Exhibit 99.2
April 14, 2003
Xxxxxx Xxx Xxxx
000 Xxxxx Xxxx Xxxx
Xxx Xxxxxxxxxx, XX 00000
Dear Xxxxxx:
Reference is made to (i) the 12% senior note held by you (herein, "you"
or the "Holder") in the principal amount of $2,682,964 issued by EasyLink
Services Corporation ("EasyLink") (the "Note") and (ii) the Debt Exchange
Agreement between you and EasyLink dated as of April 10, 2003 (the "Debt
Exchange Agreement"). Capitalized terms used herein shall have the respective
meanings ascribed to such terms in the Note or the Debt Exchange Agreement.
The undersigned hereby agrees that, upon the closing of the Transfer
under the Debt Exchange Agreement, all accrued but unpaid interest on the Note
through April 1, 2003 ($283,504.37) shall capitalized into a promissory note in
the form attached hereto (the "Interest Note"). The calculation of all accrued
paid and unpaid interest on the Note from the original date of issuance is
attached hereto. EasyLink agrees that it shall execute and deliver the Interest
Note upon the closing of the Transfer.
If you are in agreement with the foregoing, kindly sign and deliver a
copy of this letter to the undersigned.
Very truly yours,
EASYLINK SERVICES CORPORATION
By s/Xxxxx Xxxxxxxx
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Name: Xxxxx Xxxxxxxx
Title: Executive Vice President and General Counsel
Accepted and Agreed as of the date first above written:
/s/Xxxxxx Xxx Xxxx
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Xxxxxx Xxx Xxxx
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
---------------
$283,504.37 Effective: April 1, 2003
FOR VALUE RECEIVED EASYLINK SERVICES CORPORATION, a Delaware
corporation ("Company") promises to pay to XXXXXX XXX XXXX ("Holder"), or its
registered assigns, the principal sum of Two Hundred Eighty Three Thousand Five
Hundred And Four Dollars and Thirty Seven Cents ($283,504.37), or such lesser
amount as shall equal the outstanding principal amount hereof together with
interest from April 1, 2003 on the unpaid principal balance at a rate equal to
12.0% per annum, computed on the basis of twelve 30 day months.
The following is a statement of the rights of Holder and the conditions
to which this Note is subject, and to which Holder, by the acceptance of this
Note, agrees:
1. Definitions. As used in this Note, the following capitalized terms
have the following meanings:
"Affiliate," with respect to any Person, means (i) any director,
officer or employee of such Person, (ii) any Person directly or indirectly
controlling or controlled by or under direct or indirect common control with
such Person, and (iii) any Person beneficially owning or holding 5% or more of
any class of voting securities of such Person or any corporation of which such
Person beneficially owns or holds, in the aggregate, 5% or more of any class of
voting securities. The term "control" means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of a Person, whether through the ownership of voting securities, by
contract or otherwise. The term "Affiliate," when used herein without reference
to any Person shall mean an Affiliate of Company.
"Bankruptcy Law" shall mean Title 11, U.S. Code or any similar federal,
state or foreign bankruptcy, insolvency or similar law.
"Business Day" means any day other than a Saturday, a Sunday or a day
on which commercial banks in New York City are required or authorized to be
closed.
"Capital Lease" means, at any time, a lease with respect to which the
lessee is required concurrently to recognize the acquisition of an asset and the
incurrence of a liability in accordance with GAAP.
"Capital Lease Obligation" means, as to any Person, the obligations of
such Person under a lease that are required to be classified and accounted for
as capital lease obligations under GAAP and, for purposes of this definition,
the amount of such obligations at the time any determination thereof is to be
made shall be the amount of the liability in respect of a capital lease that
would at such time be so required to be capitalized on a balance sheet in
accordance with GAAP.
"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.
"Default Rate" has the meaning given in Section 16 hereof.
"Event of Default" has the meaning given in Section 6 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;
(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
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 (including in the case of
stock, stockholder agreements, voting trust agreements and all similar
arrangements).
"Material Subsidiary" means any Subsidiary of the 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 Debt Exchange Agreement
dated as of April 10, 2003 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.
"Prepayment Notice" has the meaning given in Section 3 hereof.
"Subsidiary" means, as to any Person, any corporation, association or
other business entity in which such Person or one or more of its Subsidiaries or
such Person and one or more of its Subsidiaries owns sufficient equity or voting
interests to enable it or them (as a group) ordinarily, in the absence of
contingencies, to elect a majority of the directors (or Persons performing
similar functions) of such entity, and any partnership or joint venture if a 50%
or more interest in the profits or capital thereof is owned by such Person or
one or more of its Subsidiaries or such Person and one or more of its
Subsidiaries (unless such partnership can and does ordinarily take major
business actions without the prior approval of such Person or one or more of its
Subsidiaries). Unless the context otherwise clearly requires, any reference to a
"Subsidiary" is a reference to a Subsidiary of the Company.
"Swaps" means, with respect to any Person, payment obligations with
respect to interest rate swaps, currency swaps and similar obligations
obligating such Person to make payments, whether periodically or upon the
happening of a contingency. For the purposes of this Agreement, the amount of
the obligation under any Swap shall be the amount determined in respect thereof
as of the end of the then most recently ended fiscal quarter of such Person,
based on the assumption that such Swap had terminated at the end of such fiscal
quarter, and in making such determination, if any agreement relating to such
Swap provides for the netting of amounts payable by and to such Person
thereunder or if any such agreement provides for the simultaneous payment of
amounts by and to such Person, then in each such case, the amount of such
obligation shall be the net amount so determined.
"Trading Day" shall mean (a) if the applicable security is quoted on
the NASDAQ National Market, a day on which trades may be made thereon, (b) if
the applicable security is listed or admitted for trading on the NYSE or another
national securities exchange, a day on which the NYSE or such other national
securities exchange is open for business or (c) if the applicable security is
not so listed, admitted for trading or quoted, any day that is a Business Day.
2. Payments of Principal of and Interest On Note. Company shall pay the
principal hereof in twelve equal monthly installments, and shall pay all accrued
interest on the outstanding principal balance, commencing on June 1, 2004 and
thereafter on the first business day of each month thereafter until the Note is
paid in full.
3. Prepayment. Purchaser may prepay all outstanding principal, together
with all accrued interest and other amounts due under this Note so long as
Company gives Purchaser at least 30 days irrevocable written notice in advance
of such prepayment (the "Prepayment Notice").
4. Representations and Warranties of the 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.
5. Events of Default. An "Event of Default" shall exist if any of the
following conditions or events shall occur and be continuing:
(a) the 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) the 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) the 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 the Company from at least 25% in aggregate
principal amount of the then outstanding Note 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 the Company or any Material
Subsidiary (or the payment of which is Guaranteed by the Company or any of the
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 the Company from the Holder of the Note
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 the 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) the Company or any Material Subsidiary pursuant to or within the
meaning of any Bankruptcy Law: (i) commences a voluntary case or proceeding; or
(ii) consents to the entry of an order for relief against such company or any
Material Subsidiary in an involuntary case or proceeding; or (iii) consents to
the appointment of a Custodian of such company or any Material Subsidiary or for
all or any substantial part of its property; or (iv) makes a general assignment
for the benefit of its creditors; or (v) take corporate or similar action to
effect any of the foregoing; or
(g) a court of competent jurisdiction enters an order or decree under
any Bankruptcy Law that: (i) is for relief against the 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.
6. Rights of Holder upon Default.
(a) If an Event of Default with respect to the Company described in
Section 5(f) or (g) has occurred (other than an Event of Default described in
clause (i) of Section 5(f) or described in clause (v) of Section 5(f) by virtue
of the fact that such clause encompasses clause (i) of Section 5(f)), the Note
then outstanding shall automatically become immediately due and payable. If any
other Event of Default has occurred and is continuing, the holder of the Note at
the time outstanding may at any time at its or their option, by notice or
notices to the Company, declare the Note then outstanding to be immediately due
and payable.
(b) Notwithstanding the foregoing, if any Event of Default described in
Section 5(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 the 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 6 (a) above shall be deemed automatically
annulled and rescinded. Upon the Note becoming due and payable under Section 6,
whether automatically or by declaration, the Note will forthwith mature and the
entire unpaid principal amount of the Note, 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 have become or have been declared
immediately due and payable under Section 6, the holder of the Note at the time
outstanding may proceed to protect and enforce the rights of the holder 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 Note or 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.
7. Representations and Warranties of Purchaser. By its acceptance of
this Note, Holder makes the following representations and warranties:
(a) 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 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 has 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 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.
8. Successors and Assigns. Subject to the restrictions on transfer
described in Sections 9 and 10 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.
9. Waiver and Amendment. Any provision of this Note may be amended,
waived or modified upon the written consent of Company and Holder.
10. Transfer of this Note. With respect to any offer, sale or other
disposition of this Note, Holder will give written notice to Company prior
thereto, describing briefly the manner thereof, together with, if requested by
the 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 11 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 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.
11. 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. 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 Operative Documents 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.
13. Payment. Payment shall be made in lawful tender of the United
States.
14. Default Rate; Usury. During any period in which an Event of Default
has occurred and is continuing, Company shall pay interest on the unpaid
principal balance hereof at a rate per annum equal to the rate otherwise
applicable hereunder plus four percent (4%). In the event any interest is paid
on this Note which is deemed to be in excess of the then legal maximum rate,
then that portion of the interest payment representing an amount in excess of
the then legal maximum rate shall be deemed a payment of principal and applied
against the principal of this Note.
15. 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.
16. 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.
17. Severablity. If one or more provisions of this Note are held to be
unenforceable under applicable law, such provision(s) shall be excluded from
this Note and the balance of the Note shall be interpreted as if such
provision(s) were so excluded and shall be enforceable in accordance with its
terms.
18. 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 Florida, without regard to the conflicts of law
provisions of the State of Florida, 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: /s/ Xxxxxx Xxxxxx
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Xxxxxx Xxxxxx, Chairman
