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Exhibit 99.1
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MAIL.COM, INC.
MAIL.COM BUSINESS MESSAGING SERVICES, INC.
THE ALLEGRO GROUP, INC.
Up to $15,000,000
10% Senior Convertible Notes due January 8, 2006
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NOTE PURCHASE AGREEMENT
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Dated January 8, 2001
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TABLE OF CONTENTS
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1. Authorization of Notes and Shares.......................................................1
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2. Sale And Purchase Of Notes..............................................................1
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3. Closing.................................................................................2
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4. Conditions To Closing...................................................................2
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4.1 Representations and Warranties...................................................2
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4.2 Performance; No Default..........................................................2
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4.3 Compliance Certificates..........................................................3
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4.4 Opinions of Counsel..............................................................3
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4.5 Purchase Permitted By Applicable Law, etc........................................3
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4.6 Transaction Agreements; Delivery of Collateral; Board Designation Letter.........3
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4.7 Proceedings and Documents........................................................3
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5. Representations And Warranties Of The Companies.........................................3
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5.1 Organization; Power and Authority................................................4
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5.2 Authorization, etc...............................................................4
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5.3 Disclosure.......................................................................4
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5.4 Capitalization; Organization and Ownership of Shares of Subsidiaries.............4
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5.5 Financial Statements.............................................................5
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5.6 Compliance with Laws, Other Instruments, etc.....................................5
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5.7 Governmental and Third Party Authorizations, etc.................................6
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5.8 Litigation; Observance of Agreements, Statutes and Orders........................6
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5.9 Taxes. (a)......................................................................6
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5.10 Title to Property; Leases........................................................6
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5.11 Licenses, Permits, etc...........................................................7
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5.12 Compliance with ERISA............................................................7
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5.13 Private Offering by the Company..................................................7
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5.14 Use of Proceeds; Margin Regulations..............................................8
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5.15 Existing Indebtedness............................................................8
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5.16 Foreign Assets Control Regulations, etc..........................................8
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5.17 Status under Certain Statutes....................................................8
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5.18 Restrictions on Dividends or other Distributions.................................8
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6. Representations Of The Purchasers.......................................................9
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6.1 Purchase for Investment; Status of Purchasers; Restrictions on Securities........9
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6.2 Source of Funds..................................................................9
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7. Information as to Company..............................................................10
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7.1 Financial and Business Information..............................................10
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7.2 Officer's Certificate...........................................................12
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7.3 Inspection......................................................................13
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8. Prepayment of the Notes................................................................13
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8.1 Optional and Mandatory Prepayments. (a)........................................13
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8.2 Allocation of Partial Optional Prepayments......................................14
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8.3 Maturity; Surrender, etc........................................................14
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9. Affirmative Covenants..................................................................15
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9.1 Compliance with Law.............................................................15
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9.2 Insurance.......................................................................15
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9.3 Maintenance of Properties.......................................................15
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9.4 Payment of Taxes................................................................15
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9.5 Corporate Existence, etc........................................................15
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9.6 Stay, Extension And Usury Law...................................................16
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9.7 Investment Company Act..........................................................16
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9.8 Reservation of Shares...........................................................16
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10. Negative Covenants.....................................................................16
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10.1 Transactions with Affiliates....................................................16
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10.2 Merger, Consolidation, etc......................................................16
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10.3 Liens...........................................................................16
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10.4 Indebtedness....................................................................16
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11. Events of Default......................................................................16
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12. Remedies on Default, etc...............................................................16
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12.1 Acceleration....................................................................16
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12.2 Other Remedies..................................................................16
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12.3 Rescission......................................................................16
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12.4 No Waivers or Election of Remedies, Expenses, etc...............................16
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13. Registration; Exchange; Substitution of Notes..........................................16
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13.1 Registration of Notes...........................................................16
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13.2 Transfer and Exchange of Notes..................................................16
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13.3 Replacement of Notes............................................................16
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14. Payments On Notes......................................................................16
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14.1 Place of Payment................................................................16
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14.2 Home Office Payment.............................................................16
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15. Conversion.............................................................................16
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15.1. Conversion Privilege............................................................16
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15.2. Conversion Procedure............................................................16
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15.3. Fractional Shares...............................................................16
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15.4. Taxes on Conversion.............................................................16
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15.5. Company to Provide Stock........................................................16
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15.6. Adjustment of Conversion Price..................................................16
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15.7. No Adjustment...................................................................16
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15.8. Other Adjustments...............................................................16
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15.9. Notice of Adjustment............................................................16
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15.10. Notice of Certain Transactions..................................................16
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15.11. Effect of Reclassifications, Consolidations, Mergers, Continuances or Sales on
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Conversion Privilege............................................................16
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15.12. Cancellation of Converted Notes.................................................16
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16. Expenses, etc..........................................................................16
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16.1 Transaction Expenses............................................................16
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16.2 Survival........................................................................16
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17. Survival Of Representations And Warranties; Entire Agreement...........................16
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18. Amendment And Waiver...................................................................16
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18.1 Requirements....................................................................16
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18.2 Solicitation of Holders of Notes................................................16
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18.3 Binding Effect, etc.............................................................16
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18.4 Notes held by Company, etc......................................................16
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19. Notices................................................................................16
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20. Reproduction Of Documents..............................................................16
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21. Confidential Information...............................................................16
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22. Substitution Of Purchaser..............................................................16
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23. Miscellaneous..........................................................................16
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23.1 Successors and Assigns..........................................................16
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23.2 Payments Due on Non-Business Days...............................................16
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23.3 Severability....................................................................16
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23.4 Construction....................................................................16
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23.5 Counterparts....................................................................16
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23.6 Governing Law...................................................................16
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23.7 Submission to Jurisdiction; Service of Process..................................16
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23.8 Section Titles..................................................................16
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23.9 Cap on Maximum Shares Issuable..................................................16
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23.10 Designated Senior Debt..........................................................16
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MAIL.COM, INC.
MAIL.COM BUSINESS MESSAGING SERVICES, INC.
THE ALLEGRO GROUP, INC.
10 % Senior Convertible Notes due January 8, 2006
January 8, 2001
TO EACH OF THE PURCHASERS LISTED IN
THE ATTACHED SCHEDULE A:
Ladies and Gentlemen:
Mail.com, Inc., a Delaware corporation ("Mail.com" or the "Company"),
Mail.com Business Messaging Services, Inc., a Delaware corporation ("Mail.com
BMS"), and The Allegro Group, Inc., an Ohio corporation ("Allegro"; Mail.com,
Mail.com BMS and Allegro being referred to herein collectively as the
"Companies"), agree with you as follows:
1. Authorization of Notes and Shares. (a) The Companies have
authorized the issue and sale of up to Fifteen Million United States dollars
(U.S. $15,000,000) aggregate principal amount of 10% Senior Convertible Notes
due January 8, 2,006 (the "Notes", such term to include any such notes issued in
substitution therefor pursuant to Section 13 of this Agreement or the other
Transaction Agreements). The Notes shall be substantially in the form set out in
Exhibit 1, with such changes therefrom, if any, as may be approved by you and
the Companies. Certain capitalized terms used in this Agreement are defined in
Schedule B; references to a "Schedule" or an "Exhibit" are, unless otherwise
specified, to a Schedule or an Exhibit attached to this Agreement.
(b) The Company has authorized and has reserved and covenants to continue
to reserve, free of preemptive rights and other similar contractual rights of
stockholders, a sufficient number of authorized but unissued shares of Class A
common stock, par value $.01 per share, or other securities into which the Notes
are convertible in accordance with their terms and a sufficient number of such
shares or securities issuable in payment of interest on the Notes (such shares
or other securities being referred to herein as the "Common Shares") to satisfy
the rights of conversion of and interest payments on the Note.
(c) All of the obligations under this Agreement and the Notes on the part
of the Company, Mail.com BMS or Allegro shall be joint and several obligations
of the Company, Mail.com BMS and Allegro.
2. Sale And Purchase Of Notes. Subject to the terms and conditions of
this Agreement, the Companies will issue and sell to you and you will purchase
from the Companies, at the Closing provided for in Section 3, Notes in the
principal amount specified opposite your name in Schedule A at the purchase
price of 100 % of the principal amount thereof. The obligations of each
Purchaser hereunder and under the Notes, the Pledge Agreement, the
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Registration Rights Agreement and the Accession Agreements (together with this
Agreement, the "Transaction Agreements") are several and not joint obligations
and none of the Purchasers shall have any obligation under any Transaction
Agreement or any liability to any Person for the performance or nonperformance
by any other Purchaser hereunder or thereunder.
3. Closing. (a) The initial closing of the purchase and sale of the
Notes hereunder shall be held at the offices of the Company at 11 Broadway, New
York, NY 10004, at 10:00 a.m., local time, on January 8, 2001 (the "Initial
Closing") or at such other time and place as shall be mutually agreed upon by
the Company and the Purchasers (the date of the Initial Closing is hereinafter
referred to as the "Initial Closing Date"). Each of the Initial Closing and each
subsequent closing contemplated by Section 3(c) is herein referred to as a
"Closing" and each of the Initial Closing Date and the date of each subsequent
Closing is herein referred to as a "Closing Date".
(b) At each Closing, the Companies will deliver to you the Notes to be
purchased by you in the form of a single Note (or such greater number of Notes
in denominations of at least $100,000 as you may request) dated the date of the
Closing and registered in your name (or in the name of your nominee), against
delivery by you to the Company or its order of immediately available funds in
the amount of the purchase price therefor by wire transfer of immediately
available funds for the account of Mail.com, Inc. to account number 323879284 at
Chase Manhattan Bank, 1411 Broadway, 5th floor, New York NY 10018, ABA number
021000021 (contact phone number 212-391-7166: Attention Min Kang).
(c) The Companies may issue up to Fifteen Million United States Dollars
($15,000,000) aggregate principal amount of Notes (including the Notes issued on
the Initial Closing Date) on or before 90 days after the Initial Closing Date
under this Agreement. Each subsequent purchaser of Notes shall execute and
deliver an agreement (an "Accession Agreement") agreeing to be bound by each of
this Agreement and the other Transaction Agreements to which the Purchasers are
party and shall thereby become a Purchaser hereunder and thereunder. Each such
Accession Agreement shall contain a new Schedule A as of the Closing Date for
such Closing.
4. Conditions To Closing. Your obligation to purchase and pay for the
Notes to be sold to you at a Closing is subject to the fulfillment to your
satisfaction, prior to or at such Closing, of the following conditions:
4.1 Representations and Warranties. The representations and
warranties of the Companies in this Agreement shall be correct when made
and at the time of such Closing with the same effect as if made on the
Closing Date.
4.2 Performance; No Default. The Companies shall have performed
and complied with all agreements and conditions contained in the
Transaction Agreements required to be performed or complied with by them
prior to or at such Closing and after giving effect to the issue and sale
of the Notes (and the application of the proceeds thereof as contemplated
by Schedule 5.14) no Default or Event of Default shall have occurred and
be continuing.
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4.3 Compliance Certificates. (a) Officer's Certificate. The
Companies shall have delivered to you an Officer's Certificate, dated the
date of the Closing, certifying that the conditions specified in Sections
4.1 and 4.2 have been fulfilled.
(b) Secretary's Certificate. The Companies shall have delivered
to you a certificate certifying as to the resolutions attached thereto
and other corporate proceedings relating to the authorization, execution
and delivery of the Notes and the other Transaction Agreements and the
certificates of incorporation (or other organizational documents) and
bylaws of the Companies.
4.4 Opinions of Counsel. You shall have received opinions in
form and substance satisfactory to you, dated the date of the Closing
from counsel for the Companies covering the matters set forth in Exhibit
4.4 (and the Companies hereby instruct their counsel to deliver such
opinion to you).
4.5 Purchase Permitted By Applicable Law, etc. On the Closing
Date, your purchase of Notes shall (i) be permitted by the laws and
regulations of each jurisdiction to which you are subject, (ii) not
violate any applicable law or regulation (including, without limitation,
Regulation U, T or X of the Board of Governors of the Federal Reserve
System) and (iii) not subject you to any tax, penalty or liability under
or pursuant to any applicable law or regulation, which law or regulation
was not in effect on the date hereof. If requested by you, you shall have
received an Officer's Certificate certifying as to such matters of fact
as you may reasonably specify to enable you to determine whether such
purchase is so permitted.
4.6 Transaction Agreements; Delivery of Collateral; Board
Designation Letter. You shall have received from the Company and
World.com, Inc., a Nevada corporation and wholly-owned subsidiary of
Mail.com ("World.com") (i) duly executed and delivered copies of each of
the Pledge Agreement and, in the case of the Company, the Registration
Rights Agreement in the respective forms of Exhibits 2 and 3 (the "Pledge
Agreement" and the "Registration Rights Agreement") and (ii) the stock
certificates representing the shares of Class B common stock of
India.com, Inc. required to be pledged under the Pledge Agreement,
together with duly executed blank stock powers. Federal Partners, L.P.
shall have received from the Company a duly executed board designation
letter in form of Exhibit 4.
4.7 Proceedings and Documents. All corporate and other
proceedings in connection with the transactions contemplated by this
Agreement and all documents and instruments incident to such transactions
shall be satisfactory to you and your counsel, and you and your counsel
shall have received all such counterpart originals or certified or other
copies of such documents as you or they may reasonably request.
5. Representations And Warranties Of The Companies. The Companies,
jointly and severally, represent and warrant to you that, except as disclosed in
the SEC Filings or in the Disclosure Schedules attached hereto:
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5.1 Organization; Power and Authority. The Company is a
corporation duly organized, validly existing and in good standing under
the laws of its jurisdiction of incorporation, and is duly qualified as a
foreign corporation and is in good standing in each jurisdiction in which
such qualification is required by law, other than those jurisdictions as
to which the failure to be so qualified or in good standing could not,
individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect. The Company has the corporate power and
authority to own or hold under lease the properties it purports to own or
hold under lease, to transact the business it transacts and proposes to
transact. Each of the Companies has the corporate power and authority to
execute and deliver this Agreement and the other Transaction Agreements
and to perform the provisions hereof and thereof.
5.2 Authorization, etc. (a) This Agreement and the other
Transaction Agreements have been duly authorized by all necessary
corporate action on the part of each of the Companies, and this Agreement
constitutes, and upon execution and delivery thereof each other
Transaction Agreement will constitute, a legal, valid and binding
obligation of each of the Companies enforceable against each of the
Companies in accordance with its terms, except as such enforceability may
be limited by (i) applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the enforcement of creditors'
rights generally and (ii) general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at
law).
(b) The Common Shares have been duly authorized by all necessary
corporate action on the part of the Company and have been duly reserved
for issuance. When the Common Shares are issued upon conversion of the
Notes or in payment of interest on the Notes in accordance with the terms
of the Notes such shares will be validly issued and outstanding, fully
paid and nonassessable and the issuance of such shares will not be
subject to preemptive or other similar contractual rights of any other
stockholder of the Company.
5.3 Disclosure. Complete and correct copies of all reports and
other filings required to be filed by the Company as of the date hereof
with the Securities and Exchange Commission (the "SEC") pursuant to the
Securities Act and the Exchange Act and the rules and regulations
thereunder since January 1, 2000 (such reports and other filings
collectively referred to herein as the "SEC Filings") are available on
the SEC's EDGAR web site. As of their respective dates, the SEC Filings
did not contain any untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were
made, not misleading. At the time of filing, the SEC Filings complied as
to form in all material respects with the applicable requirements of the
Securities Act and the Exchange Act and the applicable rules and
regulations thereunder.
5.4 Capitalization; Organization and Ownership of Shares of
Subsidiaries. (a) As of the date hereof, the authorized capital stock of
the Company consisted of 150,000,000 shares of Class A common stock, of
which approximately 51,718,039 shares are issued and outstanding,
10,000,000 shares of Class B common stock, par value $.01 per share, of
which 10,000,000 shares are issued and outstanding, and 60,000,000 shares
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of Preferred Stock, none of which is issued and outstanding. The
outstanding shares of capital stock have been duly authorized and validly
issued, and are fully paid and non-assessable. As of the date hereof,
there are 5,277,044 shares (subject to adjustment under certain
circumstances) of Class A common stock issuable upon conversion of
$100,000,000 principal amount of outstanding 7.00% Convertible
Subordinated Notes Due 2005 and warrants to purchase 231,233 shares of
Class A common stock outstanding. As of September 30, 2000, there were
options to purchase 14,512,529 shares of Class A common stock. Except as
disclosed in the SEC Filings or Schedule 5.4, there are no other options,
warrants, convertible securities, preemptive rights or other rights to
purchase any of the Company's authorized and unissued capital stock.
(b) Schedule 5.4 contains (except as noted therein) complete
and correct lists of the Company's Subsidiaries, showing, as to each
Subsidiary, the correct name thereof, the jurisdiction of its
organization, and the percentage of shares of each class of its capital
stock or similar equity interests outstanding owned by the Company and
each other Subsidiary.
(c) All of the outstanding shares of capital stock or similar
equity interests of each Subsidiary shown in Schedule 5.4 as being owned
by the Company and its Subsidiaries have been validly issued, are fully
paid and nonassessable and are owned by the Company or another Subsidiary
free and clear of any Lien (except as otherwise disclosed in Schedule
5.4).
(d) Each Subsidiary identified in Schedule 5.4 is a corporation
or other legal entity duly organized, validly existing and in good
standing under the laws of its jurisdiction of organization, and is duly
qualified as a foreign corporation or other legal entity and is in good
standing in each jurisdiction in which such qualification is required by
law, other than those jurisdictions as to which the failure to be so
qualified or in good standing could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect. Each
such Subsidiary has the corporate or other power and authority to own or
hold under lease the properties it purports to own or hold under lease
and to transact the business it transacts and proposes to transact.
5.5 Financial Statements. The financial statements of the
Company consisting of the balance sheets, income statements and cash flow
statements included in the SEC filings (including in each case the
related notes) fairly present in all material respects the consolidated
financial position of the Company and its Subsidiaries as of their
respective dates and the consolidated results of their operations and
cash flows for the respective periods so specified and have been prepared
in accordance with GAAP consistently applied throughout the periods
involved except as set forth in the notes thereto (subject, in the case
of any interim financial statements, to normal year-end adjustments).
5.6 Compliance with Laws, Other Instruments, etc. The
execution, delivery and performance by each of the Companies of the
Transaction Agreements will not (i) contravene, result in any breach of,
or constitute a default under, or result in the creation of any Lien in
respect of any property of the Company or any Subsidiary under, any
indenture, mortgage, deed of trust, loan, purchase or credit agreement,
lease, corporate
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charter or by-laws, or any other agreement or instrument to which the
Company or any Subsidiary is bound or by which the Company or any
Subsidiary or any of their respective properties may be bound or
affected, (ii) conflict with or result in a breach of any of the terms,
conditions or provisions of any order, judgment, decree, or ruling of any
court, arbitrator or Governmental Authority applicable to the Company or
any Subsidiary or (iii) violate or conflict with any provision of any
statute or other rule or regulation of any Governmental Authority
applicable to the Company or any Subsidiary.
5.7 Governmental and Third Party Authorizations, etc. No
consent, approval or authorization of, or registration, filing or
declaration with, any Governmental Authority or other third party is
required in connection with the execution, delivery or performance by the
Companies of the Transaction Agreements.
5.8 Litigation; Observance of Agreements, Statutes and Orders.
(a) Except as disclosed in Schedule 5.8, there are no actions, suits or
proceedings pending or, to the best knowledge of the Companies,
threatened against or affecting the Company or any Subsidiary or any
property of the Company or any Subsidiary in any court or before any
arbitrator of any kind or before or by any Governmental Authority that,
individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect.
(b) Neither the Company nor any Subsidiary is in violation of
or default under any term of any charter, bylaw, agreement or instrument
to which it is a party or by which it is bound, or any order, judgment,
decree or ruling of any court, arbitrator or Governmental Authority or is
in violation of any applicable law, ordinance, rule or regulation of any
Governmental Authority, which default or violation, individually or in
the aggregate, could reasonably be expected to have a Material Adverse
Effect.
5.9 Taxes. (a) The Company and its Subsidiaries have filed all
tax returns that are required to have been filed in any jurisdiction, and
have paid all taxes shown to be due and payable on such returns and all
other taxes and assessments levied upon them or their properties, assets,
income or franchises, to the extent such taxes and assessments have
become due and payable and before they have become delinquent, except for
any taxes and assessments (i) the amount of which is not individually or
in the aggregate Material or (ii) the amount, applicability or validity
of which is currently being contested in good faith by appropriate
proceedings and with respect to which the Company or a Subsidiary, as the
case may be, has established adequate reserves in accordance with GAAP.
The Companies know of no basis for any other tax or assessment that could
reasonably be expected to have a Material Adverse Effect. The charges,
accruals and reserves on the books of the Company and its Subsidiaries in
respect of Federal, state or other taxes for all fiscal periods are
adequate.
(b) There are no transfer taxes or similar fees or charges
required to be paid in connection with the execution and delivery of the
Transaction Agreements or the original issuance by the Company of the
Notes.
5.10 Title to Property; Leases. The Company and its Subsidiaries
have good and sufficient title to their respective properties that
individually or in the aggregate are
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Material, including all such properties reflected in the most recent
audited balance sheet referred to in Section 5.5 or purported to have
been acquired by the Company or any Subsidiary after said date (except as
sold or otherwise disposed of in the ordinary course of business), in
each case free and clear of Liens prohibited by this Agreement. All
leases that individually or in the aggregate are Material are valid and
subsisting and are in full force and effect in all material respects.
5.11 Licenses, Permits, etc. Except as disclosed in Schedule
5.11 or in the SEC Filings,
(a) the Company and its Subsidiaries own or possess all
licenses, permits, franchises, authorizations, patents, patent
applications, copyrights, service marks, trademarks and trade names,
domain names, trade secrets, technology and know-how and other
intellectual property rights, or rights thereto, that individually or in
the aggregate are Material, without, to the best knowledge of the
Companies, conflict with the rights of others;
(b) to the best knowledge of the Companies, no product of the
Company or any of its Subsidiaries infringes in any material respect any
license, permit, franchise, authorization, patent, patent application,
copyright, service mark, trademark, trade name, domain name, trade
secret, technology, know-how or other intellectual property right, or
other right owned by any other Person; and
(c) to the best knowledge of the Companies, there is no
Material violation by any Person of any right of the Company or any of
its Subsidiaries with respect to any patent, patent application,
copyright, service mark, trademark, trade name, domain name, trade
secret, technology, know-how or other intellectual property right, or
other right owned or used by the Company or any of its Subsidiaries.
5.12 Compliance with ERISA. The Companies and each ERISA
Affiliate have operated and administered each Plan in compliance with all
applicable laws except for such instances of noncompliance as have not
resulted in and could not reasonably be expected to result in a Material
Adverse Effect. None of the Companies nor any ERISA Affiliate has
incurred any liability pursuant to Title I or IV of ERISA or the penalty
or excise tax provisions of the Code relating to employee benefit plans
(as defined in Section 3 of ERISA), and no event, transaction or
condition has occurred or exists that could reasonably be expected to
result in the incurrence of any such liability by the Companies or any
ERISA Affiliate, or in the imposition of any Lien on any of the rights,
properties or assets of the Companies or any ERISA Affiliate, in either
case pursuant to Title I or IV of ERISA or to such penalty or excise tax
provisions or to Section 401(a)(29) or 412 of the Code, other than such
liabilities or Liens as would not individually or in the aggregate have
resulted in or could reasonably be expected to have a Material Adverse
Effect.
5.13 Private Offering by the Company. Neither the Companies nor
anyone acting on their behalf has offered the Notes or any similar
securities for sale to, or solicited any offer to buy any of the same
from, or otherwise approached or negotiated in
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respect thereof with, any person other than the Purchasers and not more
than 50 other accredited investors (within the meaning of Rule 501 of
Regulation D promulgated under the Securities Act), each of which has
been offered the Notes at a private sale for investment. Neither the
Companies nor anyone acting on their behalf has taken, or will take, any
action that would subject the issuance or sale of the Notes to the
registration requirements of Section 5 of the Securities Act.
5.14 Use of Proceeds; Margin Regulations. The Companies will
apply the proceeds of the sale of the Notes as set forth in Schedule
5.14. No part of the proceeds from the sale of the Notes hereunder will
be used, directly or indirectly, for the purpose of buying or carrying
any margin stock within the meaning of Regulation U of the Board of
Governors of the Federal Reserve System (12 CFR 207), or for the purpose
of buying or carrying or trading in any securities under such
circumstances as to involve any of the Companies in a violation of
Regulation X of said Board (12 CFR 224) or to involve any broker or
dealer in a violation of Regulation T of said Board (12 CFR 220). As used
in this Section, the terms "margin stock" and "purpose of buying or
carrying" shall have the meanings assigned to them in said Regulation U.
5.15 Existing Indebtedness. Except as described therein,
Schedule 5.15 sets forth a complete and correct list of all outstanding
Indebtedness of the Company and its Subsidiaries as of November 30, 2000,
since which date there has been no Material change in the amounts,
interest rates, sinking funds, installment payments or maturities of the
Indebtedness of the Company or its Subsidiaries. Neither the Company nor
any Subsidiary is in default and no waiver of default is currently in
effect, in the payment of any principal or interest on any Indebtedness
of the Company or such Subsidiary and no event or condition exists with
respect to any Indebtedness of the Company or any Subsidiary that would
permit (or that with notice or the lapse of time, or both, would permit)
one or more Persons to cause such Indebtedness to become due and payable
before its stated maturity or before its regularly scheduled dates of
payment.
5.16 Foreign Assets Control Regulations, etc. Neither the sale
of the Notes by the Companies hereunder nor their use of the proceeds
thereof will violate the Trading with the Enemy Act, as amended, or any
of the foreign assets control regulations of the United States Treasury
Department (31 CFR, Subtitle B, Chapter V, as amended) or any enabling
legislation or executive order relating thereto.
5.17 Status under Certain Statutes. Neither the Company nor any
Subsidiary is, or will be as a result of the transactions contemplated by
the Transaction Agreements, subject to regulation under the Investment
Company Act of 1940, as amended, the Public Utility Holding Company Act
of 1935, as amended, the Interstate Commerce Act, as amended, or the
Federal Power Act, as amended.
5.18 Restrictions on Dividends or other Distributions. Except as
set forth on Schedule 5.18, no Subsidiary of the Company is currently
prohibited, directly or indirectly, from paying any dividends to the
Company, from making any other distributions on such Subsidiary's capital
stock or from repaying to the Company any loans or advances to such
Subsidiary from the Company.
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6. Representations Of The Purchasers.
6.1 Purchase for Investment; Status of Purchasers; Restrictions
on Securities.
Each Purchaser represents that it is purchasing the Notes for its own
account or for one or more separate accounts maintained by it or for the
account of one or more pension or trust funds and not with a view to the
distribution thereof, provided that the disposition of such Purchaser's
or their property shall at all times be within your or their control.
Each Purchaser (i) is an "accredited investor" as that term is defined in
Rule 501(a) promulgated under the Securities Act, (ii) is an investor
experienced in the evaluation of businesses similar to Company, (iii) is
able to fend for itself in the transactions contemplated by this
Agreement, (iv) has such knowledge and experience of financial, business
and investment matters as to be capable of evaluating the merits and
risks of this investment, (v) has the ability to bear the economic risks
of this investment, (vi) was not organized or reorganized for the
specific purpose of acquiring the Notes or the Common Shares and (vii)
has been afforded the opportunity to ask questions of, and to receive
answers from, the Company and to obtain additional information, to the
extent the Company has such information or could have acquired it without
unreasonable effort or expense, all as necessary for such Purchaser to
make an informed investment decision with respect to the Notes and the
Common Shares. Each Purchaser understands that neither the Notes nor the
Common Shares have been registered under the Securities Act, that neither
the Notes nor the Common Shares may be resold unless registered pursuant
to the provisions of the Securities Act or an exemption from registration
is available, and that the Company is not required to register the Notes.
Each Purchaser understands and acknowledges that certificates
representing the Notes and the Common Shares will bear a restrictive
legend in customary form.
6.2 Source of Funds. Each Purchaser represents that at least
one of the following statements is an accurate representation as to each
source of funds (a "Source") to be used by such Purchaser to pay the
purchase price of the Notes to be purchased by it hereunder:
(a) if such Purchaser is an insurance company, the
Source does not include assets allocated to any separate account
maintained by such Purchaser in which any employee benefit plan
(or its related trust) has any interest, other than a separate
account that is maintained solely in connection with your fixed
contractual obligations under which the amounts payable, or
credited, to such plan and to any participant or beneficiary of
such plan (including any annuitant) are not affected in any manner
by the investment performance of the separate account; or
(b) the Source is either (i) an insurance company pooled
separate account, within the meaning of Prohibited Transaction
Exemption ("PTE") 90-1 (issued January 29, 1990), or (ii) a bank
collective investment fund, within the meaning of the PTE 91-38
(issued July 12, 1991) and, except as you have disclosed to the
Company in writing pursuant to this paragraph (b), no employee
benefit plan or group of plans maintained by the same employer or
employee
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<PAGE> 14
organization beneficially owns more than 10% of all assets
allocated to such pooled separate account or collective investment
fund; or
(c) the Source constitutes assets of an "investment
fund" (within the meaning of Part V of the QPAM Exemption) managed
by a "qualified professional asset manager" or "QPAM" (within the
meaning of Part V of the QPAM Exemption), no employee benefit
plan's assets that are included in such investment fund, when
combined with the assets of all other employee benefit plans
established or maintained by the same employer or by an affiliate
(within the meaning of Section V(c)(1) of the QPAM Exemption) of
such employer or by the same employee organization and managed by
such QPAM, exceed 20% of the total client assets managed by such
QPAM, the conditions of Part I(c) and (g) of the QPAM Exemption
are satisfied, neither the QPAM nor a person controlling or
controlled by the QPAM (applying the definition of "control" in
Section V(e) of the QPAM Exemption) owns a 5% or more interest in
the Company and (i) the identity of such QPAM and (ii) the names
of all employee benefit plans whose assets are included in such
investment fund have been disclosed to the Company in writing
pursuant to this paragraph (c); or
(d) the Source is a governmental plan; or
(e) the Source is one or more employee benefit plans, or
a separate account or trust fund comprised of one or more employee
benefit plans, each of which has been identified to the Company in
writing pursuant to this paragraph (e); or
(f) the Source does not include assets of any employee
benefit plan, other than a plan exempt from the coverage of ERISA.
As used in this Section 6.2, the terms "employee benefit plan",
"governmental plan", "party in interest" and "separate account" shall
have the respective meanings assigned to such terms in Section 3 of
ERISA.
7. Information as to Company.
7.1 Financial and Business Information.The Companies shall
deliver to each holder of Notes:
(a) Quarterly Statements -- within 60 days after the end of
each quarterly fiscal period in each fiscal year of the Company (other
than the last quarterly fiscal period of each such fiscal year), a copy
of :
(i) a consolidated balance sheet of the Company and its
Subsidiaries as at the end of such quarter, and
(ii) consolidated statements of income and cash flows of
the Company and its Subsidiaries, for the period
from the beginning of such fiscal year through the
end of such quarter,
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setting forth in each case in comparative form the figures for the
corresponding periods in the previous fiscal year, all in reasonable
detail, prepared in accordance with GAAP applicable to quarterly
financial statements generally, and certified by a Senior Financial
Officer as fairly presenting, in all material respects, the financial
position of the companies being reported on and their results of
operations and cash flows, subject to changes resulting from year-end
adjustments, provided that delivery within the time period specified
above of copies of the Company's Quarterly Report on Form 10-Q prepared
in compliance with the requirements therefor and filed with the
Securities and Exchange Commission shall be deemed to satisfy the
requirements of this Section 7.1(a);
(b) Annual Statements -- within 105 days after the end of each
fiscal year of the Company, duplicate copies of,
(i) a consolidated balance sheet of Mail.com and its
Subsidiaries, as at the end of such year, and
(ii) consolidated statements of income, changes in
shareholders' equity and cash flows of Mail.com and
its Subsidiaries, for such year,
setting forth in each case in comparative form the figures for the
previous fiscal year, all in reasonable detail, prepared in accordance
with GAAP, and accompanied by an opinion thereon of independent certified
public accountants of recognized national standing, which opinion shall
state that such financial statements present fairly, in all material
respects, the financial position of the companies being reported upon and
their results of operations and cash flows and have been prepared in
conformity with GAAP, and that the examination of such accountants in
connection with such financial statements has been made in accordance
with generally accepted auditing standards, and that such audit provides
a reasonable basis for such opinion in the circumstances, provided that
the delivery within the time period specified above of the Company's
Annual Report on Form 10-K for such fiscal year (together with the
Company's annual report to shareholders, if any, prepared pursuant to
Rule 14a-3 under the Exchange Act) prepared in accordance with the
requirements therefor and filed with the Securities and Exchange
Commission shall be deemed to satisfy the requirements of this Section
7.1(b);
(c) SEC and Other Reports -- promptly upon their becoming
available, one copy of (i) each financial statement, report, notice or
proxy statement sent by the Company to public securities holders
generally, and (ii) each regular or periodic report, each registration
statement (without exhibits except as expressly requested by such
holder), and each prospectus and all amendments thereto filed by the
Company with the Securities and Exchange Commission;
(d) Notice of Default or Event of Default -- promptly, and in
any event within five days after a Responsible Officer becoming aware of
the existence of any Default or Event of Default or that any Person has
given any notice or taken any action with respect to a claimed default
hereunder or that any Person has given any notice or taken any action
with respect to a claimed default of the type referred to in Section
11(e), a written notice
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<PAGE> 16
specifying the nature and period of existence thereof and what action the
Companies are taking or propose to take with respect thereto;
(e) ERISA Matters -- promptly, and in any event within five
days after a Responsible Officer becoming aware of any of the following,
a written notice setting forth the nature thereof and the action, if any,
that the Companies or an ERISA Affiliate proposes to take with respect
thereto:
(i) with respect to any Plan, any reportable event, as
defined in section 4043(b) of ERISA, for which
notice thereof has not been waived; or
(ii) the taking by the PBGC of steps to institute, or the
threatening by the PBGC of the institution of,
proceedings under section 4042 of ERISA for the
termination of, or the appointment of a trustee to
administer, any Plan, or the receipt by any of the
Companies or any ERISA Affiliate of a notice from a
Multiemployer Plan that such action has been taken
by the PBGC with respect to such Multiemployer Plan;
or
(iii) any event, transaction or condition that could
result in the incurrence of any liability by the
Companies or any ERISA Affiliate pursuant to Title I
or IV of ERISA or the penalty or excise tax
provisions of the Code relating to employee benefit
plans, or in the imposition of any Lien on any of
the rights, properties or assets of the Companies or
any ERISA Affiliate pursuant to Title I or IV of
ERISA or such penalty or excise tax provisions, if
such liability or Lien, taken together with any
other such liabilities or Liens then existing, could
reasonably be expected to have a Material Adverse
Effect;
(f) Notices from Governmental Authority -- promptly, and in any
event within 30 days of receipt thereof, copies of any notice to the
Company or any Subsidiary from any Federal or state Governmental
Authority relating to any order, ruling, statute or other law or
regulation that could reasonably be expected to have a Material Adverse
Effect; and
(g) Requested Information - subject to appropriate
confidentiality and use restrictions, with reasonable promptness, such
other data and information relating to the business, operations, affairs,
financial condition, assets or properties of the Company or any of its
Subsidiaries or relating to the ability of the Companies to perform their
obligations hereunder and under the Notes as from time to time may be
reasonably requested by any such holder of Notes.
7.2 Officer's Certificate. Each set of financial statements
delivered to a holder of Notes pursuant to Section 7.1(a) or Section
7.1(b) hereof shall be accompanied by a certificate of a Senior Financial
Officer setting forth a statement that such officer has
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<PAGE> 17
reviewed the relevant terms hereof and has made, or caused to be made,
under his or her supervision, a review of the transactions and conditions
of the Company and its Subsidiaries from the beginning of the quarterly
or annual period covered by the statements then being furnished to the
date of the certificate and that such review shall not have disclosed the
existence during such period of any condition or event that constitutes a
Default or an Event of Default or, if any such condition or event existed
or exists, specifying the nature and period of existence thereof and what
action the Companies shall have taken or propose to take with respect
thereto.
7.3 Inspection. The Companies shall permit the representatives
of each holder of Notes that is an Institutional Investor, subject to
appropriate confidentiality and use restrictions:
(a) No Default -- if no Default or Event of Default then
exists, at the expense of such holder and upon reasonable prior notice to
the Company, to visit the principal executive office of the Company, to
discuss the affairs, finances and accounts of the Company and its
Subsidiaries with the Companies' officers, and (with the consent of the
Company, which consent will not be unreasonably withheld) its independent
public accountants, and (with the consent of the Company, which consent
will not be unreasonably withheld) to visit the other offices and
properties of the Company and each Subsidiary, all at such reasonable
times and as often as may be reasonably requested in writing; and
(b) Default -- if a Default or Event of Default then exists, at
the expense of the Company to visit and inspect any of the offices or
properties of the Company or any Subsidiary, to examine all their
respective books of account, records, reports and other papers, to make
copies and extracts therefrom, and to discuss their respective affairs,
finances and accounts with their respective officers and independent
public accountants (and by this provision the Company authorizes said
accountants to discuss the affairs, finances and accounts of the Company
and its Subsidiaries), all at such times and as often as may be
requested.
8. Prepayment of the Notes.
8.1 Optional and Mandatory Prepayments. (a) The Companies may,
at their option, upon notice as provided herein, prepay the Notes, in
whole or in part, at any time (i) on or after the third anniversary of
the Closing Date, (ii) if the closing price of the Company's Class A
common stock on the NASDAQ stock market, or other securities market on
which the Company's shares are then traded, is at or above $5.00 per
share (such amount to be appropriately adjusted in the event of a stock
split, stock dividend, stock combination or recapitalization or similar
event having a similar effect) for 30 consecutive trading days or (iii)
the Company desires to effect a merger, consolidation or sale of all or
substantially all of its assets in a manner that is prohibited by Section
10.2 and the holders of the Notes fail to consent to a waiver of Section
10.2 to permit such merger, consolidation or sale (each, an "Optional
Prepayment").
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<PAGE> 18
(b) The Companies shall, upon the closing of the event giving rise
to such prepayment, prepay in whole or in part any or all Notes for which
it has received written notice from any holder of Notes that elects to be
prepaid upon such event, which notice shall be received within ten days
of receipt of notice by such holder of such event, if either of the
following conditions shall occur (each, a "Mandatory Prepayment");
provided that, in the case of clause (ii) below, such Mandatory
Prepayment shall not exceed the amount of net proceeds received by the
Company in connection with such event: (i) the lenders of any of the
additional $40 million of indebtedness permitted to be incurred as
described herein (excluding the $15 million of Notes permitted to be
incurred under this Agreement) require a security interest in, or the
release of the holders' security interest in, the shares of India.com,
Inc. that are pledged to secure the Notes and any of such holders elect
to be prepaid upon the consummation of such financing, in which case the
proceeds of such financing shall be applied to the repayment of the Notes
the holders of which have so elected to be prepaid, provided that this
clause (i) shall not apply if the security interest is required to be
released pursuant to Section 16 of the Pledge Agreement as a result of
the Company's raising at least $35 million in cash proceeds from the sale
of assets (including the Pledged Collateral) or from the issuance of
additional debt (other than Purchase Money Indebtedness or Acquired Debt)
or equity financings on or before April 30, 2001, or (ii) the Company
decides to sell the shares of India.com, Inc. pledged to the holders of
the Notes and any of such holders elect to be prepaid upon the
consummation of such sale, in which case the net proceeds of such sale
received by the Company shall be applied to the repayment of the Notes so
electing to be prepaid; provided however, that if such net proceeds are
insufficient to prepay the holders that elect to be prepaid, such net
proceeds shall be applied pro rata to the Notes for which holders have so
elected, provided further that, to the extent such net proceeds consist
of securities or property other than cash, such net proceeds shall be
held in pledge under the Pledge Agreement until converted into cash or
released to the Pledgor in accordance with the terms of the Pledge
Agreement and upon such conversion into cash shall be applied to such
prepayment as aforesaid unless so released to Pledgor prior thereto. The
Company shall provide the holders of Notes not less than ten days advance
notice of any prepayment in order to permit the holders to convert in
lieu of being prepaid. All prepayments shall be at par and without
payment of any premium.
8.2 Allocation of Partial Optional Prepayments. In the case of
each partial Optional Prepayment of the Notes, the principal amount of
the Notes to be prepaid shall be allocated among all of the Notes at the
time outstanding in proportion, as nearly as practicable, to the
respective unpaid principal amounts thereof not theretofore called for
prepayment.
8.3 Maturity; Surrender, etc. In the case of each prepayment of
Notes pursuant to this Section 8, the principal amount of each Note to be
prepaid shall mature and become due and payable on the date fixed for
such prepayment, together with interest on such principal amount accrued
to such date, if any. From and after such date, unless the Companies
shall fail to pay such principal amount when so due and payable, together
with the interest, if any, as aforesaid, interest on such principal
amount shall cease to accrue. Any Note paid or prepaid in full shall be
surrendered to the Company and cancelled and shall not be reissued, and
no Note shall be issued in lieu of any prepaid
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<PAGE> 19
principal amount of any Note. The obligation of the Companies to make any
Mandatory Prepayment or any Optional Prepayment shall be conditioned upon
the consummation of the event giving rise to such Mandatory Prepayment or
such Optional Prepayment.
9. Affirmative Covenants.
The Companies covenant that so long as any of the Notes are outstanding:
9.1 Compliance with Law. The Companies will and will cause each
of the Company's Subsidiaries to comply with all laws, ordinances or
governmental rules or regulations to which each of them is subject and
will obtain and maintain in effect all licenses, certificates, permits,
franchises and other governmental authorizations necessary to the
ownership of their respective properties or to the conduct of their
respective businesses, in each case to the extent necessary to ensure
that non-compliance with such laws, ordinances or governmental rules or
regulations or failures to obtain or maintain in effect such licenses,
certificates, permits, franchises and other governmental authorizations
could not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect.
9.2 Insurance. The Companies will and will cause each of the
Company's Subsidiaries to maintain, with financially sound and reputable
insurers, insurance with respect to their respective properties and
businesses against such casualties and contingencies, of such types, on
such terms and in such amounts (including deductibles, co-insurance and
self-insurance, if adequate reserves are maintained with respect thereto)
as is customary in the case of entities of established reputations
engaged in the same or a similar business and similarly situated.
9.3 Maintenance of Properties. The Companies will and will
cause each of the Company's Subsidiaries to maintain and keep, or cause
to be maintained and kept, their respective properties in good repair,
working order and condition (other than ordinary wear and tear), so that
the business carried on in connection therewith may be properly conducted
at all times, provided that this Section shall not prevent the Company or
any Subsidiary from discontinuing the operation and the maintenance of
any of its properties if such discontinuance is desirable in the conduct
of its business and the Company has concluded that such discontinuance
could not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect.
9.4 Payment of Taxes. The Companies shall pay, and shall cause
each of the Company's Subsidiaries to pay, prior to delinquency, all
taxes, assessments and governmental levies, except such as are contested
in good faith and by appropriate proceedings and for which adequate
reserves in accordance with GAAP or other appropriate provisions have
been made.
9.5 Corporate Existence, etc. Except as provided in Section
10.2, the Companies will, and will cause the Company's Subsidiaries to,
do or cause to be done all things necessary to preserve and keep in full
force and effect its corporate existence and the rights (charter and
statutory), licenses and franchises of the Company and its
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<PAGE> 20
Subsidiaries; provided, however, that the Companies shall not be required
to preserve, or to cause the Company's Subsidiaries to preserve, any such
right, license or franchise, if the Board of Directors of the Company
shall determine that the preservation thereof is no longer desirable in
the conduct of the business of the Company and its Subsidiaries taken as
a whole and that the loss thereof is not adverse in any material respect
to the holders of the Notes.
9.6 Stay, Extension And Usury Law. The Companies covenant (to
the extent that they may lawfully do so) that they will not at any time
insist upon, plead, or in any manner whatsoever claim or take the benefit
or advantage of, any stay, extension or usury law wherever enacted, now
or at any time hereafter in force, which may affect the covenants or the
performance of the Transaction Agreements; and the Companies (to the
extent they may lawfully do so) hereby expressly waive all benefit or
advantage of any such law, and covenants that they will not, by resort to
any such law, hinder, delay or impede the execution of any power herein
granted to the holders of the Notes, but will suffer and permit the
execution of every such power as though no such law has been enacted.
9.7 Investment Company Act. As long as any Notes are
outstanding, the Companies will conduct their businesses and operations
so as not to become an "investment company" within the meaning of the
Investment Company Act of 1940, as amended (the "Investment Company
Act"), and will take all steps required in order for them to continue not
to be an "investment company" and not to be required to be registered
under the Investment Company Act, including, if necessary, redeployment
of the assets of the Companies.
9.8 Reservation of Shares. The Company shall at all times
reserve and keep available, free from preemptive rights, out of its
authorized but unissued shares of Class A common stock, solely for the
purpose of issuance in payment of interest on the Notes in shares of
Class A common stock as provided in the Notes, a sufficient number of
shares of Class A common stock to permit the payment of interest in such
shares as so provided.
All shares of Class A common stock which may be issued in payment
of interest on the Notes shall be duly authorized, validly issued, fully
paid and nonassessable when so issued.
The Company shall from time to time take all action necessary so
that the Class A common stock which may be issued in payment of interest
on the Notes, immediately upon their issuance (or, if such Class A common
stock is subject to restrictions on transfer under the Securities 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.
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10. Negative Covenants.
The Companies covenant that so long as any of the Notes are outstanding:
10.1 Transactions with Affiliates. The Companies will not and
will not permit any Subsidiary to enter into directly or indirectly any
transaction or group of related transactions (including without
limitation the purchase, lease, sale or exchange of properties of any
kind or the rendering of any service) with any Affiliate (other than the
Company or another Subsidiary), except in the ordinary course and
pursuant to the reasonable requirements of the Company's or such
Subsidiary's business and upon fair and reasonable terms no less
favorable to the Company or such Subsidiary than would be obtainable in a
comparable arm's-length transaction with a Person not an Affiliate.
10.2 Merger, Consolidation, etc. The Company shall not
consolidate with or merge with any other corporation or convey, transfer
or lease all or substantially all of its assets in a single transaction
or series of transactions to any Person unless:
(a) the successor formed by such consolidation or the
survivor of such merger or the Person that acquires by conveyance,
transfer or lease all or substantially all of the assets of the
Company as an entirety, as the case may be, shall have executed
and delivered to each holder of any Notes its assumption of the
due and punctual performance and observance of each covenant and
condition of this Agreement, the other Transaction Agreements and
the Notes;
(b) the Notes would have a credit rating from Moody's or
Standard and Poors immediately thereafter at least as favorable as
immediately theretofore; and
(c) immediately after giving effect to such transaction,
no Default or Event of Default shall have occurred and be
continuing.
No such conveyance, transfer or lease of all or substantially all of the
assets of the Company shall have the effect of releasing the Company or
any successor corporation that shall theretofore have become such in the
manner prescribed in this Section 10.2 from its liability under this
Agreement, the other Transaction Agreements or the Notes.
10.3 Liens. Without the consent of the holders of at least 70%
in principal amount of Notes then outstanding, none of the Companies
shall create, incur, assume or suffer to exist any Lien (except Permitted
Liens) on any asset now owned or hereafter acquired unless such Lien
shall secure the Notes on an equal and ratable or prior basis.
10.4 Indebtedness. Without the consent of the holders of at
least 70% in principal amount of Notes then outstanding, none of the
Companies shall create, incur, issue, assume, guarantee or otherwise
become liable with respect to (collectively, "incur") any Indebtedness
(including Acquired Debt) that is pari passu with the Notes; provided,
however, that, this covenant shall not apply from and after the date on
which the closing price of the Company's Class A common stock on the
NASDAQ stock market, or other securities market on which the Company's
shares are then traded, has been at or above
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<PAGE> 22
$5.00 per share (such amount to be appropriately adjusted in the event of
a stock split, stock dividend, stock combination or recapitalization or
similar event having a similar effect) for 30 consecutive trading days.
The foregoing limitation on the incurrence of Indebtedness will not apply
to any of the following incurrences of Indebtedness:
(i) Indebtedness evidenced by the Notes or represented by
the Transaction Agreements;
(ii) the incurrence by the Companies of up to $55 million
aggregate principal amount of Indebtedness (including the Notes)
that is pari passu with the Notes;
(iii) Indebtedness of the Companies that is by its terms
subordinated to the Notes;
(iv) Existing Indebtedness;
(v) Acquired Debt of a Person incurred prior to the date
upon which such Person was acquired by any of the Companies
(excluding Indebtedness incurred by such entity other than in the
ordinary course of its business in connection with, or in
contemplation of, such entity being so acquired);
(vi) the incurrence of Purchase Money Indebtedness by the
Companies in an amount not to exceed the cost of construction,
acquisition or improvement of assets used in any business of the
Companies;
(vii) Swaps of the Companies covering Indebtedness of the
Companies to the extent the notional principal amount of such Swap
does not exceed the principal amount of the Indebtedness to which
such Swap relates;
(viii) Indebtedness of the Companies incurred in the
ordinary course of business in respect of performance bonds or
letters of credit of the Companies or surety bonds provided by the
Companies;
(ix) the incurrence by the Companies of Indebtedness issued
in exchange for, or the proceeds of which are used to extend,
refinance, renew, replace, substitute or refund in whole or in
part Indebtedness permitted to be incurred under clauses (i),
(ii), (iv), (v), (vi) or (vii) above ("Refinancing Indebtedness");
provided, however, that: (A) the principal amount of such
Refinancing Indebtedness shall not exceed the principal amount and
accrued interest of the Indebtedness so extended, refinanced,
renewed, replaced, substituted or refunded and any premiums
payable and reasonable fees, expenses, commissions and costs in
connection therewith; and (B) the Refinancing Indebtedness shall
have a final maturity later than, and a Weighted Average Life to
Maturity equal to or greater than, the final maturity and Weighted
Average Life to Maturity, respectively, of the Indebtedness being
extended, refinanced, renewed, replaced or refunded (a "Permitted
Refinancing"); or
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(x) Indebtedness under Capital Lease Obligations of the
Companies.
For purposes of determining compliance with this Section 10.4, in
the event that an item of Indebtedness meets the criteria of more than
one of the categories described in clauses (i) through (x) above or is
permitted to be incurred pursuant to the first sentence of this Section
10.4 and also meets the criteria of one or more of the categories
described in clauses (i) through (x) above, the Companies shall, in their
sole discretion, classify such item of Indebtedness in any manner that
complies with this Section 10.4 and may from time to time reclassify such
item of Indebtedness in any manner in which such item could be incurred
at the time of such reclassification. Accrual of interest and the
accretion of accreted value will not be deemed to be an incurrence of
Indebtedness for purposes of this Section 10.4.
11. Events of Default. An "Event of Default" shall exist if any of the
following conditions or events shall occur and be continuing:
(a) the Companies default 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 Companies default in the payment of any principal of or
premium, if any, on any Note when the same becomes due and payable,
whether at maturity or upon Mandatory Prepayment or otherwise; or
(c) the Companies or World.com, Inc. breach in any Material
respect any representation or warranty under the any of the Transaction
Agreements, or fail to observe or perform any other covenant or agreement
contained in any of the Transaction Agreements or the Notes 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) the Companies or World.com, Inc. challenge the validity or
enforceability of the Pledge Agreement or the security interest granted
under the Pledge Agreement is determined to be invalid or unenforceable
in whole or in part; or
(e) 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 any of the
Companies or any Material Subsidiary (or the payment of which is
Guaranteed by any of the Companies or any of the Company's 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
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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
(f) 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 any of the
Companies 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
(g) any of the Companies 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
(h) a court of competent jurisdiction enters an order or decree
under any Bankruptcy Law that: (i) is for relief against any of the
Companies 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 paragraph (h) the order or decree remains unstayed and in effect for
60 days.
The term "Bankruptcy Law" means Title 11, U.S. Code or any similar
federal, state or foreign bankruptcy, insolvency or similar law. The term
"Custodian" means any custodian, receiver, trustee, assignee, sequestor,
liquidator or similar official under any Bankruptcy Law.
12. Remedies on Default, etc.
12.1 Acceleration.
(a) If an Event of Default with respect to any of the Companies
described in paragraph (g) or (h) of Section 11 (other than an Event of
Default described in clause (i) of paragraph (g) or described in clause
(v) of paragraph (g) by virtue of the fact that such clause encompasses
clause (i) of paragraph (g)) has occurred, all the Notes then outstanding
shall automatically become immediately due and payable.
(b) If any other Event of Default has occurred and is
continuing, any holder or holders of a majority in 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.
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<PAGE> 25
(c) Notwithstanding subparagraph (b) above, if any Event of
Default described in paragraph (a) or (b) of Section 11 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.
(d) Notwithstanding subparagraph (b) above, if any Event of
Default described in paragraph (e) of Section 11 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 subparagraph (b) above shall be deemed
automatically annulled and rescinded.
Upon any Notes becoming due and payable under this Section 12.1,
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.
12.2 Other Remedies. 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
12.1, 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 other
Transaction Agreement, 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.
12.3 Rescission. At any time after any Notes have been declared
due and payable pursuant to clause (b) or (c) of Section 12.1, 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 (a) the Companies 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, (b)
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 pursuant to Section 18, and (c) 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 this Section 12.3 will
extend to or affect any subsequent Event of Default or Default or impair
any right consequent thereon.
12.4 No Waivers or Election of Remedies, Expenses, etc. No
course of dealing and no delay on the part of any holder of any Note in
exercising any right, power or remedy shall operate as a waiver thereof
or otherwise prejudice such holder's rights, powers or remedies. No
right, power or remedy conferred by this Agreement or by any
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<PAGE> 26
Note upon any holder thereof shall be exclusive of any other right, power
or remedy referred to herein or therein or now or hereafter available at
law, in equity, by statute or otherwise. Without limiting the obligations
of the Companies under Section 16, the Companies will pay to the holder
of each Note on demand such further amount as shall be sufficient to
cover all costs and expenses of such holder incurred in any enforcement
or collection under this Section 12, including, without limitation,
reasonable attorneys' fees, expenses and disbursements.
13. Registration; Exchange; Substitution of Notes.
13.1 Registration of Notes. The Company shall keep at its
principal executive office a register for the registration and
registration of transfers of Notes. The name and address of each holder
of one or more Notes, each transfer thereof and the name and address of
each transferee of one or more Notes shall be registered in such
register. Prior to due presentment for registration of transfer, the
Person in whose name any Note shall be registered shall be deemed and
treated as the owner and holder thereof for all purposes hereof, and the
Company shall not be affected by any notice or knowledge to the contrary.
The Company shall give to any holder of a Note that is an Institutional
Investor promptly upon request therefor, a complete and correct copy of
the names and addresses of all registered holders of Notes.
13.2 Transfer and Exchange of Notes. Upon surrender of any Note
at the principal executive office of the Company for registration of
transfer or exchange (and in the case of a surrender for registration of
transfer, duly endorsed or accompanied by a written instrument of
transfer duly executed by the registered holder of such Note or his
attorney duly authorized in writing and accompanied by the address for
notices of each transferee of such Note or part thereof), the Companies
shall execute and deliver, at the Companies' expense (except as provided
below), one or more new Notes (as requested by the holder thereof) in
exchange therefor, in an aggregate principal amount equal to the unpaid
principal amount of the surrendered Note. Each such new Note shall be
payable to such Person as such holder may request and shall be
substantially in the form of Exhibit 1. Each such new Note shall be dated
and bear interest from the date to which interest shall have been paid on
the surrendered Note or dated the date of the surrendered Note if no
interest shall have been paid thereon. The Company may require payment of
a sum sufficient to cover any stamp tax or governmental charge imposed in
respect of any such transfer of Notes. Notes shall not be transferred in
denominations of less than $100,000, provided that if necessary to enable
the registration of transfer by a holder of its entire holding of Notes,
one Note may be in a denomination of less than $100,000. Any transferee,
by its acceptance of a Note registered in its name (or the name of its
nominee), shall be deemed to have made the representations set forth in
Sections 6.1 and 6.2.
13.3 Replacement of Notes. Upon receipt by the Company of
evidence reasonably satisfactory to it of the ownership of and the loss,
theft, destruction or mutilation of any Note (which evidence shall be, in
the case of an Institutional Investor, notice from such Institutional
Investor of such ownership and such loss, theft, destruction or
mutilation), and
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(a) in the case of loss, theft or destruction, of
indemnity reasonably satisfactory to it or
(b) in the case of mutilation, upon surrender and
cancellation thereof,
the Companies at their own expense shall execute and deliver, in lieu
thereof, a new Note, dated and bearing interest from the date to which
interest shall have been paid on such lost, stolen, destroyed or
mutilated Note or dated the date of such lost, stolen, destroyed or
mutilated Note if no interest shall have been paid thereon.
14. Payments On Notes.
14.1 Place of Payment. Subject to Section 14.2, payments of
principal and interest becoming due and payable on the Notes shall be
made in New York, New York at the principal office of the Company in such
jurisdiction. The Company may at any time, by notice to each holder of a
Note, change the place of payment of the Notes so long as such place of
payment shall be either the principal office of the Company in such
jurisdiction or the principal office of a bank or trust company in such
jurisdiction.
14.2 Home Office Payment. So long as an initial Purchaser shall
be the holder of any Note, and notwithstanding anything contained in
Section 14.1 or in such Note to the contrary, the Companies will pay all
sums becoming due on such Note for principal and interest by the method
and at the address specified for such purpose below such Purchaser's name
in Schedule A, or by such other method or at such other address as such
Purchaser shall have from time to time specified to the Company in
writing for such purpose, without the presentation or surrender of such
Note or the making of any notation thereon, except that upon written
request of the Company made concurrently with or reasonably promptly
after payment or prepayment in full of any Note, you shall surrender such
Note for cancellation upon such request to the Company at its principal
executive office or at the place of payment most recently designated by
the Company pursuant to Section 14.1. Prior to any sale or other
disposition of any Note held by you or your nominee you will, at your
election, either endorse thereon the amount of principal paid thereon and
the last date to which interest has been paid thereon or surrender such
Note to the Company in exchange for a new Note or Notes pursuant to
Section 13.2. The Companies will afford the benefits of this Section 14.2
to any Institutional Investor that is the direct or indirect transferee
of any Note purchased by you under this Agreement and that has made the
same agreement relating to such Note as you have made in this Section
14.2.
15. Conversion.
15.1. 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
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mandatory prepayment, such conversion right shall terminate at the close
of business on the Business Day immediately preceding the prepayment date
(unless the Companies shall default in making the prepayment, including
interest, when it becomes due, in which case the conversion right shall
terminate at the close of business on the date on which such default is
cured).
The number of shares of Class A common stock issuable upon
conversion of a Note is determined by dividing the principal amount of
the Note converted by the Conversion Price in effect on the Conversion
Date.
"Conversion Price" means ONE UNITED STATES DOLLAR ($1.00), as the
same may be adjusted from time to time as provided in this Section 15.
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 15.
15.2. Conversion Procedure. To convert a Note, a holder must
satisfy the requirements in the paragraphs 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 15.3. 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 15.2, 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
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<PAGE> 29
payable on such Note on such interest payment date shall be paid on such
interest payment date to the person who was the 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.
15.3. Fractional Shares. The Company will not issue fractional
shares of Class A common stock 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.
15.4. 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.
15.5. 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
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that par value of the Class A common stock shall at all times be equal to
or less than the Conversion Price then in effect.
The Company shall from time to time take all action necessary so
that the Class A common stock which may be issued upon conversion of
Notes, immediately upon their issuance (or, if such Class A common stock
is subject to restrictions on transfer under the Securities 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.
15.6. Adjustment of Conversion Price. The Conversion Price shall
be subject to adjustment from time to time as follows:
(a) In case the Company shall (1) 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), (2) 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), (3) subdivide its outstanding shares of Class A common stock
into a greater number of shares of Class A common stock or (4) 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
stock outstanding on such
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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 15.11), 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 Section 15.6(c), 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 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
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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 paragraph (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 paragraph (c) or (e) of this Section or this
paragraph (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 paragraphs
(c) or (e) of this Section or this paragraph (d) has been made, exceeds
12 1/2% of the product of the Current Market Price per share (determined
as provided in paragraph (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
paragraph (d) by a fraction of which the numerator shall be the Current
Market Price per share (determined as provided in paragraph (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 paragraph (f) of this Section) of the Class A common stock on
the Distribution Record Date, such reduction to become effective
immediately prior to the opening of business on the day following the
Distribution Record Date.
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(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 paragraph (c) or paragraph
(d) of this Section or this paragraph (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 paragraph (c) or (d) of this Section or this
paragraph (e) has been made, exceeds 12 1/2% of the product of the
Current Market Price per share (determined as provided in paragraph (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 paragraph (e) by a
fraction of which the numerator shall be the Current Market Price per
share (determined as provided in paragraph (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 paragraph (f)
of this Section) of the Class A common stock on the Purchase Date, such
reduction to become effective immediately prior to the opening of
business on the day following the Purchase Date.
(f) The "Current Market Price" per share of Class A common stock
on any date shall be deemed to be the average of the Daily Market Prices
for the shorter of (i) 30 consecutive Business Days ending on the last
full Trading Day on the exchange or market referred to in determining
such Daily Market Prices prior to the time of determination or (ii) the
period commencing on the date next succeeding the first public
announcement of the issuance of such rights or such warrants or such
other distribution or such tender offer or other negotiated transaction
through such last full Trading Day on the exchange or market referred to
in determining such Daily Market Prices prior to the time of
determination.
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(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 15.6 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.
15.7. 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 15.7 are not required to be
made shall be carried forward and taken into account in any subsequent
adjustment. All calculations under this Section 15 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.
15.8. Other Adjustments. (a) In the event that, as a result of an
adjustment made pursuant to Section 15.6 above, the holder of any Note
thereafter surrendered for conversion 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
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<PAGE> 35
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 15.
(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 15.6(b) and Section 15.6(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 15.6 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.
15.9. 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.
15.10. Notice of Certain Transactions. In 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
15.11; 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 15.10.
15.11. 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 (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,
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<PAGE> 36
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 15. 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
15.6, 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 15.11 shall similarly apply to successive
reclassifications, changes, consolidations, mergers, continuances, sales
or conveyances.
15.12. Cancellation of Converted Notes. All Notes delivered for
conversion shall be delivered to the Company to be canceled.
16. Expenses, etc.
16.1 Transaction Expenses. Whether or not the transactions
contemplated hereby are consummated, the Companies will pay all
reasonable out-of-pocket costs and expenses (including reasonable
attorneys' fees of one counsel and, if reasonably required, one local or
other counsel in each jurisdiction where so required for all of the
Purchasers) incurred by the holders of the Notes in connection with such
transactions (subject to a cap in connection with the negotiation,
preparation, execution and delivery of the Transaction Agreements of
$40,000) and in connection with any amendments, waivers or consents under
or in respect of the Transaction Agreements (whether or not such
amendment, waiver or consent becomes effective), including, without
limitation: (a) the costs and expenses incurred in enforcing or defending
any rights under this Agreement, the Notes or any of the other
Transaction Agreements or in responding to any subpoena or other legal
process or informal investigative demand issued in connection with this
Agreement, the Notes or any of the other Transaction Agreements, or by
reason of being a holder of any Note, and (b) the costs and expenses
incurred in connection with the insolvency or bankruptcy of the Company
or any Subsidiary or in connection with any work-out or restructuring of
the transactions contemplated hereby and by the Notes and any of the
other Transaction Agreements. The Companies will pay, and will save you
and each
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<PAGE> 37
other holder of a Note harmless from, all claims in respect of any fees,
costs or expenses if any, of brokers and finders (other than those
retained by you).
16.2 Survival. The obligations of the Companies under this
Section 16 will survive the payment or transfer of any Note, the
enforcement, amendment or waiver of any provision of this Agreement, the
Notes or any of the other Transaction Agreements, and the termination of
this Agreement.
17. Survival Of Representations And Warranties; Entire Agreement. All
representations and warranties contained herein and in the other Transaction
Agreements shall survive the execution and delivery of the Transaction
Agreements. All statements contained in any certificate or other instrument
delivered by or on behalf of the Companies pursuant to this Agreement shall be
deemed representations and warranties of the Companies under this Agreement.
Subject to the preceding sentence, the Transaction Agreements embody the entire
agreement and understanding between you, on the one hand, and the Companies, on
the other hand, and supersede all prior agreements and understandings relating
to the subject matter hereof.
18. Amendment And Waiver.
18.1 Requirements. This Agreement and the Notes may be amended,
and the observance of any term hereof or of the Notes may be waived
(either retroactively or prospectively), with (and only with) the written
consent of the Companies and the Required Holders, except that (a) no
amendment or waiver of any of the provisions of Section 1, 2, 3, 4 or 22
hereof, or any defined term (as it is used in such Section), will be
effective as to any one Purchaser unless consented to in writing by such
Purchaser, and (b) no such amendment or waiver may, without the written
consent of the holder of each Note at the time outstanding affected
thereby, (i) subject to the provisions of Section 12 relating to
acceleration or rescission, change the amount or time of any prepayment
or payment of principal of, or reduce the rate or change the time of
payment or method of computation of interest on, the Notes, (ii) change
the percentage of the principal amount of the Notes the holders of which
are required to consent to any such amendment or waiver,r (iii) amend or
waive any of Sections 8, 11(a), 11(b), 11(d), 12, 18 or 22 or the
paragraph entitled "Interest" in the Notes, or (iv) modify Section 15 in
a manner adverse to the holders of the Notes.
18.2 Solicitation of Holders of Notes. (a) Solicitation. The
Company will provide each holder of the Notes (irrespective of the amount
of Notes then owned by it) with sufficient information, sufficiently far
in advance of the date a decision is required, to enable such holder to
make an informed and considered decision with respect to any proposed
amendment, waiver or consent in respect of any of the provisions hereof
or of the Notes. The Company will deliver executed or true and correct
copies of each amendment, waiver or consent effected pursuant to the
provisions of this Section 18 to each holder of outstanding Notes
promptly following the date on which it is executed and delivered by, or
receives the consent or approval of, the requisite holders of Notes.
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(b) Payment. Neither the Company nor any Affiliate of the
Company shall, directly or indirectly, pay or cause to be paid any
consideration, whether by way of interest, fee or otherwise, to any
holder of a Note for or as an inducement to any consent, waiver or
amendment of any of the terms or provisions of the Transaction Agreements
unless such consideration is offered to be paid to all holders that so
consent, waive or agree to amend in the time frame set forth in
solicitation documents relating to such consent, waiver or agreement.
18.3 Binding Effect, etc. Any amendment or waiver consented to
as provided in this Section 18 applies equally to all holders of Notes
and is binding upon them and upon each future holder of any Note and upon
the Companies without regard to whether such Note has been marked to
indicate such amendment or waiver. No such amendment or waiver will
extend to or affect any obligation, covenant, agreement, Default or Event
of Default not expressly amended or waived or impair any right consequent
thereon. No course of dealing between the Companies and the holder of any
Note nor any delay in exercising any rights hereunder or under any Note
shall operate as a waiver of any rights of any holder of such Note. As
used herein, the term "this Agreement" and references thereto shall mean
this Agreement as it may from time to time be amended or supplemented.
18.4 Notes held by Company, etc. Solely for the purpose of
determining whether the holders of the requisite percentage of the
aggregate principal amount of Notes then outstanding approved or
consented to any amendment, waiver or consent to be given under this
Agreement or the Notes, or have directed the taking of any action
provided herein or in the Notes to be taken upon the direction of the
holders of a specified percentage of the aggregate principal amount of
Notes then outstanding, Notes directly or indirectly owned by the Company
or any of its Affiliates shall be deemed not to be outstanding.
19. Notices. All notices and communications provided for hereunder
shall be in writing and sent (a) 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 (b) by registered or certified mail with return receipt
requested (postage prepaid), or (c) by a recognized overnight delivery service
(with charges prepaid). Any such notice must be sent:
(i) if to you or your nominee, to you or it at the address specified
for such communications in Schedule A, or at such other address as you or
it shall have specified to the Company in writing,
(ii) if to any other holder of any Note, to such holder at such address
as such other holder shall have specified to the Company in writing, or
(iii) if to the Company, to the Company at Suite 660, 11 Broadway, New
York, NY 10004, 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 the holder of each Note in writing.
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<PAGE> 39
Notices under this Section 19 will be deemed given only when actually
received.
20. Reproduction Of Documents. This Agreement and all documents
relating thereto, including, without limitation, (a) consents, waivers and
modifications that may hereafter be executed, (b) documents received by you at
the Closing (except the Notes themselves), and (c) financial statements,
certificates and other information previously or hereafter furnished to you, may
be reproduced by you by any photographic, photostatic, microfilm, microcard,
miniature photographic or other similar process and you may destroy any original
document so reproduced. The Companies agree and stipulate that, to the extent
permitted by applicable law, any such reproduction shall be admissible in
evidence as the original itself in any judicial or administrative proceeding
(whether or not the original is in existence and whether or not such
reproduction was made by you in the regular course of business) and any
enlargement, facsimile or further reproduction of such reproduction shall
likewise be admissible in evidence. This Section 20 shall not prohibit the
Companies or any other holder of Notes from contesting any such reproduction to
the same extent that it could contest the original, or from introducing evidence
to demonstrate the inaccuracy of any such reproduction.
21. Confidential Information. For the purposes of this Section 21,
"Confidential Information" means information delivered to you by or on behalf of
the Company or any Subsidiary in connection with the transactions contemplated
by or otherwise pursuant to this Agreement that is proprietary in nature and
that was clearly marked or labeled or otherwise adequately identified when
received by you as being confidential information of the Company or such
Subsidiary, provided that such term does not include information that (a) was
publicly known or otherwise known to you prior to the time of such disclosure,
(b) subsequently becomes publicly known through no act or omission by you or any
person acting on your behalf, (c) otherwise becomes known to you other than
through disclosure by the Company or any Subsidiary or (d) constitutes financial
statements delivered to you under Section 7.1 that are otherwise publicly
available. You will maintain the confidentiality of such Confidential
Information in accordance with procedures adopted by you in good faith to
protect confidential information of third parties delivered to you, provided
that you may deliver or disclose Confidential Information to (i) your directors,
officers, employees, agents, attorneys and affiliates (to the extent such
disclosure reasonably relates to the administration of the investment
represented by your Notes), (ii) your financial advisors and other professional
advisors who agree to hold confidential the Confidential Information
substantially in accordance with the terms of this Section 21, (iii) any other
holder of any Note, (iv) any Institutional Investor to which you sell or offer
to sell such Note or any part thereof or any participation therein (if such
Person has agreed in writing prior to its receipt of such Confidential
Information to be bound by the provisions of this Section 21), (v) any Person
from which you offer to purchase any security of the Company (if such Person has
agreed in writing prior to its receipt of such Confidential Information to be
bound by the provisions of this Section 21), (vi) any federal or state
regulatory authority having jurisdiction over you, (vii) the National
Association of Insurance Commissioners or any similar organization, or any
nationally recognized rating agency that requires access to information about
your investment portfolio or (viii) any other Person to which such delivery or
disclosure may be necessary or appropriate (w) to effect compliance with any
law, rule, regulation or order applicable to you, (x) in response to any
subpoena or other legal process, (y) in connection with any litigation to which
you are a party or (z) if an Event of Default has occurred and is continuing, to
the extent you may reasonably determine such
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<PAGE> 40
delivery and disclosure to be necessary or appropriate in the enforcement or for
the protection of the rights and remedies under your Notes and this Agreement.
Each holder of a Note, by its acceptance of a Note, will be deemed to have
agreed to be bound by and to be entitled to the benefits of this Section 21 as
though it were a party to this Agreement. On reasonable request by the Company
in connection with the delivery to any holder of a Note of information required
to be delivered to such holder under this Agreement or requested by such holder
(other than a holder that is a party to this Agreement or its nominee), such
holder will enter into an agreement with the Company embodying the provisions of
this Section 21.
22. Substitution Of Purchaser. You shall have the right to substitute
any one of your Affiliates as the purchaser of the Notes that you have agreed to
purchase hereunder, by written notice to the Company, which notice shall be
signed by both you and such Affiliate, shall contain such Affiliate's agreement
to be bound by this Agreement and shall contain a confirmation by such Affiliate
of the accuracy with respect to it of the representations set forth in Section
6. Upon receipt of such notice, wherever the word "you" is used in this
Agreement (other than in this Section 22), such word shall be deemed to refer to
such Affiliate in lieu of you. In the event that such Affiliate is so
substituted as a purchaser hereunder and such Affiliate thereafter transfers to
you all of the Notes then held by such Affiliate, upon receipt by the Company of
notice of such transfer, wherever the word "you" is used in this Agreement
(other than in this Section 22), such word shall no longer be deemed to refer to
such Affiliate, but shall refer to you, and you shall have all the rights of an
original holder of the Notes under this Agreement.
23. Miscellaneous.
23.1 Successors and Assigns. All covenants and other agreements
contained in this Agreement by or on behalf of any of the parties hereto
bind and inure to the benefit of their respective successors and assigns
(including, without limitation, any subsequent holder of a Note) whether
so expressed or not.
23.2 Payments Due on Non-Business Days. Anything in this
Agreement or the Notes to the contrary notwithstanding, any payment of
principal of or interest on any Note that is due on a date other than a
Business Day shall be made on the next succeeding Business Day without
including the additional days elapsed in the computation of the interest
payable on such next succeeding Business Day.
23.3 Severability. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof,
and any such prohibition or unenforceability in any jurisdiction shall
(to the full extent permitted by law) not invalidate or render
unenforceable such provision in any other jurisdiction.
23.4 Construction. Each covenant contained herein shall be
construed (absent express provision to the contrary) as being independent
of each other covenant contained herein, so that compliance with any one
covenant shall not (absent such an express contrary provision) be deemed
to excuse compliance with any other covenant. Where any provision herein
refers to action to be taken by any Person, or which such Person is
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<PAGE> 41
prohibited from taking, such provision shall be applicable whether such
action is taken directly or indirectly by such Person.
23.5 Counterparts. This Agreement may be executed in any number
of counterparts, each of which shall be an original but all of which
together shall constitute one instrument. Each counterpart may consist of
a number of copies hereof, each signed by less than all, but together
signed by all, of the parties hereto.
23.6 Governing Law. This Agreement shall be construed and
enforced in accordance with, and the rights of the parties shall be
governed by, the law of the State of New York excluding choice-of-law
principles of the law of such State that would require the application of
the laws of a jurisdiction other than such State.
23.7 Submission to Jurisdiction; Service of Process. (a) The
Companies and the Purchasers agree that any action or proceeding brought
by the Holders in connection with this Agreement may be brought (and any
action or proceeding brought by the Companies against the Holders in
connection herewith shall exclusively be brought) in the courts of the
State of New York sitting in the Borough of Manhattan or of the United
States of America for the Southern District of New York and, by execution
and delivery of this Agreement, the Companies and the Purchasers hereby
irrevocably waive any objection, including, without limitation, any
objection to the laying of venue or based on the grounds of forum non
conveniens, which it may now or hereafter have to the bringing of any
such action or proceeding by the Companies or the Holders in such
non-exclusive jurisdictions.
(b) The Companies hereby irrevocably appoint CT Corporation System
(the "Process Agent"), with an office on the date hereof at 1633
Broadway, New York, NY 10019, United States of America, as their agent to
receive on their behalf service of copies of the summons and complaint
and any other process that may be served in any such action or
proceeding. The Companies irrevocably consent to the service of process
of any of the aforesaid courts in any such action or proceeding by the
mailing of copies thereof by registered mail, postage prepaid, to it at
its address set forth in this Agreement or to the Process Agent at its
address specified above.
23.8 Section Titles. The Section titles contained in this
Agreement are and shall be without substantive meaning or content of any
kind whatsoever and are not part of this Agreement.
23.9 Cap on Maximum Shares Issuable. Notwithstanding anything to
the contrary contained herein or in the Notes, until the Company shall
have obtained stockholder approval pursuant to the rules of the NASDAQ
stock market or an exemption therefrom in accordance with customary
NASDAQ policies, the maximum number of shares issued or issuable upon
conversion of the $15 million principal amount of Notes issuable under
this Agreement and in payment of interest on such Notes shall not equal
or exceed 20% of the number of shares of Class A common stock and Class B
common stock outstanding as of the date hereof (such 20% being equal to
12,343,607 shares, as the same may be adjusted as a result of the events
described in Section 15.6(a) of this
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Agreement (the "Maximum Threshold")). The foregoing limitation shall
continue to apply whether or not the Company's Class A common stock is
listed on the NASDAQ stock market. In order to avoid exceeding the
limitation contained in this Section 23.9, the Company agrees that, until
it obtains stockholder approval in accordance with NASDAQ stock market
rules or an exemption therefrom in accordance with NASDAQ policies, it
will not issue additional Notes after the Initial Closing or effect
transactions of the kind described under paragraphs (b), (c), (d) or (e)
of Section 15.6 or elect to pay interest after 18 months after the
Initial Closing Date in shares of Class A common stock if, after giving
effect thereto, such action would result in the number of shares issued
or issuable upon conversion of Notes and required to be issued in payment
of interest on such Notes to equal or exceed the Maximum Threshold.
23.10 Designated Senior Debt. The Notes shall constitute
"Designated Senior Debt" (as defined in the Indenture dated as of January
26, 2000 between the Company and American Stock Transfer & Trust Company
as trustee for the Company's 7% Convertible Subordinated Notes due 2005)
if FIFTEEN MILLION United States Dollars ($15,000,000) aggregate
principal amount of Notes are issued.
* * * * *
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If you are in agreement with the foregoing, please sign the form of
agreement on the accompanying counterpart of this Agreement and return it to the
Company, whereupon the foregoing shall become a binding agreement between you
and the Company.
Very truly yours,
MAIL.COM, INC.
MAIL.COM BUSINESS MESSAGING
SERVICES, INC.
By: /s/ Thomas Murawski
--------------------------------
Thomas Murawski
Chief Executive Officer
THE ALLEGRO GROUP, INC.
By: /s/ Gerald Gorman
--------------------------------
Gerald Gorman
Chairman
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The foregoing is hereby
agreed to as of the
date hereof.
FEDERAL PARTNERS, L.P.
By: Ninth Floor Corporation, its general partner
By /s/ Kevin S. Moore
----------------------------------------------
Kevin S. Moore
President
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NATIONAL FEDERATION OF INDEPENDENT BUSINESS
EMPLOYEE PENSION TRUST
PUBLIC EMPLOYEE RETIREMENT SYSTEM OF IDAHO
CITY OF MILFORD PENSION & RETIREMENT FUND
CITY OF STAMFORD FIREMEN'S PENSION FUND
THE JENIFER ALTMAN FOUNDATION
ASPHALT GREEN, INC.
DEAN WITTER FOUNDATION
LAZAR FOUNDATION
ROANOKE COLLEGE
A. CAREY ZESIGER
ALEXA ZESIGER CARVER
BUTLER FAMILY LLC
DAVID ZESIGER
HBL CHARITABLE UNITRUST
ANDREW HEISKELL
HELEN HUNT
JEANNE L. MORENCY
PSYCHOLOGY ASSOCIATES
PETER LOORAM
MARY C. ANDERSON
MURRAY CAPITAL, LLC
THE MEEHAN INVESTMENT PARTNERSHIP I, L.P.
DOMENIC J. MIZIO
MORGAN TRUST CO.OF THE BAHAMAS LTD. AS
TRUSTEE U/A/D 11/30/93
NICOLA Z. MULLEN
SUSAN URIS HALPERN
THEEUWES FAMILY TRUST, FELIX THEEUWES TRUSTEE
WILLIAM B. LAZAR
WELLS FAMILY LLC
ALBERT L. ZESIGER
BARRIE RAMSAY ZESIGER
DONALD AND DAN-THANH DEVIVO
JOHN J. & CATHERINE H. KAYOLA
WOLFSON INVESTMENT PARTNERS LP
By: ZESIGER CAPITAL GROUP, LLC, as attorney in
fact
By: /s/ Albert Zesiger
--------------------------------------------
Name: Albert Zesiger
Title: Managing Director
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SCHEDULE B
DEFINED TERMS
As used herein, the following terms have the respective meanings set
forth below or set forth in the Section hereof following such term:
"Allegro" is defined in the introductory paragraph of this Agreement.
"Accession Agreement" is defined in Section 3.
"Acquired Debt" means, with respect to any specified Person, Indebtedness
of any other Person existing at the time such other Person merges with or into
or becomes a Subsidiary of such specified Person, or Indebtedness incurred by
such Person in connection with the acquisition of assets, including Indebtedness
incurred in connection with such other Person merging with or into or becoming a
Subsidiary of such specified Person or the acquisition of such assets, as the
case may be.
"Affiliate" means, at any time, and with respect to any Person, any other
Person that at such time directly or indirectly through one or more
intermediaries Controls, or is Controlled by, or is under common Control with,
such first Person. As used in this definition, "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. Unless the context otherwise clearly
requires, any reference to an "Affiliate" is a reference to an Affiliate of the
Company.
"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.
"Closing" is defined in Section 3.
"Closing Date" is defined in Section 3.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time, and the rules and regulations promulgated thereunder from time to time.
<PAGE> 47
"Company" is defined in the introductory paragraph of this Agreement.
"Common Shares" is defined in Section 1(b).
"Confidential Information" is defined in Section 21.
"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" means an event or condition the occurrence or existence of
which would, with the lapse of time or the giving of notice or both, become an
Event of Default.
"Default Rate" means that rate of interest that is two percent (2%) per
annum above the rate of interest stated in the second paragraph of the Notes.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the rules and regulations promulgated thereunder
from time to time.
"ERISA Affiliate" means any trade or business (whether or not
incorporated) that is considered a member of the controlled group of any of the
Companies under section 414 of the Code.
"Event of Default" is defined in Section 11.
"Exchange Act" means the Securities Exchange Act of 1934, as amended from
time to time.
"Existing Indebtedness" means the Notes and any other Indebtedness of the
Companies in existence on the date of this Agreement until such amounts are
repaid in full.
"GAAP" means generally accepted accounting principles as in effect from
time to time in the United States of America.
"Governmental Authority" means
(a) the government of
2
<PAGE> 48
(i) the United States of America or any State or other
political subdivision thereof, or
(ii) any jurisdiction in which the Company or any Subsidiary
conducts all or any part of its business, or which asserts
jurisdiction over any properties of the Company or any
Subsidiary, or
(b) any entity exercising executive, legislative, judicial, regulatory
or administrative functions of, or pertaining to, any such government.
"Guaranty" means, with respect to any Person, any obligation (except the
endorsement in the ordinary course of business of negotiable instruments for
deposit or collection) of such Person guaranteeing or in effect guaranteeing any
indebtedness, dividend or other obligation of any other Person in any manner,
whether directly or indirectly, including (without limitation) obligations
incurred through an agreement, contingent or otherwise, by such Person:
(a) to purchase such indebtedness or obligation or any property
constituting security therefor;
(b) to advance or supply funds (i) for the purchase or payment of such
indebtedness or obligation, or (ii) to maintain any working capital or
other balance sheet condition or any income statement condition of any
other Person or otherwise to advance or make available funds for the
purchase or payment of such indebtedness or obligation;
(c) to lease properties or to purchase properties or services
primarily for the purpose of assuring the owner of such indebtedness or
obligation of the ability of any other Person to make payment of the
indebtedness or obligation; or
(d) otherwise to assure the owner of such indebtedness or obligation
against loss in respect thereof.
In any computation of the indebtedness or other liabilities of the
obligor under any Guaranty, the indebtedness or other obligations that are the
subject of such Guaranty shall be assumed to be direct obligations of such
obligor.
"holder" means, with respect to any Note, the Person in whose name such
Note is registered in the register maintained by the Company pursuant to Section
13.1.
"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);
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<PAGE> 49
(c) all liabilities appearing on its balance sheet in accordance with
GAAP in respect of Capital Leases;
(d) all liabilities for borrowed money secured by any Lien with
respect to any property owned by such Person (whether or not it has
assumed or otherwise become liable for such liabilities);
(e) all its liabilities in respect of letters of credit or instruments
serving a similar function issued or accepted for its account by banks
and other financial institutions (whether or not representing obligations
for borrowed money);
(f) Swaps of such Person; and
(g) any Guaranty of such Person with respect to liabilities of a type
described in any of clauses (a) through (f) hereof.
Indebtedness of any Person shall include all obligations of such Person of the
character described in clauses (a) through (g) to the extent such Person remains
legally liable in respect thereof notwithstanding that any such obligation is
deemed to be extinguished under GAAP.
"Initial Closing" is defined in Section 3.
"Initial Closing Date" is defined in Section 3.
"Institutional Investor" means (a) any holder of a Note holding more than
10% of the aggregate principal amount of the Notes then outstanding, (b) any
bank, trust company, savings and loan association or other financial
institution, any pension plan, any investment company, any insurance company,
any broker or dealer, or any other similar financial institution or entity,
regardless of legal form and (c) Federal Partners, L.P. and the accounts for
which The Clark Estates provides management services.
"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).
"Mail.com" is defined in the introductory paragraph of this Agreement.
"Mail.com BMS" is defined in the introductory paragraph of this
Agreement.
"Material" means material in relation to the business, operations,
affairs, financial condition, assets or properties of the Company and its
Subsidiaries taken as a whole.
"Material Adverse Effect" means a material adverse effect on (a) the
business, operations, affairs, financial condition, assets or properties of the
Company and its Subsidiaries taken as a whole, or (b) the ability of the
Companies taken as a whole to perform their obligations under
4
<PAGE> 50
any of the Transaction Agreements, or (c) the validity or enforceability of any
of the Transaction Agreements.
"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).
"Multiemployer Plan" means any Plan that is a "multiemployer plan" (as
such term is defined in Section 4001(a)(3) of ERISA).
"Notes" is defined in Section 1.
"Officer's Certificate" means a certificate of a Senior Financial Officer
or of any other officer of the respective Companies whose responsibilities
extend to the subject matter of such certificate.
"PBGC" means the Pension Benefit Guaranty Corporation referred to and
defined in ERISA or any successor thereto.
"Permitted Liens" means:
(a) Liens securing the Notes;
(b) Liens securing Purchase Money Indebtedness, provided that such
Indebtedness was permitted to be incurred by the terms of this Agreement and
such Liens do not extend to any assets of the Companies other than the assets so
acquired;
(c) Liens on property of a Person existing at the time such Person is
merged into or consolidated with any of the Companies, provided, that such Liens
were not incurred in connection with, or in contemplation of, such merger or
consolidation;
(d) Liens on property existing at the time of acquisition thereof by any
of the Companies; provided that such Liens were not incurred in connection with,
or in contemplation of, such acquisition and do not extend to any assets of any
of the Companies other than the property so acquired;
(e) Liens to secure the performance of statutory obligations, surety or
appeal bonds or performance bonds, or landlords', carriers', warehousemen's,
mechanics', suppliers', materialmen's or other like Liens, in any case incurred
in the ordinary course of business and with respect to amounts for which an
adequate reserve or other appropriate provision, if any, as is required by GAAP
shall have been made therefor;
(f) Liens existing on the date of this Agreement;
(g) Liens for taxes, assessments or governmental charges or claims that
are not yet delinquent or that are being contested in good faith by appropriate
proceedings promptly instituted and diligently concluded; provided that any
reserve or other appropriate provision as shall be required in conformity with
GAAP shall have been made therefor;
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<PAGE> 51
(h) Liens incurred in the ordinary course of business of the Companies
(including, without limitation, Liens securing Purchase Money Indebtedness) with
respect to obligations that do not exceed $5 million in principal amount in the
aggregate at any one time outstanding;
(i) Liens securing Indebtedness permitted under clause (ix) of Section
10.4; provided that such Liens shall not extend to assets other than the assets
that secure such Indebtedness being refinanced;
(j) any interest or title of a lessor under any Capital Lease Obligation;
(k) Liens not provided for in clauses (a) through (j) above securing
Indebtedness incurred in compliance with the terms of this Agreement provided
that the Notes are secured by the assets subject to such Liens on an equal and
ratable basis or on a basis prior to such Liens; provided that to the extent
that such Liens secured Indebtedness that is subordinated to the Notes, such
Liens shall be subordinated to and be later in priority than the Notes on the
same basis; and
(l) extensions, renewals or refundings of any Liens referred to in
clauses (a) through (k) above, provided that any such extension, renewal or
refunding does not extend to any assets or secure any Indebtedness not securing
or secured by the Liens being extended, renewed or refinanced.
"Person" means an individual, partnership, corporation, limited liability
company, association, trust, unincorporated organization, or a government or
agency or political subdivision thereof.
"Plan" means an "employee benefit plan" (as defined in Section 3(3) of
ERISA) that is or, within the preceding five years, has been established or
maintained, or to which contributions are or, within the preceding five years,
have been made or required to be made, by the Companies or any ERISA Affiliate
or with respect to which the Companies or any ERISA Affiliate may have any
liability.
"Pledge Agreement" is defined in Section 4.6.
"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.
"Purchase Money Indebtedness" means
(a) Indebtedness of the Company incurred (within 180 days of such
purchase) to finance the purchase of any assets (including the purchase of
equity interests of Persons that are not Affiliates of the Company) of the
Company, provided that the amount of Indebtedness thereunder does not exceed
100% of the purchase cost of such assets; or
(b) Indebtedness of the Company which refinances indebtedness referred to
in clause (a) of this definition, provided that such refinancing satisfies the
proviso of such clause (a).
6
<PAGE> 52
"QPAM Exemption" means Prohibited Transaction Class Exemption 8414 issued
by the United States Department of Labor.
"Registration Rights Agreement" is defined in Section 4.6.
"Required Holders" means, at any time, the holders of a majority in
principal amount of the Notes at the time outstanding (exclusive of Notes then
owned by the Company or any of its Affiliates).
"Responsible Officer" means any Senior Financial Officer and any other
officer of the respective Companies with responsibility for the administration
of the relevant portion of this agreement.
"Securities Act" means the Securities Act of 1933, as amended from time
to time.
"Senior Financial Officer" means the chief financial officer, principal
accounting officer, treasurer or comptroller of the Company.
"Subsidiary" means, as to any Person, any corporation, association or
other business entity in which such Person or one or more of its Subsidiaries or
such Person and one or more of its Subsidiaries owns sufficient equity or voting
interests to enable it or them (as a group) ordinarily, in the absence of
contingencies, to elect a majority of the directors (or Persons performing
similar functions) of such entity, and any partnership or joint venture if a50%
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.
"Transaction Agreements" is defined in Section 2.
7
<PAGE> 53
"Weighted Average Life to Maturity" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing (a) the then
outstanding principal amount of such Indebtedness into (b) the total of the
product obtained by multiplying (i) the amount of each then remaining
installment, sinking fund, serial maturity or other required payments of
principal, including payment at final maturity, in respect thereof, by (ii) the
number of years (calculated to the nearest one-twelfth) that will elapse between
such date and the making of such payment.
8
<PAGE> 54
EXHIBIT 4.4(b)
[FORM OF NOTE]
THE SECURITIES REPRESENTED BY THIS INSTRUMENT HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
QUALIFIED UNDER APPLICABLE STATE SECURITIES LAWS AND HAVE BEEN
TAKEN FOR INVESTMENT PURPOSES ONLY AND NOT WITH A VIEW TO OR
FOR SALE IN CONNECTION WITH ANY DISTRIBUTION THEREOF. THE
SECURITIES MAY NOT BE SOLD OR OTHERWISE TRANSFERRED IN THE
ABSENCE OF SUCH REGISTRATION AND QUALIFICATION EXCEPT UNDER
CERTAIN LIMITED CIRCUMSTANCES AND SUBJECT TO THE DELIVERY OF AN
OPINION OF COUNSEL FOR THE HOLDER, CONCURRED IN BY COUNSEL FOR
THE COMPANY THAT SUCH REGISTRATION AND QUALIFICATION ARE NOT
REQUIRED.
MAIL.COM, INC.
MAIL.COM BUSINESS MESSAGING SERVICES, INC.
THE ALLEGRO GROUP, INC.
10% SENIOR CONVERTIBLE NOTE DUE JANUARY 8, 2006
No. [ ]
----
January 8, 2001
$[ ]
-------
FOR VALUE RECEIVED, the undersigned, MAIL.COM, INC., a Delaware
corporation (the "Company" or "Mail.com"), MAIL.COM BUSINESS MESSAGING SERVICES,
INC., a Delaware corporation ("Mail.com BMS"), and THE ALLEGRO GROUP, INC., an
Ohio corporation ("Allegro"; Mail.com, Mail.com BMS and Allegro being referred
to herein collectively as the "Companies"), hereby promises to pay to [______],
or registered assigns, the principal sum of [_______] DOLLARS ($_______________)
on January 8, 2006. All of the obligations under this Note shall be joint and
several obligations of Mail.com, Mail.com BMS and Allegro.
Interest. The Companies shall pay interest (computed on the basis of a
360 day year of twelve 30 day months) on the unpaid principal balance hereof at
the rate of 10% per annum from the date hereof, payable semiannually, on the
15th day of July and January in each year, commencing with the July 15 next
succeeding the date hereof, until the principal hereof shall have become due and
payable, except that, to the extent permitted by law, the Companies shall pay
interest (computed on such basis) on any overdue payment of principal (including
any overdue prepayment) and any overdue payment of interest, payable
semiannually as aforesaid (or, at the option of the registered holder hereof, on
demand), at a rate per annum from time to time equal to 12 %. One half of each
interest payment shall be payable in cash and one half shall be payable (i)
until 18 months after the Initial Closing Date, in shares of Mail.com Class A
common stock having a deemed value equal to the Conversion Price at the time of
payment of such interest or (ii) after 18 months after the Initial Closing Date,
at the option of the Companies either in cash or in shares of Mail.com Class A
common stock having a deemed value equal to
<PAGE> 55
the Conversion Price at the time of payment of such interest. In the event that
the shares of Mail.com Class A common stock are converted into securities,
property or cash in connection with a merger, consolidation, recapitalization or
other event having similar effect, the portion of such interest payment shall
instead be made in the appropriate amount of such securities, property or cash
into which such shares have been so converted.
Payments. Payments of principal of and interest on this Note are to be
made in lawful money of the United States of America at New York, New York or at
such other place as the Companies shall have designated by written notice to the
holder of this Note as provided in the Note Purchase Agreement referred to
below.
Note Purchase Agreement and other Transaction Agreements. This Note is
one of a series of Senior Convertible Notes (herein called the "Notes") issued
pursuant to the Note Purchase Agreement, dated as of January 8, 2001 (as from
time to time amended, the "Note Purchase Agreement"), among the Companies and
the Purchasers named therein and is entitled to the benefits thereof. Each
holder of this Note will be deemed, by its acceptance hereof, (i) to have agreed
to the confidentiality provisions set forth in Section 21 of the Note Purchase
Agreement and (ii) to have made the representation set forth in Section 6.2 of
the Note Purchase Agreement. This Note is entitled to the benefits of the Note
Purchase Agreement, the Pledge Agreement and the Registration Rights Agreements.
Registered Note. This Note is a registered Note and, as provided in the
Note Purchase Agreement, upon surrender of this Note for registration of
transfer, duly endorsed, or accompanied by a written instrument of transfer duly
executed, by the registered holder hereof or such holder's attorney duly
authorized in writing, a new Note for a like principal amount will be issued to,
and registered in the name of, the transferee. Prior to due presentment for
registration of transfer, the Companies may treat the person in whose name this
Note is registered as the owner hereof for the purpose of receiving payment and
for all other purposes, and the Companies will not be affected by any notice to
the contrary.
Prepayments. The Companies will make required prepayments of principal on
the dates and in the amounts specified in the Note Purchase Agreement. This Note
is also subject to optional prepayment, in whole or from time to time in part,
at the times and on the terms specified in the Note Purchase Agreement, but not
otherwise.
Conversion Right. The holder of this Note has the right, exercisable at
any time prior to the close of business on the Business Day immediately
preceding the final maturity date of this Note to convert the principal amount
thereof (or any portion thereof that is an integral multiple of $1,000) into
shares of Class A common stock, par value $.01 per share, of Mail.com at the
initial Conversion Price of $1.00 per share, subject to adjustment under certain
circumstances as provided in the Note Purchase Agreement, except that if a Note
becomes subject to optional or mandatory prepayment, the conversion right will
terminate at the close of business on the Business Day immediately preceding the
date fixed for such prepayment (unless the Companies shall default in making the
prepayment, including interest, when it becomes due, in which case the
conversion right shall terminate at the close of business on the date on which
such default is cured).
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<PAGE> 56
To convert a Note, the holder must (1) complete and sign a notice of
election to convert substantially in the form attached hereto (or complete and
manually sign a facsimile thereof) and deliver such notice to Mail.com, (2)
surrender the Note to Mail.com, (3) furnish appropriate endorsements or transfer
documents if required by Mail.com and (4) pay any transfer or similar tax, if
required by Mail.com in accordance with Section 15.4 of the Note Purchase
Agreement. Upon conversion, no adjustment or payment will be made for accrued
and unpaid interest on the Note so converted or for dividends or distributions
on any Class A common stock issued on conversion of the Note, except that, if
any holder of a Note surrenders a Note for conversion after the close of
business on a record date for the payment of interest and prior to the opening
of business on the next interest payment date, then, notwithstanding such
conversion, the interest payable on such interest payment date will be paid on
such interest payment date to the person who was the registered holder of such
Note on such record date.
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 converted by
the Conversion Price in effect on the Conversion Date. No fractional shares will
be issued upon conversion but a cash adjustment will be made for any fractional
interest.
Events of Default. If an Event of Default, as defined in the Note
Purchase Agreement, occurs and is continuing, the principal of this Note may be
declared or otherwise become due and payable in the manner, at the price and
with the effect provided in the Note Purchase Agreement.
Description of Transaction Agreements. The above description of certain
provisions of the Note Purchase Agreement and other Transaction Agreements is
qualified by reference to, and is subject in its entirety to, the more complete
description thereof contained in the Note Purchase Agreement and the other
Transaction Agreements.
Capitalized Terms. Capitalized terms used herein that are defined in the
Note Purchase Agreement (as defined above) shall have the respective meanings
ascribed to such terms in the Note Purchase Agreement.
Governing Law. This Note shall be construed and enforced in accordance
with, and the rights of the parties shall be governed by, the law of the State
of New York excluding choice-of-law principles of the law of such State that
would require the application of the laws of a jurisdiction other than such
State. In the event of any conflict between the provisions of this Note, on the
one hand, and any of the Transaction Agreements, on the other hand, the
provisions of the applicable Transaction Agreement shall control.
MAIL.COM, INC.
MAIL.COM BUSINESS MESSAGING
SERVICES, INC.
By
-------------------------
Thomas Murawski
Chief Excecutive Officer
3
<PAGE> 57
THE ALLEGRO GROUP, INC.
By
-------------------------
Gerald Gorman
Chairman
4
<PAGE> 58
ELECTION TO CONVERT
To Mail.com, Inc.:
The undersigned owner of this Note hereby irrevocably exercises the option to
convert this Note, or the portion below designated, into Class A common stock of
Mail.com, Inc. in accordance with the terms of the Note Purchase Agreement
referred to in this Note, and directs that the shares issuable and deliverable
upon conversion, together with any check in payment for fractional shares, be
issued in the name of and delivered to the undersigned, unless a different name
has been indicated below. If shares are to be issued in the name of a person
other than the undersigned, the undersigned will pay all transfer taxes payable
with respect thereto.
The undersigned agrees to be bound by the terms of the Note Purchase Agreement
relating to the Class A common stock issued upon conversion of the Note. If you
want to convert this Note in whole, check the box below. If you want to convert
this Note in part, indicate the portion of this Note to be converted in the
space provided below.
In whole / /
or
Portion of Note to be converted ($1,000 or any integral multiple thereof):
$
--------------
Date:
--------------
Name of Holder:
Signature of Authorized Representative of Holder
(Sign exactly as your name appears on the
--------------------------------------
other side of this Note)
Medallion Signature Guarantee:
-------------------------------------
Please print or typewrite your name and address, including zip code, and social
security or other identifying number:
If the Class A common stock is to be issued and delivered to someone other than
you, please print or typewrite the name and address, including zip code, and
social security or other identifying number of that person:
5
