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Document Preview Modification Agreement |
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Title: |
Modification Agreement |
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Date: |
2001 |
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Preview shows 23KB of 119KB total |
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$53 |
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ID: |
#1956069 |
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MODIFICATION AGREEMENT
THIS MODIFICATION AGREEMENT (the "Agreement") is made effective as of
June 1, 2001 (the "Effective Date"), by and between George Abi Zeid ("Holder"),
and EasyLink Services Corporation ("EasyLink" or the "Company").
W I T N E S S E T H:
- - - - - - - - - -
A. Holder is the holder of a promissory note issued by EasyLink in
the original principal amount of $9,188,235 (the " Original
Note").
B. EasyLink has requested that Holder modify the Original Note as set
forth herein and forbear from exercising his rights and remedies
under the Original Note, and, subject to the terms and conditions
contained herein, Holder has agreed to do so for the period
provided herein.
NOW, THEREFORE, for and in consideration of the mutual covenants set
forth herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. Representations of EasyLink. EasyLink hereby represents and warrants
to Holder as follows:
(a) Neither the execution of this Agreement, nor the consummation
of the transactions contemplated thereby, will constitute a violation of, or
will conflict with, any agreement entered into by EasyLink, or any order, decree
or judgment made against EasyLink.
(b) This Agreement has been duly authorized by all requisite
corporate action on the part of EasyLink, has been duly executed and delivered
by EasyLink and constitutes the vald and binding obligation of EasyLink
enforceable in accordance with its terms.
2. Forbearance and Waiver. Provided that EasyLink complies with all
terms and conditions of this Agreement, Holder hereby waives all current
defaults under the Original Note and defers all payments under the Original Note
until November 30, 2001, subject to Holder's right to revoke this waiver and
deferral at any time by giving written notice to Easylink that the waiver is
being terminated in the event that EasyLink fails to comply with its obligations
hereunder. All deferred payments under the Original Note will continue to accrue
interest at the late payment interest rate specified in the Original Note. Upon
termination of the waiver and deferral, all deferred payments, including
applicable interest, will be immediately due and payable.
Nothing in this paragraph or in any other provision of this Agreement
shall be deemed to be a waiver of any of Holder's rights under the Original Note
or otherwise available to Holder at law or in equity. In addition, nothing in
this Agreement shall be construed to release EasyLink from any liability under
the Original Note. Holder hereby expressly reserves all such remedies.
{PAGE}
3. Restructure. If EasyLink consummates a restructuring arrangement
with AT&T Corp. with respect to its outstanding $35 million note and lessors
holding at least 90% of the outstanding obligations under EasyLink's existing
equipment leases (other than exceptions agreed to by Holder) on terms and
conditions, taken as a whole, that are not more favorable to any of such
creditors than the terms hereof (the "Other Creditor's Condition"), then the
Original Note shall be amended and restated in the form of the Note (as defined
below) and converted into the right to receive the Shares and the Warrants and
EasyLink shall enter the Registration Rights Agreement on the following terms
and conditions:
(a) EasyLink shall execute and deliver to Holder a promissory
note in the principal amount of $2,682,964 (the "Note"). The Note shall be in
the form attached hereto as Exhibit A.
(b) EasyLink shall deliver 2,682,964 shares of EasyLink's
Class A common stock, par value $.01 per share ("Shares") to Holder. 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 date of the
closing of the issuance of the Shares (the "Closing Date").
(c) EasyLink shall deliver warrants to purchase 2,682,964
shares of EasyLink's Class A common stock, par value $.01 per share
("Warrants"), to Holder. The Warrants shall be in the form attached hereto as
Exhibit B. The Warrants shall expire ten (10) years from the date of issue and
shall have an exercise price equal to the average of the closing prices of
EasyLink's Class A common stock over the 30 trading days ending two days before
the Closing Date. The initial exercise price under the Warrants and the number
of shares issuable upon exercise of the Warrants shall be appropriately adjusted
in the event the Company shall effect a stock split, stock dividend or stock
combination on or before the Closing Date and thereafter shall be subject to
adjustment as provided in the form of Warrants.
(d) EasyLink will execute, and Holder shall be entitled to
become a party to a registration rights agreement which will obligate EasyLink
to file within 45 days from the Closing Date a registration statement covering
the resale of the Shares and the shares issuable upon exercise of the Warrants
and to use all reasonable commercial efforts to cause such registration
statement to become effective as soon as practicable thereafter. The
Registration Rights Agreement shall be in the form attached hereto as Exhibit C.
(e) Holder 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 all agreements with other creditors to Holder.
4. Compliance with Act; Disposition of Shares of Common Stock.
(a) Compliance with Act. Holder of the Note, the Shares and
the Warrants (collectively, the "Securities"), by acceptance thereof, agrees
that the Securities, and the shares to be issued upon conversion of the Note or
payment of interest on the Note or prepayment of the Note (collectively, the
"Conversion Shares") or exercise of the Warrants (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 Warrants, 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, Holder 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. 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:
2
{PAGE}
" 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."
The Company agrees that Berlack, Israels & Liberman LLP is acceptable
counsel to issue an opinion contemplated by the foregoing legend. Said legend
shall be removed by the Company, upon the request of a holder, at such time as
the restrictions on the transfer of the applicable security shall have
terminated. In addition, in connection with the issuance of the Securities and,
by acceptance of the Securities, Holder specifically represents to the Company,
as of the date hereof and upon the date of issuance of the Securities as
follows:
(1) 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. 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) 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 Holder's investment intent as expressed herein.
(3) 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.
Holder is aware of the provisions of Rule 144, promulgated under the
Act.
(4) Holder is an "accredited investor" as such term is defined
in Rule 501 of Regulation D promulgated under the Act.
3
{PAGE}
(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, Holder agrees to give written notice to the Company prior thereto,
describing briefly the manner thereof, together with a written opinion of
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
(it being understood that Berlack, Israels & Lieberman LLP is acceptable counsel
to issue such an 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 4(b) that the opinion of counsel for Holder or
other evidence is not reasonably satisfactory to the Company, the Company shall
so notify Holder promptly with details thereof after such determination has been
made. Notwithstanding the foregoing, the Securities, the Conversion Shares or
the Warrant Shares may, as to such federal laws, be offered, sold or otherwise
disposed of in accordance with Rule 144 under the Act, provided that the Company
shall have been furnished with such information as the Company may reasonably
request to provide a reasonable assurance that the provisions of Rule 144 have
been satisfied. Each certificate representing Securities, Conversion Shares or
Warrant Shares thus transferred (except a transfer pursuant to Rule 144) shall
bear a legend as to the applicable restrictions on transferability in order to
ensure compliance with such laws, unless in the aforesaid opinion of counsel for
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. The Company agrees to take use reasonable
commercial efforts to take all actions reasonably necessary to enable the
Securities, the Conversion Shares and the Warrant Shares to be eligible for sale
under Rule 144 upon satisfaction of any required holding periods under Rule 144.
(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 4(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 Holder if Holder is a
partnership or to a member of Holder if Holder is a limited liability company,
(ii) to a partnership of which Holder is a partner or to a limited liability
company of which Holder is a member, or (iii) to any affiliate of Holder if
Holder is a corporation; provided, however, in any such transfer, if applicable,
the transferee shall on the Company's request agree in writing to be bound by
the terms of this Agreement as if an original holder hereof.
5. Expenses. EasyLink agrees to pay all costs, fees, and
expenses of Holder in the enforcement of this Agreement.
6. Binding Effect; Integration. This Agreement shall be
binding upon the parties and their respective heirs, successors and assigns.
This Agreement, together with the Original Note and the Exhibits hereto,
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.
4
{PAGE}
7. Severability. The provisions of this Agreement are intended
to be severable. If any of the provisions of this initial Agreement shall be
held invalid or unenforceable in whole or in part in any jurisdiction, such
provision shall, as to such jurisdiction, be ineffective to the extent of such
invalidity or enforceability without in any matter affecting the validity or
enforceability of such provision in any other jurisdiction or the remaining
provisions of this Agreement in any jurisdiction.
8. Governing Law. This Agreement shall be governed and
construed in accordance with the substantive laws of the State of New York,
without regard to the choice of law principles of such state.
9. Survival. All representations, warranties, covenants,
agreements, undertakings, waivers and releases contained herein shall survive
the Closing Date.
10. Amendment. No amendment, modification, rescission, waiver
or release of any provision of this Agreement shall be effective unless the same
shall be in writing and signed by the parties hereto.
11. Venue; Jurisdiction; Jury Trial Waiver. EasyLink and
Holder each hereby irrevocably: (1) consent to the jurisdiction of any state or
federal court sitting in the State of New York; (2) agree that venue shall be
proper in any court of competent jurisdiction located in the Borough of
Manhattan, the City and State of New York; and (3) waive the right to trial by
jury on any controversy arising out of or relating to this Agreement.
12. Notices. All notices and communications provided for
hereunder shall be in writing and sent (1) by telecopy if the sender on the same
day sends a confirming copy of such notice by a recognized overnight delivery
service (charges prepaid), or (2) by registered or certified mail with return
receipt requested (postage prepaid), or (3) by a recognized overnight delivery
service (with charges prepaid). Any such notice must be sent:
(a) if to Holder, to him at 320 Frost Pond Road, Old Brookville, NY
11545, or at such other address as you or it shall have specified to
the Company in writing, or
(b) if to the Company, to the Company at 399 Thornall Street, 6th
Floor, Edison, New Jersey 08837, to the attention of Thomas Murawski,
with a copy to David Ambrosia at the same address, or at such other
address as the Company shall have specified to Holder in writing.
Notices under this Section 12 will be deemed given only when
actually received.
[REST OF PAGE INTENTIONALLY LEFT BLANK]
5
{PAGE}
IN WITNESS WHEREOF, the parties hereto have signed this Agreement as of
the effective date.
/s/ George Abi Zeid
-------------------------------------------
George Abi Zeid
EASYLINK SERVICES CORPORATION
By: /s/ Gerald Gorman
---------------------------------------
Print Name: Gerald Gorman
Its: Chairman
6
{PAGE}
EXHIBIT A
THIS NOTE AND THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED. THEY MAY NOT BE SOLD, OFFERED FOR SALE,
PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS
TO THE SECURITIES UNDER SAID ACT OR AN OPINION OF COUNSEL SATISFACTORY TO THE
CORPORATION THAT SUCH REGISTRATION IS NOT REQUIRED.
EASYLINK SERVICES CORPORATION
PROMISSORY NOTE
$2,682,964 Effective as of June 1, 2001
FOR VALUE RECEIVED EASYLINK SERVICES CORPORATION, a Delaware
corporation ("EasyLink" or the "Company") promises to pay to GEORGE ABI ZEID
("Holder"), or his registered assigns, the principal sum of TWO MILLION SIX
HUNDRED EIGHTY TWO THOUSAND NINE HUNDRED SIXTY FOUR DOLLARS ($2,682,964), or
such lesser amount as shall equal the outstanding principal amount hereof,
together with interest from June 1, 2001 on the unpaid principal balance at the
rate specified herein, payable as provided herein.
The following is a statement of the rights of Holder and the conditions
to which this Note is subject, and to which Holder, by the acceptance of this
Note, agrees:
1. Definitions. As used in this Note, the following capitalized terms
have the following meanings:
"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 the Company.
"Bankruptcy Law" shall mean Title 11 of the United States Code (11
U.S.C. Section 101 et. seq.), as amended from time to time, 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.
{PAGE}
"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.
"Closing Date" has the meaning given in Section 3(b) of the
Modification Agreement between the Company and George Abi Zeid dated as of June
1, 2001.
"Common Stock" means Class A common stock, par value $.01 per share, of
Company or any shares into which such shares have been changed pursuant to any
recapitalization, merger, consolidation or similar event.
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