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EASYLINK SERVICES CORP
|
SC 13D
Jul 12, 5:28 PM ET
EASYLINK SERVICES CORP SC 13D
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Contents
46
1. Definitions. In addition to the terms defined elsewhere in this Note, (a) capitalized terms that are not otherwise defined herein have the meanings given to such terms in the Purchase Agreement, and (b) the following terms have the meanings indicated:
2. Principal and Interest.
(a) The Company shall pay interest to the Holder on the then outstanding principal amount of this Note at a rate equal to the Prime Rate on the applicable Interest Payment Date (the “Interest Rate”). Interest shall be payable quarterly in arrears in cash on each of March 31, June 30, September 30 and December 31 (except if such date is not a Business Day in which case such interest shall be payable on the next succeeding Business Day) (each, an “Interest Payment Date”). The first Interest Payment Date shall be September 30, 2007. During the pendancy of any Event of Default, the Interest Rate shall equal 18%.
(b) The Company shall repurchase this Note from the Holder at a price equal to 100% of the outstanding principal balance of this Note, plus all accrued and unpaid interest thereon, in cash on the Maturity Date (except if such date is not a Business Day in which case such amount shall be payable on the next succeeding Business Day); provided; however; that if upon the Maturity Date, (i) the Merger has not been consummated, (ii) the Merger Agreement has been terminated, or (iii) the Company has indicated to the Holder or any Purchaser under the May Agreement that the Company does not intend to consummate the transactions contemplated thereby on the terms set forth therein, then in each case the Company shall repurchase this Note from the Holder at a price equal to 115% of the outstanding principal balance of this Note, plus all accrued and unpaid interest thereon; except that in the case of clause (ii) above, if the Merger Agreement is duly terminated by the Company due to (A) a breach of the Merger Agreement by Easylink or (B) the failure of Easylink to obtain the required shareholder approval contemplated by the Merger Agreement, and in each case there has not been a Superior Proposal (as defined in the Merger Agreement), then the repurchase price shall equal 100% of the outstanding principal balance of this Note, plus all accrued and unpaid interest thereon.
3. Ranking and Covenants.
(a) Except for Permitted Indebtedness (as defined in Section 4.8(a) of the Purchase Agreement) (i) no Indebtedness of the Company is senior to or on a parity with this Note in right of payment, whether with respect to interest, damages or upon liquidation or dissolution or otherwise, and (ii) the Company will not, and will not permit any Subsidiary to, directly or indirectly, enter into, create, incur, assume or suffer to exist any Indebtedness of any kind, on or with respect to any of its property or assets now owned or hereafter acquired or any interest therein or any income or profits therefrom.
(b) So long as any Notes are outstanding, neither the Company nor any Subsidiary shall, directly or indirectly, redeem, purchase or otherwise acquire any capital stock or set aside any monies for such a redemption, purchase or other acquisition of its capital stock (other than pursuant to the definition of “Excluded Stock” under the May Agreement).
(d) The Company covenants that it will at all times reserve and keep available out of its authorized but unissued and otherwise unreserved Common Stock, solely for the purpose of enabling it to issue Common Stock as required hereunder, the amount of Common Stock which is then issuable and deliverable upon the conversion of (and otherwise in respect of) the Underlying Securities underlying each Note, free from preemptive rights or any other contingent purchase rights of Persons other than the Holder. The Company covenants that all Common Stock so issuable and deliverable shall, upon issuance in accordance with the terms hereof, be duly and validly authorized and issued and fully paid and nonassessable.
6. Conversion at the Option of the Holder. Provided that the Holder notifies the Company no later than 5:30 p.m. on July 9, 2007 of its intention to convert this Note under this Section 6 (which the Holder may do in its sole and absolute discretion), this Note shall be converted in full by the Holder at the time specified by the Holder (but not later than the consummation of the Merger in accordance with the Merger Agreement and the consummation of the transactions contemplated to occur at the Closing (the “May Closing”) as defined in and in accordance with the May Agreement) (the “Conversion Date”), into additional Series A Notes and Series B Notes (subject to the modifications set forth in Section 4.17 of the Purchase Agreement) divided pro rata among Series A Notes and Series B Notes according to the proportion of Series A Notes and Series B Notes purchased or agreed to be purchased by the original Holder of this Note as a Purchaser under the May Agreement. The amount of any Underlying Securities issuable upon any conversion hereunder shall equal the outstanding principal amount of this Note, plus the amount of any accrued but unpaid interest on this Note through the Conversion Date. The Holder shall effect conversion under this Section 6 by delivering to the Company a Conversion Notice.
7. Mechanics of Conversion; Restrictive Legends.
(a) Upon conversion of this Note, the Company shall promptly (but in no event later than two Business Days after the Conversion Date) issue or cause to be issued and cause to be delivered to or upon the written order of the Holder and in such name or names as the Holder may designate an instrument for the Underlying Securities issuable upon such conversion. The Holder, or any Person so designated by the Holder to receive Underlying Securities, shall be deemed to have become holder of record of such Underlying Securities as of the Conversion Date.
(b) The Holder shall not be required to deliver the original Note in order to effect a conversion hereunder. Execution and delivery of the Conversion Notice shall have the same effect as cancellation of the original Note; provided that the cancellation of the original Note shall not be deemed effective until instruments for such Underlying Securities are delivered to the Holder.
(c) The Company’s obligations to issue and deliver Underlying Securities upon conversion of this Note in accordance with the terms and subject to the conditions hereof are absolute and unconditional, irrespective of any action or inaction by the Holder to enforce the same, any waiver or consent with respect to any provision hereof, the recovery of any judgment against any Person or any action to enforce the same, or any set-off, counterclaim, recoupment, limitation or termination, or any breach or alleged breach by the Holder or any other Person of any obligation to the Company or any violation or alleged violation of law by the Holder or any other Person, and irrespective of any other circumstance which might otherwise limit such obligation of the Company to the Holder in connection with the issuance of such Underlying Securities (other than such limitations contemplated by this Note).
(d) If by the second Business Day after the Conversion Date the Company fails to deliver to the Holder such Underlying Securities in such amounts and in the manner required pursuant to Section 7(a), then the Holder will have the right to rescind such conversion.
(e) If by the second Business Day after the Conversion Date the Company fails to deliver to the Holder such Underlying Securities in such amounts and in the manner required pursuant to Section 7(a), the Holder shall be entitled to treat this Note as, and this Note shall be deemed to be for all purposes, the physical representation of such Underlying Securities and the Holder shall be entitled to all of the rights of a holder of such Underlying Securities thereupon, including without limitation the right to convert such Underlying Securities into underlying Common Stock immediately thereunder.
8. Events of Default.
(a) “Event of Default” means any one of the following events (whatever the reason and whether it shall be voluntary or involuntary or effected by operation of law or pursuant to any judgment, decree or order of any court, or any order, rule or regulation of any administrative or governmental body):
(i) any default in the payment (free of any claim of subordination) of principal, interest or liquidated damages in respect of any Notes, as and when the same becomes due and payable (whether on a date specified for the payment of interest or the date on which the obligations under the Note mature or by acceleration, redemption, prepayment or otherwise);
(ii) the Company or any Subsidiary defaults in any of its covenants or other obligations in respect of (A) any Permitted Indebtedness or (B) any other note or any mortgage, credit agreement or other facility, indenture agreement, factoring agreement or other instrument under which there may be issued, or by which there may be secured or evidenced, any Indebtedness for borrowed money or money due under any long term leasing or factoring arrangement of the Company or any Subsidiary in an amount exceeding $500,000, whether such Indebtedness now exists or is hereafter created, and any such default is not cured within the time permitted by such agreements; or any event or circumstance occurs that with notice or lapse of time would constitute such a default.
(iii) the Company or any Subsidiary is in default under any contract or agreement, financial or otherwise, between the Company or any Subsidiary, as applicable, and any other Person and such default involves claimed actual damages in excess of $2,500,000 or the other party thereto commences litigation or arbitration
proceedings to exercise its rights and remedies under such contract or agreement as a consequence of such default and such default is not waived or cured within 90 days of the occurrence thereof;
(iv) there is entered against the Company or any Subsidiary (A) a final judgment or order or settlement for the payment of money in an aggregate amount exceeding $1,500,000, except to the extent such amounts have been paid to or on behalf of the Company or such Subsidiary by its respective insurer(s), or (B) any one or more non-monetary final judgments that have, or could reasonably be expected to have, individually or in the aggregate, a material adverse effect on the Company or any Subsidiary;
(v) any provision of any Transaction Document, at any time after the date hereof, and for any reason other than as expressly permitted thereunder, ceases to be in full force and effect; or the Company or any Subsidiary contests in any manner the validity or enforceability of any Transaction Document or any provision thereof; or the Company or any Subsidiary denies that it has any or further liability or obligation under any Transaction Document, or purports to revoke, terminate or rescind any Transaction Documents;
(vi) any Security Agreement ceases to give the Agent (as defined in the Security Agreements) the primary benefits thereof, including a perfected, enforceable first priority security interest in, and Lien on, all of the Collateral (as defined therein);
(vii) the occurrence of a Triggering Event; or
(viii) the occurrence of a Bankruptcy Event.
(b) Upon the occurrence of any Bankruptcy Event, all amounts pursuant to Section 8(a) shall immediately become due and payable in full in cash, without any further action by the Holder.
(c) In connection with any Event of Default, the Holder need not provide, and the Company hereby waives, any presentment, demand, protest or other notice of any kind, and the Holder may immediately and without expiration of any grace period enforce any and all of its rights and remedies hereunder and all other remedies available to it under applicable law. Any such declaration may be rescinded and annulled by the Holder at any time prior to payment hereunder. No such rescission or annulment shall affect any subsequent Event of Default or impair any right incidental thereto.
9. Charges, Taxes and Expenses. Issuance of certificates for Underlying Shares upon conversion of (or otherwise in respect of) this Note shall be made without charge to the Holder for any issue or transfer tax, withholding tax, transfer agent fee or other incidental tax or expense in respect of the issuance of such certificate, all of which taxes and expenses shall be paid by the Company; provided, however, that the Company shall not be required to pay any tax which may be payable in respect of any transfer involved in the registration of any certificates for Underlying Shares or Notes in a name other than that of the Holder. The Holder shall be responsible for all other tax liability that may arise as a result of holding or transferring this Note or receiving Underlying Shares in respect hereof.
10. Fundamental Changes.
(a) Fundamental Changes. If, at any time while this Note is outstanding, (i) the Company effects any merger or consolidation of the Company with or into another Person, (ii) the Company effects any sale of all or substantially all of its assets in one or more transactions, or (iii) there is a Change of Control (each case in clauses (i) through (iii) above, a “Fundamental Change”), then upon any subsequent conversion of this Note, the Holder shall have the right to receive, for the Underlying Securities that would have been issuable upon such conversion absent such Fundamental Change, the same kind and amount of securities, cash or property as it would have been entitled to receive upon the occurrence of such Fundamental Change if it had been, immediately prior to such Fundamental Change, the holder of such Underlying Securities (the “Alternate Consideration”). If holders of Common Stock are given any choice as to the securities, cash or property to be received in a Fundamental Change, then the Holder shall be given the same choice as to the Alternate Consideration it receives upon any conversion of this Note following such Fundamental Change. In the event of a Fundamental Change, the Company or the successor or purchasing Person, as the case may be, shall execute with the Holder a written agreement providing that:
If, in the case of any Fundamental Change, the Alternate Consideration includes shares of stock, other securities, other property or assets of a Person other than the Company or any such successor or purchasing Person, as the case may be, in such Fundamental Change, then such written agreement shall also be executed by such other Person and shall contain such additional provisions to protect the interests of the Holder as the Board of Directors of the Company shall reasonably consider necessary by reason of the foregoing. At the Holder’s request, any successor to the Company or surviving Person in such Fundamental Change shall issue to the Holder a new Note consistent with the foregoing provisions and evidencing the Holder’s right to convert such Note into Alternate Consideration. The terms of any agreement pursuant to which a Fundamental Change is effected shall include terms requiring any such successor or surviving Person to comply with the provisions of this Section 10(a) and insuring that this Note (or any such replacement security) will be similarly adjusted upon any subsequent transaction analogous to a Fundamental Change. If any Fundamental Change constitutes or results in a Change of Control, then at the request of the Holder, the Company (or any such successor or surviving entity) will purchase this Note from the Holder for a purchase price, payable in cash within five Trading Days after such request, equal to the greater of (x) 125% of the outstanding principal amount of the Notes repurchased, plus all accrued but unpaid interest thereon through the date of payment and (y) the Black-Scholes value of this Note; provided that if the Equity Conditions are not satisfied on the date of such repurchase and, with respect to clause (ii) of the Equity Conditions, for the 20 Trading Days immediately preceding such date, such Notes shall be repurchased at a price equal to the greater of (I) the price set forth in the foregoing clause and (II) the Event Equity Value of the Common Stock underlying the Underlying Securities then issuable upon conversion of the Notes repurchased (without regard to any restrictions on conversion).
(b) Notice of Adjustments. Upon the occurrence of any Fundamental Change pursuant to Section 10(a), the Company at its expense will promptly prepare and deliver to the Holder a certificate describing in reasonable detail such Fundamental Change and the transactions giving rise thereto.
(c) Notice of Corporate Events. If the Company (i) authorizes or approves, enters into any agreement contemplating or solicits stockholder approval for a Fundamental Change or (ii) authorizes the voluntary dissolution, liquidation or winding up of the affairs of the Company, then the Company shall deliver to the Holder a notice describing the material terms and conditions of such transaction, at least 30 Trading Days prior to the applicable record or effective date on which a Person would need to hold Common Stock in order to participate in or vote with
respect to such transaction, and the Company will take all steps reasonably necessary in order to insure that the Holder is given the practical opportunity to convert this Note and the corresponding Underlying Securities prior to such time so as to participate in or vote with respect to such transaction.
11. Intentionally Omitted.
12. Notices. Any and all notices or other communications or deliveries hereunder (including any Conversion Notice) shall be in writing and shall be deemed given and effective on the earliest of (i) the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number specified in this Section 12 prior to 6:30 p.m. (New York City time) on a Trading Day, (ii) the next Trading Day after the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number specified in this Section 12 on a day that is not a Trading Day or later than 6:30 p.m. (New York City time) on any Trading Day, (iii) the Trading Day following the date of mailing, if sent by nationally recognized overnight courier service specifying next Business Day delivery, or (iv) upon actual receipt by the party to whom such notice is required to be given, if by hand delivery. The address and facsimile number of a party for such notices or communications shall be as set forth in the Purchase Agreement, unless changed by such party by two Trading Days’ prior notice to the other party in accordance with this Section 12.
13. Miscellaneous.
(a) This Note shall be binding on and inure to the benefit of the parties hereto and their respective successors and permitted assigns. The Company shall not be permitted to assign this Note absent the prior written consent of the Holder.
(b) Subject to Section 13(a), nothing in this Note shall be construed to give to any person or corporation other than the Company and the Holder any legal or equitable right, remedy or cause under this Note.
(c) GOVERNING LAW; VENUE; WAIVER OF JURY TRIAL. ALL QUESTIONS CONCERNING THE CONSTRUCTION, VALIDITY, ENFORCEMENT AND INTERPRETATION OF THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAW THEREOF. EACH PARTY HEREBY IRREVOCABLY SUBMITS TO THE EXCLUSIVE JURISDICTION OF THE STATE AND FEDERAL COURTS SITTING IN THE CITY OF NEW YORK, BOROUGH OF MANHATTAN, FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION HEREWITH OR WITH ANY TRANSACTION CONTEMPLATED HEREBY OR DISCUSSED HEREIN (INCLUDING WITH RESPECT TO THE ENFORCEMENT OF ANY OF THE TRANSACTION DOCUMENTS), AND HEREBY IRREVOCABLY WAIVES, AND AGREES NOT TO ASSERT IN ANY SUIT, ACTION OR PROCEEDING, ANY CLAIM THAT IT IS NOT PERSONALLY SUBJECT TO THE JURISDICTION OF ANY SUCH COURT, THAT SUCH SUIT, ACTION OR PROCEEDING IS IMPROPER. EACH PARTY HEREBY IRREVOCABLY WAIVES PERSONAL SERVICE OF PROCESS AND CONSENTS TO PROCESS BEING SERVED IN ANY SUCH SUIT, ACTION OR PROCEEDING BY MAILING A COPY THEREOF VIA REGISTERED OR CERTIFIED MAIL OR OVERNIGHT DELIVERY (WITH EVIDENCE OF DELIVERY) TO SUCH PARTY AT THE ADDRESS IN EFFECT FOR NOTICES TO IT UNDER THIS AGREEMENT AND AGREES THAT SUCH SERVICE SHALL CONSTITUTE GOOD AND SUFFICIENT
SERVICE OF PROCESS AND NOTICE THEREOF. NOTHING CONTAINED HEREIN SHALL BE DEEMED TO LIMIT IN ANY WAY ANY RIGHT TO SERVE PROCESS IN ANY MANNER PERMITTED BY LAW. THE COMPANY HEREBY WAIVES ALL RIGHTS TO A TRIAL BY JURY.
(d) The headings herein are for convenience only, do not constitute a part of this Note and shall not be deemed to limit or affect any of the provisions hereof.
(e) In case any one or more of the provisions of this Note shall be invalid or unenforceable in any respect, the validity and enforceability of the remaining terms and provisions of this Note shall not in any way be affected or impaired thereby and the parties will attempt in good faith to agree upon a valid and enforceable provision which shall be a commercially reasonable substitute therefor, and upon so agreeing, shall incorporate such substitute provision in this Note.
(f) In the event of any stock split, subdivision, dividend or distribution payable in shares of Common Stock (or other securities or rights convertible into, or entitling the holder thereof to receive directly or indirectly shares of Common Stock), combination or other similar recapitalization or event occurring after the date hereof, each reference in this Note to a price shall be amended to appropriately account for such event.
(g) This Note, together with the other Transaction Documents, constitutes the entire agreement of the parties with respect to the subject matter hereof. No provision of this Note may be waived or amended except in a written instrument signed, in the case of an amendment, by the Company and the Majority Holders or, in the case of a waiver, by the Majority Holders. Any waiver executed by the Majority Holders shall be binding on the Company and all Holders. No waiver of any default with respect to any provision, condition or requirement of this Note shall be deemed to be a continuing waiver in the future or a waiver of any subsequent default or a waiver of any other provision, condition or requirement hereof, nor shall any delay or omission of either party to exercise any right hereunder in any manner impair the exercise of any such right.