Exhibit 99.5
MODIFICATION AGREEMENT
THIS MODIFICATION AGREEMENT (the "Agreement") is made effective as of
June 1, 2001 (the "Effective Date"), by and among Pentech Financial Services,
Inc. ("Pentech") and EasyLink Services Corporation (formerly ▇▇▇▇.▇▇▇, Inc. and
herein referred to as "EasyLink").
W I T N E S S E T H:
A. Pentech and EasyLink entered into certain lease agreements (all of
such lease agreements and all amendments and lease schedules thereto are
collectively referred to herein as the "Lease").
B. Pursuant to the Lease, EasyLink leased certain equipment from
Pentech (the "Leased Equipment) as more fully described in the Lease.
C. EasyLink has requested that Pentech modify certain terms and
conditions of the Lease as set forth herein and forbear from exercising its
rights and remedies under the Lease, and Pentech has agreed to do so for the
period provided herein and subject to EasyLink's strict compliance with the
terms and conditions set forth herein; and
D. Pentech has agreed to a modification of the payment terms of the
Lease as set forth herein.
NOW, THEREFORE, for and in consideration of the mutual covenants set
forth herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. Recitals. The foregoing recitals are true and correct and are hereby
incorporated into the text of this Agreement by this reference.
2. Ratification, Reaffirmation and Acknowledgement. EasyLink
acknowledges, ratifies, reaffirms, confirms and agrees to all of the terms,
covenants, conditions set forth in the Lease and confirms that $1,777,000
(hereinafter collectively referred to as the "Indebtedness") is due and payable
by EasyLink to Pentech as of June 30, 2001 pursuant to the terms of the Lease
without offset, counterclaim or defenses.
3. Representations of EasyLink. EasyLink hereby represents and warrants
to Pentech the following:
(a) Neither the execution of this Agreement, nor the consummation
of the terms thereof by EasyLink will constitute a violation of, or will
conflict with, any agreement entered into by any of said parties, or any order,
decree or judgment made against any of the parties.
(b) There is no pending action or proceeding against or involving
the Leased Equipment.
(c) With the exception of the payment terms in the Lease, Pentech
may under the terms of the Lease exercise all rights and remedies under the
Lease.
(d) EasyLink, recognizing that Pentech has changed its position
and will change its position in reliance on the foregoing representations,
acknowledgments, and warranties of EasyLink, further agrees that:
(i) If EasyLink should default under the terms of this
Agreement and the default is not cured within 7 days after notice from
Pentech, Pentech may exercise its rights and remedies as provided for
in the Lease; and
(ii) EasyLink will not attempt to delay or frustrate Pentech's
exercise its rights and remedies under the Lease, nor raise any
defenses to same.
(e) The Lease is in full force and effect as of the date hereof,
is enforceable according to its terms, and there are no defenses or offsets to
the collection by Pentech of sums due thereunder.
4. Representations, Covenants and Warranties of Pentech and EasyLink.
Pentech and EasyLink hereby jointly and severally represent and warrant as
follows:
(a) All terms and conditions of the Lease not otherwise modified
herein shall continue in full force and effect during the term of this
Agreement.
(b) References in this Agreement to the exercise of rights and
remedies provided for in the Lease shall mean those rights and remedies in the
Lease with the exception of the Indebtedness, which shall be governed by the
Forbearance Note described below.
5. Forbearance Note. On the date hereof, EasyLink shall execute and
deliver to Pentech a promissory note in the principal amount of $1,777,000 (the
"Forbearance Note). The Forbearance Note shall be payable on demand after
October 31, 2001, and shall accrue interest at the rate of 12% per annum
beginning from June 30, 2001. A copy of the form of the Forbearance Note is
attached as Exhibit A. The Forbearance Note shall continue to be secured by the
Leased Equipment pursuant to the Lease, provided that Pentech shall release such
security interest in any Leased Equipment that Pentech sells to EasyLink
pursuant to Section 6 or otherwise.
6. Terms and Conditions.
(a) EasyLink will purchase, for 17.5% of the original equipment
cost (the "Equipment Purchase Payment"), all of the Leased Equipment on or
before October 31, 2001. The Equipment Purchase Payment shall be credited
against the principal of the Forbearance Note. For each business day that the
Equipment Purchase Payment is late, EasyLink will pay Pentech a liquidated
damage amount equal to 2.5% of the amount of the payment shortfall. EasyLink, at
its option, may pay the liquidated damage amount in cash or shares of EasyLink
Class A common stock, par value $.01 per share (such shares to be valued at the
average of the closing prices of EasyLink's Class A common stock for 10 trading
days ending one week before
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the penalty payment date or, if on any trading day there is no closing price
then the closing price for such day shall be deemed to be the average of the
closing bid and asked prices on such day).
(b) On or before September 22, 2001, EasyLink will grant Pentech a
lien on EasyLink's assets to secure the obligations under the Forbearance Note
subject to the following provisions:
(1) the lien will not cover working capital and will permit the
issuance of up to $25 million of debt with more senior Liens to raise
new cash capital,
(2) the lien will also be subordinate to existing Liens and Permitted
Liens (as defined below),
(3) the lien under the security agreement will be pari pasu with other
debt secured by such lien, and
(4) EasyLink will arrange for a collateral agent to manage liens for
all parties under such agreement, both existing and new, such as new
trade and other creditors.
As used herein, "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.
As used herein, "Permitted Liens" means:
(1) Liens securing the Note;
(2) Liens securing Purchase Money Indebtedness, provided such
Liens do not extend to any assets of the Company other than the assets so
acquired;
(3) Liens on property of a Person existing at the time such Person
is merged into or consolidated with any of the Company, provided, that such
Liens were not incurred in connection with, or in contemplation of, such merger
or consolidation;
(4) Liens on property existing at the time of acquisition thereof
by any of the Company; provided that such Liens were not incurred in connection
with, or in contemplation of, such acquisition and do not extend to any assets
of any of the Company other than the property so acquired;
(5) Liens to secure the performance of statutory obligations,
surety or appeal bonds or performance bonds, or landlords', carriers',
warehousemen's, mechanics', suppliers', materialmen's or other like Liens, in
any case incurred in the ordinary course of business and with respect to amounts
for which an adequate reserve or other appropriate provision, if any, as is
required by GAAP shall have been made therefor;
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(6) Liens existing on the date of this Agreement;
(7) Liens for taxes, assessments or governmental charges or claims
that are not yet delinquent or that are being contested in good faith by
appropriate proceedings promptly instituted and diligently concluded; provided
that any reserve or other appropriate provision as shall be required in
conformity with GAAP shall have been made therefor;
(8) Liens incurred in the ordinary course of business of the
Company with respect to obligations that do not exceed $5 million in principal
amount in the aggregate at any one time outstanding;
(9) Liens securing Indebtedness issued in exchange for, or the
proceeds of which are used to extend, refinance, renew, replace, substitute or
refund in whole or in part Indebtedness that is secured by such Liens; provided
that such Liens shall not extend to assets other than the assets that secure
such Indebtedness being refinanced;
(10) any interest or title of a lessor under any Capital Lease
Obligation; and
(11) extensions, renewals or refundings of any Liens referred to
in clauses (1) through (10) above or this clause (11), provided that any such
extension, renewal or refunding does not extend to any assets or secure any
Indebtedness not securing or secured by the Liens being extended, renewed or
refinanced.
As used herein, "Purchase Money Indebtedness" means:
(1) Indebtedness of the Company 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, provided that the amount of Indebtedness thereunder does not exceed
100% of the purchase cost of such assets; or
(2) Indebtedness of the Company which refinances indebtedness
referred to in clause (1) of this definition, provided that such refinancing
satisfies the proviso of such clause (1).
7. Forbearance and Waiver. Provided that (i) EasyLink executes the
Forbearance Note, (ii) EasyLink complies with all terms and conditions of this
Agreement, and (iii) no additional default occurs under the Lease, then Pentech
agrees that it shall forbear from exercising its remedies under the Lease until
October 31, 2001 (the "Forbearance Period"). In the event EasyLink at any time
fails to comply with clause (i), (ii) or (iii) hereinabove, Pentech shall be
entitled to immediately exercise any and all rights it may have under this
Agreement and the Lease and may declare the Forebearance Note to be immediately
due and payable.
Nothing in this paragraph or in any other provision of this Agreement
shall be deemed to be a waiver of any of Pentech's rights under the Lease or
otherwise available to Pentech at law or in equity. In addition, nothing in this
Agreement shall be construed to release EasyLink from any liability under the
Lease. Pentech hereby expressly reserves all such remedies.
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8. Anti-Novation. It is the intent of the parties that this Agreement
shall not constitute a novation, and shall in no way adversely affect the lien
priority of the Lease, to the extent applicable. In the event that this
Agreement, or any part hereof, shall be construed by a court of competent
jurisdiction as operating to affect the lien priority of the Lease over the
claim which would otherwise be subordinate thereto, then to the extent that
third parties acquiring an interest in such property between the time of
execution of the Lease and the execution hereof are hereby prejudiced, this
Agreement or such portion hereof as shall be so construed, shall be void and of
no force and effect and this Agreement shall constitute, as to that portion, a
subordinate lien on the collateral incorporating by reference the terms of the
Lease, and which Lease shall then be enforced pursuant to the terms therein
contained, independent of this Agreement; provided, however, that
notwithstanding the foregoing, the parties hereto as between themselves shall be
bound by all terms and conditions hereof until all indebtedness evidenced by the
Lease has been satisfied.
9. Default. EasyLink acknowledges that but for this Agreement it would
be in default under the Lease and that, upon default under this Agreement or
upon further default under the Lease, Pentech may immediately exercise any and
all rights provided to Pentech under the Lease and applicable law, including,
without limitation, an action on the Forbearance Note against EasyLink. EasyLink
hereby acknowledges and admits that in any action on the Forebearance Note
commenced after October 31, 2001, Pentech shall be entitled to a judgment as a
matter of law, and EasyLink hereby waives, abandons and relinquishes all
defenses thereto and agrees not to seek or to prevent either the entry of a
final judgment against EasyLink for payment of the indebtedness due under the
Lease, or any post-judgment remedy allowed by law. EasyLink hereby releases
Pentech and its officers, directors, shareholders, agents, attorneys, successors
and assigns, from any and all claims, actions, demands, and causes of actions,
whether in contract, tort or otherwise, existing as of the date of this
Agreement which relate to or arise from the Lease, or pertaining directly or
indirectly thereto. Further, upon the occurrence of a Default under this
Agreement, Pentech shall be entitled to exercise any and all rights and remedies
against EasyLink by virtue of the defaults under the Lease existing as of the
date hereof, EasyLink acknowledging and agreeing that Pentech shall not be
deemed to have waived or relinquished such rights or remedies by reason of
entering into this Agreement.
10. Restructure. If EasyLink (i) is not in material default under this
Agreement or any of the non-payment terms of the Lease; (ii) successfully raises
a minimum of $10,000,000.00 of capital by no later than October 31, 2001 (the
"Financing Condition"); and (iii) enters into a restructuring arrangement with
AT&T Corp. with respect to its outstanding note in the original principal amount
of $35 million, ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇ with respect to his outstanding note in the
original principal amount of $9.2 million and lessors holding at least 90% of
its equipment lease obligations on terms and conditions taken as a whole that
are not more favorable to such parties than the terms hereof (the "Other
Creditor's Condition"), then the Lease shall be terminated and Pentech will
convert the Forbearance Note into the Note, the Shares, the Warrant and the
other rights provided below and EasyLink shall enter the Registration Rights
Agreement on the following terms and conditions:
(a) EasyLink shall execute and deliver to Pentech a convertible
promissory note in the principal amount of $519,000 ("Note"). The Note shall be
in the form of Exhibit B
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attached hereto. The initial conversion price of the Note shall be appropriately
adjusted in the event the Company shall effect a stock split, stock dividend or
stock combination on or before the closing. The Equipment Purchase Payment shall
continue to be secured by the Leased Equipment pursuant to the Lease, provided
that Pentech shall release such security interest in any Leased Equipment that
Pentech sells to EasyLink pursuant to Section 6 or otherwise. The Note shall be
secured by the lien under the security agreement entered into pursuant to
Section 6(d) above on the same terms and conditions. In addition to the payments
on the Note, on the third anniversary of the date of issuance of the Note,
EasyLink shall make a balloon payment to Pentech in the amount of $430,000.
(b) EasyLink shall deliver 518,952 shares of EasyLink's Class A
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 518,952 warrants to purchase EasyLink's
Class A common stock ("Warrant") to Pentech. The Warrant 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. Such initial exercise price and
the number of shares issuable upon exercise of the Warrant 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 Warrant. A copy of the
form of Warrant in substantially the form to be used is attached as Exhibit C.
(d) EasyLink and Pentech will execute an Accession Agreement
pursuant to which Pentech shall become a party to the registration rights
agreement which will obligate EasyLink to file a registration statement covering
the resale of the Shares and the shares issuable upon conversion of the Note and
upon exercise of the Warrants within 45 days from the closing of the
restructuring and to use all reasonable commercial efforts to cause such
registration statement to become effective as soon as practicable thereafter. A
copy of the form of Registration Rights Agreement is attached as Exhibit D.
(e) Pentech 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 Pentech
within two (2) business days of Pentech having made request for the agreement.
11. 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 conversion of the Note (the
"Conversion Shares") or 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, the Conversion Shares 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
conversion of the Note or exercise of the
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Warrant, unless the Conversion or 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
Conversion or 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, the Conversion Shares 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, Conversion Shares or Warrant
Shares. With respect to any offer, sale or other disposition of any of the
Securities, the Conversion Shares 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, the Conversion
Shares 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, Conversion Shares 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 11(b) that the opinion of counsel for the holder
or other evidence is not reasonably satisfactory to the Company, the Company
shall so notify the holder promptly with details thereof after such
determination has been made. Notwithstanding the foregoing, the Securities, the
Conversion Shares 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, Conversion Shares 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, the Conversion Shares or the Warrant Shares
nor the requirements of Section 11(b) above shall apply to any transfer of, or
grant of a security interest in, the Securities, the Conversion Shares 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.
12. Expenses. EasyLink agrees to pay all costs, fees, and expenses of
Pentech in the enforcement of this Agreement.
13. Integration. This Agreement, together with the Lease, constitutes
the entire agreement and understanding among the parties relating to the subject
matter hereof, and supersedes all prior proposals, negotiations, agreements, and
understandings related to this matter.
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14. Severability. The provisions of this Agreement are intended to be
severable. If any of the provisions of this initial Agreement shall be held
invalid or unenforceable in whole or in part in any jurisdiction, such provision
shall, as to such jurisdiction, be ineffective to the extent of such invalidity
or enforceability without in any matter affecting the validity or enforceability
of such provision in any other jurisdiction or the remaining provisions of this
Agreement in any jurisdiction.
15. Governing Law. This Agreement shall be governed and construed in
accordance with the subsequent laws of the State of New York, without regard to
the choice of law or principles of such state.
16. Survival. All representations, warranties, covenants, agreements,
undertakings, waivers and releases contained herein shall survive the
termination of the forbearance period and payment in full of the obligations of
EasyLink.
17. Amendment. No amendment, modification, rescission, waiver or
release of any provision of this Agreement shall be effective unless the same
shall be in writing and signed by the parties hereto.
18. Venue; Jurisdiction; Jury Trial Waiver. EasyLink and Pentech each
hereby irrevocably: (1) consent to the jurisdiction of any state or federal
court sitting in the City of New York, Borough of Manhattan, State of New York;
(2) agree that venue shall be proper in any court of competent jurisdiction
located in the City of New York, Borough of Manhattan, State of New York; and
(3) waive the right to trial by jury on any controversy arising out of or
relating to this Agreement or the Lease.
[REST OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties hereto have signed this Agreement as of
the effective date.
Attest: Pentech Financial Services, Inc.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------
Print Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------ -----------------
Print Name: Its: President, COO
------------------------- ---------------
Attest: EasyLink Services Corporation
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
------------------------
Print Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
------------------------------------ --------------
Print Name: Its: Chairman
------------------------- ---------
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EXHIBIT A
PROMISSORY NOTE
Date of Note: June 30, 2001
Amount of Note: $1,777,000.00
FOR VALUE RECEIVED, the undersigned ("Maker") does hereby covenant and promise
to pay to the order of Pentech Financial Services, Inc., or its successors or
assigns, ("Lender"), at [INSERT ADDRESS] or at such other place as Lender may
designate to Maker in writing from time to time, in legal tender of the United
States, the sum of One Million Seven Hundred Seventy Seven Thousand Dollars
($1,777,000.00), together with all accrued interest, which shall be due and
payable upon the following terms and conditions contained in this Note.
1. Interest Rate: This Note shall bear interest commencing August 1,
2001 computed at the rate of twelve percent (12%) per annum on the outstanding
principal balance. In all cases, interest shall be calculated on the basis of a
year of 360 days with twelve 30-day months (i.e., interest will accrue and be
paid for each full calendar month based on 1/12 of the annual interest and on
the actual number of calendar days elapsed for any partial month). Interest
shall be due and payable on the date when principal of the Note is due and
payable.
2. Term: The Note shall be due and payable in full on demand from
Lender to Maker (the "Maturity Date"), which demand may be made at any time
after October 31, 2001.
3. Payment Terms The entire outstanding principal balance plus any
accrued but unpaid interest thereon shall be due and payable in full on the
Maturity Date.
4. Prepayment: This Note may be prepaid, in whole or in part, at any
time during the term hereof.
5. Default Interest Rate: All delinquent principal and installments of
interest shall bear interest from the date that said payments are due at a rate
equal to seventeen percent (17%) per annum calculated in the same manner as set
forth in Section 1.
6. Acceleration: Should any default occur in the payment as stipulated
above of either the interest or principal, or should a default occur under that
certain Modification Agreement executed by and between Lender and Maker dated of
even date herewith (the "Modification Agreement"), and such default is not cured
with fifteen (15) days after Lender provides notice to Maker, then in either
event, the principal of this Note or any unpaid part thereof and all accrued
interest thereon shall, in the sole discretion of Lender, at once become due and
payable and may be collected forthwith without notice to the undersigned,
regardless of the stipulated date of maturity. However, Lender may, in the sole
discretion of Lender, accept payments made by Maker after any default has
occurred, without waiving any of Lender's rights herein.
7. Costs: In the event that this Note is collected by law or through
attorneys at law, or under advice therefrom (whether such attorneys are
employees of Lender or an affiliate of Lender or are outside counsel), Maker and
any endorser, guarantor or other person primarily or
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secondarily liable for payment hereof hereby, severally and jointly agree to pay
all costs of collection, including reasonable attorneys' fees including charges
for paralegals and others working under the direction or supervision of Lender's
attorneys, whether or not suit is brought, and whether incurred in connection
with collection, trial, appeal, bankruptcy or other creditors' proceedings or
otherwise.
8. Documentary Stamp Tax Liability. The Maker shall pay any and all
documentary stamp tax and/or any other excise tax due and payable on this Note.
The Maker shall further indemnify and save harmless Lender from any documentary
stamp tax or intangibles tax assessed by the State of New York, including,
without limitation, any penalties and interest (the "Taxes"). The Maker hereby
waives any right that it may have now or in the future to raise nonpayment of
the Taxes as a defense to the collection of this Note.
9. Usury: Nothing herein contained, nor any transaction related
thereto, shall be construed or so operate as to require Maker or any person
liable for the repayment of same, to pay interest in an amount or at a rate
greater than the maximum allowed by applicable law. Should any interest or other
charges paid by Maker, or any parties liable for the payment of the loan made
pursuant to this Note, result in the computation or earning of interest in
excess of the maximum legal rate of interest permitted under the law in effect
while said interest is being earned, then any and all of that excess shall be
and is waived by Lender, and all that excess shall be automatically credited
against and in reduction of the principal balance, and any portion of the excess
that exceeds the principal balance shall be paid by Lender to Maker or any
parties liable for the payment of the loan made pursuant to this Note so that
under no circumstances shall the Maker, or any parties liable for the payment of
the loan hereunder, be required to pay interest in excess of the maximum rate
allowed by applicable law.
10. Continuing Security Interest: This Note shall continue to be
secured by the Leased Equipment pursuant to the Lease (as such terms are defined
in the Modification Agreement).
11. Jurisdiction: The laws of the State of New York shall govern the
interpretation and enforcement of this Note. In the event that legal action is
instituted to collect any amounts due under, or to enforce any provision of,
this instrument, Maker and any endorser, guarantor or other person primarily or
secondarily liable for payment hereof consent to, and by execution hereof submit
themselves to, the jurisdiction of the courts of the Borough of Manhattan, City
and and State of New York, and, notwithstanding the place of residence of any of
them or the place of execution of this instrument, such litigation may be
brought in or transferred to a court of competent jurisdiction in and for the
Borough of Manhattan, City and and State of New York.
12. Miscellaneous:
a. TIME IS OF THE ESSENCE OF THIS NOTE.
b. It is agreed that the granting to Maker or any other party of
an extension or extensions of time for the payment of any sum or sums
due under this Note or for the performance of any covenant or
stipulation thereof or the taking of other or additional security shall
not in any way release or affect the liability of Maker under this
Note.
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c. This Note may not be changed orally, but only by an agreement
in writing, signed by the party against whom enforcement of any waiver,
change, modification or discharge is sought.
d. All parties to this Note, whether Maker, principal, surety,
guarantor or endorser, hereby waive presentment for payment, demand,
notice, protest, notice of protest and notice of dishonor.
e. Anything herein to the contrary notwithstanding, the
obligations of Maker under this Note shall be subject to the limitation
that payments of interest shall not be required to the extent that
receipt of any such payment by Lender would be contrary to provisions
of law applicable to Lender limiting the maximum rate of interest which
may be charged or collected by Lender.
f. Maker acknowledges that Lender shall have no obligation
whatsoever to renew, modify or extend this Note or to refinance the
indebtedness under this Note upon the maturity thereof, except as
specifically provided herein.
g. Lender shall have the right to accept and apply to the
outstanding balance of this Note any and all payments or partial
payments received from Maker after the due date therefor, whether this
Note has been accelerated or not, without waiver of any of Lender's
rights to continue to enforce the terms of this Note and to seek any
and all remedies provided for herein or in any instrument securing the
same, including, but not limited to, the right to foreclose on such
security.
h. The term "Maker" as used herein, in every instance shall
include the makers of this Note, and its heirs, executors,
administrators, successors, legal representatives and assigns, and
shall denote the singular and/or plural, the masculine and/or feminine,
and natural and/or artificial persons whenever and wherever the context
so requires or admits.
i. If more than one party executes this Note, all such parties
shall be jointly and severally liable for the payment of this Note.
13. Waiver of Jury Trial: MAKER AND LENDER HEREBY KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT EITHER MAY HAVE TO A TRIAL BY JURY
IN RESPECT OF ANY LITIGATION BASED HEREON OR ARISING OUT OF, UNDER OR IN
CONNECTION WITH THIS NOTE AND ANY AGREEMENT CONTEMPLATED TO BE EXECUTED IN
CONJUNCTION HEREWITH, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS
(WHETHER VERBAL OR WRITTEN) OR ACTIONS OF EITHER PARTY. THIS PROVISION IS A
MATERIAL INDUCEMENT FOR LENDER ENTERING INTO THIS AGREEMENT.
3
IN WITNESS WHEREOF, Maker has duly executed this Note effective the day
and year first above written.
MAKER:
EASYLINK SERVICES CORPORATION
By:
---------------------------------------
Print Name:
-------------------------------
Title:
------------------------------------
4
EXHIBIT B
THIS NOTE AND THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED. THEY MAY NOT BE SOLD, OFFERED FOR SALE,
PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS
TO THE SECURITIES UNDER SAID ACT OR AN OPINION OF COUNSEL SATISFACTORY TO THE
CORPORATION THAT SUCH REGISTRATION IS NOT REQUIRED.
EASYLINK SERVICES CORPORATION
CONVERTIBLE PROMISSORY NOTE
$519,000 Effective: June 1, 2001
FOR VALUE RECEIVED EASYLINK SERVICES CORPORATION, a Delaware
corporation ("Company") promises to pay to PENTECH FINANCIAL SERVICES, INC.
("Holder"), or its registered assigns, the principal sum of FIVE HUNDRED
NINETEEN THOUSAND DOLLARS ($519,000), 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 a rate equal to 12.0% per annum, computed on the
basis of twelve 30 day months, payable as provided herein.
The following is a statement of the rights of Holder and the conditions
to which this Note is subject, and to which Holder, by the acceptance of this
Note, agrees:
Definitions. As used in this Note, the following capitalized terms have
the following meanings:
"Affiliate," with respect to any Person, means (i) any director,
officer or employee of such Person, (ii) any Person directly or indirectly
controlling or controlled by or under direct or indirect common control with
such Person, and (iii) any Person beneficially owning or holding 5% or more of
any class of voting securities of such Person or any corporation of which such
Person beneficially owns or holds, in the aggregate, 5% or more of any class of
voting securities. The term "control" means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of a Person, whether through the ownership of voting securities, by
contract or otherwise. The term "Affiliate," when used herein without reference
to any Person shall mean an Affiliate of Company.
"Bankruptcy Law" shall mean Title 11, U.S. Code or any similar federal,
state or foreign bankruptcy, insolvency or similar law.
"Business Day" means any day other than a Saturday, a Sunday or a day
on which commercial banks in New York City are required or authorized to be
closed.
"Capital Lease" means, at any time, a lease with respect to which the
lessee is required concurrently to recognize the acquisition of an asset and the
incurrence of a liability in accordance with GAAP.
"Capital Lease Obligation" means, as to any Person, the obligations of
such Person under a lease that are required to be classified and accounted for
as capital lease obligations under GAAP and, for purposes of this definition,
the amount of such obligations at the time any determination thereof is to be
made shall be the amount of the liability in respect of a capital lease that
would at such time be so required to be capitalized on a balance sheet in
accordance with GAAP.
"Common Stock" means Class A common stock, par value $.01 per share, of
Company or any shares into which such shares have been changed pursuant to any
recapitalization, merger, consolidation or similar event.
"Company" includes the corporation initially executing this Note and
any Person which shall succeed to or assume the obligations of Company as
permitted under this Note.
"Conversion Price" has the meaning given in Section 9.1 hereof.
"Conversion Shares" has the meaning given in Section 9.6 (c) hereof.
"Custodian" shall mean any custodian, receiver, trustee, assignee,
sequester, liquidator or similar official under any Bankruptcy Law.
"Daily Market Price" means the last reported per share sale price,
regular way on such day, or, if no sale takes place on such day, the average of
the reported closing per share bid and asked prices on such day, regular way, in
either case as reported on the NASDAQ National Market or, if such Class A common
stock is not quoted or admitted to trading on such quotation system, on the
principal national securities exchange or quotation system on which such Class A
common stock may be listed or admitted to trading or quoted, or, if not listed
or admitted to trading or quoted on any national securities exchange or
quotation system, the average of the closing per share bid and asked prices of
such Class A common stock on the over-the-counter market on the day in question
as reported by the National Quotation Bureau Incorporated, or similar generally
accepted reporting service, or, if not so available in such manner, as furnished
by any NASDAQ member firm selected from time to time by the Board of Directors
of Company for that purpose, or, if not so available in such manner, as
otherwise determined in good faith by the Board of Directors of Company.
"Default Rate" has the meaning given in Section 16 hereof.
"Event of Default" has the meaning given in Section 6 hereof.
"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
2
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);
3
(f) Swaps of such Person; and
(g) any Guaranty of such Person with respect to liabilities of a
type described in any of clauses (a) through (f) hereof.
Indebtedness of any Person shall include all obligations of such Person
of the character described in clauses (a) through (g) to the extent such Person
remains legally liable in respect thereof notwithstanding that any such
obligation is deemed to be extinguished under GAAP.
"Lien" means, with respect to any Person, any mortgage, lien, pledge,
charge, security interest or other encumbrance, or any interest or title of any
vendor, lessor, lender or other secured party to or of such Person under any
conditional sale or other title retention agreement or Capital Lease, upon or
with respect to any property or asset of such Person.
"Material Subsidiary" means any Subsidiary of Company which at the date
of determination is a "significant subsidiary" as defined in Rule 1-02(w) of
Regulation S-X under the Securities Act and the Exchange Act (as such Regulation
is in effect on the date hereof).
"Obligations" shall mean and include all loans, advances, debts,
liabilities and obligations, howsoever arising, owed by Company to Holder of
every kind and description (whether or not evidenced by any note or instrument
and whether or not for the payment of money), now existing or hereafter arising
under or pursuant to the terms of this Note and the other Operative Agreements,
including, all interest, fees, charges, expenses, attorneys' fees and costs and
accountants' fees and costs chargeable to and payable by Company hereunder and
thereunder, in each case, whether direct or indirect, absolute or contingent,
due or to become due, and whether or not arising after the commencement of a
proceeding under Title 11 of the United States Code (11 U. S. C. Section 101 et
seq.), as amended from time to time (including post-petition interest) and
whether or not allowed or allowable as a claim in any such proceeding.
"Operative Agreements" shall mean that certain Modification Agreement
dated as of June 1, 2001 by and between Holder and Company and any and all
agreements and documents to be executed and delivered in connection therewith.
"Person" means an individual, partnership, corporation, limited
liability company, association, trust, unincorporated organization, or a
government or agency or political subdivision thereof.
"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.
"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
4
or capital thereof is owned by such Person or one or more of its Subsidiaries or
such Person and one or more of its Subsidiaries (unless such partnership can and
does ordinarily take major business actions without the prior approval of such
Person or one or more of its Subsidiaries). Unless the context otherwise clearly
requires, any reference to a "Subsidiary" is a reference to a Subsidiary of
Company.
"Swaps" means, with respect to any Person, payment obligations with
respect to interest rate swaps, currency swaps and similar obligations
obligating such Person to make payments, whether periodically or upon the
happening of a contingency. For the purposes of this Agreement, the amount of
the obligation under any Swap shall be the amount determined in respect thereof
as of the end of the then most recently ended fiscal quarter of such Person,
based on the assumption that such Swap had terminated at the end of such fiscal
quarter, and in making such determination, if any agreement relating to such
Swap provides for the netting of amounts payable by and to such Person
thereunder or if any such agreement provides for the simultaneous payment of
amounts by and to such Person, then in each such case, the amount of such
obligation shall be the net amount so determined.
"Trading Day" shall mean (a) if the applicable security is quoted on
the NASDAQ National Market, a day on which trades may be made thereon, (b) if
the applicable security is listed or admitted for trading on the NYSE or another
national securities exchange, a day on which the NYSE or such other national
securities exchange is open for business or (c) if the applicable security is
not so listed, admitted for trading or quoted, any day that is a Business Day.
2. Interest. Accrued interest on this Note shall be due and payable
quarterly, commencing on the first business day of the month immediately
following 90 days after the date of issuance hereof. Interest on any portion of
the principal hereof that is prepaid shall be paid on the date of such
prepayment as provided herein. EasyLink may make interest payments in cash or
shares of Common Stock, provided that (i) if paid in Common Stock, the Fair
Market Value of the Common Stock must be equal to 120% of the cash interest
payment due and (ii) payment in shares of Common Stock will not be permitted if
Company's free cash balance on the interest payment date is in excess of $20
million. The "Fair Market Value" of the a share of Common Stock, for purposes of
this Section 2, shall be equal to the average of the closing market prices of
the Common Stock during the 10 trading days ending one week before the interest
payment date (or, if there shall be no such closing price on any day, the
closing market price on such day shall be deemed to be the average of the
closing bid and asked prices on such day).
3. Scheduled Installments of Principal; Mandatory Prepayment. (a)
Company shall make equal semi-annual installment payments of principal in the
amount of $74,143 (subject to proportionate reduction as a result of a
prepayment) commencing on the second anniversary of the date of the Restructure
Note and semi-annually thereafter until paid in full (7 semi-annual payments in
all).
(b) On or before June 30, 2002, up to 100% of the principal hereof and
accrued interest hereon shall be subject to mandatory prepayment upon the 5th
business day after the closing of one or more equity or equity-linked financings
in which Company raises cash in an aggregate cumulative amount in excess of $10
million ("Eligible Financings"). In such event, Company shall prepay the
5
note with (i) cash in an amount (up to 50% of principal hereof plus accrued
interest hereon) equal to 1.04% of the net proceeds in excess of $10 million
received in one or more Eligible Financings and (ii) Common Stock having a Fair
Market Value equal to the cash payment. For example, if the Holder's share of
the cash proceeds is $100,000, then Company would be obligated to prepay
$200,000 of the note, $100,000 in cash and $100,000 in stock having a Fair
Market value equal to $100,000. The "Fair Market Value" of the shares of Common
Stock, for purposes of this Section 3, shall be equal to the average of the
closing market prices of the Common Stock during the 10 trading days ending one
week before the prepayment date (or, if there shall be no such closing price on
any day, the closing market price on such day shall be deemed to be the average
of the closing bid and asked prices on such day).
4. Optional Prepayment. At any time and from time to time on or before
June 30, 2002, Company may prepay all or a portion of the outstanding principal
hereof and accrued interest hereon upon the same terms and conditions (that is,
cash and Common Stock) as set forth in Section 3 above for mandatory prepayment,
so long as Company gives the Holder at least 30 days irrevocable written notice
in advance of such prepayment. At any time and from time to time, Company may
prepay all or a portion of the outstanding principal hereof, together with
accrued interest hereon, so long as Company gives the Holder at least 30 days
irrevocable written notice in advance of such prepayment. The Company's decision
to prepay this Note will not, in any way, affect the Holder's right of
conversion on or before the prepayment as provided in Section 9 herein.
5. Representations and Warranties of Company. The Company hereby
represents and warrants to the Holder that:
(a) This Note, when issued, sold and delivered for the
consideration provided for herein, will be duly and validly issued, fully paid
and nonassessable.
(b) The offer and sale of this Note solely to Holder is exempt
from the registration and prospectus delivery requirements of the Securities Act
of 1933, as amended (the "Securities Act") and the securities registration and
qualification requirements of the currently effective provisions of the
securities laws of all applicable states.
(c) The Conversion Shares have been duly authorized and reserved
and, if and when issued upon conversion of the Note, in accordance with the
terms hereof, will be validly issued, fully paid and non-assessable, and the
issuance of the Conversion Shares will not be subject to any preemptive or
similar rights.
6. Events of Default. An "Event of Default" shall exist if any of the
following conditions or events shall occur and be continuing:
(a) Company defaults in the payment of any interest on the Note
when the same becomes due and payable and the default continues for a period of
30 days; or
(b) Company defaults in the payment of any principal or premium,
if any, on the Note when the same becomes due and payable, whether at maturity
or otherwise; or
6
(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) Company or any Material Subsidiary pursuant to or within the
meaning of any Bankruptcy Law: (i) commences a voluntary case or proceeding; or
(ii) consents to the entry of an order for relief against such company or any
Material Subsidiary in an involuntary case or proceeding; or (iii) consents to
the appointment of a Custodian of such company or any Material Subsidiary or for
all or any substantial part of its property; or (iv) makes a general assignment
for the benefit of its creditors; or (v) take corporate or similar action to
effect any of the foregoing; or
(g) a court of competent jurisdiction enters an order or decree
under any Bankruptcy Law that: (i) is for relief against Company or any Material
Subsidiary in an involuntary case or proceeding; or (ii) appoints a Custodian of
such company or any Material Subsidiary or for all or any substantial part of
the property of such company or any Material Subsidiary; or (iii) orders the
liquidation of such company or any Material Subsidiary; and in each case
referred to in this subsection (g) the order or decree remains unstayed and in
effect for 60 days.
7. Rights of Holder upon Default.
7
(a) If an Event of Default with respect to Company described in Section
6(f) or (g) has occurred (other than an Event of Default described in clause (i)
of Section 6(f) or described in clause (v) of Section 6(f) by virtue of the fact
that such clause encompasses clause (i) of Section 6(f)), the Note then
outstanding shall automatically become immediately due and payable. If any other
Event of Default has occurred and is continuing, the Holder may at any time at
its option, by notice or notices to Company, declare the Note to be immediately
due and payable.
(b) Notwithstanding the foregoing, if (i) any Event of Default
described in Section 6 (a) or (b) has occurred and is continuing, the Holder of
the Note may at any time, at its option, by notice or notices to Company,
declare the Note to be immediately due and payable; or (ii) any Event of Default
described in Section 6 (d) has occurred and is continuing and the Payment
Default giving rise to such Event of Default is cured or the acceleration giving
rise to such Event of Default is annulled or rescinded within 30 days after
receipt of written notice of such Event of Default by Company from the Holder of
the Note stating that such notice is a "Notice of Default," then such Event of
Default and any declaration under Section 7 (a) above shall be deemed
automatically annulled and rescinded. Upon the Note becoming due and payable
under Section 7, whether automatically or by declaration, the Note will
forthwith mature and the entire unpaid principal amount hereof, plus all accrued
and unpaid interest thereon, shall all be immediately due and payable, in each
and every case without presentment, demand, protest or further notice, all of
which are hereby waived.
(c) If any Default or Event of Default has occurred and is continuing,
and irrespective of whether the Note has become or has been declared immediately
due and payable under Section 7, the holder of the Note at the time outstanding
may proceed to protect and enforce its rights by an action at law, suit in
equity or other appropriate proceeding, whether for the specific performance of
any agreement contained herein or in the Operative Agreements, or for an
injunction against a violation of any of the terms hereof or thereof, or in aid
of the exercise of any power granted hereby or thereby or by law or otherwise.
8. Representations and Warranties of Holder. By its acceptance of this
Note, the Holder makes the following representations and warranties:
(a) The Holder is aware of Company's business affairs and
financial condition, and has acquired information about Company sufficient to
reach an informed and knowledgeable decision to acquire this Note. The Holder is
acquiring this Note for its own account for investment purposes only and not
with a view to, or for the resale in connection with, any "distribution" thereof
in violation of the Act.
(b) The Holder understands that this Note, and the securities into
which it is convertible, have not been registered under the Act in reliance upon
a specific exemption therefrom, which exemption depends upon, among other
things, the bona fide nature of the Holder's investment intent as expressed
herein.
(c) The Holder further understands that this Note, and the
securities into which it is convertible, must be held indefinitely unless
subsequently registered under the Act and qualified
8
under any applicable state securities laws, or unless exemptions from
registration and qualification are otherwise available. The Holder is aware of
the provisions of Rule 144, promulgated under the Act.
(d) The Holder is an "accredited investor" as such term is defined
in Rule 501 of Regulation D promulgated under the Securities Act.
9. Conversion.
9.1 Conversion Privilege. The holder of this Note may convert
the principal amount thereof (or any portion thereof that is an
integral multiple of $1,000) into fully paid and nonassessable shares
of Class A common stock, par value $.01 per share, of Company at any
time prior to the close of business on the Business Day immediately
preceding the final maturity date of the Note at the Conversion Price
then in effect, except that, with respect to the principal amount of
the Note that is subject to optional or mandatory prepayment, such
conversion right shall terminate at the close of business on the
Business Day immediately preceding the prepayment date (unless Company
shall default in making the prepayment, including interest, when it
becomes due, in which case the conversion right shall terminate at the
close of business on the date on which such default is cured).
The number of shares of Class A common stock issuable upon
conversion of a Note is determined by dividing the principal amount of
the Note so converted by the Conversion Price in effect on the
Conversion Date.
"Conversion Price" means ONE UNITED STATES DOLLAR ($1.00)
[subject to appropriate adjustment in the event of a stock split, stock
dividend or stock combination prior to closing], as the same may be
adjusted from time to time as provided in this Section.
Provisions of this Agreement that apply to conversion of all
of a Note also apply to conversion of a portion of it. A holder of a
Note is not entitled to any rights of a holder of Class A common stock
until such holder has converted such Note into Class A common stock,
and only to the extent that such Note is deemed to have been converted
into Class A common stock under this Section 9.1.
9.2 Conversion Procedure
To convert the Note, the Holder must (1) complete and sign a notice of
election to convert substantially in the form attached hereto (or
complete and manually sign a facsimile thereof) and deliver such notice
to Company, (2) surrender the Note to Company, (3) furnish appropriate
endorsements or transfer documents if required by Company and (4) pay
any transfer or similar tax, if required by Company in accordance with
Section 9.4 hereof. The date on which the holder satisfies all of those
requirements is the conversion date (the "Conversion Date"). As
promptly as practicable on or after the Conversion Date, Company shall
issue and deliver to the holder a certificate or certificates for the
number of whole shares of Class A common stock issuable upon the
conversion and a check or other payment for any
9
fractional share in an amount determined pursuant to Section 9.3. The
Person in whose name the certificate is registered shall become the
stockholder of record on the Conversion Date and, as of such date, such
Person's rights as a holder of a Note with respect to the converted
Note shall cease and such converted Note shall no longer be deemed
outstanding; provided, however, that, except as otherwise provided in
this Section 9.2, no surrender of a Note on any date when the stock
transfer books of Company shall be closed shall be effective to
constitute the Person entitled to receive the shares of Class A common
stock upon such conversion as the stockholder of record of such shares
of Class A common stock on such date, but such surrender shall be
effective to constitute the Person entitled to receive such shares of
Class A common stock as the stockholder of record thereof for all
purposes at the close of business on the next succeeding day on which
such stock transfer books are open; provided further, however, that
such conversion shall be at the Conversion Price in effect on the date
that such Note shall have been surrendered for conversion, as if the
stock transfer books of Company had not been closed.
No payment or adjustment will be made for accrued and unpaid
interest on a converted Note or for dividends or distributions on
shares of Class A common stock issued upon conversion of a Note, except
that, if the Holder surrenders the Note for conversion after the close
of business on any record date for the payment of an installment of
interest and prior to the opening of business on the next succeeding
interest payment date, then, notwithstanding such conversion, accrued
and unpaid interest payable on the Note on such interest payment date
shall be paid on such interest payment date to the person who was the
holder of the Note (or one or more predecessor Notes) at the close of
business on such record date. Holders of Class A common stock issued
upon conversion will not be entitled to receive any dividends payable
to holders of Class A common stock as of any record time before the
close of business on the Conversion Date.
If a holder converts more than one Note at the same time, the
number of whole shares of Class A common stock issuable upon the
conversion shall be based on the total principal amount of Notes
converted.
Upon surrender of a Note that is converted in part, Company
shall issue to the holder a new Note equal in principal amount to the
unconverted portion of the Note surrendered.
9.3 Fractional Shares. Company will not issue fractional
shares of Class A common stock upon conversion of a Note. In lieu
thereof, Company will pay an amount in cash based upon the Daily Market
Price of the Class A common stock on the Trading Day prior to the
Conversion Date.
9.4. Taxes on Conversion. The issuance of certificates for
shares of Class A common stock upon the conversion of the Note shall be
made without charge to the converting Noteholder for such certificates
or for any tax in respect of the issuance of such certificates, and
such certificates shall be issued in the respective names of, or in
such names as may be directed by, the holder or holders of the
converted Note; provided, however, that in the event that certificates
for shares of Class A common stock are to be issued in a name
10
other than the name of the holder of the Note converted, such Note,
when surrendered for conversion, shall be accompanied by an instrument
of assignment or transfer, in form satisfactory to Company, duly
executed by the registered holder thereof or his duly authorized
attorney; and provided further, however, that Company shall not be
required to pay any tax which may be payable in respect of any transfer
involved in the issuance and delivery of any such certificates in a
name other than that of the holder of the converted Note, and Company
shall not be required to issue or deliver such certificates unless or
until the person or persons requesting the issuance thereof shall have
paid to Company the amount of such tax or shall have established to the
satisfaction of Company that such tax has been paid or is not
applicable.
9.5. Company to Provide Stock. The Company shall at all times
reserve and keep available, free from preemptive rights, out of its
authorized but unissued Class A common stock, solely for the purpose of
issuance upon conversion of the Note as herein provided, a sufficient
number of shares of Class A common stock to permit the conversion of
the Note for shares of Class A common stock.
All shares of Class A common stock which may be issued upon
conversion of the Note shall be duly authorized, validly issued, fully
paid and nonassessable when so issued. The Company shall take such
action from time to time as shall be necessary so that par value of the
Class A common stock shall at all times be equal to or less than the
Conversion Price then in effect.
The Company shall from time to time take all action necessary
so that the Class A common stock which may be issued upon conversion of
the Note, immediately upon their issuance (or, if such Class A common
stock is subject to restrictions on transfer under the Act, upon their
resale pursuant to an effective registration statement or in a
transaction pursuant to which the certificate evidencing such Class A
common stock shall no longer bear a restrictive common stock legend),
will be listed on the Nasdaq National Market or such other interdealer
quotation system and market or principal securities exchanges, if any,
on which other shares of Class A common stock of Company are then
listed or quoted.
9.6. Adjustment of Conversion Price. The Conversion Price
shall be subject to adjustment from time to time as follows:
(a) In case Company shall (i) pay a dividend in
shares of Class A common stock to holders of Class A common stock (or
any event treated as such for U.S. Federal income tax purposes), (ii)
make a distribution in shares of Class A common stock to holders of
Class A common stock (or any event treated as such for U.S. Federal
income tax purposes), (iii) subdivide its outstanding shares of Class A
common stock into a greater number of shares of Class A common stock or
(iv) combine its outstanding shares of Class A common stock into a
smaller number of shares of Class A common stock, the Conversion Price
in effect immediately prior to such action shall be adjusted so that
the holder of this Note thereafter surrendered for conversion shall be
entitled to receive the number of shares of Class A common stock which
he would have owned immediately following such action had
11
the Note been converted immediately prior thereto. Any adjustment made
pursuant to this subsection (a) shall become effective immediately
after the record date in the case of a dividend or distribution and
shall become effective immediately after the effective date in the case
of a subdivision or combination.
(b) In case Company shall issue rights, options or
warrants to all holders of Class A common stock entitling them to
subscribe for or purchase shares of Class A common stock (or securities
convertible into Class A common stock) at a price per share (or having
a conversion price per share) less than the Current Market Price per
share (as determined pursuant to subsection (f) below) of the Class A
common stock on the record date for determining the holders of the
Class A common stock entitled to receive such rights, options or
warrants, the Conversion Price shall be adjusted so that the same shall
equal the price determined by multiplying the Conversion Price in
effect immediately prior to such record date by a fraction of which the
numerator shall be the number of shares of Class A common stock
outstanding as of the close of business on such record date plus the
number of shares of Class A common stock which the aggregate offering
price of the total number of shares of Class A common stock so offered
(to the holders of outstanding Class A common stock) for subscription
or purchase (or the aggregate conversion price of the convertible
securities so offered) would purchase at such Current Market Price (as
determined pursuant to subsection (f) below), and of which the
denominator shall be the number of shares of Class A common stock
outstanding on such record date plus the number of additional shares of
Class A common stock so offered for subscription or purchase (or into
which the convertible securities so offered are convertible). Such
adjustments shall become effective immediately after such record date.
For the purposes of this subsection (b), the number of shares of Class
A common stock at any time outstanding shall not include shares held in
the treasury of Company but shall include shares issuable in respect of
scrip certificates issued in lieu of fractions of shares of such Class
A common stock. The Company shall not issue any rights, options or
warrants in respect of shares of Class A common stock held in the
treasury of Company. In determining whether any rights, options or
warrants entitle the holders to subscribe for or purchase shares of
Class A common stock at less than the Current Market Price, and in
determining the aggregate offering price of such shares of Class A
common stock, there shall be taken into account any consideration
received by Company for such rights, warrants, or options, the value of
such consideration, if any, other than cash, to be determined by the
Board of Directors.
(c) In case Company shall distribute to all holders
of Class A common stock shares of capital stock of Company (other than
Class A common stock), evidences of indebtedness, cash, rights, options
or warrants entitling the holders thereof to subscribe for or purchase
securities (other than rights, options or warrants described in
subsection (b) above) or other assets (including securities of Persons
other than Company but excluding (i) dividends or distributions paid
exclusively in cash except as described in subsection (d) below, (ii)
dividends and distributions described in subsection (a) above and (iii)
distributions in connection with the consolidation, merger or transfer
of assets covered by Section 9.11), then in each such case the
Conversion Price shall be adjusted so that the same shall equal the
price determined by multiplying the Conversion Price in effect
immediately prior to the date
12
of such distribution by a fraction of which the numerator shall be the
Current Market Price (determined as provided in subsection (f) below)
of the Class A common stock on the record date mentioned below less the
fair market value on such record date (as determined by the Board of
Directors, whose determination shall be conclusive evidence of such
fair market value and described in a board resolution) of the portion
of the evidences of indebtedness, shares of capital stock, cash,
rights, options, warrants or other assets so distributed applicable to
one share of Class A common stock (determined on the basis of the
number of shares of the Class A common stock outstanding on the record
date), and of which the denominator shall be such Current Market Price
of the Class A common stock. Such adjustment shall become effective
immediately after the record date for the determination of the holders
of Class A common stock entitled to receive such distribution.
Notwithstanding the foregoing, in case Company shall distribute rights,
options or warrants to subscribe for additional shares of Company's
capital stock (other than rights, options or warrants referred to in
subsection (b) above) ("Rights") to all holders of Class A common
stock, Company may, in lieu of making any adjustment pursuant to the
foregoing provisions of this subsection (c) of Section 9.6 make proper
provision so that the holder of the Note who converts the Note (or any
portion thereof) after the record date for such distribution and prior
to the expiration or redemption of the Rights shall be entitled to
receive upon such conversion, in addition to the shares of Class A
common stock issuable upon such conversion (the "Conversion Shares"), a
number of Rights to be determined as follows: (i) if such conversion
occurs on or prior to the date for the distribution to the holders of
Rights of separate certificates evidencing such Rights (the
"Distribution Date"), the same number of Rights to which a holder of a
number of shares of Class A common stock equal to the number of
Conversion Shares is entitled at the time of such conversion in
accordance with the terms and provisions of and applicable to the
Rights; and (ii) if such conversion occurs after the Distribution Date,
the same number of Rights to which a holder of the number of shares of
Class A common stock into which the principal amount of the Note so
converted was convertible immediately prior to the Distribution Date
would have been entitled on the Distribution Date in accordance with
the terms and provisions of and applicable to the Rights.
(d) In case Company shall, by dividend or otherwise,
at any time make a distribution to all holders of its Class A common
stock exclusively in cash (including any distributions of cash out of
current or retained earnings of Company but excluding any cash that is
distributed as part of a distribution requiring a Conversion Price
adjustment pursuant to subsection (c) of this Section) in an aggregate
amount that, together with the sum of (x) the aggregate amount of any
other distributions made exclusively in cash to all holders of Class A
common stock within the 12 months preceding the date fixed for
determining the stockholders entitled to such distribution (the
"Distribution Record Date") and in respect of which no Conversion Price
adjustment pursuant to subsection (c) or (e) of this Section or this
subsection (d) has been made plus (y) the aggregate amount of all
Excess Payments in respect of any tender offers or other negotiated
transactions by Company or any of its Subsidiaries for Class A common
stock concluded within the 12 months preceding the Distribution Record
Date and in respect of which no Conversion Price adjustment pursuant to
subsections (c) or (e) of this Section or this subsection (d) has been
made, exceeds 12 1/2% of the product of
13
the Current Market Price per share (determined as provided in
subsection (f) of this Section) of the Class A common stock on the
Distribution Record Date multiplied by the number of shares of Class A
common stock outstanding on the Distribution Record Date (excluding
shares held in the treasury of Company), the Conversion Price shall be
reduced so that the same shall equal the price determined by
multiplying such Conversion Price in effect immediately prior to the
effectiveness of the Conversion Price reduction contemplated by this
subsection (d) by a fraction of which the numerator shall be the
Current Market Price per share (determined as provided in subsection
(f) of this Section) of the Class A common stock on the Distribution
Record Date less the sum of the aggregate amount of cash and the
aggregate Excess Payments so distributed, paid or payable within such
12-month period (including, without limitation, the distribution in
respect of which such adjustment is being made) applicable to one share
of Class A common stock (which shall be determined by dividing the sum
of the aggregate amount of cash and the aggregate Excess Payments so
distributed, paid or payable with respect to outstanding shares of
Class A common stock within such 12 months (including, without
limitation, the distribution in respect of which such adjustment is
being made) by the number of shares of Class A common stock outstanding
on the Distribution Record Date) and the denominator shall be such
Current Market Price per share (determined as provided in subsection
(f) of this Section) of the Class A common stock on the Distribution
Record Date, such reduction to become effective immediately prior to
the opening of business on the day following the Distribution Record
Date.
(e) In case a tender offer or other negotiated
transaction made by Company or any Subsidiary of Company for all or any
portion of the Class A common stock shall be consummated, if an Excess
Payment is made in respect of such tender offer or other negotiated
transaction and the aggregate amount of such Excess Payment, together
with the sum of (x) the aggregate amount of any distributions, by
dividend or otherwise, to all holders of the Class A common stock made
in cash (including any distributions of cash out of current or retained
earnings of Company) within the 12 months preceding the date of payment
of such current negotiated transaction consideration or expiration of
such current tender offer, as the case may be (the "Purchase Date"),
and as to which no adjustment in the Conversion Price pursuant to
subsection (c) or (d) of this Section or this subsection (e) has been
made plus (y) the aggregate amount of all Excess Payments in respect of
any other tender offers or other negotiated transactions by Company or
any of its Subsidiaries for Class A common stock concluded within the
12 months preceding the Purchase Date and in respect of which no
adjustment in the Conversion Price pursuant to subsection (c) or (d) of
this Section or this subsection (e) has been made, exceeds 12 1/2% of
the product of the Current Market Price per share
14
(determined as provided in subsection (f) of this Section) of the Class
A common stock on the Purchase Date multiplied by the number of shares
of Class A common stock outstanding on the Purchase Date (including any
tendered shares but excluding any shares held in the treasury of
Company), the Conversion Price shall be reduced so that the same shall
equal the price determined by multiplying such Conversion Price in
effect immediately prior to the effectiveness of the Conversion Price
reduction contemplated by this subsection (e) by a fraction of which
the numerator shall be the Current Market Price per share (determined
as provided in subsection (f) of this Section) of the Class A common
stock on the Purchase Date less the sum of the aggregate amount of cash
and the aggregate Excess Payments so distributed, paid or payable
within such 12 month period (including, without limitation, the Excess
Payment in respect of which such adjustment is being made) applicable
to one share of Class A common stock (which shall be determined by
dividing the sum of the aggregate amount of cash and the aggregate
Excess Payments so distributed, paid or payable with respect to
outstanding shares of Class A common stock within such 12 months
(including, without limitation, the Excess Payment in respect of which
such adjustment is being made) by the number of shares of Class A
common stock outstanding on the Purchase Date) and the denominator
shall be such Current Market Price per share (determined as provided in
subsection (f) of this Section) of the Class A common stock on the
Purchase Date, such reduction to become effective immediately prior to
the opening of business on the day following the Purchase Date.
(f) The "Current Market Price" per share of Class A
common stock on any date shall be deemed to be the average of the Daily
Market Prices for the shorter of (i) 30 consecutive Business Days
ending on the last full Trading Day on the exchange or market referred
to in determining such Daily Market Prices prior to the time of
determination or (ii) the period commencing on the date next succeeding
the first public announcement of the issuance of such rights or such
warrants or such other distribution or such tender offer or other
negotiated transaction through such last full Trading Day on the
exchange or market referred to in determining such Daily Market Prices
prior to the time of determination.
(g) "Excess Payment" means the excess of (i) the
aggregate of the cash and fair market value (as determined by the Board
of Directors, whose determination shall be conclusive evidence of such
fair market value and described in a board resolution) of other
consideration paid by Company or any of its Subsidiaries with respect
to the shares acquired in a tender offer or other negotiated
transaction over (ii) the Daily Market Price on the Trading Day
immediately following the completion of the tender offer or other
negotiated transaction multiplied by the number of acquired shares.
(h) The Company reserves the right to make such
reductions in the Conversion Price in addition to those required in the
foregoing provisions as it considers to be advisable in order that any
event treated for United States federal income tax purposes as a
dividend of stock or stock rights will not be taxable to the
recipients.
(i) The Company from time to time may decrease the
Conversion Price by any amount for any period of at least 20 days
(which decrease is irrevocable during such period), in which case
Company shall give at least 15 days' notice of such decrease, if the
Board of Directors has made a determination that such decrease would be
in the best interests of Company, which determination shall be
conclusive; provided however that in no case shall Company decrease the
Conversion Price to less than 80% of the Current Market Price.
(j) In any case in which this Section 9.6 shall
require that an adjustment be made immediately following a record date
for an event, Company may elect to defer, until
15
such event, issuing to the holder of the Note converted after such
record date the shares of Class A common stock and other capital stock
of Company issuable upon such conversion over and above the shares of
Class A common stock and other capital stock of Company issuable upon
such conversion on the basis of the Conversion Price prior to
adjustment; and, in lieu of the shares the issuance of which is so
deferred, Company shall issue or cause its transfer agents to issue due
bills or other appropriate evidence of the right to receive such
shares.
9.7. No Adjustment. No adjustment in the Conversion Price
shall be required until cumulative adjustments amount to 1.0% or more
of the Conversion Price as last adjusted; provided, however, that any
adjustments which by reason of this Section 9.7 are not required to be
made shall be carried forward and taken into account in any subsequent
adjustment. All calculations under this Section 9 shall be made to the
nearest cent or to the nearest one-hundredth of a share, as the case
may be. No adjustment need be made for rights to purchase Class A
common stock pursuant to a Company plan for reinvestment of dividends
or interest. No adjustment need be made for a change in the par value
or no par value of the Class A common stock.
9.8. Other Adjustments. (a) In the event that, as a result of
an adjustment made pursuant to Section 9.6 above, the holder of the
Note thereafter surrendered for conversion shall become entitled to
receive any shares of capital stock of Company other than shares of its
Class A common stock, thereafter the Conversion Price of such other
shares so receivable upon conversion of the Note shall be subject to
adjustment from time to time in a manner and on terms as nearly
equivalent as practicable to the provisions with respect to Class A
common stock contained in this Section 9.
(b) In the event that any shares of Class A common
stock issuable upon exercise of any of the rights, options or warrants
referred to in Section 9.6(b) and Section 9.6(c) hereof are not
delivered prior to the expiration of such rights, options, or warrants,
the Conversion Price shall be readjusted to the Conversion Price which
would otherwise have been in effect had the adjustment made upon the
issuance of such rights, options or warrants been made on the basis of
delivery of only the number of such rights, options and warrants which
were actually exercised.
(c) In any case in which Section 9.6 shall require
that an adjustment be made immediately following a record date for a
dividend or distribution and the dividend or distribution does not
occur, the Conversion Price shall again be adjusted to the Conversion
Price that would then be in effect if such dividend or distribution had
not been declared.
9.9. Notice of Adjustment. Whenever the Conversion Price is
adjusted, Company shall promptly mail to the Holder a notice of the
adjustment. Such notice shall briefly state the facts requiring the
adjustment and the manner of computing it and shall be signed by a
Senior Financial Officer.
16
9.10. Notice of Certain ▇▇▇▇▇▇▇▇▇▇▇▇.▇▇ the event that: (a)
Company takes any action which would require an adjustment in the
Conversion Price; (b) Company takes any action described in Section
9.11; or (c) there is a dissolution or liquidation of Company; Company
shall mail to the Holder a notice stating the proposed record or
effective date, as the case may be. The Company shall mail the notice
at least 15 days before such date; however, failure to mail such notice
or any defect therein shall not affect the validity of any transaction
referred to in clause (a), (b) or (c) of this Section 9.10.
9.11. Effect of Reclassifications, Consolidations, Mergers,
Continuances or Sales on Conversion Privilege. If any of the following
shall occur, namely: (i) any reclassification or change of outstanding
shares of Class A common stock issuable upon conversion of the Note
(other than a change in par value, or from par value to no par value,
or from no par value to par value, or as a result of a subdivision or
combination), (ii) any consolidation or merger to which Company is a
party other than a merger in which Company is the continuing
corporation and which does not result in any reclassification of, or
change (other than a change in name, or par value, or from par value to
no par value, or from no par value to par value or as a result of a
subdivision or combination) in, outstanding shares of Class A common
stock, (iii) any continuance in a new jurisdiction which does not
result in any reclassification of, or change (other than a change in
name, or par value, or from par value to no par value, or from no par
value to par value) in, outstanding shares of Class A common stock, or
(iv) any sale or conveyance of all or substantially all of the property
of Company (determined on a consolidated basis), then Company, or such
successor or purchasing corporation, as the case may be, shall, as a
condition precedent to such reclassification, change, consolidation,
merger, continuance, sale or conveyance, execute and deliver to the
Holder a written notice providing that the Holder shall have the right
to convert the Note into the kind and amount of shares of stock and
other securities and property (including cash) receivable upon such
reclassification, change, consolidation, merger, continuance, sale or
conveyance by a holder of the number of shares of Class A common stock
deliverable upon conversion of such Note immediately prior to such
reclassification, change, consolidation, merger, continuance, sale or
conveyance. Such notice shall provide for adjustments of the Conversion
Price which shall be as nearly equivalent as may be practicable to the
adjustments of the Conversion Price provided for in this Section 9. The
foregoing, however, shall not in any way affect the right a holder of a
Note may otherwise have, pursuant to clause (ii) of the last sentence
of subsection (c) of Section 9.6, to receive Rights upon conversion of
a Note. If, in the case of any such reclassification, change,
consolidation, merger, continuance, sale or conveyance, the stock or
other securities and property (including cash) receivable thereupon by
a holder of Class A common stock includes shares of stock or other
securities and property of a corporation or other business entity other
than the successor or purchasing corporation, as the case may be, in
such reclassification, change, consolidation, merger, continuance, sale
or conveyance, then such notice shall also be executed by such other
corporation or other business entity and shall contain such additional
provisions to protect the interests of the holder of the Note as the
Board of Directors of Company shall reasonably consider necessary by
reason of the foregoing. The provision of this Section 9.11 shall
similarly apply to
17
successive reclassifications, changes, consolidations, mergers,
continuances, sales or conveyances.
9.12. Cancellation of Converted Notes. All Notes delivered for
conversion shall be delivered to Company to be canceled.
10. Successors and Assigns. Subject to the restrictions on transfer
described in Sections 12 and 13 below, the rights and obligations of Company and
Holder of this Note shall be binding upon and benefit the successors, assigns,
heirs, administrators and transferees of the parties.
11. Waiver and Amendment. Any provision of this Note may be amended,
waived or modified upon the written consent of Company and Holder.
12. Transfer of this Note or Securities Issuable on Conversion Hereof.
With respect to any offer, sale or other disposition of this Note or securities
into which such Note may be converted, Holder will give written notice to
Company prior thereto, describing briefly the manner thereof, together with, if
requested by Company, a written opinion of Holder's counsel, to the effect that
such offer, sale or other distribution may be effected without registration or
qualification (under any federal or state law then in effect). Upon receiving
such written notice and reasonably satisfactory opinion, if so requested,
Company, as promptly as practicable, shall notify Holder that Holder may sell or
otherwise dispose of this Note or such securities, all in accordance with the
terms of the notice delivered to Company. If a determination has been made
pursuant to this Section 12 that the opinion of counsel for Holder is not
reasonably satisfactory to Company, Company shall so notify Holder promptly
after such determination has been made. Each Note thus transferred and each
certificate representing the securities thus transferred shall bear a legend as
to the applicable restrictions on transferability in order to ensure compliance
with the Act, unless in the opinion of counsel for Company such legend is not
required in order to ensure compliance with the Act. Company may issue stop
transfer instructions to its transfer agent in connection with such
restrictions. Subject to the foregoing transfers of this Note shall be
registered upon registration books maintained for such purpose by or on behalf
of Company. Prior to presentation of this Note for registration of transfer,
Company shall treat the registered holder hereof as the owner and holder of this
Note for the purpose of receiving all payments of principal and interest hereon
and for all other purposes whatsoever, whether or not this Note shall be overdue
and Company shall not be affected by notice to the contrary.
13. Assignment by Company. Neither this Note nor any of the rights,
interests or obligations hereunder may be assigned, by operation of law or
otherwise, in whole or in part, by Company without the prior written consent of
Holder except in connection with an assignment in whole to a successor
corporation to Company in connection with a reincorporation of Company in
another state of the United States.
14. Notices. Any notice, request or other communication required or
permitted hereunder shall be in writing and shall be deemed to have been duly
given if personally delivered or mailed by registered or certified mail, postage
prepaid, or by recognized overnight courier or personal delivery at the
respective addresses of the parties as set forth in the Modification Agreement
or on the register
18
maintained by Company. Any party hereto may by notice so given change its
address for future notice hereunder. Notice shall conclusively be deemed to have
been given when received.
15. Payment. Payment shall be made in lawful tender of the United
States.
16. Default Rate; Usury. During any period in which an Event of Default
has occurred and is continuing, Company shall pay interest on the unpaid
principal balance hereof at a rate per annum equal to the rate otherwise
applicable hereunder plus four percent (4%). In the event any interest is paid
on this Note which is deemed to be in excess of the then legal maximum rate,
then that portion of the interest payment representing an amount in excess of
the then legal maximum rate shall be deemed a payment of principal and applied
against the principal of this Note.
17. Expenses; Waivers. If action is instituted to collect this Note,
Company promises to pay all costs and expenses, including, without limitation,
reasonable attorneys' fees and costs, incurred in connection with such action.
Company hereby waives notice of default, presentment or demand for payment,
protest or notice of nonpayment or dishonor and all other notices or demands
relative to this instrument.
18. No Impairment. The Company will not, by amendment of its Articles
and/or Certificate of Incorporation or Bylaws, or through reorganization,
consolidation, merger, dissolution, issue or sale of securities, sale of assets
or any other voluntary action, willfully avoid or seek to avoid the observance
or performance of any of the terms of this Note, but will at all times and in
good faith assist in the carrying out of all such terms and in the taking of all
such action as may be necessary or appropriate in order to protect the rights of
the holder under this Note against wrongful impairment. Without limiting the
generality of the foregoing, Company will take all such action as may be
necessary or appropriate in order that Company may duly and validly issue fully
paid and nonassessble Conversion Shares upon the conversion of this Note.
19. Severablity. If one or more provisions of this Note are held to be
unenforceable under applicable law, such provision(s) shall be excluded from
this Note and the balance of the Note shall be interpreted as if such
provision(s) were so excluded and shall be enforceable in accordance with its
terms.
19
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:
-------------------------------------
20
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
21
______________________________________ (Sign exactly as your name
appears on the other side of this Note)
Medallion Signature Guarantee:_____________________________________
Please print or typewrite your name and address, including zip code,
and social security or other identifying number:
If the Class A common stock is to be issued and delivered to someone
other than you, please print or typewrite the name and address, including zip
code, and social security or other identifying number of that person:
22
EXHIBIT C
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 [518,592] SHARES
OF CLASS A COMMON STOCK
THIS CERTIFIES THAT, for value received, PENTECH FINANCIAL SERVICES,
INC. and its assignees are entitled to subscribe for and purchase 518,592 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
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in this Section 4. The provisions of this Section 4(a) shall similarly apply to
successive reclassifications, changes, mergers and sales.
(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.
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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
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 isued.
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
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Right (i.e., the number of Converted Warrant
Shares multiplied by the Warrant Price)
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
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securities exchange or other trading system at 4:00 p.m. New York City time on
the applicable trading day.
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
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or exchangeable securities and the exercise of all outstanding options
and warrants), does not exceed [________] shares.
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
-7-
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.
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 D
See Exhibit D to Exhibit 99.1 for Form of Registration Rights Agreement