Exhibit 99.8
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 vald 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.
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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.
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(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,
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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.
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IN WITNESS WHEREOF, the parties hereto have signed this Agreement as of
the effective date.
Attest: AT&T CORP.
/s/ Xxxxxxx X. Xxxx By: /s/ Xxxxxxx Xxxx
------------------------------------ --------------------------
Print Name: Xxxxxxx Xxxx Print Name: Xxxxxxx Xxxx
Its: Vice President
Attest:
EASYLINK SERVICES CORPORATION
/s/ Xxxxx X. Xxxxxxxx By: /s/ Xxxxxx Xxxxxx
------------------------------------ -------------------------
Print Name: Xxxxx X. Xxxxxxxx Print Name: Xxxxxx Xxxxxx
Its: Chairman
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EXHIBIT A
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
PROMISSORY NOTE
$10,000,000 Effective: June 1, 2001
FOR VALUE RECEIVED EASYLINK SERVICES CORPORATION, a Delaware corporation
("Company") promises to pay to AT&T CORP. ("Holder"), or its registered assigns,
the principal sum of TEN MILLION DOLLARS ($10,000,000), 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 the rate specified herein,
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:
"Acquired Debt" means, with respect to any specified Person,
Indebtedness of any other Person existing at the time such other Person merges
with or into or becomes a Subsidiary of such specified Person, or Indebtedness
incurred by such Person in connection with the acquisition of assets, including
Indebtedness incurred in connection with such other Person merging with or into
or becoming a Subsidiary of such specified Person or the acquisition of such
assets, as the case may be.
"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.
"Custodian" shall mean any custodian, receiver, trustee, assignee,
sequester, liquidator or similar official under any Bankruptcy Law. "Event of
Default" has the meaning given in Section 6 hereof. "Existing Debt" has the
meaning given in Section 3(c) hereof.
"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;
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(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;
(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
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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.
"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.
"Purchase Money Indebtedness" means
(a) Indebtedness of the Company or any Wholly-Owned Subsidiary
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 the Company) of the Company or any Wholly-Owned Subsidiary,
provided that the amount of Indebtedness thereunder does not exceed 100% of the
purchase cost of such assets; or
(b) Indebtedness of the Company or any Wholly-Owned Subsidiary
which refinances indebtedness referred to in clause (a) of this definition,
provided that such refinancing satisfies the proviso of such clause (a).
"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
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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.
"Weighted Average Life to Maturity" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing (a) the then
outstanding principal amount of such Indebtedness into (b) the total of the
product obtained by multiplying (i) the amount of each then remaining
installment, sinking fund, serial maturity or other required payments of
principal, including payment at final maturity, in respect thereof, by (ii) the
number of years (calculated to the nearest one-twelfth) that will elapse between
such date and the making of such payment.
"Wholly-Owned Subsidiary" means, at any time, any Subsidiary one
hundred percent (100 %) of all of the equity interests (except directors'
qualifying shares) and voting interests of which are owned by any one or more of
the Company and the Company's other Wholly-Owned Subsidiaries at such time;
provided that in the event that the Company or its other Wholly-Owned
Subsidiaries do not own one hundred percent (100%) of the equity interests of a
Subsidiary, but the only other shareholders of such Subsidiary are Affiliates,
employees, officers and/or directors of the Company or another Wholly-Owned
Subsidiary, then such Subsidiary shall be deemed a Wholly-Owned Subsidiary for
purposes of this Agreement.
2. Interest. The unpaid principal balance hereof shall bear interest at
a rate equal to 12% per annum. Interest shall be payable quarterly commencing
three months after the Closing Date either in cash or, at Easylink's option, in
registered shares of Easylink Class A common stock, par value $.01 per share
("Common Stock") having a Fair Market Value equal to 120% of the cash interest
amount. Easylink shall provide written notice to Holder at least thirty days
prior to the scheduled interest payment date of whether it intends to pay the
dividend in cash or Common Stock. After receipt of such notice, Holder may elect
not to receive such payment in Common Stock by providing written notice of such
election to Easylink at least ten days prior to the scheduled interest payment
date. If Holder elects not to be paid in Common Stock, Easylink shall have the
option of either paying such interest in cash or deferring such interest. All
deferred interest shall accrue interest at the specified interest rate,
compounded every month. The Fair Market Value of the Common Stock for purposes
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of this Section shall be equal to the average closing market price of the Common
Stock for the 30-day period immediately prior to the payment date (subject to
appropriate anti-dilution adjustment in the event of a stock split, stock
dividend or stock combination occurring on or before the date Holder receives
the shares that Holder is not eligible to participate in and that is not
reflected in calculating the Fair Market Value of the Shares). All deferred
interest shall be payable beginning on the second anniversary of the date of the
Note and quarterly thereafter with each scheduled payment of principal. Deferred
interest on any portion of principal prepaid shall be paid on the date of such
prepayment as provided herein. The late payment interest rate (which will be
applicable during any period in which an Event of Default exists or in the event
of a late payment) shall be at 300 basis points (that is, 3%) higher than the
rate that would be applicable if there were no Event of Default or late payment.
3. Scheduled Installments of Principal; Mandatory Prepayment. (a)
Principal shall be payable in thirteen quarterly payments of $769,230.77
(subject to appropriate reduction to reflect prior prepayments) commencing on
the second anniversary of the Note. Notwithstanding anything to the contrary,
the Note (that is, principal and accrued interest) shall be paid in full by the
fifth anniversary date.
(b) On or before June 30, 2002, up to $5,000,000 of the Note plus
accrued interest thereon 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 the Company raises cash in an aggregate cumulative amount in excess of
$10,000,000 ("Eligible Financings"). In such event, the Company shall prepay the
Note in an amount (up to $5,000,000 of principal plus accrued interest thereon)
equal to 20% of the net proceeds in excess of $10,000,000 received in one or
more Eligible Financings. If $5,000,000 of principal plus accrued interest
thereon is required to be prepaid, such amount shall be repaid in full for
$2,500,000 (plus 50% of accrued interest on the original principal amount being
prepaid prior to such reduction) in cash and the number of shares of Common
Stock having a "Fair Market Value" equal to $2,500,000 plus 50% of the accrued
interest on the original principal amount being prepaid prior to such reduction.
If less than $5,000,000 of principal shall be mandatorily prepaid at any time,
the cash payment and number of shares issuable in connection with the prepayment
shall be reduced proportionately. The "Fair Market Value" of the shares of
Common Stock, for purposes of this subparagraph (b), shall be equal to the
average of the closing trading prices of the Common Stock during the 30-day
period immediately prior to the prepayment date (or if on any day there shall be
no closing trading price then the closing trading price shall be deemed to be
the average of the closing bid and ask prices on such day). If (a) the average
of the Common Stock closing trading prices for the 30-day period immediately
prior to the prepayment date as determined above is less than $1 per share, or
(b) there exists an overdue payment or Event of Default under the Note or
EasyLink has breached the Transition Services Agreement, the Master Carrier
Agreement or any of the other Transaction Agreements, which overdue payment or
Event of Default or breach has not been cured, AT&T Corp. may elect not to be
prepaid, such election to be made before the prepayment date after receipt of
written notice from EasyLink of its intent to prepay at least 30 days prior to
the proposed prepayment date.
(c) EasyLink shall not make any optional prepayment of principal of or
interest on any of the notes restructured as of the date of issuance hereof and
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issued to its equipment lessors or to Xxxxxx Xxx Xxxx, or the 10% senior
convertible notes or 7% Subordinated Convertible Debentures outstanding as of
the date of issuance hereof (collectively, the "Existing Debt") unless EasyLink
simultaneously offers to the Holder to make a payment of principal of and/or
interest on the Note in an amount proportionate to the amount of underlying debt
to such other creditors on the same terms and conditions. Such prepayment shall
not be eligible for the discount specified in subsection (i) unless such
prepayment satisfies all the conditions specified in subsection (i) of the
"Mandatory Prepayments" section or subsection (i) of the Optional Prepayments
section or unless such prepayment is offered to the Holder on the same basis as
offered to other holders of debt being prepaid.
4. Optional Prepayments. At any time and from time to time on or before
June 30, 2002, the Company may prepay at its option up to $5,000,000 of the Note
and accrued interest thereon upon the same terms and conditions (that is, cash
and shares of Common Stock, etc.) as set forth above in Section 3(b) for
mandatory prepayment. If (a) the Common Stock average closing trading price for
the 30-day period immediately prior to the prepayment date as determined in
Section 3(b) is less than $1 per share or (b) there exists an overdue payment or
Event of Default under the Note or EasyLink has breached the Transition Services
Agreement, the Master Carrier Agreement or any of the other Transaction
Agreements, which overdue payment or Event of Default or breach has not been
cured, AT&T may elect not to be prepaid, such election to be made before the
prepayment date after receipt of written notice from EasyLink of its intent to
prepay at least 30 days prior to the proposed prepayment date. 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.
(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:
7
(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
(f) Swift Telecommunications, Inc. ("Swift") shall default in
the payment of any amounts due under the Transition Services Agreement or the
Master Carrier Agreement, each dated as of January 31, 2001, between Swift and
Holder, and such default shall continue uncured for a period of at least 30 days
after notice of such default is given to Swift; provided that it shall not be
deemed a default if Swift shall have contested in good faith such payment within
30 days after the receipt of an invoice therefor (while timely paying those
portions of the invoice that are not disputed in good faith) and the parties
have not yet resolved such dispute; or
(g) 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
8
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
(h) 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(g) or (h) has occurred (other than an Event of Default described in clause (i)
of Section 6(g) or described in clause (v) of Section 6(g) by virtue of the fact
that such clause encompasses clause (i) of Section 6(g)), 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. Representations and Warranties of Holder. By its acceptance of this
Note, the Holder makes the following representations and warranties:
9
(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. Indebtedness.
Without the consent of Holder, the Company shall not, nor shall it
permit any of its Wholly-Owned Subsidiaries to, create, incur, issue, assume,
guarantee or otherwise become liable with respect to (collectively, "incur") any
Indebtedness (including Acquired Debt) that is pari passu in right of payment
with this Note. The foregoing limitation on the incurrence of Indebtedness will
not apply to any of the following incurrences of Indebtedness (without
duplication):
(a) Indebtedness evidenced by this Note;
(b) Up to $80 million aggregate principal amount of Indebtedness (other
than this Note) that is by its terms pari passu in right of payment with this
Note (but such pari passu right of payment shall not apply to the security
interests securing this Note);
(c) Indebtedness that is by its terms subordinated to this Note;
(d) Existing Indebtedness (other than this Note but including the
restructure notes issued contemporaneously herewith);
(e) Acquired Debt of a Person incurred prior to the date upon which
such Person was acquired by the Company and its Wholly-Owned Subsidiaries
(excluding Indebtedness incurred by such entity other than in the ordinary
course of its business in connection with, or in contemplation of, such entity
being so acquired);
10
(f) the incurrence of Purchase Money Indebtedness by the Company and
its Wholly-Owned Subsidiaries in an amount not to exceed the cost of
construction, acquisition or improvement of assets used in any business of the
Company and its Subsidiaries;
(g) Swaps of the Company and its Wholly-Owned Subsidiaries covering
Indebtedness of the Company and its Wholly-Owned Subsidiaries to the extent the
notional principal amount of such Swap does not exceed the principal amount of
the Indebtedness to which such Swap relates;
(h) Indebtedness of the Company and its Wholly-Owned Subsidiaries
incurred in the ordinary course of business in respect of performance bonds or
letters of credit of the Company and its Wholly-Owned Subsidiaries or surety
bonds provided by the Company and its Wholly-Owned Subsidiaries;
(i) the incurrence by the Company and its Wholly-Owned Subsidiaries of
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 permitted to be incurred under clauses (a), (b), (d), (e), (f) or
(g) above ("Refinancing Indebtedness"); provided, however, that: (A) the
principal amount of such Refinancing Indebtedness shall not exceed the principal
amount and accrued interest of the Indebtedness so extended, refinanced,
renewed, replaced, substituted or refunded and any premiums payable and
reasonable fees, expenses, commissions and costs in connection therewith; (B)
the terms, provisions and conditions of such Refinancing Indebtedness, taken as
a whole, shall not be Materially more burdensome to the Company than the terms,
provisions and conditions of the Indebtedness so extended, refinanced, renewed,
replaced, substituted or refunded or would otherwise adversely affect the
ability of the Company to pay or perform its obligations hereunder or otherwise
materially adversely affect the rights of the Holder under any of the Operative
Agreements; and (C) the Refinancing Indebtedness shall have a final maturity
later than, and a Weighted Average Life to Maturity equal to or greater than,
the final maturity and Weighted Average Life to Maturity, respectively, of the
Indebtedness being extended, refinanced, renewed, replaced or refunded (a
"Permitted Refinancing"); or
(j) Indebtedness under Capital Lease Obligations of the Company and its
Wholly-Owned Subsidiaries.
For purposes of determining compliance with this Section 9, in the
event that an item of Indebtedness meets the criteria of more than one of the
categories described in clauses (a) through (j) above or is permitted to be
incurred pursuant to the first sentence of this Section 9 and also meets the
criteria of one or more of the categories described in clauses (a) through (j)
above, the Company shall, in its sole discretion, classify such item of
Indebtedness in any manner that complies with this Section 9 and may from time
to time reclassify such item of Indebtedness in any manner in which such item
could be incurred at the time of such reclassification. Accrual of interest and
the accretion of accreted value will not be deemed to be an incurrence of
Indebtedness for purposes of this Section 9.
10. Security. This Note is entitled to the benefits of the Security
Documents pursuant to which Company and certain of its Affiliates have granted
liens to secure the obligations hereunder. Notwithstanding anything to the
11
contrary contained in the Security Documents, Holder agrees that Company and its
Affiliates may grant a senior lien on accounts receivable to secure a working
capital loan of up to $5,000,000 (the "Working Capital Loan"), provided that (i)
payment of amounts due under the Transition Services Agreement and Master
Carrier Agreement shall be given first priority for payment (that is, any unpaid
balances must be paid within 10 days of such working capital loan); and (ii)
such working capital loan cannot be used to prepay any of the Existing Debt.
Holder agrees that the liens and security interests contained in the security
documents shall be subordinate to the liens and security interests on accounts
receivable securing the Working Capital Loan, and Holder shall enter into such
customary agreements with the lender under the Working Capital Loan as such
lender may reasonably request in order to facilitate such loan.
11. 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.
12. Waiver and Amendment. Any provision of this Note may be amended,
waived or modified upon the written consent of Company and Holder.
13. 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.
14. 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.
12
15. 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.
16. Payment. Payment shall be made in lawful tender of the United
States.
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. Severability. 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.
13
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:
------------------------
14
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
15
______________________________________ (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:
16
EXHIBIT B
THIS WARRANT HAS 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, (iii) RECEIPT OF NO-ACTION LETTERS FROM THE
APPROPRIATE GOVERNMENTAL AUTHORITIES, OR (iv) OTHERWISE COMPLYING WITH THE
PROVISIONS OF SECTION 7 OF THIS WARRANT.
EASYLINK SERVICES CORPORATION
WARRANT TO PURCHASE [10,000,000] SHARES
OF CLASS A COMMON STOCK
THIS CERTIFIES THAT, for value received, AT&T CORP. and its assignees
are entitled to subscribe for and purchase 10,000,000 shares [subject to
appropriate adjustment prior to closing for any stock split, stock dividend or
stock combination] (as adjusted pursuant to Section 4 hereof, the "Shares") of
the fully paid and nonassessable Class A Common Stock, par value $.01 per share
("Common Stock"), of EASYLINK SERVICES CORPORATION, a Delaware corporation (the
"Company"), at the price of $ [To Be Determined Prior to Closing and subject to
appropriate adjustment prior to closing for any stock split, stock dividend or
stock combination] per share (such price and such other price as shall result,
from time to time, from the adjustments specified in Section 4 hereof is herein
referred to as the "Warrant Price"), subject to the provisions and upon the
terms and conditions hereinafter set forth. As used herein, (a) the term "Date
of Grant" shall mean [Closing Date], 2001, and (b) the term "Other Warrants"
shall mean any other warrants issued by the Company in connection with the
transaction with respect to which this Warrant was issued, and any warrant
issued upon transfer or partial exercise of or in lieu of this Warrant. The term
"Warrant" as used herein shall be deemed to include Other Warrants unless the
context clearly requires otherwise.
1. Term. The purchase right represented by this Warrant is exercisable,
in whole or in part, at any time and from time to time from the Date of Grant
through ten (10) years after the Date of Grant.
2. Method of Exercise; Payment; Issuance of New Warrant. Subject to
Section 1 hereof, the purchase right represented by this Warrant may be
exercised by the holder hereof, in whole or in part and from time to time, at
the election of the holder hereof, by (a) the surrender of this Warrant (with
the notice of exercise substantially in the form attached hereto as Exhibit A-1
duly completed and executed) at the principal office of the Company and by the
payment to the Company, by certified or bank check, or by wire transfer to an
account designated by the Company (a "Wire Transfer") of an amount equal to the
then applicable Warrant Price multiplied by the number of Shares then being
purchased; or (b) exercise of the "net issuance" right provided for in Section
10.2 hereof. The person or persons in whose name(s) any certificate(s)
representing the Shares shall be issuable upon exercise of this Warrant shall be
deemed to have become the holder(s) of record of, and shall be treated for all
purposes as the record holder(s) of, the shares represented thereby (and such
shares shall be deemed to have been issued) immediately prior to the close of
business on the date or dates upon which this Warrant is exercised. In the event
of any exercise of the rights represented by this Warrant, certificates for the
shares of stock so purchased shall be delivered to the holder hereof as soon as
possible and in any event within thirty (30) days after such exercise and,
unless this Warrant has been fully exercised or expired, a new Warrant
representing the portion of the Shares, if any, with respect to which this
Warrant shall not then have been exercised shall also be issued to the holder
hereof as soon as possible and in any event within such thirty-day period;
provided, however, if requested by the holder of this Warrant, the Company shall
cause its transfer agent to deliver the certificate representing Shares issued
upon exercise of this Warrant to a broker or other person (as directed by the
holder exercising this Warrant) within the time period required to settle any
trade made by the holder after exercise of this Warrant.
3. Stock Fully Paid; Reservation of Shares. All Shares that may be
issued upon the exercise of the rights represented by this Warrant will, upon
issuance pursuant to the terms and conditions herein, be fully paid and
nonassessable, and free from all preemptive rights and taxes, liens and charges
with respect to the issue thereof. During the period within which the rights
represented by this Warrant may be exercised, the Company will at all times have
authorized, and reserved for the purpose of the issue upon exercise of the
purchase rights evidenced by this Warrant, a sufficient number of shares of its
Common Stock to provide for the exercise of the rights represented by this
Warrant.
4. Adjustment of Warrant Price and Number of Shares. The number and
kind of securities purchasable upon the exercise of this Warrant and the Warrant
Price shall be subject to adjustment from time to time upon the occurrence of
certain events, as follows:
(a) Reclassification or Merger. In case of any
reclassification or change of securities of the class issuable upon exercise of
this Warrant (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), or in case of any merger of the Company with or into another
corporation (other than a merger with another corporation in which the Company
is the acquiring and the surviving corporation and which does not result in any
reclassification or change of outstanding securities issuable upon exercise of
this Warrant), or in case of any sale of all or substantially all of the assets
of the Company, the Company, or such successor or purchasing corporation, as the
case may be, shall duly execute and deliver to the holder of this Warrant a new
Warrant (in form and substance satisfactory to the holder of this Warrant), or
the Company shall make appropriate provision without the issuance of a new
Warrant, so that the holder of this Warrant shall have the right to receive upon
exercise of this Warrant, at a total purchase price not to exceed that payable
upon the exercise of the unexercised portion of this Warrant, and in lieu of the
shares of Common Stock theretofore issuable upon exercise of this Warrant, the
kind and amount of shares of stock, other securities, money and property
receivable upon such reclassification, change, merger or sale by a holder of the
number of shares of Common Stock then purchasable under this Warrant. Any new
Warrant shall provide for adjustments that shall be as nearly equivalent as may
be practicable to the adjustments provided for in this Section 4. The provisions
of this Section 4(a) shall similarly apply to successive reclassifications,
changes, mergers and sales.
-2-
(b) Subdivision or Combination of Shares. If the Company at
any time while this Warrant remains outstanding and unexpired shall subdivide or
combine its outstanding shares of Common Stock, the Warrant Price shall be
proportionately decreased and the number of Shares issuable hereunder shall be
proportionately increased in the case of a subdivision and the Warrant Price
shall be proportionately increased and the number of Shares issuable hereunder
shall be proportionately decreased in the case of a combination.
(c) Stock Dividends and Other Distributions. If the Company at
any time while this Warrant is outstanding and unexpired shall (i) pay a
dividend with respect to its Common Stock payable in Common Stock, then the
Warrant Price shall be adjusted, from and after the date of determination of
shareholders entitled to receive such dividend or distribution, to that price
determined by multiplying the Warrant Price in effect immediately prior to such
date of determination by a fraction (A) the numerator of which shall be the
total number of shares of Common Stock outstanding immediately prior to such
dividend or distribution, and (B) the denominator of which shall be the total
number of shares of Common Stock outstanding immediately after such dividend or
distribution; or (ii) make any other distribution with respect to Common Stock
(except any distribution specifically provided for in Sections 4(a) and 4(b) and
other than ordinary cash dividends declared by the board of directors pursuant
to a regular dividend program adopted by the board of directors), then, in each
such case, provision shall be made by the Company such that the holder of this
Warrant shall receive upon exercise of this Warrant a proportionate share of any
such dividend or distribution as though it were the holder of the Shares as of
the record date fixed for the determination of the shareholders of the Company
entitled to receive such dividend or distribution.
(d) Adjustment of Number of Shares. Upon each adjustment in
the Warrant Price, the number of Shares purchasable hereunder shall be adjusted,
to the nearest whole share, to the product obtained by multiplying the number of
Shares purchasable immediately prior to such adjustment in the Warrant Price by
a fraction, the numerator of which shall be the Warrant Price immediately prior
to such adjustment and the denominator of which shall be the Warrant Price
immediately thereafter.
5. Notice of Adjustments. Whenever the Warrant Price or the number of
Shares purchasable hereunder shall be adjusted pursuant to Section 4 hereof, the
Company shall make a certificate signed by its chief financial officer setting
forth, in reasonable detail, the event requiring the adjustment, the amount of
the adjustment, the method by which such adjustment was calculated, and the
Warrant Price and the number of Shares purchasable hereunder after giving effect
to such adjustment, and shall cause copies of such certificate to be mailed
(without regard to Section 13 hereof, by first class mail, postage prepaid) to
the holder of this Warrant.
6. Fractional Shares. No fractional shares of Common Stock will be
issued in connection with any exercise hereunder, but in lieu of such fractional
shares the Company shall make a cash payment therefor based on the fair market
value of the Common Stock on the date of exercise as reasonably determined in
good faith by the Company's Board of Directors.
7. Rights as Shareholders; Information. No holder of this Warrant, as
such, shall be entitled to vote or receive dividends or be deemed the holder of
Common Stock which may at any time be issuable upon the exercise hereof for any
purpose, nor shall anything contained herein be construed to confer upon the
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holder of this Warrant, as such, any of the rights of a shareholder of the
Company or any right to vote for the election of directors or upon any matter
submitted to shareholders at any meeting thereof, or to receive notice of
meetings, or to receive dividends or subscription rights or otherwise until this
Warrant shall have been exercised and the Shares purchasable upon the exercise
hereof shall have become deliverable, as provided herein. Notwithstanding the
foregoing, the Company will transmit to the holder of this Warrant such
information, documents and reports as are generally distributed to the holders
of any class or series of the securities of the Company concurrently with the
distribution thereof to the shareholders.
8. Registration Rights. The Shares purchasable hereunder have certain
registration rights pursuant to the Registration Rights Agreement dated as of
the date on which the Warrant is issued.
9. Additional Rights.
9.1 Acquisition Transactions. The Company shall provide the holder
of this Warrant with at least twenty (20) days' written notice prior to closing
thereof of the terms and conditions of any of the following transactions (to the
extent the Company has notice thereof): (i) the sale, lease, exchange,
conveyance or other disposition of all or substantially all of the Company's
property or business, or (ii) its merger into or consolidation with any other
corporation (other than a wholly-owned subsidiary of the Company), or any
transaction (including a merger or other reorganization) or series of related
transactions, in which more than 50% of the voting power of the Company is
disposed of.
9.2 Right to Convert Warrant into Stock: Net Issuance.
(a) Right to Convert. In addition to and without limiting the
rights of the holder under the terms of this Warrant, the holder shall have the
right to convert this Warrant or any portion thereof (the "Conversion Right")
into shares of Common Stock as provided in this Section 9.2 at any time or from
time to time during the term of this Warrant. Upon exercise of the Conversion
Right with respect to a particular number of shares subject to this Warrant (the
"Converted Warrant Shares"), the Company shall deliver to the holder (without
payment by the holder of any exercise price or any cash or other consideration)
that number of shares of fully paid and nonassessable Common Stock as is
determined according to the following formula:
X = B - A
---------
Y
Where: X = the number of shares of Common Stock that shall be
issued to holder
Y = the fair market value of one share of Common Stock
A = the aggregate Warrant Price of the specified number
of Converted Warrant Shares immediately prior to the
exercise of the Conversion Right (i.e., the number of
Converted Warrant Shares multiplied by the Warrant
Price)
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B = the aggregate fair market value of the specified
number of Converted Warrant Shares (i.e., the number
of Converted Warrant Shares multiplied by the fair
market value of one Converted Warrant Share)
No fractional shares shall be issuable upon exercise of the Conversion
Right, and, if the number of shares to be issued determined in accordance with
the foregoing formula is other than a whole number, the Company shall pay to the
holder an amount in cash equal to the fair market value of the resulting
fractional share on the Conversion Date (as hereinafter defined). For purposes
of Section 9 of this Warrant, shares issued pursuant to the Conversion Right
shall be treated as if they were issued upon the exercise of this Warrant.
(b) Method of Exercise. The Conversion Right may be exercised
by the holder by the surrender of this Warrant at the principal office of the
Company together with a written statement (which may be in the form of Exhibit
A-1) specifying that the holder thereby intends to exercise the Conversion Right
and indicating the number of shares subject to this Warrant which are being
surrendered (referred to in Section 9.2(a) hereof as the Converted Warrant
Shares) in exercise of the Conversion Right. Such conversion shall be effective
upon receipt by the Company of this Warrant together with the aforesaid written
statement, or on such later date as is specified therein (the "Conversion
Date"). Certificates for the shares issuable upon exercise of the Conversion
Right and, if applicable, a new warrant evidencing the balance of the shares
remaining subject to this Warrant, shall be issued as of the Conversion Date and
shall be delivered to the holder within thirty (30) days following the
Conversion Date.
(c) Determination of Fair Market Value. For purposes of this
Section 9.2, "fair market value" of a share of Common Stock as of a particular
date (the "Determination Date") shall mean:
(i) If traded on a securities exchange, the fair
market value of the Common Stock shall be deemed to be the average of the
closing prices of the Common Stock on such exchange over the five trading days
immediately prior to the Determination Date;
(ii) If traded on the Nasdaq Stock Market or other
over-the-counter system, the fair market value of the Common Stock shall be
deemed to be the average of the closing sale prices, or if there shall be no
closing sale price on any day the average of the closing bid and ask prices for
such day, of the Common Stock over the five trading days immediately prior to
the Determination Date; and
(iii) If there is no public market for the Common
Stock, then fair market value shall be determined by mutual agreement of the
holder of this Warrant and the Company.
If closing prices or closing bid and ask prices are no longer reported by a
securities exchange or other trading system, the closing price or closing bid
and ask prices shall be that which is reported by such securities exchange or
other trading system at 4:00 p.m. New York City time on the applicable trading
day.
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9.3 Exercise Prior to Expiration. To the extent this Warrant is
not previously exercised as to all of the Shares subject hereto, and if the fair
market value of one share of the Common Stock is greater than the Warrant Price
then in effect, this Warrant shall be deemed automatically exercised pursuant to
Section 9.2 above (even if not surrendered) immediately before its expiration.
To the extent this Warrant or any portion thereof is deemed automatically
exercised pursuant to this Section 9.3, the Company agrees to promptly notify
the holder hereof of the number of Shares, if any, the holder hereof is to
receive by reason of such automatic exercise.
10. Representations and Warranties. The Company represents and
warrants to the holder of this Warrant as follows:
(a) This Warrant has been duly authorized and executed by the
Company and is a valid and binding obligation of the Company enforceable in
accordance with its terms, subject to laws of general application relating to
bankruptcy, insolvency and the relief of debtors and the rules of law or
principles at equity governing specific performance, injunctive relief and other
equitable remedies.
(b) The Shares have been duly authorized and reserved for
issuance by the Company and, when issued in accordance with the terms hereof,
will be validly issued, fully paid and nonassessable and free from preemptive
rights.
(c) The rights, preferences, privileges and restrictions
granted to or imposed upon the classes and series of the Company's capital stock
and the holders thereof are as set forth in the Certificate of Incorporation
("Articles").
(d) The execution and delivery of this Warrant are not, and
the issuance of the Shares upon exercise of this Warrant in accordance with the
terms hereof will not be, inconsistent with the Company's Articles or by-laws,
do not and will not contravene any law, governmental rule or regulation,
judgment or order applicable to the Company, and do not and will not conflict
with or contravene any provision of, or constitute a default under, any
indenture, mortgage, contract or other instrument of which the Company is a
party or by which it is bound or require the consent or approval of, the giving
of notice to, the registration or filing with or the taking of any action in
respect of or by, any Federal, state or local government authority or agency or
other person, except for the filing of notices pursuant to federal and state
securities laws, which filings will be effected by the time required thereby.
(e) There are no actions, suits, audits, investigations or
proceedings pending or, to the knowledge of the Company, threatened against the
Company in any court or before any governmental commission, board or authority
which, if adversely determined, could have a material adverse effect on the
ability of the Company to perform its obligations under this Warrant.
(f) The number of shares of Common Stock of the Company
outstanding on the date hereof, on a fully diluted basis (assuming the
conversion or exchange of all outstanding convertible or exchangeable securities
and the exercise of all outstanding options and warrants), does not exceed
[________] shares.
-6-
11. Modification and Waiver. This Warrant and any provision hereof may
be changed, waived, discharged or terminated only by an instrument in writing
signed by the party against which enforcement of the same is sought.
12. Notices. Any notice, request, communication or other document
required or permitted to be given or delivered to the holder hereof or the
Company shall be delivered, or shall be sent by certified or registered mail,
postage prepaid, to each such holder at its address as shown on the books of the
Company or to the Company at the address indicated therefor on the signature
page of this Warrant.
13. Binding Effect on Successors. This Warrant shall be binding upon
any corporation succeeding the Company by merger, consolidation or acquisition
of all or substantially all of the Company's assets, and all of the obligations
of the Company relating to the Shares issuable upon the exercise or conversion
of this Warrant shall survive the exercise, conversion and termination of this
Warrant and all of the covenants and agreements of the Company shall inure to
the benefit of the successors and assigns of the holder hereof.
14. Lost Warrants or Stock Certificates. The Company covenants to the
holder hereof that, upon receipt of evidence reasonably satisfactory to the
Company of the loss, theft, destruction or mutilation of this Warrant or any
stock certificate and, in the case of any such loss, theft or destruction, upon
receipt of an indemnity reasonably satisfactory to the Company, or in the case
of any such mutilation upon surrender and cancellation of such Warrant or stock
certificate, the Company will make and deliver a new Warrant or stock
certificate, of like tenor, in lieu of the lost, stolen, destroyed or mutilated
Warrant or stock certificate.
15. Descriptive Headings. The descriptive headings of the various
Sections of this Warrant are inserted for convenience only and do not constitute
a part of this Warrant. The language in this Warrant shall be construed as to
its fair meaning without regard to which party drafted this Warrant.
16. Governing Law. This Warrant shall be construed and enforced in
accordance with, and the rights of the parties shall be governed by, the laws of
the State of New York.
17. Survival of Representations, Warranties and Agreements. All
representations and warranties of the Company and the holder hereof contained
herein shall survive the Date of Grant, the exercise or conversion of this
Warrant (or any part hereof) or the termination or expiration of rights
hereunder. All agreements of the Company and the holder hereof contained herein
shall survive indefinitely until, by their respective terms, they are no longer
operative.
18. Remedies. In case any one or more of the covenants and agreements
contained in this Warrant shall have been breached, the holders hereof (in the
case of a breach by the Company), or the Company (in the case of a breach by a
holder), may proceed to protect and enforce their or its rights either by suit
in equity and/or by action at law, including, but not limited to, an action for
damages as a result of any such breach and/or an action for specific performance
of any such covenant or agreement contained in this Warrant.
-7-
19. No Impairment of Rights. The Company will not, by amendment of its
Articles or through any other means, avoid or seek to avoid the observance or
performance of any of the terms of this Warrant, but will at all times 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 of this Warrant against impairment.
20. Severability. The invalidity or unenforceability of any provision
of this Warrant in any jurisdiction shall not affect the validity or
enforceability of such provision in any other jurisdiction, or affect any other
provision of this Warrant, which shall remain in full force and effect.
21. Recovery of Litigation Costs. If any legal action or other
proceeding is brought for the enforcement of this Warrant, or because of an
alleged dispute, breach, default, or misrepresentation in connection with any of
the provisions of this Warrant, the successful or prevailing party or parties
shall be entitled to recover reasonable attorneys' fees and other costs incurred
in that action or proceeding, in addition to any other relief to which it or
they may be entitled.
22. Entire Agreement; Modification. This Warrant constitutes the entire
agreement between the parties pertaining to the subject matter contained in it
and supersedes all prior and contemporaneous agreements, representations, and
undertakings of the parties, whether oral or written, with respect to such
subject matter.
The Company has caused this Warrant to be duly executed and delivered
as of the Date of Grant specified above.
EASYLINK SERVICES CORPORATION
By
--------------------------
Title
-----------------------
Address:
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EXHIBIT A-1
NOTICE OF EXERCISE
To: [COMPANY] (the "Company")
1. The undersigned hereby:
[ ] elects to purchase________ shares of Common Stock of
the Company pursuant to the terms of the attached
Warrant, and tenders herewith payment of the purchase
price of such shares in full, or
[ ] elects to exercise its net issuance rights pursuant
to Section 10.2 of the attached Warrant with respect
to________shares of Common Stock.
2. Please issue a certificate or certificates representing
________ shares in the name of the undersigned or in such other name or names as
are specified below:
-------------------------------
(Name)
-------------------------------
-------------------------------
(Address)
3. The undersigned represents that the aforesaid shares are being
acquired for the account of the undersigned for investment and not with a view
to, or for resale in connection with, the distribution thereof and that the
undersigned has no present intention of distributing or reselling such shares,
all except as in compliance with applicable securities laws.
-------------------------------
(Signature)
---------------
(Date)
EXHIBIT C
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
4
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.
(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;
(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
6
(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
(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.
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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,
(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
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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.
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
9
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.
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.
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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.
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
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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.
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.
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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
