
note in the principal amount of $10,000,000 (the "Note"). The Note shall be in
the form attached hereto as Exhibit A. The Note shall continue to be secured by
the Security Interests under the Security Documents.
(b) EasyLink shall deliver 10,000,000 shares of EasyLink's
Class A common stock, par value $.01 per share ("Shares") to ATT. 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.
(c) EasyLink shall deliver warrants to purchase 10,000,000
shares of EasyLink's Class A common stock, par value $.01 per share ("Warrants")
to ATT. The Warrants shall shall be in the form attached hereto as Exhibit B.
The Warrants shall expire ten (10) years from the date of issue and shall have
an exercise price equal to the average of the closing prices of EasyLink's Class
A common stock over the 30 trading days ending two days before the closing. The
initial exercise price under the Warrants and the number of shares issuable upon
exercise of the Warrants shall be appropriately adjusted in the event the
Company shall effect a stock split, stock dividend or stock combination on or
before the closing and thereafter shall be subject to adjustment as provided in
the form of Warrants.
(d) EasyLink will execute, and ATT shall be entitled to become
a party to a registration rights agreement which will obligate EasyLink to file
a registration statement covering the resale of the Shares and the shares
issuable upon exercise of the Warrants within 45 days from closing of the
issuance of the Note, the Shares and the Warrants and to use all reasonable
commercial efforts to cause such registration statement to become effective as
soon as practicable thereafter. The Registration Rights Agreement shall be in
the form attached hereto as Exhibit C.
(e) ATT 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 ATT.
4. Compliance with Act; Disposition of Shares of Common Stock.
(a) Compliance with Act. The holder of the Note, the Shares
and the Warrant (collectively, the "Securities"), by acceptance thereof, agrees
that the Securities and the shares to be issued upon exercise of the Warrant
(the "Warrant Shares") are being acquired for investment and that such holder
will not offer, sell or otherwise dispose of the Securities or the Warrant
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 exercise of the Warrant, unless the Warrant 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 Warrant 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 Warrant 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.
(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 Warrant Shares. With respect
to any offer, sale or other disposition of any of the Securities or the Warrant
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 Warrant 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 Warrant Shares, all in accordance with the terms of the
notice delivered to the Company. If a determination has been made pursuant to
this Section 4(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 Warrant 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 Warrant 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.
(c) Applicability of Restrictions. Neither any restrictions of
any legend described in the Securities or the Warrant Shares nor the
requirements of Section 4(b) above shall apply to any transfer of, or grant of a
security interest in, the Securities or the Warrant 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.
5. Expenses. EasyLink agrees to pay all costs, fees, and
expenses of ATT in the enforcement of this Agreement.
6. 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.
7. 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.
8. 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.
9. 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.
10. 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.
11. Venue; Jurisdiction; Jury Trial Waiver. EasyLink and
ATT each hereby irrevocably: (1) consent to the jurisdiction of any state or
federal court sitting in the State of Florida; (2) agree that venue shall be
proper in any court of competent jurisdiction located in the Borough of
Manhattan, the City and 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]
IN WITNESS WHEREOF, the parties hereto have signed this Agreement as of
the effective date.
AT&T CORP.
By:
Print Name:
Its:
EASYLINK SERVICES CORPORATION
By:
Print Name:
Its:
