Exhibit 99.2
MODIFICATION AGREEMENT
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THIS MODIFICATION AGREEMENT (the "Agreement") is made effective as of June
1, 2001 (the "Effective Date"), by and between GATX Technology Services
Corporation ("GATX"), as successor in interest to Pacific Atlantic Systems
Leasing ("PASL"),and EasyLink Services Corporation ("EasyLink").
W I T N E S S E T H:
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A. On or about January 22, 1999, PASL and EasyLink entered into a Master
Lease Agreement Number 4398 and certain equipment schedules thereunder, which
are subject to the terms thereof (collectively the "Lease").
B. Pursuant to the Lease, EasyLink leased certain equipment from PASL (the
"Leased Equipment) as more fully described in the Lease.
C. GATX acquired the Lease and all rights to the Leased Equipment
effective as of January 1, 2001.
D. EasyLink has requested that GATX modify certain terms and conditions of
the Lease as set forth herein and forbear from exercising its rights and
remedies under the Lease, and GATX 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
E. GATX 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 that $389,619.59 (hereinafter referred to as
the "Indebtedness") is due and payable by EasyLink to GATX as of July, 2001
pursuant to the terms of the Lease without offset, counterclaim or defenses.
3. Representations of EasyLink. EasyLink hereby represents and warrants to
GATX 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, GATX may
under the terms of the Lease exercise all rights and remedies under the Lease.
(d) EasyLink, recognizing that GATX 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
GATX, GATX may exercise its rights and remedies as provided for in the
Master Lease; and
(ii) EasyLink will not attempt to delay or frustrate GATX's
exercise its rights and remedies under the Master Lease, nor raise any
defenses to same.
(e) The Master 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 GATX of sums due thereunder.
4. Representations, Covenants and Warranties of GATX and EasyLink. GATX
and EasyLink hereby jointly and severally represent and warrant as follows:
(f) All terms and conditions of the Lease not otherwise modified herein
shall continue in full force and effect during the term of this Agreement.
(g) 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 GATX a promissory note in the principal amount of $389,619.59 (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 1, 2001. A copy of the form of the Forbearance Note is
attached as Exhibit A.
6. Terms and Conditions.
(h) On or before August 16, 2001, EasyLink shall return to GATX Leased
Equipment or equivalent equipment reasonably acceptable to GATX (collectively
the "Returned Equipment") having a minimum aggregate value of at least 50% of
the original equipment cost ("OEC") as set forth on the Lease. EasyLink shall,
at its own cost and expense, deliver the Returned Equipment to a location
specified by GATX. GATX may, in its sole discretion, notify
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EasyLink what Leased Equipment GATX wants included in the Returned Equipment and
EasyLink shall use its best efforts to include the equipment in the Returned
Equipment.
(i) On or before September 16, 2001, EasyLink, at its own cost and
expense, shall deliver the remaining Leased Equipment to GATX at a location to
be specified by GATX.
(j) Notwithstanding the above, EasyLink will purchase, for 15% of the
original equipment cost, any and all of the Leased Equipment that GATX does not
request to be returned by August 31, 2001 and any missing and/or damaged
equipment (unless replaced with equivalent equipment reasonably acceptable to
GATX). All amounts due GATX by EasyLink under this paragraph (c) shall be paid
upon the earlier of October 31, 2001 or completion of raising the Additional
Capital as set forth in Section 10 below.
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 GATX
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, GATX 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 GATX's rights under the Lease or
otherwise available to GATX at law or in equity. In addition, nothing in this
Agreement shall be construed to release EasyLink from any liability under the
Lease. GATX hereby expressly reserves all such remedies.
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 to 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 evidence by any
of the Lease or security agreements referred to above 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, GATX may immediately exercise any and all
rights provided to GATX 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, GATX shall be entitled to a judgment as a matter of law,
and EasyLink hereby waives, abandons and relinquishes all defenses thereto and
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agree 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 GATX 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, GATX 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 GATX shall not be deemed to have waived or
relinquished such rights or remedies by reason of entering into this Agreement.
10. Restructure. If EasyLink (a) is not in material default under this
Agreement or any of the non-payment terms of the Lease; (b) successfully raises
a minimum of $10,000,000.00 of capital by no later than October 31, 2001 (the
"Financing Condition"); and (c) enters into a restructuring arrangement with
AT&T Corp. with respect to its outstanding note, ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇ with respect to
his outstanding note and lessors holding substantially all 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 GATX will convert the
Forbearance Note into the Note, the Shares and the Warrants and EasyLink shall
enter the Registration Rights Agreement on the following terms and conditions:
(a) EasyLink shall execute and deliver to GATX a convertible promissory
note in the principal amount of $115,000 ("Note"). The Note shall be for a five
(5) year term commencing June 1, 2001 and accrue interest at a rate of 12.0%.
The Note will accrue interest for the first three years and will thereafter
require principal amortization starting at the end of third year. The interest
and principal payments will be payable semi-annually and will fully amortize the
Note by the end of the fifth year. The Note will be convertible into shares of
EasyLink Class A common stock, par value $.01 per share ("Class A common
stock"), at an exercise price of $1.00 per share at the request of GATX at any
time during the term. Such initial Conversion Price 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 Note. The Note shall also provide that, upon
thirty (30) days prior written notice, EasyLink may irrevocably elect at any
time and from time to time to prepay the outstanding balance of the Note, or any
portion thereof, plus accrued interest for cash in such amount. A copy of the
form of the Note in substantially the form to be used is attached as Exhibit B.
(b) EasyLink shall deliver 115,000 shares of EasyLink's Class A common
stock ("Shares") to GATX. Such number of Shares shall be appropriately adjusted
in the event the Company shall effect a stock split, stock dividend or stock
combination on or before the closing.
(c) EasyLink shall deliver 115,000 warrants to purchase EasyLink's
Class A common stock ("Warrants") to GATX. The Warrants shall expire ten (10)
years from the date of issue and shall have an exercise price equal to the
average of the closing prices of EasyLink's Class A common stock over the 30
trading days ending two days before the closing. Such initial exercise price and
the number of shares issuable upon exercise of the Warrants shall be
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appropriately adjusted in the event the Company shall effect a stock split,
stock dividend or stock combination on or before the closing and thereafter
shall be subject to adjustment as provided in the form of Warrants. A copy of
the form of Warrant in substantially the form to be used is attached as
Exhibit C.
(d) EasyLink will execute a registration rights agreement which will
obligate EasyLink to file a registration statement covering the resale of the
Shares and the shares issuable upon exercise of the Warrants within 45 days from
closing 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 in substantially the form to be used is
attached as Exhibit D.
(e) GATX 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 GATX within two
(2) business days of GATX 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 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
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connection with the issuance of the Securities, the holder specifically
represents to the Company, as of the date hereof and upon the date of issuance
of the Securities, by acceptance of the Securities as follows:
(1) The holder is aware of the Company's business affairs and
financial condition, and has acquired information about the Company
sufficient to reach an informed and knowledgeable decision to acquire
the Securities. The holder is acquiring the Securities for its own
account for investment purposes only and not with a view to, or for the
resale in connection with, any "distribution" thereof in violation of
the Act.
(2) The holder understands that the Securities have not been
registered under the Act in reliance upon a specific exemption
therefrom, which exemption depends upon, among other things, the bona
fide nature of the holder's investment intent as expressed herein.
(3) The holder further understands that the Securities must be
held indefinitely unless subsequently registered under the Act and
qualified under any applicable state securities laws, or unless
exemptions from registration and qualification are otherwise available.
The holder is aware of the provisions of Rule 144, promulgated under
the Act.
(4) The holder is an "accredited investor" as such term is
defined in Rule 501 of Regulation D promulgated under the Act.
(b) Disposition of Securities, 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
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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 GATX
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.
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 Florida, 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 GATX each hereby
irrevocably: (1) consent to the jurisdiction of any state or federal court
sitting in the State of Florida; (2) agree that venue shall be proper in any
court of competent jurisdiction located in
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Hillsborough County, Florida; 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: GATX Technology Services Corporation
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇
/s/ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇ Print Name: ▇▇▇▇ ▇▇▇▇▇▇
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Print Name: ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇ Its: Vice President
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Attest: EasyLink Services Corporation
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Print Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
------------------------------------ -------------------------
Print Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Its: Chief Executive Officer
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EXHIBIT A
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PROMISSORY NOTE
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Date of Note: June 1, 2001
Amount of Note: $389,619.59
FOR VALUE RECEIVED, the undersigned ("Maker") does hereby covenant and promise
to pay to the order of GATX TECHNOLOGY SERVICES CORPORATION, or its successors
or assigns, ("Lender"), at ▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇. ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇▇▇ 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 Three Hundred
Eighty Nine Thousand Six Hundred Nineteen and 59/100 Dollars ($389,619.59),
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 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 (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
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Lender or are outside counsel), Maker and any endorser, guarantor or other
person primarily or 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 Florida, 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. Jurisdiction: The laws of the State of Florida 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 State of Florida, 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 Hillsborough County, Florida.
11. 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.
12. 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.
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IN WITNESS WHEREOF, Maker has duly executed this Note effective the day
and year first above written.
MAKER:
EASYLINK SERVICES CORPORATION
By:
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Print Name:
----------------------------
Title:
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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
---------------------------
$115,000 Effective: June 1, 2001
FOR VALUE RECEIVED EASYLINK SERVICES CORPORATION, a Delaware corporation
("Company") promises to pay to GATX TECHNOLOGY SERVICES CORPORATION ("Holder"),
or its registered assigns, the principal sum of One Hundred Fifteen Thousand
Dollars ($115,000), or such lesser amount as shall equal the outstanding
principal amount hereof together with interest from the effective date of this
Note on the unpaid principal balance at a rate equal to 12.0% per annum,
computed on the basis of twelve 30 day months. No payment shall be due during
the first thirty-six (36) months from the effective date. Commencing on June 1,
2004, Company shall make semi-annual payments in an amount sufficient to fully
amortize the principal and accrued interest by May 31, 2006.
The following is a statement of the rights of Holder and the conditions to
which this Note is subject, and to which Holder, by the acceptance of this Note,
agrees:
1. Definitions. As used in this Note, the following capitalized terms have
the following meanings:
"Affiliate," with respect to any Person, means (i) any director, officer
or employee of such Person, (ii) any Person directly or indirectly controlling
or controlled by or under direct or indirect common control with such Person,
and (iii) any Person beneficially owning or holding 5% or more of any class of
voting securities of such Person or any corporation of which such Person
beneficially owns or holds, in the aggregate, 5% or more of any class of voting
securities. The term "control" means the possession, directly or indirectly, of
the power to direct or cause the direction of the management and policies of a
Person, whether through the ownership of voting securities, by contract or
otherwise. The term "Affiliate," when used herein without reference to any
Person shall mean an Affiliate of Company.
"Bankruptcy Law" shall mean Title 11, U.S. Code or any similar federal,
state or foreign bankruptcy, insolvency or similar law.
"Business Day" means any day other than a Saturday, a Sunday or a day on
which commercial banks in New York City are required or authorized to be closed.
"Capital Lease" means, at any time, a lease with respect to which the
lessee is required concurrently to recognize the acquisition of an asset and the
incurrence of a liability in accordance with GAAP.
"Capital Lease Obligation" means, as to any Person, the obligations of
such Person under a lease that are required to be classified and accounted for
as capital lease obligations under GAAP and, for purposes of this definition,
the amount of such obligations at the time any determination thereof is to be
made shall be the amount of the liability in respect of a capital lease that
would at such time be so required to be capitalized on a balance sheet in
accordance with GAAP.
"Company" includes the corporation initially executing this Note and any
Person which shall succeed to or assume the obligations of Company as permitted
under this Note.
"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 the Company for that purpose, or, if not so available in such manner, as
otherwise determined in good faith by the Board of Directors of the 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 guaranteeing or in effect guaranteeing any
indebtedness, dividend or other obligation of any other
2
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);
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(f) Swaps of such Person; and
(g) any Guaranty of such Person with respect to liabilities of a
type described in any of clauses (a) through (f) hereof.
Indebtedness of any Person shall include all obligations of such Person of
the character described in clauses (a) through (g) to the extent such Person
remains legally liable in respect thereof notwithstanding that any such
obligation is deemed to be extinguished under GAAP.
"Lien" means, with respect to any Person, any mortgage, lien, pledge,
charge, security interest or other encumbrance, or any interest or title of any
vendor, lessor, lender or other secured party to or of such Person under any
conditional sale or other title retention agreement or Capital Lease, upon or
with respect to any property or asset of such Person (including in the case of
stock, stockholder agreements, voting trust agreements and all similar
arrangements).
"Material Subsidiary" means any Subsidiary of the Company which at the
date of determination is a "significant subsidiary" as defined in Rule 1-02(w)
of Regulation S-X under the Securities Act and the Exchange Act (as such
Regulation is in effect on the date hereof).
"Obligations" shall mean and include all loans, advances, debts,
liabilities and obligations, howsoever arising, owed by Company to Holder of
every kind and description (whether or not evidenced by any note or instrument
and whether or not for the payment of money), now existing or hereafter arising
under or pursuant to the terms of this Note and the other Operative Agreements,
including, all interest, fees, charges, expenses, attorneys' fees and costs and
accountants' fees and costs chargeable to and payable by Company hereunder and
thereunder, in each case, whether direct or indirect, absolute or contingent,
due or to become due, and whether or not arising after the commencement of a
proceeding under Title 11 of the United States Code (11 U. S. C. Section 101 et
seq.), as amended from time to time (including post-petition interest) and
whether or not allowed or allowable as a claim in any such proceeding.
"Operative Agreements" shall mean that certain Modification Agreement
dated August _____, 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. "Prepayment Notice" has the meaning given in
Section 3 hereof.
"Subsidiary" means, as to any Person, any corporation, association or
other business entity in which such Person or one or more of its
4
Subsidiaries or such Person and one or more of its Subsidiaries owns sufficient
equity or voting interests to enable it or them (as a group) ordinarily, in the
absence of contingencies, to elect a majority of the directors (or Persons
performing similar functions) of such entity, and any partnership or joint
venture if a 50% or more interest in the profits or capital thereof is owned by
such Person or one or more of its Subsidiaries or such Person and one or more of
its Subsidiaries (unless such partnership can and does ordinarily take major
business actions without the prior approval of such Person or one or more of its
Subsidiaries). Unless the context otherwise clearly requires, any reference to a
"Subsidiary" is a reference to a Subsidiary of the Company.
"Swaps" means, with respect to any Person, payment obligations with
respect to interest rate swaps, currency swaps and similar obligations
obligating such Person to make payments, whether periodically or upon the
happening of a contingency. For the purposes of this Agreement, the amount of
the obligation under any Swap shall be the amount determined in respect thereof
as of the end of the then most recently ended fiscal quarter of such Person,
based on the assumption that such Swap had terminated at the end of such fiscal
quarter, and in making such determination, if any agreement relating to such
Swap provides for the netting of amounts payable by and to such Person
thereunder or if any such agreement provides for the simultaneous payment of
amounts by and to such Person, then in each such case, the amount of such
obligation shall be the net amount so determined.
"Trading Day" shall mean (a) if the applicable security is quoted on the
NASDAQ National Market, a day on which trades may be made thereon, (b) if the
applicable security is listed or admitted for trading on the NYSE or another
national securities exchange, a day on which the NYSE or such other national
securities exchange is open for business or (c) if the applicable security is
not so listed, admitted for trading or quoted, any day that is a Business Day.
2. Interest. Accrued interest on this Note shall be due and payable on
June 1, 2004 and thereafter semiannually on the first business day of such
month.
3. Prepayment. Purchaser may prepay all outstanding principal, together
with all accrued interest and other amounts due under this Note so long as
Company gives Purchaser at least 30 days irrevocable written notice in advance
of such prepayment (the "Prepayment Notice"). Company's decision to prepay this
Note will not, in any way, affect Purchaser's right of conversion as provided in
Section 9 herein.
4. RESERVED
5. Representations and Warranties of the Company. The Company hereby
represents and warrants to the Holder that:
(a) This Note, when issued, sold and delivered for the consideration
provided for herein, will be duly and validly issued, fully paid and
nonassessable.
(b) The offer and sale of this Note solely to Holder is exempt from the
registration and prospectus delivery requirements of the Securities Act of 1933,
as amended (the "Securities
5
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) the Company defaults in the payment of any interest on any Note
when the same becomes due and payable and the default continues for a period of
30 days; or
(b) the Company defaults in the payment of any principal or premium, if
any, on any Note when the same becomes due and payable, whether at maturity or
otherwise; or
(c) the Company breaches in any material respect any representation or
warranty contained in this Note or the any of the Operative Agreements, or fails
to observe or perform any other covenant or agreement contained in this Note or
the Operative Agreements required to be performed by any of them, and such
breach is not cured or such failure continues for a period of 60 days after the
receipt of written notice by the Company from at least 25% in aggregate
principal amount of the then outstanding Notes stating that such notice is a
"Notice of Default"; or
(d) a default under any credit agreement, mortgage, indenture or
instrument under which there may be issued or by which there may be secured or
evidenced any Indebtedness for money borrowed by the Company or any Material
Subsidiary (or the payment of which is Guaranteed by the Company or any of the
Company's Material Subsidiaries), whether such Indebtedness or Guarantee exists
on the date of this Agreement or is created hereafter, which default (i) is
caused by a failure to pay when due any principal of or interest on such
Indebtedness within the grace period, if any, provided for in such Indebtedness
(which failure continues beyond any applicable grace period) (a "Payment
Default") or (ii) results in the acceleration of such Indebtedness prior to its
express maturity (without such acceleration being rescinded or annulled) and, in
each case, the principal amount of such Indebtedness, together with the
principal amount of any other such Indebtedness under which there is a Payment
Default or the maturity of which has been so accelerated, aggregates $15,000,000
or more and after written receipt by the Company from any Holder of Notes
stating that such notice is a "Notice of Default"; or
(e) a final, non-appealable judgment or final non-appealable judgments
(other than any judgment as to which a reputable insurance company has accepted
full liability) for the payment of money are entered by a court or courts of
competent jurisdiction against the Company or any Material Subsidiary and remain
unstayed, unbonded or undischarged for a period (during which execution shall
not be effectively stayed) of 60 days, provided that the aggregate of all such
judgments exceeds $5,000,000; or
6
(f) the Company or any Material Subsidiary pursuant to or within the
meaning of any Bankruptcy Law: (i) commences a voluntary case or proceeding; or
(ii) consents to the entry of an order for relief against such company or any
Material Subsidiary in an involuntary case or proceeding; or (iii) consents to
the appointment of a Custodian of such company or any Material Subsidiary or for
all or any substantial part of its property; or (iv) makes a general assignment
for the benefit of its creditors; or (v) take corporate or similar action to
effect any of the foregoing; or
(g) a court of competent jurisdiction enters an order or decree under
any Bankruptcy Law that: (i) is for relief against the Company or any Material
Subsidiary in an involuntary case or proceeding; or (ii) appoints a Custodian of
such company or any Material Subsidiary or for all or any substantial part of
the property of such company or any Material Subsidiary; or (iii) orders the
liquidation of such company or any Material Subsidiary; and in each case
referred to in this subsection (g) the order or decree remains unstayed and in
effect for 60 days.
(7) Rights of Holder upon Default.
(a) If an Event of Default with respect to the 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)), all the
Notes then outstanding shall automatically become immediately due and payable.
If any other Event of Default has occurred and is continuing, any holder or
holders of a majority of the principal amount of the Notes at the time
outstanding may at any time at its or their option, by notice or notices to the
Company, declare all the Notes then outstanding 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, any holder or holders of
Notes at the time outstanding affected by such Event of Default may at any time,
at its or their option, by notice or notices to the Company, declare all the
Notes held by it or them 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 the
Company from any holder of Notes 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 any Notes
becoming due and payable under Section 7, whether automatically or by
declaration, such Notes will forthwith mature and the entire unpaid principal
amount of such Notes, 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 any Notes have become or have been declared immediately
due and payable under Section 7, the holder of any Note at the time outstanding
may proceed to protect and enforce the rights of such holder by an action at
law, suit in equity or other appropriate proceeding, whether for the specific
performance of any agreement contained herein or in any Note or the Operative
Agreements, or for an injunction against a violation of any of the terms hereof
or thereof, or in aid of the exercise of any power granted hereby or thereby or
by law or otherwise.
7
(d) At any time after any Notes have been declared due and payable
pursuant to of Section 7 (a) or (b), the holders of not less than a majority in
principal amount of the Notes then outstanding, by written notice to the
Company, may rescind and annul any such declaration and its consequences if (i)
the Company shall have paid all overdue principal of and interest on any Notes
that are due and payable and are unpaid other than by reason of such
declaration, and all interest on such overdue principal and (to the extent
permitted by applicable law) any overdue interest in respect of the Notes, at
the Default Rate, (ii) all Events of Default and Defaults, other than
non-payment of amounts that have become due solely by reason of such
declaration, have been cured or have been waived (iii) no judgment or decree has
been entered for the payment of any monies due pursuant hereto or to the Notes.
No rescission and annulment under Section 7 will extend to or affect any
subsequent Event of Default or impair any right consequent thereon.
8. Representations and Warranties of Purchaser. By its acceptance of this
Note, Holder makes the following representations and warranties:
(a) The Holder is aware of the Company's business affairs and financial
condition, and has acquired information about the Company sufficient to reach an
informed and knowledgeable decision to acquire this Note. The Holder is
acquiring this Note for its own account for investment purposes only and not
with a view to, or for the resale in connection with, any "distribution" thereof
in violation of the Act.
(b) The Holder understands that this Note, and the securities into
which it is convertible, have not been registered under the Act in reliance upon
a specific exemption therefrom, which exemption depends upon, among other
things, the bona fide nature of the Holder's investment intent as expressed
herein.
(c) The Holder further understands that this Note, and the securities
into which it is convertible, must be held indefinitely unless subsequently
registered under the Act and qualified under any applicable state securities
laws, or unless exemptions from registration and qualification are otherwise
available. The Holder is aware of the provisions of Rule 144, promulgated under
the Act.
(d) The Holder is an "accredited investor" as such term is defined in
Rule 501 of Regulation D promulgated under the Securities Act.
9. Conversion.
9.1 Conversion Privilege. A holder of any 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 the 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 any 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 the Company shall default in making the
prepayment,
8
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 a Note, a holder must satisfy
the requirements in the subsections entitled "Conversion Right" of the
Notes. 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, the 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 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 the 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 the 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
any holder surrenders a 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 such Note on such interest payment date shall be paid on such interest
payment date to the person who was the
9
holder of such 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, the 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 tock upon conversion of a Note. In lieu thereof, the
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 any 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 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 the Company, duly executed by the registered holder
thereof or his duly authorized attorney; and provided further, however,
that the 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 the 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 the Company the amount of such tax or shall
have established to the satisfaction of the 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 Notes as herein provided, a sufficient number
of shares of Class A common stock to permit the conversion of all
outstanding Notes for shares of Class A common stock.
All shares of Class A common stock which may be issued upon
conversion of the Notes 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
10
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
Notes, 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 the 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 the 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 any 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 such Notes 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 the 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
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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 the 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 the
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 the 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 the Company shall distribute to all holders of
Class A common stock shares of capital stock of the 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 the
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 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 the
Company shall distribute rights, options or warrants to subscribe for
additional shares of the 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, the 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 each holder of a Note who
converts such 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
12
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 the 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 the 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 the 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 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 the 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
13
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 the Company or any Subsidiary of the 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 the 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 the 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 (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 the 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
14
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 the 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 the 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 the
Company, which determination shall be conclusive; provided however that in
no case shall the 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,
the Company may elect to defer, until such event, issuing to the holder of
any Note converted after such record date the shares of Class A common
stock and other capital stock of the Company issuable upon such conversion
over and above the shares of Class A common stock and other capital stock
of the 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, the 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 any Note
thereafter surrendered for conversion
15
shall become entitled to receive any shares of capital stock of the
Company other than shares of its Class A common stock, thereafter the
Conversion Price of such other shares so receivable upon conversion of any
Notes 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, the Company shall promptly mail to Noteholders 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.
9.10. Notice of Certain ▇▇▇▇▇▇▇▇▇▇▇▇.▇▇ the event that: (a) the
Company takes any action which would require an adjustment in the
Conversion Price; (b) the Company takes any action described in Section
9.11; or (c) there is a dissolution or liquidation of the Company; the
Company shall mail to Noteholders 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 Notes (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 the Company is a party other
than a merger in which the 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 the Company
16
(determined on a consolidated basis), then the 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 Noteholders a
written notice providing that the holder of each Note then outstanding
shall have the right to convert such 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 holders of the Notes as the
Board of Directors of the Company shall reasonably consider necessary by
reason of the foregoing. The provision of this Section 9.11 shall
similarly apply to successive reclassifications, changes, consolidations,
mergers, continuances, sales or conveyances.
9.12. Cancellation of Converted Notes. All Notes delivered for
conversion shall be delivered to the 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 the Company, a written opinion of
Holder's counsel, to the effect that such offer, sale or other
distribution may be effected without registration or qualification (under
any federal or state law then in effect). Upon receiving such written
notice and reasonably satisfactory opinion, if so requested, Company, as
promptly as practicable, shall notify Holder that Holder may sell or
otherwise dispose of this Note or such securities, all in accordance with
the terms of the notice delivered to Company. If a determination has been
made pursuant to this Section 12 that the opinion of counsel for Holder is
not reasonably satisfactory to Company, Company shall so notify Holder
17
promptly after such determination has been made. Notwithstanding the
foregoing, this Note can be transferred to GATX Ventures, Inc., formerly
known as ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & Company. 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
Loan Agreement or on the register maintained by Company. Any party hereto
may by notice so given change its address for future notice hereunder.
Notice shall conclusively be deemed to have been given when received.
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
18
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, the Company will take all such
action as may be necessary or appropriate in order that the 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 Florida, without regard to the conflicts of
law provisions of the State of Florida, or of any other state.
IN WITNESS WHEREOF, Company has caused this Note to be issued as of
the date first written above.
EASYLINK SERVICES CORPORATION,
a Delaware corporation
By:
----------------------------------------
Title:
-------------------------------------
20
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 [115,000] SHARES
OF CLASS A COMMON STOCK
THIS CERTIFIES THAT, for value received, GATX TECHNOLOGY SERVICES
CORPORATION and its assignees are entitled to subscribe for and purchase 115,000
shares [subject to appropriate adjustment prior to closing for any stock split,
stock dividend or stock combination] (as adjusted pursuant to Section 4 hereof,
the "Shares") of the fully paid and nonassessable Class A Common Stock, par
value $.01 per share ("Common Stock"), of EASYLINK SERVICES CORPORATION, a
Delaware corporation (the "Company"), at the price of $ [To Be Determined Prior
to Closing] per share (such price and such other price as shall result, from
time to time, from the adjustments specified in Section 4 hereof is herein
referred to as the "Warrant Price"), subject to the provisions and upon the
terms and conditions hereinafter set forth. As used herein, (a) the term "Date
of Grant" shall mean [Closing Date], 2001, and (b) the term "Other Warrants"
shall mean any other warrants issued by the Company in connection with the
transaction with respect to which this Warrant was issued, and any warrant
issued upon transfer or partial exercise of or in lieu of this Warrant. The term
"Warrant" as used herein shall be deemed to include Other Warrants unless the
context clearly requires otherwise.
1. Term. The purchase right represented by this Warrant is exercisable, in
whole or in part, at any time and from time to time from the Date of Grant
through ten (10) years after the Date of Grant.
2. Method of Exercise; Payment; Issuance of New Warrant. Subject to
Section 1 hereof, the purchase right represented by this Warrant may be
exercised by the holder hereof, in whole or in part and from time to time, at
the election of the holder hereof, by (a) the surrender of this Warrant (with
the notice of exercise substantially in the form attached hereto as Exhibit A-1
duly completed and executed) at the principal office of the Company and by the
payment to the Company, by certified or bank check, or by wire transfer to an
account designated by the Company (a "Wire Transfer") of an amount equal to the
then applicable Warrant Price multiplied by the number of Shares then being
purchased; or (b) exercise of the "net issuance" right provided for in Section
10.2 hereof. The person or persons in whose name(s) any certificate(s)
representing the Shares shall be issuable upon exercise of this Warrant shall be
deemed to have become the holder(s) of record of, and shall be treated for all
purposes as the record holder(s) of, the shares represented thereby (and such
shares shall be deemed to have been issued) immediately prior to the close of
business on the date or dates upon which this Warrant is exercised. In the event
of any exercise of the rights represented by this Warrant, certificates for the
shares of stock so purchased shall be delivered to the holder hereof as soon as
possible and in any event within thirty (30) days after such exercise and,
unless this Warrant has been fully exercised or expired, a new Warrant
representing the portion of the Shares, if any, with respect to which this
Warrant shall not then have been exercised shall also be issued to the holder
hereof as soon as possible and in any event within such thirty-day period;
provided, however, if requested by the holder of this Warrant, the Company shall
cause its transfer agent to deliver the certificate representing Shares issued
upon exercise of this Warrant to a broker or other person (as directed by the
holder exercising this Warrant) within the time period required to settle any
trade made by the holder after exercise of this Warrant.
3. Stock Fully Paid; Reservation of Shares. All Shares that may be issued
upon the exercise of the rights represented by this Warrant will, upon issuance
pursuant to the terms and conditions herein, be fully paid and nonassessable,
and free from all preemptive rights and taxes, liens and charges with respect to
the issue thereof. During the period within which the rights represented by this
Warrant may be exercised, the Company will at all times have authorized, and
reserved for the purpose of the issue upon exercise of the purchase rights
evidenced by this Warrant, a sufficient number of shares of its Common Stock to
provide for the exercise of the rights represented by this Warrant.
4. Adjustment of Warrant Price and Number of Shares. The number and kind
of securities purchasable upon the exercise of this Warrant and the Warrant
Price shall be subject to adjustment from time to time upon the occurrence of
certain events, as follows:
(a) Reclassification or Merger. In case of any reclassification or
change of securities of the class issuable upon exercise of this Warrant (other
than a change in par value, or from par value to no par value, or from no par
value to par value, or as a result of a subdivision or combination), or in case
of any merger of the Company with or into another corporation (other than a
merger with another corporation in which the Company is the acquiring and the
surviving corporation and which does not result in any reclassification or
change of outstanding securities issuable upon exercise of this Warrant), or in
case of any sale of all or substantially all of the assets of the Company, the
Company, or such successor or purchasing corporation, as the case may be, shall
duly execute and deliver to the holder of this Warrant a new Warrant (in form
and substance satisfactory to the holder of this Warrant), or the Company shall
make appropriate provision without the issuance of a new Warrant, so that the
holder of this Warrant shall have the right to receive upon exercise of this
Warrant, at a total purchase price not to exceed that payable upon the exercise
of the unexercised portion of this Warrant, and in lieu of the shares of Common
Stock theretofore issuable upon exercise of this Warrant, the kind and amount of
shares of stock, other securities, money and property receivable upon such
reclassification, change, merger or sale by a holder of the number of shares of
Common Stock then purchasable under this Warrant. Any new Warrant shall provide
for adjustments that shall be as nearly equivalent as may be practicable to the
adjustments provided for in this Section 4. The provisions of this Section 4(a)
shall similarly apply to successive reclassifications, changes, mergers and
sales.
-2-
(b) Subdivision or Combination of Shares. If the Company at any time
while this Warrant remains outstanding and unexpired shall subdivide or combine
its outstanding shares of Common Stock, the Warrant Price shall be
proportionately decreased and the number of Shares issuable hereunder shall be
proportionately increased in the case of a subdivision and the Warrant Price
shall be proportionately increased and the number of Shares issuable hereunder
shall be proportionately decreased in the case of a combination.
(c) Stock Dividends and Other Distributions. If the Company at any time
while this Warrant is outstanding and unexpired shall (i) pay a dividend with
respect to its Common Stock payable in Common Stock, then the Warrant Price
shall be adjusted, from and after the date of determination of shareholders
entitled to receive such dividend or distribution, to that price determined by
multiplying the Warrant Price in effect immediately prior to such date of
determination by a fraction (A) the numerator of which shall be the total number
of shares of Common Stock outstanding immediately prior to such dividend or
distribution, and (B) the denominator of which shall be the total number of
shares of Common Stock outstanding immediately after such dividend or
distribution; or (ii) make any other distribution with respect to Common Stock
(except any distribution specifically provided for in Sections 4(a) and 4(b) and
other than ordinary cash dividends declared by the board of directors pursuant
to a regular dividend program adopted by the board of directors), then, in each
such case, provision shall be made by the Company such that the holder of this
Warrant shall receive upon exercise of this Warrant a proportionate share of any
such dividend or distribution as though it were the holder of the Shares as of
the record date fixed for the determination of the shareholders of the Company
entitled to receive such dividend or distribution.
(d) Adjustment of Number of Shares. Upon each adjustment in the Warrant
Price, the number of Shares purchasable hereunder shall be adjusted, to the
nearest whole share, to the product obtained by multiplying the number of Shares
purchasable immediately prior to such adjustment in the Warrant Price by a
fraction, the numerator of which shall be the Warrant Price immediately prior to
such adjustment and the denominator of which shall be the Warrant Price
immediately thereafter.
5. Notice of Adjustments. Whenever the Warrant Price or the number of
Shares purchasable hereunder shall be adjusted pursuant to Section 4 hereof, the
Company shall make a certificate signed by its chief financial officer setting
forth, in reasonable detail, the event requiring the adjustment, the amount of
the adjustment, the method by which such adjustment was calculated, and the
Warrant Price and the number of Shares purchasable hereunder after giving effect
to such adjustment, and shall cause copies of such certificate to be mailed
(without regard to Section 13 hereof, by first class mail, postage prepaid) to
the holder of this Warrant.
6. Fractional Shares. No fractional shares of Common Stock will be issued
in connection with any exercise hereunder, but in lieu of such fractional shares
the Company shall make a cash payment therefor based on the fair market value of
the Common Stock on the date of exercise as reasonably determined in good faith
by the Company's Board of Directors.
7. Rights as Shareholders; Information. No holder of this Warrant, as
such, shall be entitled to vote or receive dividends or be deemed the holder of
Common Stock which may at any time be issuable upon the exercise hereof for any
purpose, nor shall anything contained herein be construed
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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 Right (i.e., the number of
Converted Warrant Shares multiplied by the
Warrant Price)
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B = the aggregate fair market value of the
specified number of Converted Warrant Shares
(i.e., the number of Converted Warrant
Shares multiplied by the fair market value
of one Converted Warrant Share)
No fractional shares shall be issuable upon exercise of the Conversion
Right, and, if the number of shares to be issued determined in accordance with
the foregoing formula is other than a whole number, the Company shall pay to the
holder an amount in cash equal to the fair market value of the resulting
fractional share on the Conversion Date (as hereinafter defined). For purposes
of Section 9 of this Warrant, shares issued pursuant to the Conversion Right
shall be treated as if they were issued upon the exercise of this Warrant.
(b) Method of Exercise. The Conversion Right may be exercised by the
holder by the surrender of this Warrant at the principal office of the Company
together with a written statement (which may be in the form of Exhibit A-1)
specifying that the holder thereby intends to exercise the Conversion Right and
indicating the number of shares subject to this Warrant which are being
surrendered (referred to in Section 9.2(a) hereof as the Converted Warrant
Shares) in exercise of the Conversion Right. Such conversion shall be effective
upon receipt by the Company of this Warrant together with the aforesaid written
statement, or on such later date as is specified therein (the "Conversion
Date"). Certificates for the shares issuable upon exercise of the Conversion
Right and, if applicable, a new warrant evidencing the balance of the shares
remaining subject to this Warrant, shall be issued as of the Conversion Date and
shall be delivered to the holder within thirty (30) days following the
Conversion Date.
(c) Determination of Fair Market Value. For purposes of this Section
9.2, "fair market value" of a share of Common Stock as of a particular date (the
"Determination Date") shall mean:
(i) If traded on a securities exchange, the fair market value of the
Common Stock shall be deemed to be the average of the closing prices of the
Common Stock on such exchange over the five trading days immediately prior to
the Determination Date;
(ii) If traded on the Nasdaq Stock Market or other over-the-counter
system, the fair market value of the Common Stock shall be deemed to be the
average of the closing sale prices, or if there shall be no closing sale price
on any day the average of the closing bid and ask prices for such day, of the
Common Stock over the five trading days immediately prior to the Determination
Date; and
iii) If there is no public market for the Common Stock, then fair
market value shall be determined by mutual agreement of the holder of this
Warrant and the Company.
If closing prices or closing bid and ask prices are no longer reported by a
securities exchange or other trading system, the closing price or closing bid
and ask prices shall be that which is reported by such securities exchange or
other trading system at 4:00 p.m. New York City time on the applicable trading
day.
-5-
9.3 Exercise Prior to Expiration. To the extent this Warrant is not
previously exercised as to all of the Shares subject hereto, and if the fair
market value of one share of the Common Stock is greater than the Warrant Price
then in effect, this Warrant shall be deemed automatically exercised pursuant to
Section 9.2 above (even if not surrendered) immediately before its expiration.
To the extent this Warrant or any portion thereof is deemed automatically
exercised pursuant to this Section 9.3, the Company agrees to promptly notify
the holder hereof of the number of Shares, if any, the holder hereof is to
receive by reason of such automatic exercise.
10. Representations and Warranties. The Company represents and warrants to
the holder of this Warrant as follows:
(a) This Warrant has been duly authorized and executed by the Company
and is a valid and binding obligation of the Company enforceable in accordance
with its terms, subject to laws of general application relating to bankruptcy,
insolvency and the relief of debtors and the rules of law or principles at
equity governing specific performance, injunctive relief and other equitable
remedies.
(b) The Shares have been duly authorized and reserved for issuance by
the Company and, when issued in accordance with the terms hereof, will be
validly issued, fully paid and nonassessable and free from preemptive rights.
(c) The rights, preferences, privileges and restrictions granted to or
imposed upon the classes and series of the Company's capital stock and the
holders thereof are as set forth in the Certificate of Incorporation
("Articles").
(d) The execution and delivery of this Warrant are not, and the
issuance of the Shares upon exercise of this Warrant in accordance with the
terms hereof will not be, inconsistent with the Company's Articles or by-laws,
do not and will not contravene any law, governmental rule or regulation,
judgment or order applicable to the Company, and do not and will not conflict
with or contravene any provision of, or constitute a default under, any
indenture, mortgage, contract or other instrument of which the Company is a
party or by which it is bound or require the consent or approval of, the giving
of notice to, the registration or filing with or the taking of any action in
respect of or by, any Federal, state or local government authority or agency or
other person, except for the filing of notices pursuant to federal and state
securities laws, which filings will be effected by the time required thereby.
(e) There are no actions, suits, audits, investigations or proceedings
pending or, to the knowledge of the Company, threatened against the Company in
any court or before any governmental commission, board or authority which, if
adversely determined, could have a material adverse effect on the ability of the
Company to perform its obligations under this Warrant.
(f) The number of shares of Common Stock of the Company outstanding on
the date hereof, on a fully diluted basis (assuming the conversion or exchange
of all outstanding convertible or exchangeable securities and the exercise of
all outstanding options and warrants), does not exceed [________] shares.
-6-
11. Modification and Waiver. This Warrant and any provision hereof may be
changed, waived, discharged or terminated only by an instrument in writing
signed by the party against which enforcement of the same is sought.
12. Notices. Any notice, request, communication or other document required
or permitted to be given or delivered to the holder hereof or the Company shall
be delivered, or shall be sent by certified or registered mail, postage prepaid,
to each such holder at its address as shown on the books of the Company or to
the Company at the address indicated therefor on the signature page of this
Warrant.
13. Binding Effect on Successors. This Warrant shall be binding upon any
corporation succeeding the Company by merger, consolidation or acquisition of
all or substantially all of the Company's assets, and all of the obligations of
the Company relating to the Shares issuable upon the exercise or conversion of
this Warrant shall survive the exercise, conversion and termination of this
Warrant and all of the covenants and agreements of the Company shall inure to
the benefit of the successors and assigns of the holder hereof.
14. Lost Warrants or Stock Certificates. The Company covenants to the
holder hereof that, upon receipt of evidence reasonably satisfactory to the
Company of the loss, theft, destruction or mutilation of this Warrant or any
stock certificate and, in the case of any such loss, theft or destruction, upon
receipt of an indemnity reasonably satisfactory to the Company, or in the case
of any such mutilation upon surrender and cancellation of such Warrant or stock
certificate, the Company will make and deliver a new Warrant or stock
certificate, of like tenor, in lieu of the lost, stolen, destroyed or mutilated
Warrant or stock certificate.
15. Descriptive Headings. The descriptive headings of the various Sections
of this Warrant are inserted for convenience only and do not constitute a part
of this Warrant. The language in this Warrant shall be construed as to its fair
meaning without regard to which party drafted this Warrant.
16. Governing Law. This Warrant shall be construed and enforced in
accordance with, and the rights of the parties shall be governed by, the laws of
the State of Florida.
17. Survival of Representations, Warranties and Agreements. All
representations and warranties of the Company and the holder hereof contained
herein shall survive the Date of Grant, the exercise or conversion of this
Warrant (or any part hereof) or the termination or expiration of rights
hereunder. All agreements of the Company and the holder hereof contained herein
shall survive indefinitely until, by their respective terms, they are no longer
operative.
18. Remedies. In case any one or more of the covenants and agreements
contained in this Warrant shall have been breached, the holders hereof (in the
case of a breach by the Company), or the Company (in the case of a breach by a
holder), may proceed to protect and enforce their or its rights either by suit
in equity and/or by action at law, including, but not limited to, an action for
damages as a result of any such breach and/or an action for specific performance
of any such covenant or agreement contained in this Warrant.
-7-
19. No Impairment of Rights. The Company will not, by amendment of its
Articles or through any other means, avoid or seek to avoid the observance or
performance of any of the terms of this Warrant, but will at all times in good
faith assist in the carrying out of all such terms and in the taking of all such
action as may be necessary or appropriate in order to protect the rights of the
holder of this Warrant against impairment.
20. Severability. The invalidity or unenforceability of any provision of
this Warrant in any jurisdiction shall not affect the validity or enforceability
of such provision in any other jurisdiction, or affect any other provision of
this Warrant, which shall remain in full force and effect.
21. Recovery of Litigation Costs. If any legal action or other proceeding
is brought for the enforcement of this Warrant, or because of an alleged
dispute, breach, default, or misrepresentation in connection with any of the
provisions of this Warrant, the successful or prevailing party or parties shall
be entitled to recover reasonable attorneys' fees and other costs incurred in
that action or proceeding, in addition to any other relief to which it or they
may be entitled.
22. Entire Agreement; Modification. This Warrant constitutes the entire
agreement between the parties pertaining to the subject matter contained in it
and supersedes all prior and contemporaneous agreements, representations, and
undertakings of the parties, whether oral or written, with respect to such
subject matter.
The Company has caused this Warrant to be duly executed and delivered as
of the Date of Grant specified above.
EASYLINK SERVICES CORPORATION
By
------------------------------------
Title
---------------------------------
Address:
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EXHIBIT A-1
NOTICE OF EXERCISE
To: [COMPANY] (the "Company")
1. The undersigned hereby:
[_] elects to purchase________ shares of Common Stock of the Company
pursuant to the terms of the attached Warrant, and tenders
herewith payment of the purchase price of such shares in full,or
[_] elects to exercise its net issuance rights pursuant to Section
10.2 of the attached Warrant with respect to________shares of
Common Stock.
2. Please issue a certificate or certificates representing ________
shares in the name of the undersigned or in such other name or names as are
specified below:
-----------------------------------------
(Name)
-----------------------------------------
-----------------------------------------
(Address)
3. The undersigned represents that the aforesaid shares are being acquired
for the account of the undersigned for investment and not with a view to, or for
resale in connection with, the distribution thereof and that the undersigned has
no present intention of distributing or reselling such shares, all except as in
compliance with applicable securities laws.
---------------------------------------
(Signature)
-------------
(Date)
Exhibit D
---------
See Exhibit D to Exhibit 99.1 for Form of Registration Rights Agreement