Exhibit 4.1





EXHIBIT 4.1




EASYLINK SERVICES INTERNATIONAL CORPORATION




and




AMERICAN STOCK TRANSFER AND TRUST COMPANY, LLC




Rights Agent




Stockholder Rights Agreement




Dated as of August 25, 2009



 


 









 




TABLE
OF CONTENTS




	 	 	 	 	 
	 	 	Page	 
	 
	 	 	 	 
	Section 1. Certain Definitions
	 	 	2	 
	 
	 	 	 	 
	Section 2. Appointment of Rights Agent
	 	 	7	 
	 
	 	 	 	 
	Section 3. Issue of Rights Certificates
	 	 	8	 
	 
	 	 	 	 
	Section 4. Form of Rights Certificates
	 	 	9	 
	 
	 	 	 	 
	Section 5. Countersignature and Registration
	 	 	10	 
	 
	 	 	 	 
	Section 6. Transfer, Split Up, Combination and Exchange of Rights Certificates; Mutilated, Destroyed, Lost
or Stolen Rights Certificates
	 	 	11	 
	 
	 	 	 	 
	Section 7. Exercise of Rights; Purchase Price; Expiration Date of Rights
	 	 	12	 
	 
	 	 	 	 
	Section 8. Cancellation and Destruction of Rights Certificates
	 	 	14	 
	 
	 	 	 	 
	Section 9. Reservation and Availability of Stock
	 	 	14	 
	 
	 	 	 	 
	Section 10. Preferred Shares Record Date
	 	 	15	 
	 
	 	 	 	 
	Section 11. Adjustment of Purchase Price, Number and Kind of Shares or Number of
Rights
	 	 	16	 
	 
	 	 	 	 
	Section 12. Certificate of Adjusted Purchase Price or Number of Shares
	 	 	23	 
	 
	 	 	 	 
	Section 13. Consolidation, Merger or Sale or Transfer of Assets, Cash Flow or
Earning Power
	 	 	23	 
	 
	 	 	 	 
	Section 14. Fractional Rights and Fractional Shares
	 	 	27	 
	 
	 	 	 	 
	Section 15. Rights of Action
	 	 	29	 
	 
	 	 	 	 
	Section 16. Agreement of Rights Holders
	 	 	29	 
	 
	 	 	 	 
	Section 17. Rights Certificate Holder Not Deemed a Stockholder
	 	 	30	 
	 
	 	 	 	 
	Section 18. Concerning the Rights Agent
	 	 	30	 
	 
	 	 	 	 
	Section 19. Merger or Consolidation or Change of Name of Rights Agent
	 	 	30	 
	 
	 	 	 	 
	Section 20. Duties of Rights Agent
	 	 	31	 
	 
	 	 	 	 
	Section 21. Change of Rights Agent
	 	 	33	 
	 
	 	 	 	 
	Section 22. Issuance of New Rights Certificates
	 	 	34	 
	 
	 	 	 	 
	Section 23. Redemption and Termination
	 	 	34	 
	 
	 	 	 	 
	Section 24. Exchange
	 	 	35	 
	 
	 	 	 	 
	Section 25. Notice of Certain Events
	 	 	37	 
	 
	 	 	 	 
	Section 26. Notices
	 	 	37	 
	 
	 	 	 	 
	Section 27. Supplements and Amendments
	 	 	39	 
	 
	 	 	 	 
	Section 28. Successors
	 	 	39	 






 


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TABLE
OF CONTENTS
(continued)




	 	 	 	 	 
	 	 	Page	 
	 
	 	 	 	 
	Section 29. Determination and Actions by the Board of Directors, etc.
	 	 	39	 
	 
	 	 	 	 
	Section 30. Benefits of this Agreement
	 	 	39	 
	 
	 	 	 	 
	Section 31. Severability
	 	 	40	 
	 
	 	 	 	 
	Section 32. Governing Law
	 	 	40	 
	 
	 	 	 	 
	Section 33. Counterparts
	 	 	40	 
	 
	 	 	 	 
	Section 34. Descriptive Headings; Interpretation
	 	 	40	 







 


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STOCKHOLDER RIGHTS AGREEMENT




STOCKHOLDER RIGHTS AGREEMENT, dated as of August 25, 2009 (this “Agreement”), between EasyLink
Services International Corporation, a Delaware corporation (the “Company”, as further defined in
Section 1 below), and American Stock Transfer and Trust Company, LLC, a New York limited liability
company (the “Rights Agent”).



W I T N E S S E T H:




WHEREAS, the Company has generated net operating losses for United States federal income tax
purposes (“NOLs”) and certain other tax benefits, such NOLs and certain other tax benefits may
potentially provide valuable tax benefits to the Company, the Company desires to avoid an
“ownership change” within the meaning of Section 382 (as defined below) and thereby preserve the
ability to utilize fully such NOLs and certain other tax benefits and, in furtherance of such
objective, the Company desires to enter into this Agreement;



WHEREAS, the Company desires to protect stockholders from coercive or otherwise unfair
takeover tactics; and



WHEREAS, on August 25, 2009 (the “Rights Dividend Declaration Date”), the Board of Directors
of the Company authorized and declared a dividend distribution of one Right (as hereinafter
defined) for each Common Share (as hereinafter defined) of the Company outstanding at the Close of
Business (as hereinafter defined) on September 8, 2009 (the “Record Date”), each Right initially
representing the right to purchase one one-thousandth of a share of Series F Junior Participating
Preferred Stock of the Company having the rights, powers and preferences set forth in the form of
the Certificate of the Powers, Designations, Preferences and Relative, Participating, Optional and
Other Special Rights of the Series F Junior Participating Preferred Stock attached hereto as
Exhibit A, upon the terms and subject to the conditions hereinafter set forth (the “Rights”), and
has further authorized the issuance of one Right (as such number may hereinafter be adjusted
pursuant to the provisions of Section 11(p)) for each Common Share of the Company issued between
the Record Date (whether originally issued or delivered from the Company’s treasury) and the
earlier of the Distribution Date and the Expiration Date (as such terms are hereinafter defined)
or, in certain circumstances provided in Section 22, after the Distribution Date;



 


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NOW, THEREFORE, in consideration of the premises and the mutual agreements herein set forth,
the parties hereby agree as follows:



Section 1. Certain Definitions. For purposes of this Agreement, the following terms
have the meanings indicated:



(a) “Acquiring Person” shall mean any Person (other than the Company, any Related Person, any
Grandfathered Person or any Exempted Person) who or which, together with all Affiliates and
Associates of such Person, shall be the Beneficial Owner of 4.9% or more of the Corporation
Securities then outstanding; provided, however, that a Person will not be deemed to
have become an Acquiring Person solely as a result of (i) a reduction in the amount of Corporation
Securities outstanding, (ii) the exercise of any options, warrants, rights or similar
interests (including shares of restricted stock) granted by the Company to its directors,
officers and employees, (iii) any unilateral grant of any Corporation Securities by the Company,
(iv) any issuance of Corporation Securities by the Company or any stock dividend, stock split or
similar transaction effected by the Company in which all holders of Corporation Securities are
treated equally or (v) any Exempted Transaction, in each case unless and until such time as such
Person (together with all Affiliates and Associates of such Person) acquires the Beneficial
Ownership of any additional Corporation Securities. Notwithstanding the foregoing, the Board of
Directors of the Company may, in its sole discretion, determine that any Exempted Person shall no
longer be deemed to be an “Exempted Person” for any purposes of this Agreement at which time such
Person shall be deemed to be an Acquiring Person. Notwithstanding the foregoing, if the Board of
Directors of the Company determines in good faith that a Person who would otherwise be an
“Acquiring Person” (as defined pursuant to the foregoing provisions of this Section 1(a)) has
become such inadvertently, and such Person promptly enters into, and delivers to the Company, an
irrevocable commitment to divest as promptly as practicable, and thereafter divests as promptly as
practicable a sufficient number of Corporation Securities so that such Person would no longer be an
“Acquiring Person” (as defined pursuant to the foregoing provisions of this Section 1(a)), then
such Person shall not be deemed to be an “Acquiring Person” for any purposes of this Agreement
unless and until such time as such Person (together with all Affiliates and Associates of such
Person) is again the Beneficial Owner of 4.9% or more of the Corporation Securities then
outstanding.




(b) “Act” shall mean the Securities Act of 1933, as amended.




(c) “Adjustment Shares” shall have the meaning set forth in Section 11(a)(ii).




(d) “Adjustment Spread” shall have the meaning set forth in Section 24(a)(ii).



(e) “Affiliate” and “Associate” shall have the respective meanings ascribed to such terms in
Rule 12b-2 of the General Rules and Regulations under the Exchange Act as in effect on the date of
this Agreement and, to the extent not included within the foregoing clause of this Section 1(e),
shall also include, with respect to any Person, any other Person whose Corporation Securities would
be deemed constructively owned by such first Person for purposes of Section 382, would be deemed
owned by a single “entity” as defined in Treasury Regulation § 1.382-3(a)(1) in which both such
Persons are included, or otherwise would be deemed aggregated with Corporation Securities owned by
such first Person pursuant to the provisions of Section 382 and the Treasury Regulations
thereunder, provided, however, that a Person shall not be deemed to be the
Affiliate or Associate of another Person solely because either or both Persons are or were
directors of the Company.


 


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(f) A Person shall be deemed to be the “Beneficial Owner” of, to have “Beneficial Ownership”
of, and to “Beneficially Own,” in addition to stock or securities actually beneficially owned by
such Person, any stock or securities:




(i) which such Person or any of such Person’s Affiliates or Associates, directly or
indirectly, has the right to acquire (whether such right is exercisable immediately or only
after the passage of time or the occurrence of an event) pursuant to any agreement,
arrangement or understanding (whether or not in writing) or upon the
exercise of conversion rights, exchange rights, warrants, options, or other rights (in
each case, other than upon exercise or exchange of the Rights); provided,
however, that a Person shall not be deemed the “Beneficial Owner” of, to have
“Beneficial Ownership” of, or to “Beneficially Own” stock or securities by reason of the
Beneficial Ownership of securities (including rights, options or warrants) which are
convertible or exchangeable into stock or securities until such time as the convertible or
exchangeable securities are exercised and converted or exchanged into such stock or
securities except to the extent the acquisition or transfer of such securities (including
rights, options or warrants) would be treated as exercised on the date of its acquisition or
transfer under Treasury Regulation § 1.382-4(d) of the Treasury Regulations;




(ii) which such Person or any of such Person’s Affiliates or Associates, directly or
indirectly, has or shares the right to vote or dispose of, or has “beneficial ownership” of
(as defined under Rule 13d-3 of the General Rules and Regulations under the Exchange Act);
or




(iii) of which any other Person is the “Beneficial Owner,” if such Person or any of
such Person’s Affiliates or Associates has any formal or informal understanding (whether or
not in writing) with such other Person (or any of such other Person’s Affiliates or
Associates) to make a “coordinated acquisition” of shares within the meaning of Treasury
Regulation § 1.382-3(a)(1) or is otherwise treated as included in the same “entity” within
the meaning of Treasury Regulation 1.382-3(a)(1) in which such other Person is also
included;



provided, however, that a Person shall not be deemed the “Beneficial Owner” of, to
have “Beneficial Ownership” of, or to “Beneficially Own” (i) stock or securities tendered pursuant
to a tender or exchange offer made by such Person or any of such Person’s Affiliates or Associates
until such tendered securities are accepted for purchase or exchange or (ii) any stock or
securities (A) by reason of such Person having the right to vote such stock or security if such
right is pursuant to an agreement, arrangement or understanding (whether or not in writing) which
(1) arises solely from a revocable proxy given to such Person in response to a public proxy or
consent solicitation made pursuant to, and in accordance with, the applicable rules and regulations
of the Exchange Act and (2) is not also then reportable on Schedule 13D under the Exchange Act (or
any comparable or successor report), or (B) if such Beneficial Ownership arises solely as a result
of such Person’s status as a “clearing agency,” as defined in Section 3(a)(23) of the Exchange Act.
Nothing in this Section 1(f) shall cause a Person engaged in business as an underwriter of
securities to be the “Beneficial Owner” of, to have “Beneficial Ownership” of, or to “Beneficially
Own,” any securities acquired through such Person’s participation in good faith in an underwriting
syndicate until the expiration of 40 calendar days after the date of such acquisition, and then
only if such securities continue to be owned by such Person at the expiration of such 40 calendar
days, or such later date as the directors of the Company may determine in any specific case.
Notwithstanding anything herein to the contrary, to the extent not within the foregoing provisions
of this Section 1(f), a Person shall be deemed the “Beneficial Owner” of, to have “Beneficial
Ownership” of, and to “Beneficially Own” stock or securities which such Person would be deemed to
constructively own or which otherwise would be aggregated with stock or securities owned by such
Person pursuant to Section 382 and the Treasury Regulations thereunder.


 


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(g) “Business Day” shall mean any day other than a Saturday, Sunday or a day on which banking
institutions in the State of New York are authorized or obligated by law or executive order to
close.



(h) “Close of Business” on any given date shall mean 5:00 P.M., Eastern time, on such date,
provided, however, that if such date is not a Business Day it shall mean 5:00 P.M.,
Eastern time, on the next succeeding Business Day.




(i) “Code” means the Internal Revenue Code of 1986, as amended, or any successor statute.



(j) “Common Shares” or “Common Share” shall mean, (a) with respect to the Company, (i) shares
of the class A common stock, par value $0.01 per share, of the Company or (ii) any shares into
which such shares of class A common stock may be reclassified or exchanged, and (b) with respect to
any Person other than the Company, the capital stock of such Person with the greatest voting power,
or the equity securities or other equity interest having power to control or direct the management,
of such Person (or, if such Person is a Subsidiary of another Person, the Person or Persons that
ultimately control such first mentioned Person).




(k) “common stock equivalents” shall have the meaning set forth in Section 11(a)(iii).



(l) “Company” shall mean EasyLink Services International Corporation, a Delaware corporation,
subject to the terms of Section 13(a)(iii)(C) hereof.



(m) “Corporation Securities” shall mean (i) Common Shares, (ii) shares of preferred stock
(other than shares of preferred stock described in Section 1504(a)(4) of the Code) of the Company,
and (iii) any other interest that would be treated as “stock” of the Company pursuant to Treasury
Regulation § 1.382-2T(f)(18).




(n) “current market price” shall have the meaning set forth in Section 11(d)(i).




(o) “Current Value” shall have the meaning set forth in Section 11(a)(iii).




(p) “Distribution Date” shall have the meaning set forth in Section 3(a).




(q) “equivalent preferred shares” shall have the meaning set forth in Section 11(b).




(r) “Exchange Act” shall mean the Securities and Exchange Act of 1934, as amended.


 


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(s) “Exempted Person” shall mean any Person who or which would otherwise be an Acquiring
Person but whose Beneficial Ownership (together with all Affiliates and Associates of such Person)
of 4.9% or more of the Corporation Securities then outstanding would not, as determined by the
Board of Directors of the Company in its sole discretion, jeopardize, endanger or limit (in timing
or amount) the availability to the Company of its Tax Benefits, at any time prior to the time at
which the Company’s right of redemption expires pursuant to Section 23(a) of this Agreement;
provided, however, that such a Person (together with all Affiliates and
Associates of such Person) will cease to be an “Exempted Person” if (i) such Person (together
with all Affiliates and Associates of such Person) ceases to beneficially own 4.9% or more of the
Corporation Securities then outstanding or (ii) the Board of Directors of the Company subsequently
makes a contrary determination in which case such Person (together with all Affiliates and
Associates of such Person) will become an “Acquiring Person”. A purchaser, assignee or transferee
of Corporation Securities from an Exempted Person shall not thereby become an Exempted Person,
except that a transferee from the estate of an Exempted Person who receives Corporation Securities
as a bequest or inheritance from an Exempted Person shall be an Exempted Person so long as such
Person continues to be the Beneficial Owner of 4.9% or more of the Corporation Securities then
outstanding.



(t) “Exempted Transaction” shall mean any transaction that the Board of Directors of the
Company determines, in its sole discretion, is an “Exempted Transaction,” which determination shall
be irrevocable.




(u) “Expiration Date” shall have the meaning set forth in Section 7(a).




(v) “Final Expiration Date” shall have the meaning set forth in Section 7(a).



(w) “Grandfathered Person” shall mean any Person (together with all Affiliates and Associates
of such Person) who would otherwise be an Acquiring Person as of the date of this Agreement;
provided, however, that such Person (together with all Affiliates and Associates of
such Person) shall cease to be a “Grandfathered Person” at such time as either (i) the Beneficial
Ownership of Corporation Securities of such Person (or any Affiliates or Associates of such Person)
increases without the Prior Written Approval of the Company, other than any increase pursuant to or
as a result of (A) a reduction in the amount of Corporation Securities outstanding, (B) the
exercise of any options, warrants, rights or similar interests (including shares of restricted
stock) granted by the Company to its directors, officers and employees, (C) any unilateral grant of
any Corporation Securities by the Company, (D) any issuance of Corporation Securities by the
Company or any stock dividend, stock split or similar transaction effected by the Company in which
all holders of Corporation Securities are treated equally or (E) any Exempted Transaction, or (ii)
the Beneficial Ownership of Corporation Securities of such Person (together with all Affiliates and
Associates of such Person) decreases to an amount less than 4.9% of the Corporation Securities then
outstanding.




(x) “NOLs” shall have the meaning set forth in the recitals to this Agreement.




(y) “OTCBB” shall have the meaning set forth in Section 11(d)(i).



(z) “Person” shall mean any individual, estate, firm, limited liability company, corporation,
trust, association, partnership or other entity, or any group of such “Persons” having a formal or
informal understanding among themselves to make a “coordinated acquisition” of shares within the
meaning of Treasury Regulation § 1.382-3(a)(1) or otherwise treated as an “entity” within the
meaning of Treasury Regulation § 1.382-3(a)(1), and shall include any successor (by merger or
otherwise) of any such entity or group.


 


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(aa) “Preferred Shares” or “Preferred Share” shall mean shares or a share, as applicable, of
Series F Junior Participating Preferred Stock, par value $0.01 per share, of the
Company, and, to the extent that there is not a sufficient number of shares of Series F Junior
Participating Preferred Stock authorized to permit the full exercise of the Rights, any other
series of preferred shares, par value $0.01 per share, of the Company designated for such purpose
containing terms substantially similar to the terms of the Series F Junior Participating Preferred
Stock.




(bb) “Principal Party” shall have the meaning set forth in Section 13(b) hereof.



(cc) “Prior Written Approval of the Company” shall mean prior express written consent of the
Company to the action in question, executed on behalf of the Company by a duly authorized officer
of the Company following express approval by action of at least a majority of the Board of
Directors of the Company.




(dd) “Purchase Price” shall have the meaning set forth in Section 4(a)(ii).




(ee) “Record Date” shall have the meaning set forth in the recitals of this Agreement.




(ff) “Redemption Price” shall have the meaning set forth in Section 23(a).



(gg) “Related Person” shall mean (i) any Subsidiary of the Company, (ii) any employee benefit
plan or other compensation arrangement of the Company or of any Subsidiary of the Company, or (iii)
any Person organized, appointed or established by the Company or any Subsidiary of the Company for
or pursuant to the terms of any such plan or compensation arrangement.




(hh) “Rights” shall have the meaning set forth in the recitals of this Agreement.




(ii) “Rights Agent” shall have the meaning set forth in the parties clause of this Agreement.




(jj) “Rights Certificates” shall have the meaning set forth in Section 3(a).



(kk) “Rights Dividend Declaration Date” shall have the meaning set forth in the first recital
of this Agreement.




(ll) “Section 11(a)(ii) Event” shall mean the event described in Section 11(a)(ii).




(mm) “Section 11(a)(ii) Trigger Date” shall have the meaning set forth in Section 11(a)(iii).



(nn) “Section 13 Event” shall mean any event described in clause (i), (ii) or (iii) of Section
13(a) hereof




(oo) “Section 24(a)(i) Exchange Ratio” shall have the meaning set forth in Section 24(a)(i).



(pp) “Section 24(a)(ii) Exchange Ratio” shall have the meaning set forth in Section 23(a)(ii).


 


6









 





(qq) “Section 382” shall mean Section 382 of the Code or any successor or replacement
provision.



(rr) “Share Acquisition Date” shall mean the first date of public announcement (which, for
purposes of this definition, shall include, without limitation, a report filed pursuant to Section
13(d) under the Exchange Act) by the Company or an Acquiring Person indicating that an Acquiring
Person has become such or such earlier date as a majority of the Board of Directors of the Company
shall become aware of the existence of an Acquiring Person; provided that if a Person is determined
to be an Exempted Person in accordance with the provisions of Section 1(s) (and as a result such
Person is not an Acquiring Person), then the Share Acquisition Date that otherwise shall have
occurred shall be deemed not to have occurred.




(ss) “Spread” shall have the meaning set forth in Section 11(a)(iii).



(tt) “Subsidiary” shall mean, with reference to any Person, any corporation or other entity of
which an amount of voting securities sufficient to elect at least a majority of the directors of
such corporation or other entity is beneficially owned, directly or indirectly, by such Person, or
otherwise controlled by such Person.



(uu) “Substitution Period” shall have the meaning set forth in Section 11(a)(iii).



(vv) “Summary of Rights” shall have the meaning set forth in Section 3(b).



(ww) “Tax Benefits” shall mean NOLs, capital loss carryovers, general business credit
carryovers, alternative minimum tax credit carryovers, foreign tax credit carryovers, any loss or
deduction attributable to a “net unrealized built-in loss” within the meaning of Section 382, of
the Company or any of its Subsidiaries and any other attribute the benefit of which is subject to
possible limitation under Section 382 or Section 383 of the Code.




(xx) “Trading Day” shall have the meaning set forth in Section 11(d)(i).



(yy) “Treasury Regulations” shall mean the final, temporary and proposed regulations
promulgated by the United States Department of the Treasury under the Code as amended or superseded
from time to time.




(zz) “Triggering Event” shall mean any Section 11(a)(ii) Event or any Section 13 Event.



Section 2. Appointment of Rights Agent. The Company hereby appoints the Rights Agent
to act as agent for the Company in accordance with the terms and conditions of this Agreement, and
the Rights Agent hereby accepts such appointment. The Company may from time to time appoint such
co-Rights Agents as it may deem necessary or desirable, upon ten (10) days’ prior written notice to
the Rights Agent. The Rights Agent shall have no duty to supervise, and shall be in no event
liable for, the acts or omissions of any such co-Rights Agent.


 


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Section 3. Issue of Rights Certificates.



(a) Until the earlier of (i) the Close of Business on the tenth day after the Share
Acquisition Date (or, if the tenth day after the Share Acquisition Date occurs before the Record
Date, the Close of Business on the Record Date) or (ii) the Close of Business on the tenth Business
Day (or such later date as may be determined by action of the Board of Directors of the Company
prior to such time as any Person becomes an Acquiring Person) after the date that a tender or
exchange offer to acquire Corporation Securities by any Person (other than the Company or any
Related Person) is first published or sent or given within the meaning of Rule 14d-2(a) of the
General Rules and Regulations under the Exchange Act, if upon consummation thereof, such Person
would become an Acquiring Person (the earlier of the dates referred to in clauses (i) and (ii)
being herein referred to as the “Distribution Date”), (x) the Rights will be evidenced (subject to
the provisions of paragraph (b) of this Section 3) by the certificates for the Common Shares
registered in the names of the holders of the Common Shares (which certificates for Common Shares
shall be deemed also to be certificates for Rights) and not by separate certificates and (y) the
Rights will be transferable only in connection with the transfer of the underlying Common Shares
(including, without limitation, a transfer to the Company). The Company must promptly notify the
Rights Agent of a Distribution Date and request its transfer agent to give the Rights Agent a
stockholder list together with all other relevant information. As soon as practicable after the
Rights Agent is notified of the Distribution Date and receives such information, the Rights Agent
will send by first-class, insured, postage prepaid mail, to each record holder of the Common Shares
as of the Close of Business on the Distribution Date, at the address of such holder shown on the
records of the Company, one or more Rights certificates, in substantially the form of Exhibit B
hereto (the “Rights Certificates”), evidencing one Right for each Common Share so held, subject to
adjustment as provided herein. In the event that any adjustment in the number of Rights per Common
Share has been made pursuant to Section 11, at the time of distribution of the Rights Certificates,
the Company shall make the necessary and appropriate rounding adjustments (in accordance with
Section 14(a)) so that Rights Certificates representing only whole numbers of Rights are
distributed and cash is paid in lieu of any fractional Rights. As of and after the Distribution
Date, the Rights will be evidenced solely by such Rights Certificates.



(b) The Company will make available, as promptly as practicable following the Record Date, a
copy of a Summary of Rights, in substantially the form attached hereto as Exhibit C (the “Summary
of Rights”), to any holder of Rights who may so request from time to time prior to the Expiration
Date. With respect to certificates for the Common Shares outstanding as of the Record Date, or
issued subsequent to the Record Date, until the Distribution Date, the Rights will be evidenced by
such certificates registered in the names of the holders thereof. Until the earlier of the
Distribution Date or the Expiration Date, the surrender for transfer of any certificate
representing Common Shares in respect of which Rights have been issued shall also constitute the
transfer of the Rights associated with such Common Shares.


 


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(c) Rights shall be issued in respect of all Common Shares which are issued (whether
originally issued or from the Company’s treasury) after the Record Date but prior to the earlier of
the Distribution Date or the Expiration Date or, in certain circumstances provided in Section 22,
after the Distribution Date. Certificates representing such Common Shares shall also be deemed to
be certificates for Rights, and shall bear a legend substantially in the following form:




This certificate also evidences and entitles the holder hereof to certain Rights as set
forth in the Stockholder Rights Agreement between EasyLink Services International
Corporation (the “Company”) and American Stock Transfer and Trust Company, LLC (the “Rights
Agent”) dated as of August 25, 2009, as the same may be amended from time to time (the
“Rights Agreement”), the terms of which are hereby incorporated herein by reference and a
copy of which is on file at the principal offices of the Company. Under certain
circumstances, as set forth in the Rights Agreement, such Rights will be evidenced by
separate certificates and will no longer be evidenced by this certificate. The Company will
mail to the holder of this certificate a copy of the Rights Agreement, as in effect on the
date of mailing, without charge promptly after receipt of a written request therefor. Under
certain circumstances set forth in the Rights Agreement, Rights issued to, or held by, any
Person who is, was or becomes an Acquiring Person or any Affiliate or Associate thereof (as
such terms are defined in the Rights Agreement), whether currently held by or on behalf of
such Person or by any subsequent holder, may become null and void.



With respect to such certificates containing the foregoing legend, until the earlier of (i) the
Distribution Date or (ii) the Expiration Date, the Rights associated with the Common Shares
represented by such certificates shall be evidenced by such certificates alone and registered
holders of Common Shares shall also be the registered holders of the associated Rights, and the
transfer of any of such certificates shall also constitute the transfer of the Rights associated
with the Common Shares represented by such certificates. In the event the Company purchases or
acquires any of its Common Shares after the Record Date but prior to the Distribution Date, any
Rights associated with such shares shall be deemed cancelled and retired so that the Company shall
not be entitled to exercise any Rights associated with Common Shares that are not outstanding.




Section 4. Form of Rights Certificates.



(a) The Rights Certificates (and the forms of election to purchase and of assignment to be
printed on the reverse thereof) shall each be substantially in the form set forth in Exhibit B
hereto and may have such marks of identification or designation and such legends, summaries or
endorsements printed thereon as the Company may deem appropriate and as are not inconsistent with
the provisions of this Agreement, or as may be required to comply with any applicable law or with
any rule or regulation made pursuant thereto or with any rule or regulation of any stock exchange
on which the Rights may from time to time be listed, or to conform to usage. Subject to the
provisions of Section 11 and Section 22, the Rights Certificates, whenever distributed, shall be
dated as of the Record Date or, in the case of Rights with respect to Common Shares issued or
becoming outstanding after the Record Date, the same date as the date of the share certificate
evidencing such shares, and on their face shall entitle the holders thereof to purchase such number
of one one-thousandths of a Preferred Share as shall be set forth therein at the price set forth
therein (such exercise price per one one-thousandth of a share, the “Purchase Price”), but the
amount and type of securities purchasable upon the exercise of each Right and the Purchase Price
thereof shall be subject to adjustment from time to time as provided in Section 11.


 


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(b) Any Rights Certificate issued pursuant to Section 3(a), Section 11(a)(ii) or Section 22
that represents Rights beneficially owned by any Person known to be: (i) an
Acquiring Person or any Associate or Affiliate of an Acquiring Person, (ii) a transferee of an
Acquiring Person (or of any such Associate or Affiliate) who becomes a transferee after the
Acquiring Person becomes such, or (iii) a transferee of an Acquiring Person (or of any such
Associate or Affiliate) who becomes a transferee prior to or concurrently with the Acquiring Person
becoming such and receives such Rights pursuant to either (A) a transfer (whether or not for
consideration) from the Acquiring Person to holders of equity interests in such Acquiring Person or
to any Person with whom such Acquiring Person has any continuing plan, agreement, arrangement or
understanding regarding the transferred Rights, shares of Corporation Securities or the Company or
(B) a transfer which the Board of Directors of the Company has determined is part of a plan,
agreement, arrangement or understanding which has as a primary purpose or effect avoidance of
Section 7(e), and any Rights Certificate issued pursuant to Section 6 or Section 11 upon transfer,
exchange, replacement or adjustment of any other Rights Certificate referred to in this sentence,
shall contain (to the extent feasible) the following legend:




The Rights represented by this Rights Certificate are or were beneficially owned by a Person
who was or became an Acquiring Person or an Affiliate or Associate of an Acquiring Person
(as such terms are defined in the Rights Agreement). Accordingly, this Rights Certificate
and the Rights represented hereby may become null and void in the circumstances specified in
Section 7(e) of such Agreement.



The absence of the foregoing legend on any Rights Certificate shall in no way affect any of
the other provisions of this Agreement, including, without limitation, the provisions of Section
7(e).




Section 5. Countersignature and Registration.



(a) The Rights Certificates shall be executed on behalf of the Company by its Chairman of the
Board, its Chief Executive Officer, its President, its Chief Financial Officer or any Vice
President, either manually or by facsimile signature, and shall have affixed thereto the Company’s
seal or a facsimile thereof which shall be attested by the Secretary or an Assistant Secretary of
the Company, either manually or by facsimile signature. The Rights Certificates shall be
countersigned manually or by facsimile signature by the Rights Agent and shall not be valid for any
purpose unless so countersigned. In case any officer of the Company who shall have signed any of
the Rights Certificates shall cease to be such officer of the Company before countersignature by
the Rights Agent and issuance and delivery by the Company, such Rights Certificates, nevertheless,
may be countersigned by the Rights Agent and issued and delivered by the Company with the same
force and effect as though the person who signed such Rights Certificates had not ceased to be such
officer of the Company; and any Rights Certificates may be signed on behalf of the Company by any
person who, at the actual date of the execution of such Rights Certificate, shall be a proper
officer of the Company to sign such Rights Certificate, although at the date of the execution of
this Rights Agreement any such person was not such an officer.



(b) Following the Distribution Date, the Rights Agent will keep or cause to be kept, at its
principal office or offices designated as the appropriate place for surrender of Rights
Certificates upon exercise or transfer, books for registration and transfer of the Rights
Certificates issued hereunder. Such books shall show the names and addresses of the respective
holders of the Rights Certificates, the number of Rights evidenced on its face by each of the
Rights Certificates and the certificate number and the date of each of the Rights Certificates.


 


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Section 6. Transfer, Split Up, Combination and Exchange of Rights Certificates; Mutilated,
Destroyed, Lost or Stolen Rights Certificates.



(a) Subject to the provisions of Section 4(b), Section 7(e), Section 11, Section 14 and
Section 24, at any time after the Close of Business on the Distribution Date, and at or prior to
the Close of Business on the Expiration Date or the redemption of the Rights pursuant to Section 23
hereof, any Rights Certificate or Certificates (other than Rights Certificates representing Rights
that have become null and void pursuant to Section 7(e) or that have been exchanged pursuant to
Section 24) may be transferred, split up, combined or exchanged for another Rights Certificate or
Certificates, entitling the registered holder to purchase a like number of one one-thousandths of a
Preferred Share (or, following a Triggering Event, Common Shares, other securities, cash or other
assets, as the case may be) as the Rights Certificate or Certificates surrendered then entitled
such holder (or former holder in the case of a transfer) to purchase. Any registered holder
desiring to transfer, split up, combine or exchange any Rights Certificate or Certificates shall
make such request in writing delivered to the Rights Agent, and shall surrender the Rights
Certificate or Certificates to be transferred, split up, combined or exchanged at the principal
office or offices of the Rights Agent designated for such purpose. Neither the Rights Agent nor
the Company shall be obligated to take any action whatsoever with respect to the transfer of any
such surrendered Rights Certificate until the registered holder shall have completed and signed the
certificate contained in the form of assignment on the reverse side of such Rights Certificate and
shall have provided such additional evidence of the identity of the Beneficial Owner (or former
Beneficial Owner) or Affiliates or Associates thereof as the Company or the Rights Agent shall
reasonably request. Thereupon the Rights Agent shall, subject to Section 4(b), Section 7(e),
Section 11, Section 14 and Section 24, countersign and deliver to the Person entitled thereto a
Rights Certificate or Rights Certificates, as the case may be, as so requested. The Company may
require payment of a sum sufficient to cover any tax or governmental charge that may be imposed in
connection with any transfer, split up, combination or exchange of Rights Certificates.



(b) Upon receipt by the Company and the Rights Agent of evidence reasonably satisfactory to
them of the loss, theft, destruction or mutilation of a Rights Certificate, and, in case of loss,
theft or destruction, of indemnity or security satisfactory to them, and reimbursement to the
Company and the Rights Agent of all reasonable expenses incidental thereto, and upon surrender to
the Rights Agent and cancellation of the Rights Certificates if mutilated, the Company will execute
and deliver a new Rights Certificate of like tenor to the Rights Agent for countersignature and
delivery to the registered owner in lieu of the Rights Certificate so lost, stolen, destroyed or
mutilated.


 


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Section 7. Exercise of Rights; Purchase Price; Expiration Date of Rights.



(a) Subject to Section 7(e) and Section 24, the registered holder of any Rights Certificate
may exercise the Rights evidenced thereby (except as otherwise provided herein including, without
limitation, the restrictions on exercisability set forth in Section 9(c), Section 11(a)(iii) and
Section 23(a)) in whole or in part at any time after the Distribution Date upon
surrender of the Rights Certificate, with the form of election to purchase and the certificate
on the reverse side thereof duly executed, to the Rights Agent at the principal office or offices
of the Rights Agent designated for such purpose, together with payment of the aggregate Purchase
Price with respect to the total number of one one-thousandths of a Preferred Share (or Common
Shares, other securities, cash or other assets, as the case may be) as to which such surrendered
Rights are then exercisable, at or prior to the earliest of (i) the Close of Business on September
8, 2019 (the “Final Expiration Date”), (ii) the time at which the Rights are redeemed as provided
in Section 23, (iii) the time at which such Rights are exchanged pursuant to Section 24, (iv) the
Close of Business on the effective date of the repeal of Section 382 or any successor statute if
the Board of Directors of the Company determines that this Agreement is no longer necessary or
desirable for the preservation of Tax Benefits, (v) the Close of Business on the first day of a
taxable year of the Company to which the Board of Directors of the Company determines that no Tax
Benefits may be carried forward and (vi) the Close of Business on the date on which the Board of
Directors of the Company determines that this Agreement is no longer in the best interests of the
Company and its stockholders (the earliest of (i), (ii), (iii), (iv), (v) and (vi) being herein
referred to as the “Expiration Date”).



(b) The Purchase Price for each one one-thousandth of a Preferred Share pursuant to the
exercise of a Right shall initially be $13, and shall be subject to adjustment from time to time as
provided in Section 11 and Section 13(a) and shall be payable in accordance with paragraph (c)
below.



(c) Upon receipt of a Rights Certificate representing exercisable Rights, with the form of
election to purchase and the certificate duly executed, accompanied by payment, with respect to
each Right so exercised, of the Purchase Price per one one-thousandth of a Preferred Share (or
other shares, securities, cash or other assets, as the case may be) to be purchased as set forth
below and an amount equal to any applicable transfer tax required to be paid by the holder of the
Rights Certificate in accordance with Section 9(e), the Rights Agent shall, subject to Section
20(k), thereupon promptly (i) (A) requisition from any transfer agent of the Preferred Shares (or
make available, if the Rights Agent is the transfer agent for such shares) certificates for the
total number of one one-thousandths of a Preferred Share to be purchased and the Company hereby
irrevocably authorizes its transfer agent to comply with all such requests, or (B) if the Company
shall have elected to deposit the total number of Preferred Shares issuable upon exercise of the
Rights hereunder with a depositary agent, requisition from the depositary agent depositary receipts
representing such number of one one-thousandths of a Preferred Share as are to be purchased (in
which case certificates for the Preferred Shares represented by such receipts shall be deposited by
the transfer agent with the depositary agent) and the Company will direct the depositary agent to
comply with such request, (ii) requisition from the Company the amount of cash, if any, to be paid
in lieu of fractional shares in accordance with Section 14, (iii) after receipt of such
certificates or depositary receipts, cause the same to be delivered to or upon the order of the
registered holder of such Rights Certificate, registered in such name or names as may be designated
by such holder, and (iv) after receipt thereof, deliver such cash, if any, to or upon the order of
the registered holder of such Rights Certificate. The payment of the Purchase Price (as such amount
may be reduced pursuant to Section 11(a)(iii)) shall be made in cash or by certified bank check or
bank draft payable to the order of the Company. In the event that the Company is obligated to
issue other securities (including, without limitation, Common Shares) of the Company, pay cash
and/or distribute other property pursuant to Section 11(a), the Company
will make all arrangements necessary so that such other securities, cash and/or other property
are available for distribution by the Rights Agent, if and when necessary to comply with the terms
of this Agreement. The Company reserves the right to require prior to the occurrence of a
Triggering Event that, upon any exercise of Rights, a number of Rights be exercised so that only
whole Preferred Shares would be issued.


 


12









 





(d) In case the registered holder of any Rights Certificate shall exercise less than all the
Rights evidenced thereby, a new Rights Certificate evidencing Rights equivalent to the Rights
remaining unexercised shall be issued by the Rights Agent and delivered to, or upon the order of,
the registered holder of such Rights Certificate, registered in such name or names as may be
designated by such holder, subject to the provisions of Section 14.



(e) Notwithstanding anything in this Agreement to the contrary, from and after the first
occurrence of a Section 11(a)(ii) Event, any Rights beneficially owned by (i) an Acquiring Person
or an Associate or Affiliate of an Acquiring Person, (ii) a transferee of an Acquiring Person (or
of any such Associate or Affiliate) who becomes a transferee after the Acquiring Person becomes
such, (iii) a transferee of an Acquiring Person (or of any such Associate or Affiliate) who becomes
a transferee prior to or concurrently with the Acquiring Person becoming such and receives such
Rights pursuant to either (A) a transfer (whether or not for consideration) from the Acquiring
Person to holders of equity interests in such Acquiring Person or to any Person with whom the
Acquiring Person has any continuing plan, agreement, arrangement or understanding regarding the
transferred Rights, shares of Corporation Securities or the Company or (B) a transfer which the
Board of Directors of the Company has determined is part of a plan, agreement, arrangement or
understanding which has as a primary purpose or effect the avoidance of this Section 7(e) and (iv)
subsequent transferees of such Persons described in clause (i), (ii) or (iii) of this sentence
shall become null and void without any further action, and no holder of such Rights shall have any
rights whatsoever with respect to such Rights, whether under any provision of this Agreement or
otherwise. The Company shall notify the Rights Agent when this Section 7(e) applies and shall use
all reasonable efforts to ensure that the provisions of this Section 7(e) and Section 4(b) are
complied with, but neither the Company nor the Rights Agent shall have any liability to any holder
of Rights Certificates or other Person as a result of the Company’s failure to make any
determinations with respect to an Acquiring Person or any of its Affiliates, Associates or
transferees hereunder.



(f) Notwithstanding anything in this Agreement to the contrary, neither the Rights Agent nor
the Company shall be obligated to undertake any action with respect to a registered holder upon the
occurrence of any purported exercise as set forth in this Section 7 unless such registered holder
shall have (i) properly completed and signed the certificate contained in the form of election to
purchase set forth on the reverse side of the Rights Certificate surrendered for such exercise and
(ii) provided such additional evidence of the identity of the Beneficial Owner (or former
Beneficial Owner) or Affiliates or Associates thereof as the Company or the Rights Agent shall
reasonably request.


 


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Section 8. Cancellation and Destruction of Rights Certificates. All Rights
Certificates surrendered for the purpose of exercise, transfer, split up, combination or exchange
shall, if surrendered to the Company or any of its agents, be delivered to the Rights Agent for
cancellation or in cancelled form, or, if surrendered to the Rights Agent, shall be cancelled by
it,
and no Rights Certificates shall be issued in lieu thereof, except as expressly permitted by
any of the provisions of this Agreement. The Company shall deliver to the Rights Agent for
cancellation and retirement, and the Rights Agent shall so cancel and retire, any other Rights
Certificates purchased or acquired by the Company otherwise than upon the exercise thereof. The
Rights Agent shall deliver all cancelled Rights Certificates to the Company, or shall, at the
written request of the Company, destroy such cancelled Rights Certificates, and in such case shall
deliver a certificate of destruction thereof to the Company.




Section 9. Reservation and Availability of Stock.



(a) The Company covenants and agrees that it will cause to be reserved and kept available out
of its authorized and unissued Preferred Shares (and, following the occurrence of a Triggering
Event, out of its authorized and unissued Common Shares and/or other securities or out of its
authorized and issued shares of stock held in its treasury), the number of Preferred Shares (and,
following the occurrence of a Triggering Event, Common Shares and/or other securities) that, as
provided in this Agreement, including, without limitation, Section 11(a)(iii), will be sufficient
to permit the exercise in full of all outstanding Rights.



(b) So long as the Preferred Shares (and, following the occurrence of a Triggering Event,
Common Shares and/or other securities) issuable and deliverable upon the exercise of the Rights may
be listed on any national securities exchange, the Company shall use its best efforts to cause,
from and after such time as the Rights become exercisable, all shares of stock reserved for such
issuance to be listed on such exchange, upon official notice of issuance upon such exercise.



(c) The Company shall use its best efforts to (i) prepare and file, as soon as practicable
following the earliest date after the first occurrence of a Section 11(a)(ii) Event on which the
consideration to be delivered by the Company upon exercise of the Rights has been determined in
accordance with Section 11(a)(iii), a registration statement under the Act with respect to the
securities purchasable upon exercise of the Rights on an appropriate form, (ii) cause such
registration statement to become effective as soon as practicable after such filing, and (iii)
cause such registration statement to remain effective (with a prospectus at all times meeting the
requirements of the Act) until the earlier of (A) the date as of which the Rights are no longer
exercisable for such securities, and (B) the Expiration Date. The Company will also take such
action as may be appropriate under, or to ensure compliance with, the securities or “blue sky” laws
of the various states in connection with the exercisability of the Rights. The Company may
temporarily suspend, for a period of time not to exceed ninety (90) days after the date set forth
in clause (i) of the first sentence of this Section 9(c), the exercisability of the Rights in order
to prepare and file such registration statement and permit it to become effective. Upon any such
suspension, the Company shall issue a public announcement stating that the exercisability of the
Rights has been temporarily suspended, as well as a public announcement at such time as the
suspension is no longer in effect. In addition, if the Company shall determine that filing a
registration statement is required under the Act or any securities laws following the Distribution
Date, and a Section 11(a)(ii) Event has not occurred, the Company may temporarily suspend (and
shall give the Rights Agent prompt notice thereof) the exercisability of Rights until such time as
a registration statement has been declared effective, and, upon any such suspension, the Company
shall issue a public announcement stating that the exercisability of the Rights has been
temporarily suspended, as well as a public announcement at such time as the suspension is no
longer in effect. Notwithstanding any provision of this Agreement to the contrary, the Rights shall
not be exercisable in any jurisdiction if the requisite qualification or exemption in such
jurisdiction shall not have been obtained, the exercise thereof shall not be permitted under
applicable law or a registration statement shall not have been declared effective.


 


14









 





(d) The Company covenants and agrees that it will take all such actions as may be necessary to
ensure that all one one-thousandths of a Preferred Share (and, following the occurrence of a
Triggering Event, Common Shares and/or other securities) delivered upon exercise of Rights shall,
at the time of delivery of the certificates for such shares (subject to payment of the Purchase
Price), be duly and validly authorized and issued and fully paid and nonassessable.



(e) The Company further covenants and agrees that it will pay, when due and payable, any and
all federal and state transfer taxes and governmental charges which may be payable in respect of
the issuance or delivery of the Rights Certificates and of any certificates for a number of one
one-thousandths of a Preferred Share (or Common Shares and/or other securities, as the case may be)
upon the exercise of Rights. The Company shall not, however, be required to pay any transfer tax
which may be payable in respect of any transfer or delivery of Rights Certificates to a Person
other than, or the issuance or delivery of a number of one one-thousandths of a Preferred Share (or
Common Shares and/or other securities, as the case may be) in respect of a name other than that of,
the registered holder of the Rights Certificates evidencing Rights surrendered for exercise or to
issue or deliver any certificates for a number of one one-thousandths of a Preferred Share (or
Common Shares and/or other securities, as the case may be) in a name other than that of the
registered holder upon the exercise of any Rights until such tax shall have been paid (any such tax
being payable by the holder of such Rights Certificate at the time of surrender) or until it has
been established to the Company’s satisfaction that no such tax is due.



Section 10. Preferred Shares Record Date. Each Person in whose name any certificate
for a number of one one-thousandths of a Preferred Share (or Common Shares and/or other securities,
as the case may be) is issued upon the exercise of Rights shall for all purposes be deemed to have
become the holder of record of such fractional Preferred Shares (or Common Shares and/or other
securities, as the case may be) represented thereby on, and such certificate shall be dated, the
date upon which the Rights Certificate evidencing such Rights was duly surrendered and payment of
the Purchase Price (and all applicable transfer taxes) was made; provided, however,
that if the date of such surrender and payment is a date upon which the Preferred Shares (or Common
Shares and/or other securities, as the case may be) transfer books of the Company are closed, such
Person shall be deemed to have become the record holder of such shares (fractional or otherwise)
on, and such certificate shall be dated, the next succeeding Business Day on which the Preferred
Shares (or Common Shares and/or other securities, as the case may be) transfer books of the Company
are open. Prior to the exercise of the Rights evidenced thereby, the holder of a Rights Certificate
shall not be entitled to any rights of a stockholder of the Company with respect to shares of stock
or other securities for which the Rights shall be exercisable, including, without limitation, the
right to vote, to receive dividends or other distributions or to exercise any preemptive rights,
and shall not be entitled to receive any notice of any proceedings of the Company, except as
provided herein.


 


15









 





Section 11. Adjustment of Purchase Price, Number and Kind of Shares or Number of
Rights. The Purchase Price, the number and kind of shares covered by each Right and the number
of Rights outstanding are subject to adjustment from time to time as provided in this Section 11.



(a) (i) In the event the Company shall at any time after the date of this Agreement (A)
declare a dividend on the Preferred Shares payable in Preferred Shares, (B) subdivide the
outstanding Preferred Shares, (C) combine the outstanding Preferred Shares into a smaller number of
shares, or (D) issue any shares of its stock in a reclassification of the Preferred Shares
(including, without limitation, any such reclassification in connection with a consolidation or
merger in which the Company is the continuing or surviving corporation), except as otherwise
provided in this Section 11(a) and Section 7(e), the Purchase Price in effect at the time of the
record date for such dividend or of the effective date of such subdivision, combination or
reclassification, and the number and kind of Preferred Shares or stock, as the case may be,
issuable on such date, shall be proportionately adjusted so that the holder of any Right exercised
after such time shall be entitled to receive, upon payment of the Purchase Price then in effect,
the aggregate number and kind of Preferred Shares or stock, as the case may be, which, if such
Right had been exercised immediately prior to such date and at a time when the Preferred Shares
transfer books of the Company were open, such holder would have owned upon such exercise and been
entitled to receive by virtue of such dividend, subdivision, combination or reclassification;
provided, however, that in no event shall the consideration to be paid upon the
exercise of one Right be less than the aggregate par value of the shares of Preferred Stock or
capital stock, as the case may be, issuable upon exercise of one Right. If an event occurs which
would require an adjustment under both this Section 11(a)(i) and Section 11(a)(ii), the adjustment
provided for in this Section 11(a)(i) shall be in addition to, and shall be made prior to, any
adjustment required pursuant to Section 11(a)(ii).




(ii) Subject to Section 24, in the event any Person becomes an Acquiring Person, then
each holder of a Right (except as provided below and in Section 7(e)) shall thereafter have
the right to receive, upon exercise thereof at a price equal to the then current Purchase
Price in accordance with the terms of this Agreement, in lieu of a number of one
one-thousandths of a Preferred Share, such number of Common Shares of the Company as shall
equal the result obtained by (x) multiplying the then current Purchase Price by the then
number of one one-thousandths of a Preferred Share for which a Right was exercisable
immediately prior to the first occurrence of a Section 11(a)(ii) Event and (y) dividing that
product (which, following such first occurrence shall thereafter be referred to as the
“Purchase Price” for each Right and for all purposes of this Agreement) by 50% of the
current market price (determined pursuant to Section 11(d)) per Common Share on the date of
such first occurrence (such number of shares, the “Adjustment Shares”).


 


16









 






(iii) In the event that the number of Common Shares which are authorized by the
Company’s certificate of incorporation, as amended, but not outstanding or reserved for
issuance for purposes other than upon exercise of the Rights, is not sufficient to permit
the exercise in full of the Rights in accordance with the foregoing subparagraph (ii) of
this Section 11(a), the Company shall: (A) determine the value of the Adjustment Shares
issuable upon the exercise of a Right (the “Current Value”), and (B) with respect
to each Right (subject to Section 7(e)), make adequate provision to substitute for the
Adjustment Shares, upon the exercise of a Right and payment of the applicable Purchase
Price, (1) cash, (2) a reduction in the Purchase Price, (3) Common Shares or other equity
securities of the Company (including, without limitation, preferred shares or units of
preferred shares, such as the Preferred Shares, which the Board of Directors of the Company
has deemed to have substantially the same value or economic rights as Common Shares (such
preferred shares or units of preferred shares, “common stock equivalents”)), (4) debt
securities of the Company, (5) other assets, or (6) any combination of the foregoing, having
an aggregate value equal to the Current Value (less the amount of any reduction in the
Purchase Price), where such aggregate value has been determined by the Board of Directors of
the Company based upon the advice of a nationally recognized investment banking firm
selected by the Board of Directors of the Company; provided, however, if the
Company shall not have made adequate provision to deliver value pursuant to clause (B) above
within thirty (30) days following the later of (x) the first occurrence of a Section
11(a)(ii) Event and (y) the date on which the Company’s right of redemption pursuant to
Section 23(a) expires (the later of (x) and (y) being referred to herein as the “Section
11(a)(ii) Trigger Date”), then the Company shall be obligated to deliver, upon the surrender
for exercise of a Right and without requiring payment of the Purchase Price, Common Shares
(to the extent available) and then, if necessary, cash, which shares and/or cash have an
aggregate value equal to the Spread. For purposes of the preceding sentence, the term
“Spread” shall mean the excess of (i) the Current Value over (ii) the Purchase Price. If
the Board of Directors of the Company shall determine in good faith that it is likely that
sufficient additional Common Shares could be authorized for issuance upon exercise in full
of the Rights, the thirty (30) day period set forth above may be extended to the extent
necessary, but not more than ninety (90) days after the Section 11(a)(ii) Trigger Date, in
order that the Company may seek stockholder approval for the authorization of such
additional shares (such thirty (30) day period, as it may be extended, the “Substitution
Period”). To the extent the Company determines that action should be taken pursuant to the
first and/or third sentences of this Section 11(a)(iii), the Company (x) shall provide,
subject to Section 7(e), that such action shall apply uniformly to all outstanding Rights,
and (y) may suspend the exercisability of the Rights until the expiration of the
Substitution Period in order to seek such stockholder approval for such authorization of
additional shares and/or to decide the appropriate form of distribution to be made pursuant
to such first sentence and to determine the value thereof. In the event of any such
suspension, the Company shall issue a public announcement stating that the exercisability of
the Rights has been temporarily suspended, as well as a public announcement at such time as
the suspension is no longer in effect (with prompt notice of such announcements to the
Rights Agent). For purposes of this Section 11(a)(iii), the value of each Adjustment Share
shall be the current market price (as determined pursuant to Section 11(d)) per Common Share
on the Section 11(a)(ii) Trigger Date and the per share or per unit value of any “common
stock equivalent” shall be deemed to equal the current market price (as determined pursuant
to Section 11(d)) per Common Share on such date.


 


17









 





(b) In case the Company shall fix a record date for the issuance of rights (other than the
Rights), options or warrants to all holders of Preferred Shares entitling them to subscribe for or
purchase (for a period expiring within forty-five (45) calendar days after such record date)
Preferred Shares (or shares having the same rights, privileges and preferences as the
Preferred Shares (“equivalent preferred shares”)) or securities convertible into Preferred Shares
or equivalent preferred shares at a price per Preferred Share or per share of equivalent preferred
shares (or having a conversion price per share, if a security convertible into Preferred Shares or
equivalent preferred shares) less than the current market price (as determined pursuant to Section
11(d)) per Preferred Share on such record date, the Purchase Price to be in effect after such
record date shall be determined by multiplying the Purchase Price in effect immediately prior to
such record date by a fraction, the numerator of which shall be the number of Preferred Shares
outstanding on such record date, plus the number of Preferred Shares which the aggregate offering
price of the total number of Preferred Shares and/or equivalent preferred shares so to be offered
(and/or the aggregate initial conversion price of the convertible securities so to be offered)
would purchase at such current market price, and the denominator of which shall be the number of
Preferred Shares outstanding on such record date, plus the number of additional Preferred Shares
and/or equivalent preferred shares to be offered for subscription or purchase (or into which the
convertible securities so to be offered are initially convertible); provided,
however, that in no event shall the consideration to be paid upon the exercise of one Right
be less than the aggregate par value of the shares of Preferred Stock or capital stock, as the case
may be, issuable upon exercise of one Right. In case such subscription price may be paid by
delivery of consideration part or all of which may be in a form other than cash, the value of such
consideration shall be as determined in good faith by the Board of Directors of the Company, whose
determination shall be described in a statement filed with the Rights Agent and shall be binding on
the Rights Agent and the holders of the Rights. Preferred Shares owned by or held for the account
of the Company shall not be deemed outstanding for the purpose of any such computation. Such
adjustment shall be made successively whenever such a record date is fixed, and in the event that
such rights, options or warrants are not so issued, the Purchase Price shall be adjusted to be the
Purchase Price which would then be in effect if such record date had not been fixed.



(c) In case the Company shall fix a record date for a distribution to all holders of Preferred
Shares (including, without limitation, any such distribution made in connection with a
consolidation or merger in which the Company is the continuing corporation) of evidences of
indebtedness, cash (other than a regular periodic cash dividend out of the earnings or retained
earnings of the Company), assets (other than a dividend payable in Preferred Shares, but including,
without limitation, any dividend payable in shares of stock other than Preferred Shares) or
subscription rights or warrants (excluding those referred to in Section 11(b)), the Purchase Price
to be in effect after such record date shall be determined by multiplying the Purchase Price in
effect immediately prior to such record date by a fraction, the numerator of which shall be the
current market price (as determined pursuant to Section 11(d)) per Preferred Share on such record
date, less the fair market value (as determined in good faith by the Board of Directors of the
Company, whose determination shall be described in a statement filed with the Rights Agent and
shall be binding on the Rights Agent and the holders of the Rights) of the portion of the cash,
assets or evidences of indebtedness so to be distributed or of such subscription rights or warrants
applicable to a Preferred Share and the denominator of which shall be such current market price (as
determined pursuant to Section 11(d)) per Preferred Share; provided, however, that
in no event shall the consideration to be paid upon the exercise of one Right be less than the
aggregate par value of the shares of Preferred Stock or capital stock, as the case may be, issuable
upon exercise of one Right. Such adjustments shall be made successively
whenever such a record date is fixed, and in the event that such distribution is not so made,
the Purchase Price shall be adjusted to be the Purchase Price which would have been in effect if
such record date had not been fixed.


 


18









 





(d) (i) For the purpose of any computation hereunder, other than computations made pursuant to
Section 11(a)(iii), the “current market price” per Common Share on any date shall be deemed to be
the average of the daily closing prices per such Common Share for the thirty (30) consecutive
Trading Days immediately prior to but not including such date, and for purposes of computations
made pursuant to Section 11(a)(iii), the “current market price” per Common Share on any date shall
be deemed to be the average of the daily closing prices per such Common Share for the ten (10)
consecutive Trading Days immediately following but not including such date; provided,
however, that in the event that the current market price per Common Share is determined
during a period following the announcement by the issuer of such Common Shares of (A) a dividend or
distribution on such Common Shares payable in such Common Shares or securities convertible into
such Common Shares (other than the Rights), or (B) any subdivision, combination or reclassification
of such Common Shares, and the ex-dividend date for such dividend or distribution, or the record
date for such subdivision, combination or reclassification shall not have occurred prior to the
commencement of the requisite thirty (30) Trading Day or ten (10) Trading Day period, as set forth
above, then, and in each such case, the “current market price” shall be properly adjusted to take
into account any trading during the period prior to such ex-dividend date or record date. The
closing price for each day shall be the last sale price, regular way, or, in case no such sale
takes place on such day, the average of the closing bid and asked prices, regular way, in either
case as reported in the principal consolidated transaction reporting system with respect to
securities listed or admitted to trading on The Nasdaq Stock Market or, if the Common Shares are
not listed or admitted to trading on The Nasdaq Stock Market, as reported in the principal
consolidated transaction reporting system with respect to securities listed on the principal
national securities exchange on which the Common Shares are listed or admitted to trading or, if
the Common Shares are not listed or admitted to trading on any national securities exchange, the
last quoted price or, if not so quoted, the average of the high bid and low asked prices in the
over-the-counter market, as reported by the OTC Bulletin Board service (the “OTCBB”) or such other
quotation system then in use, or, if on any such date the Common Shares are not quoted by any such
organization, the average of the closing bid and asked prices as furnished by a professional market
maker making a market in the Common Shares selected by the Board of Directors of the Company. If on
any such date no market maker is making a market in the Common Shares, the fair value of such
shares on such date as determined in good faith by the Board of Directors of the Company shall be
used. The term “Trading Day” shall mean a day on which the principal national securities exchange
on which the Common Shares are listed or admitted to trading is open for the transaction of
business or, if the Common Shares are not listed or admitted to trading on any national securities
exchange, a Business Day. If the Common Shares are not publicly held or not so listed or traded,
“current market price” per share shall mean the fair value per share as determined in good faith by
the Board of Directors of the Company, whose determination shall be described in a statement filed
with the Rights Agent and shall be conclusive for all purposes.


 


19









 






(ii) For the purpose of any computation hereunder, the “current market price” per
Preferred Share shall be determined in the same manner as set forth above for the Common
Shares in clause (i) of this Section 11(d) (other than the last sentence thereof).
If the current market price per Preferred Share cannot be determined in the manner
provided above, or if the Preferred Shares are not publicly held or listed or traded in a
manner described in clause (i) of this Section 11(d), the “current market price” per
Preferred Share shall be conclusively deemed to be an amount equal to 1,000 (as such number
may be appropriately adjusted for such events as stock splits, stock dividends and
recapitalizations with respect to the Common Shares occurring after the date of this
Agreement) multiplied by the current market price per Common Share. If neither the Common
Shares nor the Preferred Shares are publicly held or so listed or traded, “current market
price” per Preferred Share shall mean the fair value per share as determined in good faith
by the Board of Directors of the Company, whose determination shall be described in a
statement filed with the Rights Agent and shall be binding on the Rights Agent and the
holders of the Rights. For all purposes of this Agreement, the “current market price” of
one one-thousandth of a Preferred Share shall be equal to the “current market price” of one
Preferred Share divided by 1,000.



(e) Anything herein to the contrary notwithstanding, no adjustment in the Purchase Price shall
be required unless such adjustment would require an increase or decrease of at least one percent
(1%) in the Purchase Price; provided, however, that any adjustments which by reason
of this Section 11(e) are not required to be made shall be carried forward and taken into account
in any subsequent adjustment. All calculations under this Section 11 shall be made to the nearest
cent or to the nearest one ten-thousandth of a Common Share or one one-millionth of a Preferred
Share or one ten-thousandth of any other share of stock or security, as the case may be.
Notwithstanding the first sentence of this Section 11(e), any adjustment required by this Section
11 shall be made no later than the earlier of (i) three (3) years from the date of the transaction
which mandates such adjustment, or (ii) the Expiration Date.



(f) If as a result of an adjustment made pursuant to Section 11(a)(ii) or Section 13(a), the
holder of any Right thereafter exercised shall become entitled to receive any shares of stock other
than Preferred Shares, thereafter the number of such other shares so receivable upon exercise of
any Right and the Purchase Price thereof shall be subject to adjustment from time to time in a
manner and on terms as nearly equivalent as practicable to the provisions with respect to the
Preferred Shares contained in Sections 11(a), (b), (c), (e), (g), (h), (i), (j), (k) and (m), and
the provisions of Sections 7, 9, 10, 13 and 14 with respect to the Preferred Shares shall apply on
like terms to any such other shares.



(g) All Rights originally issued by the Company subsequent to any adjustment made to the
Purchase Price hereunder shall evidence the right to purchase, at the adjusted Purchase Price, the
number of one one-thousandths of a Preferred Share purchasable from time to time hereunder upon
exercise of the Rights, all subject to further adjustment as provided herein.



(h) Unless the Company shall have exercised its election as provided in Section 11(i), upon
each adjustment of the Purchase Price as a result of the calculations made in Sections 11(b) and
(c), each Right outstanding immediately prior to the making of such adjustment shall thereafter
evidence the right to purchase, at the adjusted Purchase Price, that number of one-thousandths of a
Preferred Share (calculated to the nearest one-millionth) obtained by (i) multiplying (x) the
number of one one-thousandths of a share covered by a Right immediately prior to this adjustment,
by (y) the Purchase Price in effect immediately prior to such adjustment
of the Purchase Price, and (ii) dividing the product so obtained by the Purchase Price in
effect immediately after such adjustment of the Purchase Price.


 


20









 





(i) The Company may elect on or after the date of any adjustment of the Purchase Price to
adjust the number of Rights, in lieu of any adjustment in the number of one one-thousandths of a
Preferred Share purchasable upon the exercise of a Right. Each of the Rights outstanding after the
adjustment in the number of Rights shall be exercisable for the number of one one-thousandths of a
Preferred Share for which a Right was exercisable immediately prior to such adjustment. Each Right
held of record prior to such adjustment of the number of Rights shall become that number of Rights
(calculated to the nearest one-ten-thousandth) obtained by dividing the Purchase Price in effect
immediately prior to adjustment of the Purchase Price by the Purchase Price in effect immediately
after adjustment of the Purchase Price. The Company shall make a public announcement (with prompt
notice thereof to the Rights Agent) of its election to adjust the number of Rights, indicating the
record date for the adjustment, and, if known at the time, the amount of the adjustment to be made.
This record date may be the date on which the Purchase Price is adjusted or any day thereafter,
but, if the Rights Certificates have been issued, shall be at least ten (10) days later than the
date of the public announcement. If Rights Certificates have been issued, upon each adjustment of
the number of Rights pursuant to this Section 11(i), the Company shall, as promptly as practicable,
cause to be distributed to holders of record of Rights Certificates on such record date Rights
Certificates evidencing, subject to Section 14, the additional Rights to which such holders shall
be entitled as a result of such adjustment, or, at the option of the Company, shall cause to be
distributed to such holders of record in substitution and replacement for the Rights Certificates
held by such holders prior to the date of adjustment, and upon surrender thereof, if required by
the Company, new Rights Certificates evidencing all the Rights to which such holders shall be
entitled after such adjustment. Rights Certificates so to be distributed shall be issued, executed
and countersigned in the manner provided for herein (and may bear, at the option of the Company,
the adjusted Purchase Price) and shall be registered in the names of the holders of record of
Rights Certificates on the record date specified in the public announcement.



(j) Irrespective of any adjustment or change in the Purchase Price or the number of one
one-thousandths of a Preferred Share issuable upon the exercise of the Rights, the Rights
Certificates theretofore and thereafter issued may continue to express the Purchase Price per one
one-thousandth of a share and the number of one one-thousandths of a share which were expressed in
the initial Rights Certificates issued hereunder.



(k) Before taking any action that would cause an adjustment reducing the Purchase Price below
the then stated value, if any, of the number of one one-thousandths of a Preferred Share issuable
upon exercise of the Rights, the Company shall take any corporate action which may, in the opinion
of its counsel, be necessary in order that the Company may validly and legally issue fully paid and
nonassessable Preferred Shares at such adjusted Purchase Price.



(l) In any case in which this Section 11 shall require that an adjustment in the Purchase
Price be made effective as of a record date for a specified event, the Company may elect to defer
until the occurrence of such event the issuance to the holder of any Right exercised after such
record date the number of one one-thousandths of a Preferred Share and other stock or securities of
the Company, if any, issuable upon such exercise over and above the number of one
one-thousandths of a Preferred Share and other stock or securities of the Company, if any,
issuable upon such exercise on the basis of the Purchase Price in effect prior to such adjustment
(and shall provide the Rights Agent prompt notice of such election); provided,
however, that the Company shall deliver to such holder a due bill or other appropriate
instrument evidencing such holder’s right to receive such additional shares (fractional or
otherwise) or securities upon the occurrence of the event requiring such adjustment.


 


21









 





(m) Anything in this Section 11 to the contrary notwithstanding, the Company shall be entitled
to make such reductions in the Purchase Price, in addition to those adjustments expressly required
by this Section 11, as and to the extent that the Board of Directors of the Company, in its good
faith judgment, shall determine to be advisable in order that any (i) consolidation or subdivision
of the Preferred Shares, (ii) issuance wholly for cash of any Preferred Shares at less than the
current market price, (iii) issuance wholly for cash of Preferred Shares or securities which by
their terms are convertible into or exchangeable for Preferred Shares, (iv) stock dividends or (v)
issuance of rights, options or warrants referred to in this Section 11, hereafter made by the
Company to holders of its Preferred Shares shall not be taxable to such stockholders.



(n) The Company covenants and agrees that it shall not, at any time after the Distribution
Date, (i) consolidate with any other Person (other than a Subsidiary of the Company in a
transaction which complies with Section 11(o)), (ii) merge with or into any other Person (other
than a Subsidiary of the Company in a transaction which complies with Section 11(o)), or (iii) sell
or transfer (or permit any Subsidiary to sell or transfer), in one transaction, or a series of
related transactions, assets, cash flow or earning power aggregating more than 50% of the assets,
cash flow or earning power of the Company and its Subsidiaries (taken as a whole) to any other
Person or Persons (other than the Company and/or any of its Subsidiaries in one or more
transactions each of which complies with Section 11(o)), if (x) at the time of or immediately after
such consolidation, merger, sale or transfer there are any rights, warrants or other instruments or
securities outstanding or agreements in effect which would substantially diminish or otherwise
eliminate the benefits intended to be afforded by the Rights or (y) prior to, simultaneously with
or immediately after such consolidation, merger or sale, the stockholders of the Person who
constitutes, or would constitute, the “Principal Party” for purposes of Section 13(a) hereof shall
have received a distribution of Rights previously owned by such Person or any of its Affiliates and
Associates.



(o) The Company covenants and agrees that, after the Distribution Date, it will not, except as
permitted by Section 23, Section 24 or Section 27, take (or permit any Subsidiary to take) any
action if at the time such action is taken it is reasonably foreseeable that such action will
diminish substantially or otherwise eliminate the benefits intended to be afforded by the Rights.



(p) Anything in this Agreement to the contrary notwithstanding, in the event that the Company
shall at any time after the Rights Dividend Declaration Date and prior to the Distribution Date (i)
declare a dividend on the outstanding Common Shares payable in Common Shares, (ii) subdivide the
outstanding Common Shares, or (iii) combine the outstanding Common Shares into a smaller number of
shares, the number of Rights associated with each Common Share then outstanding, or issued or
delivered thereafter but prior to the Distribution Date, shall
be proportionately adjusted so that the number of Rights thereafter associated with each
Common Share following any such event shall equal the result obtained by multiplying the number of
Rights associated with each Common Share immediately prior to such event by a fraction the
numerator of which shall be the total number of Common Shares outstanding immediately prior to the
occurrence of the event and the denominator of which shall be the total number of Common Shares
outstanding immediately following the occurrence of such event.


 


22









 





Section 12. Certificate of Adjusted Purchase Price or Number of Shares. Whenever an
adjustment is made as provided in Section 11 and Section 13, the Company shall (a) promptly prepare
a certificate setting forth such adjustment and a brief statement of the facts and computations
accounting for such adjustment, (b) promptly file with the Rights Agent, and with each transfer
agent for the Preferred Shares and the Common Shares, a copy of such certificate, and (c) if a
Distribution Date has occurred, mail a brief summary thereof to each holder of a Rights Certificate
in accordance with Section 26. The Rights Agent shall be fully protected in relying on any such
certificate and on any adjustment therein contained and shall not be deemed to have knowledge of
such adjustment unless and until it shall have received such certificate.



Section 13. Consolidation, Merger or Sale or Transfer of Assets, Cash Flow or Earning
Power.



(a) In the event that, following a Person becoming an Acquiring Person, directly or
indirectly:




(i) the Company shall consolidate with, or merge with and into, any other Person (other
than a wholly-owned Subsidiary of the Company in a transaction the principal purpose of
which is to change the state of incorporation of the Company and which complies with Section
11(o) hereof);




(ii) any Person (other than a wholly-owned Subsidiary of the Company in a transaction
the principal purpose of which is to change the state of incorporation of the Company and
which complies with Section 11(o) hereof) shall consolidate with the Company, or merge with
and into the Company and the Company shall be the continuing or surviving Person of such
consolidation or merger and, in connection with such merger, all or part of the Common
Shares shall be changed into or exchanged for stock or other securities of any other Person
(or the Company) or cash or any other property; or




(iii) the Company shall sell or otherwise transfer (or one or more of its Subsidiaries
shall sell or otherwise transfer), in one or more transactions, assets, cash flow or earning
power aggregating fifty percent (50%) or more of the assets, cash flow or earning power of
the Company and its Subsidiaries (taken as a whole) to any other Person or Persons (other
than the Company or one or more of its wholly owned Subsidiaries in one or more
transactions, each of which individually (and together) complies with Section 11(o) hereof),




	 	 	then, concurrent with and in each such case,




 


23









 











(A) each holder of a Right (except as provided in Section 7(e) hereof) shall
thereafter have the right to receive, upon the exercise thereof at a price equal to
the Purchase Price applicable immediately prior to the occurrence of the Section 13
Event in accordance with the terms of this Agreement and in lieu of Preferred
Shares, such number of validly authorized and issued, fully paid, nonassessable and
freely tradeable Common Shares of the Principal Party (as hereinafter defined), free
of any liens, encumbrances, rights of first refusal or other adverse claims, as
shall be equal to the result obtained by dividing such Purchase Price by an amount
equal to fifty percent (50%) of the current market price of the Common Shares of
such Principal Party on the date of consummation of such Section 13 Event,
provided, however, that the Purchase Price and the number of Common
Shares of such Principal Party so receivable upon exercise of a Right shall be
subject to further adjustment as appropriate in accordance with Section 11(c)
hereof;




(B) such Principal Party shall thereafter be liable for, and shall assume, by
virtue of such Section 13 Event, all the obligations and duties of the Company
pursuant to this Agreement;




(C) the term “Company” shall thereafter be deemed to refer to such Principal
Party, it being specifically intended that the provisions of Section 11 hereof shall
apply only to such Principal Party following the first occurrence of a Section 13
Event;




(D) such Principal Party shall take such steps (including, but not limited to,
the reservation of a sufficient number of its Common Shares) in connection with the
consummation of any such transaction as may be necessary to ensure that the
provisions hereof shall thereafter be applicable, as nearly as reasonably may be, in
relation to its Common Shares thereafter deliverable upon the exercise of the
Rights; and




(E) upon the subsequent occurrence of any consolidation, merger, sale or
transfer of assets or other extraordinary transaction in respect of such Principal
Party, each holder of a Right shall thereupon be entitled to receive, upon exercise
of a Right and payment of the Purchase Price as provided in this Section 13(a), such
cash, shares, rights, warrants and other property which such holder would have been
entitled to receive had such holder, at the time of such transaction, owned the
Common Shares of the Principal Party receivable upon the exercise of such Right
pursuant to this Section 13(a), and such Principal Party shall take such steps
(including, but not limited to, reservation of shares of stock) as may be necessary
to permit the subsequent exercise of the Rights in accordance with the terms hereof
for such cash, shares, rights, warrants and other property.




(F) For purposes hereof, the “earning power” of the Company and its
Subsidiaries shall be determined in good faith by the Company’s Board of Directors
on the basis of the operating income of each business operated by the Company and
its Subsidiaries during the three fiscal years preceding the date of
such determination (or, in the case of any business not operated by the Company
or any Subsidiary during three full fiscal years preceding such date, during the
period such business was operated by the Company or any Subsidiary).


 


24









 






(b) For purposes of this Agreement, the term “Principal Party” shall mean:




(i) in the case of any transaction described in clause (i) or (ii) of Section 13(a)
hereof: (A) the Person that is the issuer of the securities into which the Common Shares are
converted in such merger or consolidation, or, if there is more than one such issuer, the
issuer the Common Shares of which have the greatest aggregate market value of shares
outstanding, or (B) if no securities are so issued, (x) the Person that is the other party
to the merger, if such Person survives said merger, or, if there is more than one such
Person, the Person the Common Shares of which have the greatest aggregate market value of
 shares outstanding or (y) if the Person that is the other party to the merger does not
survive the merger, the Person that does survive the merger (including the Company if it
survives) or (z) the Person resulting from the consolidation; and




(ii) in the case of any transaction described in clause (iii) of Section 13(a) hereof,
the Person that is the party receiving the greatest portion of the assets, cash flow or
earning power transferred pursuant to such transaction or transactions, or, if more than one
Person that is a party to such transaction or transactions receives the same portion of the
assets, cash flow or earning power so transferred and each such portion would, were it not
for the other equal portions, constitute the greatest portion of the assets, cash flow or
earning power so transferred, or if the Person receiving the greatest portion of the assets,
cash flow or earning power cannot be determined, whichever of such Persons is the issuer of
Common Shares having the greatest aggregate market value of shares outstanding; provided
that in any such case described in the foregoing clause (b)(i) or (b)(ii), if the Common
Shares of such Person are not at such time or have not been continuously over the preceding
12-month period registered under Section 12 of the Exchange Act, then (1) if such Person is
a direct or indirect Subsidiary of another Person the Common Shares of which are and have
been so registered, the term “Principal Party” shall refer to such other Person, or (2) if
such Person is a Subsidiary, directly or indirectly, of more than one Person, the Common
Shares of which are and have been so registered, the term “Principal Party” shall refer to
whichever of such Persons is the issuer of Common Shares having the greatest aggregate
market value of shares outstanding, or (3) if such Person is owned, directly or indirectly,
by a joint venture formed by two or more Persons that are not owned, directly or indirectly
by the same Person, the rules set forth in clauses (1) and (2) above shall apply to each of
the owners having an interest in the venture as if the Person owned by the joint venture was
a Subsidiary of both or all of such joint venturers, and the Principal Party in each such
case shall bear the obligations set forth in this Section 13 in the same ratio as its
interest in such Person bears to the total of such interests.


 


25









 





(c) The Company shall not consummate any Section 13 Event unless the Principal Party shall
have a sufficient number of authorized Common Shares that have not been issued or reserved for
issuance to permit the exercise in full of the Rights in accordance with this Section 13 and unless
prior thereto the Company and such issuer shall have executed and delivered to the Rights Agent a
supplemental agreement confirming that such Principal Party shall, upon
consummation of such Section 13 Event, assume this Agreement in accordance with Sections 13(a)
and 13(b) hereof, that all rights of first refusal or preemptive rights in respect of the issuance
of Common Shares of such Principal Party upon exercise of outstanding Rights have been waived, that
there are no rights, warrants, instruments or securities outstanding or any agreements or
arrangements which, as a result of the consummation of such transaction, would eliminate or
substantially diminish the benefits intended to be afforded by the Rights and that such transaction
shall not result in a default by such Principal Party under this Agreement, and further providing
that, as soon as practicable after the date of such Section 13 Event, such Principal Party will:




(i) prepare and file a registration statement under the Act with respect to the Rights
and the securities purchasable upon exercise of the Rights on an appropriate form, use its
best efforts to cause such registration statement to become effective as soon as practicable
after such filing and use its best efforts to cause such registration statement to remain
effective (with a prospectus at all times meeting the requirements of the Act) until the
Expiration Date, and similarly comply with applicable state securities laws;




(ii) take all such other action as may be necessary to enable the Principal Party to
issue the securities purchasable upon exercise of the Rights, including but not limited to
the registration or qualification of such securities under all requisite securities laws of
jurisdictions of the various states and the listing of such securities on such exchanges and
trading markets as may be necessary or appropriate;




(iii) use its best efforts to list (or continue the listing of) the Rights and the
securities purchasable upon exercise of the Rights on a national securities exchange; and




(iv) deliver to holders of the Rights historical financial statements for such
Principal Party and each of its Affiliates that comply in all respects with the requirements
for registration on Form 10 (or any successor form) under the Exchange Act.



In the event that a Section 13 Event shall occur at any time after the occurrence of a Section
11(a)(ii) Event, the Rights which have not theretofore been exercised shall thereafter be
exercisable in the manner described in Section 13(a) (without taking into account any prior
adjustment required by Section 11(a)(ii)).



(d) In case the Principal Party has a provision in any of its authorized securities or in its
certificate of incorporation or by-laws or other instrument governing its affairs, which provision
would have the effect of (i) causing such Principal Party to issue (other than to holders of Rights
pursuant to this Section 13), in connection with, or as a consequence of, the consummation of a
transaction referred to in this Section 13, Common Shares or common stock equivalents of such
Principal Party at less than the then applicable current market price or securities exercisable
for, or convertible into, Common Shares or common stock equivalents of such Principal Party at less
than such then applicable current market price, or (ii) providing for any special payment, tax or
similar provision in connection with the issuance of the Common Shares of such Principal Party
pursuant to the provisions of Section 13, then, in such event, the Company hereby agrees with each
holder of Rights that it shall not consummate any such transaction unless prior thereto the Company
and such Principal Party shall have executed and
delivered to the Rights Agent a supplemental agreement providing that the provision in
question of such Principal Party shall have been canceled, waived or amended, or that the
authorized securities shall be redeemed, so that the applicable provision will have no effect in
connection with, or as a consequence of, the consummation of the proposed transaction.


 


26









 





(e) The Company covenants and agrees that it shall not, at any time after a Person first
becomes an Acquiring Person enter into any transaction of the type contemplated by Sections
13(a)(i)-(iii) hereof if (x) at the time of or immediately after such consolidation, merger, sale,
transfer or other transaction there are any rights, warrants or other instruments or securities
outstanding or agreements in effect which would substantially diminish or otherwise eliminate the
benefits intended to be afforded by the Rights, (y) prior to, simultaneously with or immediately
after such consolidation, merger, sale, transfer or other transaction, the stockholders of the
Person who constitutes, or would constitute, the Principal Party for purposes of Section 13(b)
hereof shall have received a distribution of Rights previously owned by such Person or any of its
Affiliates or Associates or (z) the form or nature of organization of the Principal Party would
preclude or limit the exercisability of the Rights.



(f) The provisions of this Section 13 shall similarly apply to successive mergers or
consolidations or sales or other transfers.




Section 14. Fractional Rights and Fractional Shares.



(a) The Company shall not be required to issue fractions of Rights, except prior to the
Distribution Date as provided in Section 11, or to distribute Rights Certificates which evidence
fractional Rights. In lieu of such fractional Rights, the Company shall pay or cause to be paid to
the registered holders of the Rights Certificates with regard to which such fractional Rights would
otherwise be issuable, an amount in cash equal to the same fraction of the current market value of
a whole Right. For purposes of this Section 14(a), the current market value of a whole Right shall
be the closing price of a Right for the Trading Day immediately prior to the date on which such
fractional Rights would have been otherwise issuable. The closing price of a Right for any Trading
Day shall be the last sale price, regular way, or, in case no such sale takes place on such day,
the average of the closing bid and asked prices, regular way, in either case as reported in the
principal consolidated transaction reporting system with respect to securities listed or admitted
to trading on The Nasdaq Stock Market or, if the Rights are not listed or admitted to trading on
The Nasdaq Stock Market, as reported to the principal consolidated transaction reporting system
with respect to securities listed or admitted to trading on the principal national securities
exchange on which the Rights are listed or admitted to trading, or if the Rights are not listed or
admitted to trading on any national securities exchange, the last quoted price or, if not so
quoted, the average of the high bid and low asked prices in the over-the-counter market, as
reported by the OTCBB or such other system then in use or, if on any such date the Rights are not
quoted by any such organization, the average of the closing bid and asked prices as furnished by a
professional market maker making a market in the Rights selected by the Board of Directors of the
Company. If on any such date no such market maker is making a market in the Rights, the fair value
of the Rights on such date as determined in good faith by the Board of Directors of the Company
shall be used.




 


27











 





(b) The Company shall not be required to issue fractions of Preferred Shares (other than
fractions which are integral multiples of one one-thousandth of a Preferred Share) upon exercise of
the Rights or to distribute certificates which evidence fractional Preferred Shares (other than
fractions which are integral multiples of one one-thousandth of a Preferred Share). Fractions of
Preferred Shares in integral multiples of one one-thousandth of a share may, at the election of the
Company, be evidenced by depositary receipts pursuant to an appropriate agreement between the
Company and a depositary selected by it; provided, however, that such agreement
shall provide that the holders of such depositary receipts shall have all the rights, privileges
and preferences to which they are entitled as beneficial owners of the shares represented by such
depositary receipts. In lieu of fractional Preferred Shares that are not integral multiples of one
one-thousandth of a Preferred Share, the Company shall pay to the registered holders of Rights
Certificates at the time such Rights are exercised as herein provided an amount in cash equal to
the same fraction of the current market value of one one-thousandth of a Preferred Share. For
purposes of this Section 14(b), the current market value of one one-thousandth of a Preferred Share
shall be one one-thousandth of the closing price of a Preferred Share (as determined pursuant to
Section 11(d)(ii)) for the Trading Day immediately prior to the date of such exercise;
provided, however, that if the closing price of the Preferred Shares cannot be so
determined, the closing price of one Preferred Share for such Trading Day shall be conclusively
deemed to be an amount equal to the closing price of one Common Share for such Trading Day
multiplied by one hundred (as such number may be appropriately adjusted by the Company’s Board of
Directors, in its judgment, to reflect events such as stock splits, stock dividends,
recapitalizations or similar transactions relating to the Common Shares occurring after the date of
this Agreement).



(c) Following the occurrence of a Triggering Event, the Company shall not be required to issue
fractions of Common Shares upon exercise of the Rights or to distribute certificates which evidence
fractional Common Shares. In lieu of fractional Common Shares, the Company shall pay to the
registered holders of Rights Certificates at the time such Rights are exercised as herein provided
an amount in cash equal to the same fraction of the current market value of one Common Share. For
purposes of this Section 14(c), the current market value of one Common Share shall be the closing
price of one Common Share (as determined pursuant to Section 11(d)(i)) for the Trading Day
immediately prior to the date of such exercise.



(d) The holder of a Right by the acceptance of the Rights expressly waives such holder’s right
to receive any fractional Rights or any fractional shares upon exercise of a Right, except as
permitted by this Section 14.



(e) Whenever a payment for fractional Rights or fractional shares is to be made by the Rights
Agent, the Company shall (i) promptly prepare and deliver to the Rights Agent a certificate setting
forth in reasonable detail the facts related to such payment and the prices and/or formulas
utilized in calculating such payments, and (ii) provide sufficient monies to the Rights Agent in
the form of fully collected funds to make such payments.


 


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Section 15. Rights of Action. All rights of action in respect of this Agreement,
other than rights of action vested in the Rights Agent pursuant to the terms of this Agreement, are
vested in the respective registered holders of the Rights Certificates (and, prior to the
Distribution Date, the registered holders of the Common Shares); and any registered holder of
any Rights Certificate (or, prior to the Distribution Date, of the Common Shares), without the
consent of the Rights Agent or of the holder of any other Rights Certificate (or, prior to the
Distribution Date, of the Common Shares), may, in such holder’s own behalf and for such holder’s
own benefit, enforce, and may institute and maintain any suit, action or proceeding against the
Company to enforce, or otherwise act in respect of, such holder’s right to exercise the Rights
evidenced by such Rights Certificate in the manner provided in such Rights Certificate and in this
Agreement. Without limiting the foregoing or any remedies available to the holders of Rights, it is
specifically acknowledged that the holders of Rights would not have an adequate remedy at law for
any breach of this Agreement and shall be entitled to specific performance of the obligations
hereunder and injunctive relief against actual or threatened violations of the obligations
hereunder of any Person subject to this Agreement.



Section 16. Agreement of Rights Holders. Every holder of a Right by accepting the
same consents and agrees with the Company and the Rights Agent and with every holder of a Right
that:



(a) prior to the Distribution Date, the Rights will be transferable only in connection with
the transfer of Common Shares;



(b) after the Distribution Date, the Rights Certificates are transferable only on the registry
books of the Rights Agent if surrendered at the principal office or offices of the Rights Agent
designated for such purposes, duly endorsed or accompanied by a proper instrument of transfer and
with the appropriate forms and certificates fully executed;



(c) subject to Section 6(a) and Section 7(f), the Company and the Rights Agent may deem and
treat the Person in whose name a Rights Certificate (or, prior to the Distribution Date, the
associated Common Shares certificate) is registered as the absolute owner thereof and of the Rights
evidenced thereby (notwithstanding any notations of ownership or writing on any Rights Certificate
or associated Common Shares certificate made by anyone other than the Company or the Rights Agent)
for all purposes whatsoever, and neither the Company nor the Rights Agent, subject to the last
sentence of Section 7(e), shall be required to be affected by any notice to the contrary; and



(d) notwithstanding anything in this Agreement to the contrary, neither the Company nor the
Rights Agent shall have any liability to any holder of a Right or other Person as a result of its
inability to perform any of its obligations under this Agreement by reason of any preliminary or
permanent injunction or other order, decree, judgment or ruling issued by any court of competent
jurisdiction or by any governmental, regulatory or administrative agency or commission, or any
statute, rule, regulation or executive order promulgated or enacted by any governmental authority,
prohibiting or otherwise restraining performance of such obligation; provided,
however, that the Company shall use commercially reasonable efforts to have any such order,
decree, judgment or ruling lifted or otherwise overturned as soon as possible.


 


29









 





Section 17. Rights Certificate Holder Not Deemed a Stockholder. No holder, as such,
of any Rights Certificate shall be entitled to vote, receive dividends or be deemed for any purpose
to be the holder of the number of one one-thousandths of a Preferred Share or any other securities
of the Company which may at any time be issuable upon the exercise of the Rights
represented thereby, nor shall anything contained herein or in any Rights Certificate be
construed to confer upon the holder of any Rights Certificate, as such, any of the rights of a
stockholder of the Company or any right to vote for the election of directors or upon any matter
submitted to stockholders at any meeting thereof, or to give or withhold consent to any corporate
action, or to receive notice of meetings or other actions affecting stockholders (except as
provided in Section 25), or to receive dividends or subscription rights, or otherwise, until the
Right or Rights evidenced by such Rights Certificate shall have been exercised in accordance with
the provisions hereof.




Section 18. Concerning the Rights Agent.



(a) The Company agrees to pay to the Rights Agent reasonable compensation for all services
rendered by it hereunder and, from time to time, on demand of the Rights Agent, its reasonable
expenses and counsel fees and disbursements and other disbursements incurred in the preparation,
execution, delivery and amendment of this Agreement and the exercise and performance of its duties
hereunder. The Company also agrees to indemnify the Rights Agent for, and to hold it harmless
against, any loss, liability or expense incurred without negligence, bad faith or willful
misconduct on the part of the Rights Agent for any action taken, suffered or omitted by the Rights
Agent in connection with the acceptance and administration of this Agreement, including, without
limitation, the reasonable costs and expenses of defending against any claim of liability in the
premises.



(b) The Rights Agent shall be authorized and protected and shall incur no liability for or in
respect of any action taken, suffered or omitted by it in connection with its acceptance and
administration of this Agreement in reliance upon any Rights Certificate or certificate for Common
Shares or for other securities of the Company, instrument of assignment or transfer, power of
attorney, endorsement, affidavit, letter, notice, direction, consent, certificate, statement, or
other paper or document believed by it to be genuine and to be signed, executed and, where
necessary, verified or acknowledged, by the proper Person or Persons, or otherwise upon the advice
of counsel as set forth in Section 20.




Section 19. Merger or Consolidation or Change of Name of Rights Agent.



(a) Any Person into which the Rights Agent or any successor Rights Agent may be merged or with
which it may be consolidated, or any Person resulting from any merger or consolidation to which the
Rights Agent or any successor Rights Agent shall be a party, or any Person succeeding to the stock
transfer business of the Rights Agent or any successor Rights Agent, shall be the successor to the
Rights Agent under this Agreement without the execution or filing of any paper or any further act
on the part of any of the parties hereto; provided, however, that such Person would
be eligible for appointment as a successor Rights Agent under the provisions of Section 21. In case
at the time such successor Rights Agent shall succeed to the agency created by this Agreement, any
of the Rights Certificates shall have been countersigned but not delivered, any such successor
Rights Agent may adopt the countersignature of a predecessor Rights Agent and deliver such Rights
Certificates so countersigned; and in case at the time any of the Rights Certificates shall not
have been countersigned, any successor Rights Agent may countersign such Rights Certificates either
in the name of the predecessor or in the
name of the successor Rights Agent; and in all such cases such Rights Certificates shall have
the full force provided in the Rights Certificates and in this Agreement.


 


30









 





(b) In case at any time the name of the Rights Agent shall be changed, and at such time any of
the Rights Certificates shall have been countersigned but not delivered, the Rights Agent may adopt
the countersignature under its prior name and deliver Rights Certificates so countersigned; and in
case, at that time, any of the Rights Certificates shall not have been countersigned, the Rights
Agent may countersign such Rights Certificates either in its prior name or in its changed name; and
in all such cases such Rights Certificates shall have the full force provided in the Rights
Certificates and in this Agreement.



Section 20. Duties of Rights Agent. The Rights Agent undertakes only the duties and
obligations expressly imposed by this Agreement upon the following terms and conditions, by all of
which the Company and the holders of Rights Certificates, by their acceptance thereof, shall be
bound:



(a) Before the Rights Agent acts or refrains from acting, the Rights Agent may consult with
legal counsel (who may be legal counsel for the Company), and the opinion of such counsel shall be
full and complete authorization and protection to the Rights Agent as to any action taken or
omitted by it in good faith and in accordance with such opinion.



(b) Whenever in the performance of its duties under this Agreement the Rights Agent shall deem
it necessary or desirable that any fact or matter (including, without limitation, the identity of
any Acquiring Person and the determination of “current market price”) be proved or established by
the Company prior to taking, suffering or omitting to take any action hereunder, such fact or
matter (unless other evidence in respect thereof be herein specifically prescribed) may be deemed
to be conclusively proved and established by a certificate signed by the Chairman of the Board, the
Chief Executive Officer, the President, the Chief Financial Officer, any Vice President, the
Treasurer, any Assistant Treasurer, the Secretary or any Assistant Secretary of the Company and
delivered to the Rights Agent; and such certificate shall be full authorization and protection to
the Rights Agent, and the Rights Agent shall incur no liability for or in respect of any action
taken, suffered or omitted to be taken by it in good faith by it under the provisions of this
Agreement in reliance upon such certificate.



(c) The Rights Agent shall be liable hereunder only for its own negligence, bad faith or
willful misconduct.



(d) The Rights Agent shall not be liable for or by reason of any of the statements of fact or
recitals contained in this Agreement or in the Rights Certificates or be required to verify the
same (except as to its countersignature on such Rights Certificates), but all such statements and
recitals are and shall be deemed to have been made by the Company only.


 


31









 





(e) The Rights Agent shall not be under any responsibility in respect of the validity of this
Agreement or the execution and delivery hereof (except the due execution hereof by the Rights
Agent) or in respect of the validity or execution of any Rights Certificate (except its
countersignature thereof); nor shall it be responsible for any breach by the Company of any
covenant or condition contained in this Agreement or in any Rights Certificate; nor shall it be
responsible for any adjustment required under the provisions of Section 11, Section 13 or
Section 24 or responsible for the manner, method or amount of any such adjustment or the
ascertaining of the existence of facts that would require any such adjustment (except with respect
to the exercise of Rights evidenced by Rights Certificates after actual notice of any such
adjustment); nor shall it by any act hereunder be deemed to make any representation or warranty as
to the authorization or reservation of any Common Shares or Preferred Shares to be issued pursuant
to this Agreement or any Rights Certificate or as to whether any Common Shares or Preferred Shares
will, when so issued, be validly authorized and issued, fully paid and nonassessable.



(f) The Company agrees that it will perform, execute, acknowledge and deliver or cause to be
performed, executed, acknowledged and delivered all such further and other acts, instruments and
assurances as may reasonably be required by the Rights Agent for the carrying out or performing by
the Rights Agent of the provisions of this Agreement.



(g) The Rights Agent is hereby authorized and directed to accept instructions with respect to
the performance of its duties hereunder from the Chairman of the Board, the Chief Executive
Officer, the President, the Chief Financial Officer, any Vice President, the Secretary, any
Assistant Secretary, the Treasurer or any Assistant Treasurer of the Company, and to apply to such
officers for advice or instructions in connection with its duties, and it shall incur no liability
for or in respect of any action taken, suffered or omitted by it in good faith in accordance with
instructions of any such officer.



(h) The Rights Agent and any stockholder, director, Affiliate, officer or employee of the
Rights Agent may buy, sell or deal in any of the Rights or other securities of the Company or
become pecuniarily interested in any transaction in which the Company may be interested, or
contract with or lend money to the Company or otherwise act as fully and freely as though it were
not Rights Agent under this Agreement. Nothing herein shall preclude the Rights Agent from acting
in any other capacity for the Company or for any other Person.



(i) The Rights Agent may execute and exercise any of the rights or powers hereby vested in it
or perform any duty hereunder either itself or by or through its attorneys or agents, and the
Rights Agent shall not be answerable or accountable for any act, default, neglect or misconduct of
any such attorneys or agents or for any loss to the Company resulting from any such act, default,
neglect or misconduct; provided, however, that reasonable care was exercised in the
selection and continued employment thereof.



(j) No provision of this Agreement shall require the Rights Agent to expend or risk its own
funds or otherwise incur any financial liability in the performance of any of its duties hereunder
or in the exercise of its rights if there shall be reasonable grounds for believing that repayment
of such funds or adequate indemnification against such risk or liability is not reasonably assured
to it.



(k) If, with respect to any Rights Certificate surrendered to the Rights Agent for exercise or
transfer, the certificate attached to the form of assignment or form of election to purchase, as
the case may be, has either not been completed or indicates an affirmative response to clause 1
and/or 2 thereof, the Rights Agent shall not take any further action with respect to such requested
exercise or transfer without first consulting with the Company.


 


32









 





(l) At any time and from time to time after the Distribution Date, upon the request of the
Company, the Rights Agent shall deliver to the Company a list, as of the most recent practicable
date (or as of such earlier date as may be specified by the Company), of the holders of record of
the Rights.



Section 21. Change of Rights Agent. The Rights Agent or any successor Rights Agent
may resign and be discharged from its duties under this Agreement upon thirty (30) days’ notice in
writing mailed to the Company, and to each transfer agent of the Common Shares and Preferred
Shares, by registered or certified mail, and to the holders of the Rights Certificates by
first-class mail. In the event the transfer agency relationship in effect between the Company and
the Rights Agent with respect to the Common Shares terminates, the Rights Agent will be deemed to
have resigned automatically and be discharged from its duties under this Agreement as of the
effective date of such termination, and the Company shall be responsible for sending any notice
required pursuant to the preceding sentence. The Company may remove the Rights Agent or any
successor Rights Agent upon thirty (30) days’ notice in writing, mailed to the Rights Agent or
successor Rights Agent, as the case may be, and to each transfer agent of the Common Shares and
Preferred Shares, by registered or certified mail, and to the holders of the Rights Certificates by
first-class mail. If the Rights Agent shall resign or be removed or shall otherwise become
incapable of acting, the Company shall appoint a successor to the Rights Agent. If the Company
shall fail to make such appointment within a period of thirty (30) days after giving notice of such
removal or after it has been notified in writing of such resignation or incapacity by the resigning
or incapacitated Rights Agent or by any registered holder of a Rights Certificate (who shall, with
such notice, submit such holder’s Rights Certificate for inspection by the Company), then any
registered holder of any Rights Certificate may apply to any court of competent jurisdiction for
the appointment of a new Rights Agent. Any successor Rights Agent, whether appointed by the Company
or by such a court, shall be (a) a Person organized and doing business under the laws of the United
States or of the State of Delaware or the State of New York (or of any other state of the United
States so long as such Person is authorized to do business in the State of Delaware or the State of
New York), in good standing, which is authorized under such laws to exercise stock transfer powers
and is subject to supervision or examination by federal or state authority and which has at the
time of its appointment as Rights Agent a combined capital and surplus of at least $[50,000,000] or
(b) an Affiliate of such Person. After appointment, the successor Rights Agent shall be vested with
the same powers, rights, duties and responsibilities as if it had been originally named as Rights
Agent without further act or deed; but the predecessor Rights Agent shall deliver and transfer to
the successor Rights Agent any property at the time held by it hereunder, and execute and deliver
any further assurance, conveyance, act or deed necessary for the purpose. Not later than the
effective date of any such appointment, the Company shall file notice thereof in writing with the
predecessor Rights Agent and each transfer agent of the Common Shares and the Preferred Shares, and
mail a notice thereof in writing to the registered holders of the Rights Certificates. Failure to
give any notice provided for in this Section 21 or any defect therein shall not affect the legality
or validity of the resignation or removal of the Rights Agent or the appointment of the successor
Rights Agent, as the case may be.


 


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Section 22. Issuance of New Rights Certificates. Notwithstanding any of the
provisions of this Agreement or of the Rights to the contrary, the Company may, at its option,
issue new Rights Certificates evidencing Rights in such form as may be approved by its Board of
Directors to reflect any adjustment or change in the Purchase Price and the number or kind or
class of shares or other securities or property purchasable under the Rights Certificates made in
accordance with the provisions of this Agreement. In addition, in connection with the issuance or
sale of Common Shares following the Distribution Date and prior to the redemption or expiration of
the Rights, the Company (a) shall, with respect to Common Shares so issued or sold pursuant to the
exercise of stock options or under any employee plan or arrangement, granted or awarded prior to
the Distribution Date, or upon the exercise, conversion or exchange of securities hereinafter
issued by the Company, and (b) may, in any other case, if deemed necessary or appropriate by the
Board of Directors of the Company, issue Rights Certificates representing an appropriate number of
Rights in connection with such issuance or sale; provided, however, that (i) no
such Rights Certificate shall be issued if, and to the extent that, the Company shall be advised by
counsel that such issuance would create a significant risk of material adverse tax consequences to
the Company or the Person to whom such Rights Certificate would be issued, and (ii) no such Rights
Certificate shall be issued if, and to the extent that, appropriate adjustment shall otherwise have
been made in lieu of the issuance thereof.




Section 23. Redemption and Termination.



(a) The Board of Directors of the Company may, at its option, at any time prior to the earlier
of (A) the Close of Business on the tenth day following the Share Acquisition Date (or, if the
Share Acquisition Date shall have occurred prior to the Record Date, the Close of Business on the
tenth day following the Record Date), or (B) the Final Expiration Date, redeem all but not less
than all of the then outstanding Rights at a redemption price of $0.001 per Right, as such amount
may be appropriately adjusted to reflect any stock split, stock dividend or similar transaction
occurring after the date hereof (such redemption price being hereinafter referred to as the
“Redemption Price”). Notwithstanding anything contained in this Agreement to the contrary, the
Rights shall not be exercisable after the first occurrence of a Section 11(a)(ii) Event until such
time as the Company’s right of redemption hereunder has expired. The Company may, at its option,
pay the Redemption Price in cash, Common Shares (based on the “current market price”, as defined in
Section 11(d)(i), of the Common Shares at the time of redemption) or any other form of
consideration deemed appropriate by the Board of Directors of the Company. The redemption of the
Rights by the Board of Directors may be made effective at such time, on such basis and with such
conditions as the Company’s Board of Directors in its sole discretion may establish.



(b) Immediately upon the action of the Board of Directors of the Company ordering the
redemption of the Rights, evidence of which shall have been filed with the Rights Agent and without
any further action and without any notice, the right to exercise the Rights will terminate and the
only right thereafter of the holders of Rights shall be to receive the Redemption Price for each
Right so held. Promptly after the action of the Board of Directors of the Company ordering the
redemption of the Rights, the Company shall give notice of such redemption to the Rights Agent and
the holders of the then outstanding Rights by mailing such notice to the Rights Agent and to all
such holders at each holder’s last address as it appears upon the registry books of the Rights
Agent or, prior to the Distribution Date, on the registry books of the transfer agent for the
Common Shares. Any notice which is mailed in the manner herein provided shall be deemed given,
whether or not the holder receives the notice. Each such notice of redemption will state the
method by which the payment of the Redemption Price will be made.


 


34









 






Section 24. Exchange.




(a) (i) The Board of Directors of the Company may, at its option, at any time after any
Person becomes an Acquiring Person, exchange all or part of the then outstanding and
exercisable Rights (which shall not include Rights that have become null and void pursuant
to the provisions of Section 7(e)) for Common Shares at an exchange ratio of one Common
Share per Right, appropriately adjusted to reflect any stock split, stock dividend or
similar transaction occurring after the date hereof (such exchange ratio being hereinafter
referred to as the “Section 24(a)(i) Exchange Ratio”). Notwithstanding the foregoing, the
Board of Directors of the Company shall not be empowered to effect such exchange at any time
after any Person (other than the Company, any Subsidiary of the Company, any employee
benefit plan or other compensation arrangement of the Company or of any Subsidiary of the
Company, or any Person organized, appointed or established by the Company for or pursuant to
the terms of any such plan or compensation arrangement), together with all Affiliates and
Associates of such Person, becomes the Beneficial Owner of fifty percent (50%) or more of
the Common Shares then outstanding.




(ii) The Board of Directors of the Company may, at its option, at any time after any
Person becomes an Acquiring Person, exchange all or part of the then outstanding and
exercisable Rights (which shall not include Rights that have become void pursuant to the
provisions of Section 7(e) hereof) for Common Shares at an exchange ratio specified in the
following sentence, as appropriately adjusted to reflect any stock split, stock dividend or
similar transaction occurring after the date of this Agreement. Subject to such adjustment,
each Right may be exchanged for that number of Common Shares obtained by dividing the
Adjustment Spread (as defined below) by the then current market price (determined pursuant
to Section 11(d) hereof) per Common Share on the earlier of (A) the date on which any Person
becomes an Acquiring Person or (B) the date on which a tender or exchange offer by any
Person (other than a Grandfathered Person, an Exempted Person, the Company, any Subsidiary
of the Company, any employee benefit plan of the Company or of any Subsidiary of the
Company, or any Person organized, appointed or established by the Company for or pursuant to
the terms of any such plan) is first published or sent or given within the meaning of Rule
14d-4(a) of the General Rules and Regulations under the Exchange Act, if upon consummation
thereof such Person would be the Beneficial Owner of 4.9% or more of the Corporation
Securities then outstanding (such exchange ratio being hereinafter referred to as the
“Section 24(a)(ii) Exchange Ratio”). The “Adjustment Spread” shall equal (x) the aggregate
market price on the date of such event of the number of Adjustment Shares determined
pursuant to Section 11(a)(ii) minus (y) the Purchase Price.



 


35









 





(b) Immediately upon the action of the Board of Directors of the Company ordering the exchange
of any Rights pursuant to subsection (a) of this Section 24 and without any further action and
without any notice, the right to exercise such Rights shall terminate and the only right thereafter
of a holder of any such Rights shall be to receive that number of Common Shares equal to the number
of such Rights held by such holder multiplied by the Section 24(a)(i) Exchange Ratio or Section
24(a)(ii) Exchange Ratio, as the case may be. The Company shall promptly give public notice (with
prompt notice thereof to the Rights Agent) of any exchange;
provided, however, that the failure to give, or any defect in, such notice
shall not affect the validity of such exchange. The Company promptly shall mail a notice of any
such exchange to all of the holders of such Rights at their last addresses as they appear upon the
registry books of the Rights Agent. Any notice which is mailed in the manner herein provided shall
be deemed given, whether or not the holder receives the notice. Each such notice of exchange will
state the method by which the exchange of the Common Shares for Rights will be effected and, in the
event of any partial exchange, the number of Rights which will be exchanged. Any partial exchange
will be effected pro rata based on the number of Rights (other than Rights which have become null
and void pursuant to the provisions of Section 7(e)) held by each holder of Rights.



(c) In any exchange pursuant to this Section 24, the Company, at its option, may substitute
Preferred Shares (or equivalent preferred shares, as such term is defined in paragraph (b) of
Section 11) for Common Shares exchangeable for Rights, at the initial rate of one one-thousandth of
a Preferred Share (or equivalent preferred shares) for each Common Share, as appropriately adjusted
to reflect adjustments in the voting rights of the Preferred Shares pursuant to the terms thereof,
so that the fraction of a Preferred Share delivered in lieu of each Common Share shall have the
same voting rights as one Common Share.



(d) In the event that there shall not be sufficient Common Shares issued but not outstanding
or authorized but unissued to permit any exchange of Rights as contemplated in accordance with this
Section 24, the Company shall take all such actions as may be necessary to authorize additional
Common Shares for issuance upon exchange of the Rights or, at the Company’s sole election, the
Company shall make adequate provision to substitute, to the extent that there are insufficient
shares of Common Stock available, (i) cash, (ii) other equity securities of the Company, (iii) debt
securities of the Company, (iv) other assets or (v) any combination of the foregoing, having an
aggregate value per Right equal to (x) in the case of an exchange pursuant to Section 24(a)(i), the
then applicable current market price (determined pursuant to Section 11(d) hereof) of the Common
Stock multiplied by the Section 24(a)(i) Exchange Ratio and (y) in the case of an exchange pursuant
to Section 24(a)(ii), the Adjustment Spread, where such aggregate value has been determined by a
majority of the members of the Board of Directors of the Company, after receiving advice from a
nationally recognized investment banking firm. To the extent that the Company determines that any
such substitution must be made, the Company shall provide, subject to Section 7(e) hereof, that
such substitution shall apply uniformly to all outstanding Rights.



(e) The Company shall not be required to issue fractions of Common Shares or to distribute
certificates which evidence fractional Common Shares. In lieu of such fractional Common Shares,
there shall be paid to the registered holders of the Rights Certificates with regard to which such
fractional Common Shares would otherwise be issuable, an amount in cash equal to the same fraction
of the current market value of a whole Common Share. For the purposes of this subsection (e), the
current market value of a whole Common Share shall be the closing price of a Common Share (as
determined pursuant to the second sentence of Section 11(d)(i)) for the Trading Day immediately
prior to the date of exchange pursuant to this Section 24.


 


36









 






Section 25. Notice of Certain Events.



(a) In case the Company shall propose, at any time after the Distribution Date, (i) to pay any
dividend payable in shares of any class to the holders of Preferred Shares or to make any other
distribution to the holders of Preferred Shares (other than a regular periodic cash dividend out of
earnings or retained earnings of the Company), (ii) to offer to the holders of Preferred Shares
rights or warrants to subscribe for or to purchase any additional Preferred Shares or shares of any
class or any other securities, rights or options, (iii) to effect any reclassification of its
Preferred Shares (other than a reclassification involving only the subdivision of outstanding
Preferred Shares), (iv) to effect any consolidation or merger into or with any other Person (other
than a Subsidiary of the Company in a transaction which complies with Section 11(o)), or to effect
any sale or other transfer (or to permit one or more of its Subsidiaries to effect any sale or
other transfer), in one transaction or a series of related transactions, of more than 50% of the
assets, cash flow or earning power of the Company and its Subsidiaries (taken as a whole) to any
other Person or Persons (other than the Company and/or any of its Subsidiaries in one or more
transactions each of which complies with Section 11(o)), or (v) to effect the liquidation,
dissolution or winding up of the Company, then, in each such case, the Company shall give to the
Rights Agent and to each holder of a Rights Certificate, to the extent feasible and in accordance
with Section 26, a notice of such proposed action, which shall specify the record date for the
purposes of such stock dividend, distribution of rights or warrants, or the date on which such
reclassification, consolidation, merger, sale, transfer, liquidation, dissolution, or winding up is
to take place and the date of participation therein by the holders of the Preferred Shares, if any
such date is to be fixed, and such notice shall be so given in the case of any action covered by
clause (i) or (ii) above at least twenty (20) days prior to the record date for determining holders
of the Preferred Shares for purposes of such action, and in the case of any such other action, at
least twenty (20) days prior to the date of the taking of such proposed action or the date of
participation therein by the holders of the Preferred Shares, whichever shall be the earlier.



(b) In case a Section 11(a)(ii) Event shall occur, then, in any such case, (i) the Company
shall as soon as practicable thereafter give to each holder of a Rights Certificate, to the extent
feasible and in accordance with Section 26, a notice of the occurrence of such event, which shall
specify the event and the consequences of the event to holders of Rights under Section 11(a)(ii),
and (ii) all references in the preceding paragraph to Preferred Shares shall be deemed thereafter
to refer to Common Shares and/or, if appropriate, other securities.



(c) Failure to give notice required by this Section 25 or any defect therein shall not affect
the legality or validity of the action taken by the Company or the vote on any such action.



Section 26. Notices. Notices or demands authorized by this Agreement to be given or
made by the Rights Agent or by the holder of any Rights Certificate to or on the Company shall be
sufficiently given or made if sent by overnight delivery service or first-class mail, postage
prepaid, addressed (until another address is filed in writing with the Rights Agent) or by
facsimile transmission (with receipt confirmed telephonically) as follows:


EasyLink Services International Corporation

6025 The Corners Parkway, Suite 100

Norcross, Georgia 30092

Attention: Chief Financial Officer

Facsimile No.: (678) 229-9087




 


37









 







Subject to the provisions of Section 21, any notice or demand authorized by this Agreement to be
given or made by the Company or by the holder of any Rights Certificate to or on the Rights Agent
shall be sufficiently given or made if sent by overnight delivery service or first-class mail,
postage prepaid, addressed (until another address is filed in writing with the Company) or by
facsimile transmission (with receipt confirmed) as follows:




If by mail:


American Stock Transfer and Trust Company, LLC

59 Maiden Lane

Plaza Level

New York, New York 10038

Attention: Executive Vice President



If by overnight delivery service:



American Stock Transfer and Trust Company, LLC

Operations Center

6201 15th Avenue

Brooklyn, NY 11219

Attention: Executive Vice President





If by facsimile transmission:




American Stock Transfer and Trust Company, LLC

Facsimile No.: (718) 236-4588



Notices or demands authorized by this Agreement to be given or made by the Company or the Rights
Agent to the holder of any Rights Certificate (or, if prior to the Distribution Date, to the holder
of certificates representing Common Shares) shall be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed to such holder at the address of such holder as shown
on the registry books of the Company.


 


38









 





Section 27. Supplements and Amendments. The Company may from time to time supplement
or amend this Agreement without the approval of any holders of Rights Certificates in order (a) to
cure any ambiguity, (b) to correct or supplement any provision contained herein which may be
defective or inconsistent with any other provision herein, (c) to shorten or lengthen any time
period hereunder (including, without limitation, to extend the Final Expiration Date), (d) to
increase or decrease the Purchase Price or (e) to change or supplement the provisions hereunder in
any manner which the Company may deem necessary or desirable; provided, however,
that from and after such time as any Person becomes an Acquiring Person, this Agreement shall not
be amended in any manner which would adversely affect the interests of the holders of Rights (other
than an Acquiring Person or an Affiliate or Associate of an
Acquiring Person); provided further that this Agreement may not be
supplemented or amended to lengthen pursuant to clause (c) of this sentence, (A) the time period
relating to when the Rights may be redeemed at such time as the Rights are not then redeemable or
(B) any other time period unless such lengthening is for the purpose of protecting, enhancing or
clarifying the rights of, or the benefits to, the holders of the Rights. Upon the delivery of a
certificate from an appropriate officer of the Company which states that the proposed supplement or
amendment is in compliance with the terms of this Section 27, the Rights Agent shall execute such
supplement or amendment; provided that such supplement or amendment does not
adversely affect the Rights Agent’s own duties, obligations or immunities under this Agreement.



Section 28. Successors. All the covenants and provisions of this Agreement by or for
the benefit of the Company or the Rights Agent shall bind and inure to the benefit of their
respective successors and assigns hereunder.



Section 29. Determination and Actions by the Board of Directors, etc. For all
purposes of this Agreement, any calculation of the number of Common Shares outstanding at any
particular time, including for purposes of determining the particular percentage of such
outstanding Common Shares of which any Person is the Beneficial Owner, shall be made in accordance
with the last sentence of Rule 13d-3(d)(1)(i) of the General Rules and Regulations under the
Exchange Act. The Board of Directors of the Company shall have the exclusive power and authority to
administer this Agreement and to exercise all rights and powers specifically granted to the Board
of Directors of the Company or to the Company, or as may be necessary or advisable in the
administration of this Agreement, including, without limitation, the right and power to (a)
interpret the provisions of this Agreement and (b) make all determinations deemed necessary or
advisable for the administration of this Agreement (including, but not limited to, a determination
to redeem or not redeem the Rights or to amend this Agreement). All such actions, calculations,
interpretations and determinations (including, without limitation, for purposes of clause (y)
below, all omissions with respect to the foregoing) which are done or made by the Board of
Directors of the Company in good faith shall (x) be final, conclusive and binding on the Company,
the Rights Agent, the holders of the Rights and all other Persons and (y) not subject the Board of
Directors of the Company to any liability to the holders of the Rights.



Section 30. Benefits of this Agreement. Nothing in this Agreement shall be construed
to give to any Person other than the Company, the Rights Agent and the registered holders of the
Rights Certificates (and, prior to the Distribution Date, registered holders of the Common Shares)
any legal or equitable right, remedy or claim under this Agreement; but this Agreement shall be for
the sole and exclusive benefit of the Company, the Rights Agent and the registered holders of the
Rights Certificates (and, prior to the Distribution Date, registered holders of the Common Shares).


 


39









 





Section 31. Severability. If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction or other authority to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants and restrictions of this Agreement
shall remain in full force and effect and shall in no way be affected, impaired or invalidated;
provided, however, that notwithstanding anything in this Agreement to the contrary,
if any such term, provision, covenant or restriction is held by such court or authority to be
invalid, void or unenforceable and the Board of Directors of the Company determines in its good
faith judgment that severing the invalid language from this Agreement would adversely affect
the purpose or effect of this Agreement, the right of redemption set forth in Section 23 shall be
reinstated and shall not expire until the Close of Business on the tenth day following the date of
such determination by the Board of Directors of the Company.



Section 32. Governing Law. This Agreement, each Right and each Rights Certificate
issued hereunder shall be deemed to be a contract made under the laws of the State of Delaware and
for all purposes shall be governed by and construed in accordance with the laws of such State
applicable to contracts made and to be performed entirely within such State.



Section 33. Counterparts. This Agreement may be executed in any number of
counterparts and each of such counterparts shall for all purposes be deemed to be an original, and
all such counterparts shall together constitute but one and the same instrument.



Section 34. Descriptive Headings; Interpretation. Descriptive headings of the several
Sections of this Agreement are inserted for convenience only and shall not control or affect the
meaning or construction of any of the provisions hereof, and the words “herein,” “hereof,”
“hereby,” “hereto,” “hereunder” and words of similar import are references to this Agreement as a
whole and not to any particular section or other provision hereof.


 


40









 





IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and
their respective corporate seals to be hereunto affixed and attested, all as of the day and year
first above written.



	 	 	 	 	 	 	 	 	 	 	 	 	 
	Attest:	 	 	 	EASYLINK SERVICES INTERNATIONAL CORPORATION	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	By:	 	/s/
Nancy L. Greenwood	 	By:	 	/s/ Glen E. Shipley	 	 
	 	 	Name:	 	Nancy L. Greenwood	 	 	 	Name:	 	Glen E. Shipley	 	 
	 

	 	Title:
	 	Legal Coordinator
	 	 	 	Title:
	 	Chief Financial Officer	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Attest:	 	 	 	AMERICAN STOCK TRANSFER AND TRUST COMPANY, LLC	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	By:	 	/s/ Jennifer Donovan	 	By:	 	/s/ Isaac J. Kagan	 	 
	 	 	Name: 	 	Jennifer Donovan	 	 	 	Name: 	 	Isaac J. Kagan	 	 
	 

	 	Title:
	 	Vice President
	 	 	 	Title:
	 	Vice President	 	 





 


41









 





Exhibit A




Certificate of the Powers, Designations, Preferences and Relative, Participating, Optional and

Other Special Rights of the




Series F Junior Participating Preferred Stock




of




EasyLink Services International Corporation




and the Qualifications, Limitations or Restrictions Thereof, Which Have Not Been Set Forth in

the Certificate of Incorporation or in Any Amendment Thereto.




(Pursuant to Section 151 of the General Corporation Law of the State of Delaware)




The undersigned, Thomas J. Stallings, Chief Executive Officer of EasyLink Services
International Corporation, a corporation organized and existing under the laws of the State of
Delaware (hereinafter, the “Corporation”), does hereby certify:



That pursuant to authority conferred upon the Board of Directors of the Corporation by its
Certificate of Incorporation, as amended (the “Certificate of Incorporation”), and pursuant to the
provisions of Section 151 of the General Corporation Law of the State of Delaware, the Board of
Directors of the Corporation, by a meeting of the Board of Directors on August 25, 2009, duly
adopted the following resolution:



RESOLVED, that, pursuant to the authority expressly granted to and vested in the Board of
Directors of the Corporation by the provisions of the Certificate of Incorporation, the Board of
Directors of the Corporation hereby creates a series of Preferred Stock of the Corporation to
consist of 100,000 of the 5,000,000 shares of Preferred Stock, $.01 par value per share, which the
Corporation now has authority to issue, and the Board of Directors of the Corporation hereby fixes
the designations, powers, preferences and relative, participating, optional and other special
rights, and the qualifications, limitations or restrictions thereof, of the shares of such series
of Preferred Stock (in addition to the designations, powers, preferences and relative,
participating, optional and other special rights, and the qualifications, limitations or
restrictions thereof, set forth in the Certificate of Incorporation of the Corporation which are
applicable to Preferred Stock of all series) as follows:



Section 1. Designation and Amount. The shares of such series shall be designated as
“Series F Junior Participating Preferred Stock” and the number of shares constituting such series
shall be 100,000 (hereinafter referred to as the “Series F Preferred Shares”).


 


A-1









 






Section 2. Dividends and Distributions.



(A) Subject to the prior and superior rights of the holders of any shares of any series of
Preferred Stock ranking prior and superior to the shares of Series F Preferred Shares with respect
to dividends, the holders of Series F Preferred Shares shall be entitled to receive, when, as and
if declared by the Board of Directors out of funds legally available for the purpose, quarterly
dividends payable in cash on the first business day of January, April, July and October in each
year (each such date being referred to herein as a “Quarterly Dividend Payment Date”), commencing
on the first Quarterly Dividend Payment Date after the first issuance of a share or fraction of a
share of Series F Preferred Shares, in an amount per share (rounded to the nearest cent) equal to
the greater of (a) $1.00 or (b) subject to the provision for adjustment hereinafter set forth,
1,000 times the aggregate per share amount of all cash dividends, plus 1,000 times the aggregate
per share amount (payable in kind) of all non-cash dividends or other distributions other than a
dividend payable in Common Shares or a subdivision of the outstanding Common Shares (by
reclassification or otherwise), declared on the Class A Common Stock, par value $.01 per share, of
the Corporation (the “Common Shares”) since the immediately preceding Quarterly Dividend Payment
Date, or, with respect to the first Quarterly Dividend Payment Date, since the first issuance of
any share or fraction of a share of Series F Preferred Shares. In the event the Corporation shall
at any time after September 8, 2009 (the “Rights Declaration Date”) (i) declare any dividend on
Common Shares payable in Common Shares, (ii) subdivide the outstanding Common Shares, or (iii)
combine the outstanding Common Shares into a smaller number of shares, then in each case the amount
to which holders of Series F Preferred Shares were entitled immediately prior to such event under
clause (b) of the preceding sentence shall be adjusted by multiplying such amount by a fraction the
numerator of which is the number of Common Shares outstanding immediately after such event and the
denominator of which is the number of Common Shares that were outstanding immediately prior to such
event.



(B) The Corporation shall declare a dividend or distribution on the outstanding Series F
Preferred Shares as provided in paragraph (A) above immediately after it declares a dividend or
distribution on the Common Shares (other than a dividend payable in Common Shares);
provided, however, that, in the event no dividend or distribution shall have been
declared on the Common Shares during the period between any Quarterly Dividend Payment Date and the
next subsequent Quarterly Dividend Payment Date, subject to the prior and superior rights of the
holders of any shares of any series of Preferred Stock ranking prior to and superior to the Series
F Preferred Shares with respect to dividends, a dividend of $1.00 per share on the Series F
Preferred Shares shall nevertheless be payable on such subsequent Quarterly Dividend Payment Date.



(C) Dividends shall begin to accrue and be cumulative on outstanding Series F Preferred Shares
from the Quarterly Dividend Payment Date next preceding the date of issue of such Series F
Preferred Shares, unless the date of issue of such shares is prior to the record date for the first
Quarterly Dividend Payment Date, in which case dividends on such shares shall begin to accrue from
the date of issue of such shares, or unless the date of issue is a Quarterly Dividend Payment Date
or is a date after the record date for the determination of holders of Series F Preferred Shares
entitled to receive a quarterly dividend and before such Quarterly Dividend Payment Date, in either
of which events such dividends shall begin to accrue and be cumulative from such Quarterly Dividend
Payment Date. Accrued but unpaid dividends shall not bear interest. Dividends paid on the Series F
Preferred Shares in an amount less than the total amount of such dividends at the time accrued and
payable on such shares shall be allocated pro rata on a share-by-share basis among all such shares
at the time outstanding. The Board of Directors may fix a record date for the determination of
holders of Series F Preferred Shares entitled to receive
payment of a dividend or distribution declared thereon, which record date shall be no more
than 60 days prior to the date fixed for the payment thereof.


 


A-2









 






Section 3. Voting Rights.




The holders of Series F Preferred Shares shall have the following voting rights:



(A) Subject to the provision for adjustment hereinafter set forth, each share of Series F
Preferred Shares shall entitle the holder thereof to 1,000 votes on all matters submitted to a vote
of the stockholders of the Corporation. In the event the Corporation shall at any time after the
Rights Declaration Date (i) declare any dividend on Common Shares payable in Common Shares, (ii)
subdivide the outstanding Common Shares, or (iii) combine the outstanding Common Shares into a
smaller number of shares, then in each such case the number of votes per share to which holders of
Series F Preferred Shares were entitled immediately prior to such event shall be adjusted by
multiplying such number by a fraction the numerator of which is the number of Common Shares
outstanding immediately after such event and the denominator of which is the number of Common
Shares that were outstanding immediately prior to such event.



(B) Except as otherwise provided herein or by law, the holders of Series F Preferred Shares
and the holders of Common Shares shall vote collectively as one class on all matters submitted to a
vote of stockholders of the Corporation.



(C) (i) If at any time dividends on any Series F Preferred Shares shall be in arrears in an
amount equal to six (6) quarterly dividends thereon, the occurrence of such contingency shall mark
the beginning of a period (herein called a “default period”) which shall extend until such time
when all accrued and unpaid dividends for all previous quarterly dividend periods and for the
current quarterly dividend period on all Series F Preferred Shares then outstanding shall have been
declared and paid or set apart for payment. During each default period, all holders of shares of
Preferred Stock (including, without limitation, holders of the Series F Preferred Shares) with
dividends in arrears in an amount equal to six (6) quarterly dividends thereon, voting as a class,
irrespective of series, shall have the right to elect two (2) Directors.



(ii) During any default period, such voting right of the holders of Series F Preferred Shares
may be exercised initially at a special meeting called pursuant to subparagraph (iii) of this
Section 3(C) or at any annual meeting of stockholders, and thereafter at annual meetings of
stockholders, provided that such voting right shall not be exercised unless the holders of ten
percent (10%) in number of shares of Preferred Stock outstanding shall be present in person or by
proxy. The absence of a quorum of the holders of Common Shares shall not affect the exercise by
the holders of shares of Preferred Stock of such voting rights. At any meeting at which the
holders of shares of Preferred Stock shall exercise such voting right initially during an existing
default period, they shall have the right, voting as a class, to elect Directors to fill such
vacancies, if any, in the Board of Directors as may then exist up to two (2) Directors or, if such
right is exercised at an annual meeting, to elect two (2) Directors. If the number which may be so
elected at any special meeting does not amount to the required number, the holders of the shares of
Preferred Stock shall have the right to make such increase in the number of Directors as shall be
necessary to permit the election by them of the required number. After the holders of the shares
of Preferred Stock shall have exercised their right to elect Directors in any default
period and during the continuance of such period, the number of Directors shall not be
increased or decreased except by vote of the holders of shares of Preferred Stock as herein
provided or pursuant to the rights of any equity securities ranking senior to or pari
passu with the Series F Preferred Shares.


 


A-3









 





(iii) Unless the holders of shares of Preferred Stock shall, during an existing default
period, have previously exercised their right to elect Directors, the Board of Directors may order,
or any stockholder or stockholders owning in the aggregate not less than ten percent (10%) of the
total number of shares of Preferred Stock outstanding, irrespective of series, may request, the
calling of a special meeting of the holders of shares of Preferred Stock, which meeting shall
thereupon be called by the Chairman of the Board, the Chief Executive Officer, the President, the
Chief Financial Officer, any Vice President or the Secretary of the Corporation. Notice of such
meeting and of any annual meeting at which holders of shares of Preferred Stock are entitled to
vote pursuant to this paragraph (C)(iii) shall be given to each holder of record of shares of
Preferred Stock by mailing a copy of such notice to him or her at his or her last address as the
same appears on the books of the Corporation. Such meeting shall be called for a time not earlier
than 20 days and not later than 60 days after such order or request, or in default of the calling
of such meeting within 60 days after such order or request, such meeting may be called on similar
notice by any stockholder or stockholders owning in the aggregate not less than ten percent (10%)
of the total number of shares of Preferred Stock outstanding. Notwithstanding the provisions of
this paragraph (C)(iii), no such special meeting shall be called during the period within 60 days
immediately preceding the date fixed for the next annual meeting of the stockholders.



(iv) In any default period, the holders of Common Shares, and, if applicable, other classes of
capital shares of the Corporation, shall continue to be entitled to elect the whole number of
Directors until the holders of shares of Preferred Stock shall have exercised their right to elect
two (2) Directors voting as a class, after the exercise of which right (x) the Directors so elected
by the holders of shares of Preferred Stock shall continue in office until their successors shall
have been elected by such holders or until the expiration of the default period, and (y) any
vacancy in the Board of Directors may (except as provided in paragraph (C)(ii) of this Section 3)
be filled by vote of a majority of the remaining Directors theretofore elected by the holders of
the class of stock which elected the Director whose office shall have become vacant. References in
this paragraph (C) to Directors elected by the holders of a particular class of stock shall include
Directors appointed by such Directors to fill vacancies as provided in clause (y) of the foregoing
sentence.



(v) Immediately upon the expiration of a default period, (x) the right of the holders of
shares of Preferred Stock as a class to elect Directors shall cease, (y) the term of any Directors
elected by the holders of shares of Preferred Stock as a class shall terminate, and (z) the number
of Directors shall be such number as may be provided for in the Certificate of Incorporation or
by-laws of the Corporation irrespective of any increase made pursuant to the provisions of
paragraph (C)(ii) of this Section 3 (such number being subject, however, to change thereafter in
any manner provided by law or in the Certificate of Incorporation or by-laws of the Corporation).
Any vacancies in the Board of Directors effected by the provisions of clauses (y) and (z) in the
preceding sentence may be filled by a majority of the remaining Directors.


 


A-4









 





(D) Except as set forth herein, holders of Series F Preferred Shares shall have no special
voting rights and their consent shall not be required (except to the extent they are entitled to
vote with holders of Common Shares as set forth herein) for taking any corporate action.




Section 4. Certain Restrictions.



(A) Whenever quarterly dividends or other dividends or distributions payable on the Series F
Preferred Shares as provided in Section 2 are in arrears, thereafter and until all accrued and
unpaid dividends and distributions, whether or not declared, on Series F Preferred Shares
outstanding shall have been paid in full, the Corporation shall not:



(i) declare or pay dividends on, make any other distributions on, or redeem or purchase or
otherwise acquire for consideration any shares of stock ranking junior (either as to dividends or
upon liquidation, dissolution or winding up) to the Series F Preferred Shares;



(ii) declare or pay dividends on or make any other distributions on any shares of stock
ranking on a parity (either as to dividends or upon liquidation, dissolution or winding up) with
the Series F Preferred Shares, except dividends paid ratably on the Series F Preferred Shares and
all such parity shares on which dividends are payable or in arrears in proportion to the total
amounts to which the holders of all such shares are then entitled;



(iii) redeem or purchase or otherwise acquire for consideration shares of any stock ranking on
a parity (either as to dividends or upon liquidation, dissolution or winding up) with the Series F
Preferred Shares, provided that the Corporation may at any time redeem, purchase or otherwise
acquire shares of any such parity shares in exchange for shares of any stock of the Corporation
ranking junior (either as to dividends or upon dissolution, liquidation or winding up) to the
Series F Preferred Shares; or



(iv) purchase or otherwise acquire for consideration any Series F Preferred Shares, or any
shares of stock ranking on a parity with the Series F Preferred Shares, except in accordance with a
purchase offer made in writing or by publication (as determined by the Board of Directors) to all
holders of such shares upon such terms as the Board of Directors, after consideration of the
respective annual dividend rates and other relative rights and preferences of the respective series
and classes, shall determine in good faith will result in fair and equitable treatment among the
respective series or classes.



(B) The Corporation shall not permit any subsidiary of the Corporation to purchase or
otherwise acquire for consideration any shares of stock of the Corporation unless the Corporation
could, under paragraph (A) of this Section 4, purchase or otherwise acquire such shares at such
time and in such manner.




Section 5. Reacquired Shares.



Any Series F Preferred Shares purchased or otherwise acquired by the Corporation in any manner
whatsoever shall be retired and cancelled promptly after the acquisition thereof. All such shares
shall upon their cancellation become authorized but unissued shares of Preferred Stock and may be
reissued as part of a new series of Preferred Stock to be created by resolution
or resolutions of the Board of Directors, subject to the conditions and restrictions on
issuance set forth herein.


 


A-5









 






Section 6. Liquidation, Dissolution or Winding Up.



(A) Upon any liquidation (voluntary or otherwise), dissolution or winding up of the
Corporation, no distribution shall be made to the holders of stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to the Series F Preferred Shares unless,
prior thereto, the holders of Series F Preferred Shares shall have received an amount equal to
$1,000 per share, plus an amount equal to accrued and unpaid dividends and distributions thereon,
whether or not declared, to the date of such payment (the “Series F Liquidation Preference”).
Following the payment of the full amount of the Series F Liquidation Preference, no additional
distributions shall be made to the holders of Series F Preferred Shares unless, prior thereto, the
holders of Common Shares shall have received an amount per share (the “Common Adjustment”) equal to
the quotient obtained by dividing (i) the Series F Liquidation Preference by (ii) 1,000 (as
appropriately adjusted as set forth in subparagraph (C) below to reflect such events as stock
splits, stock dividends and recapitalizations with respect to the Common Shares) (such number in
clause (ii), the “Adjustment Number”). Following the payment of the full amount of the Series F
Liquidation Preference and the Common Adjustment in respect of all outstanding Series F Preferred
Shares and Common Shares, respectively, and the payment of liquidation preferences of all other
shares of stock which rank prior to or on a parity with Series F Preferred Shares, holders of
Series F Preferred Shares and holders of Common Shares shall receive their ratable and
proportionate share of the remaining assets to be distributed in the ratio of the Adjustment Number
to 1 with respect to such shares of Preferred Stock and Common Shares, on a per share basis,
respectively.



(B) In the event, however, that there are not sufficient assets available to permit payment in
full of the Series F Liquidation Preference and the liquidation preferences of all other series of
Preferred Stock, if any, which rank on a parity (either as to dividends or upon liquidation,
dissolution or winding up) with the Series F Preferred Shares, then such remaining assets shall be
distributed ratably to the holders of such parity shares in proportion to their respective
liquidation preferences. In the event, however, that there are not sufficient assets available to
permit payment in full of the Common Adjustment, then such remaining assets shall be distributed
ratably to the holders of Common Shares.



(C) In the event the Corporation shall at any time after the Rights Declaration Date (i)
declare any dividend on Common Shares payable in Common Shares, (ii) subdivide the outstanding
Common Shares, or (iii) combine the outstanding Common Shares into a smaller number of shares, then
in each such case the Adjustment Number in effect immediately prior to such event shall be adjusted
by multiplying such Adjustment Number by a fraction the numerator of which is the number of Common
Shares outstanding immediately after such event and the denominator of which is the number of
Common Shares that were outstanding immediately prior to such event.


 


A-6









 






Section 7. Consolidation, Merger, etc.



In case the Corporation shall enter into any consolidation, merger, combination or other
transaction in which the Common Shares are exchanged for or changed into other stock or securities,
cash and/or any other property, then in any such case the Series F Preferred Shares shall at the
same time be similarly exchanged or changed into an amount per share (subject to the provision for
adjustment hereinafter set forth) equal to 1,000 times the aggregate amount of stock, securities,
cash and/or any other property (payable in kind), as the case may be, for which or into which each
Common Share is exchanged or changed. In the event the Corporation shall at any time after the
Rights Declaration Date (i) declare any dividend on Common Shares payable in Common Shares, (ii)
subdivide the outstanding Common Shares, or (iii) combine the outstanding Common Shares into a
smaller number of shares, then in each such case the amount set forth in the preceding sentence
with respect to the exchange or change of Series F Preferred Shares shall be adjusted by
multiplying such amount by a fraction the numerator of which is the number of Common Shares
outstanding immediately after such event and the denominator of which is the number of Common
Shares that were outstanding immediately prior to such event.




Section 8. No Redemption.




The Series F Preferred Shares shall not be redeemable.




Section 9. Ranking.



The Series F Preferred Shares shall rank junior to all other series of the Corporation’s
Preferred Stock as to the payment of dividends and the distribution of assets, whether or not upon
the dissolution, liquidation or winding up of the Corporation, unless the terms of any such series
shall provide otherwise.




Section 10. Amendment.



The Certificate of Incorporation shall not be amended in any manner which would materially
alter or change the powers, preferences or special rights of the Series F Preferred Shares so as to
affect them adversely without the affirmative vote of the holders of a majority of the outstanding
Series F Preferred Shares, voting separately as a class.




Section 11. Fractional Shares.



Series F Preferred Shares may be issued in fractions of a share which shall entitle the
holder, in proportion to such holder’s fractional shares, to exercise voting rights, receive
dividends, participate in distributions and to have the benefit of all other rights of holders of
Series F Preferred Shares.


 


A-7









 





THE UNDERSIGNED Chief Executive Officer of EasyLink Services International Corporation hereby
makes this certificate, declaring and certifying that this is the duly authorized act and deed of
the Corporation and the facts herein stated are true, and accordingly have hereunto set his hand
this 31st day of August, 2009.



	 	 	 	 	 
	 	EASYLINK SERVICES INTERNATIONAL CORPORATION

 	 
	 	By:  	 	 
	 	 	Name:  	Thomas J. Stallings 	 
	 	 	Title:  	Chief Executive Officer 	 



	 	 	 
	(Corporate Seal)
	 	 
	 
	 	 
	Attest:
	 	 
	 
	 	 
	 

Glen E. Shipley

	 	 





 


A-8









 





Exhibit B




[Form of Rights Certificate]




			
	 	 	 
	Certificate No. R- _______
	 	                     Rights






NOT EXERCISABLE AFTER THE EXPIRATION DATE (AS DEFINED IN THE STOCKHOLDER RIGHTS AGREEMENT) OR
EARLIER IF REDEEMED OR EXCHANGED BY THE COMPANY. THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE
OPTION OF THE COMPANY AT $0.001 PER RIGHT AND TO EXCHANGE, ON THE TERMS SET FORTH IN THE
STOCKHOLDER RIGHTS AGREEMENT. UNDER CERTAIN CIRCUMSTANCES, RIGHTS BENEFICIALLY OWNED BY AN
ACQUIRING PERSON (AS SUCH TERM IS DEFINED IN THE STOCKHOLDER RIGHTS AGREEMENT) AND ANY SUBSEQUENT
HOLDER OF SUCH RIGHTS MAY BECOME NULL AND VOID. [THE RIGHTS REPRESENTED BY THIS RIGHTS CERTIFICATE
ARE OR WERE BENEFICIALLY OWNED BY A PERSON WHO WAS OR BECAME AN ACQUIRING PERSON OR AN AFFILIATE OR
ASSOCIATE OF AN ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN THE STOCKHOLDER RIGHTS AGREEMENT).
ACCORDINGLY, THIS RIGHTS CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY MAY BECOME NULL AND VOID IN
THE CIRCUMSTANCES SPECIFIED IN SECTION 7(e) OF SUCH AGREEMENT.]1



 







	 	 	 
	1	 	The portion of the legend in brackets shall be inserted
only if applicable and shall replace the preceding sentence.



 


B-1









 









Rights Certificate




EASYLINK SERVICES INTERNATIONAL CORPORATION




This certifies that                     , or registered assigns, is the registered owner of the
number of Rights set forth above, each of which entitles the owner thereof, subject to the terms,
provisions and conditions of the Stockholder Rights Agreement, dated as of August 25, 2009 (the
“Rights Agreement”), between EasyLink Services International Corporation, a Delaware corporation
(the “Company”), and American Stock Transfer and Trust Company, LLC, a New York limited liability
company (the “Rights Agent”), to purchase from the Company at any time prior to the Expiration Date
(as defined in the Rights Agreement) at the office or offices of the Rights Agent designated for
such purpose, or its successors as Rights Agent, one one-thousandth of a fully paid, nonassessable
share of Series F Junior Participating Preferred Stock, par value $0.01 per share (the “Preferred
Shares”), of the Company, at a purchase price of $           per one one-thousandth of a share (the
“Purchase Price”), upon presentation and surrender of this Rights Certificate with the Form of
Election to Purchase and related Certificate duly executed. The number of Rights evidenced by this
Rights Certificate (and the number of shares which may be purchased upon exercise thereof) set
forth above, and the Purchase Price per share set forth above, are the number and Purchase Price as
of                                , 20     , based on the Preferred Shares as constituted at such date. The
Company reserves the right to require prior to the occurrence of a Triggering Event (as defined in
the Rights Agreement) that, upon any exercise of Rights, a number of Rights be exercised so that
only whole Preferred Shares will be issued.



Upon the occurrence of a Section 11(a)(ii) Event (as defined in the Rights Agreement), if the
Rights evidenced by this Rights Certificate are beneficially owned by (i) an Acquiring Person or an
Affiliate or Associate of any such Acquiring Person (as such terms are defined in the Rights
Agreement), (ii) a transferee of any such Acquiring Person or an Affiliate or Associate of an
Acquiring Person who becomes a transferee after the Acquiring Person becomes such, or (iii) under
certain circumstances specified in the Rights Agreement, a transferee of an Acquiring Person or an
Affiliate or Associate of an Acquiring Person who becomes a transferee prior to or concurrently
with the Acquiring Person becoming such, such Rights shall become null and void and no holder
hereof shall have any right with respect to such Rights from and after the occurrence of such
Section 11(a)(ii) Event.



As provided in the Rights Agreement, the Purchase Price and the number and kind of Preferred
Shares or other securities which may be purchased upon the exercise of the Rights evidenced by this
Rights Certificate are subject to modification and adjustment upon the happening of certain events,
including, without limitation, Triggering Events.



This Rights Certificate is subject to all of the terms, provisions and conditions of the
Rights Agreement, which terms, provisions and conditions are hereby incorporated herein by
reference and made a part hereof and to which Rights Agreement reference is hereby made for a full
description of the rights, limitations of rights, obligations, duties and immunities hereunder of
the Rights Agent, the Company and the holders of the Rights Certificates, which limitations of
rights include, without limitation, the temporary suspension of the exercisability of such Rights
under the specific circumstances set forth in the Rights Agreement. Copies of the Rights
Agreement are on file at the office of the Company and are also available upon written request
to the Company.


 


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This Rights Certificate, with or without other Rights Certificates, upon surrender at the
principal office or offices of the Rights Agent designated for such purpose, may be exchanged for
another Rights Certificate or Rights Certificates of like tenor and date evidencing Rights
entitling the holder to purchase a like aggregate number of one one-thousandths of a Preferred
Share as the Rights evidenced by the Rights Certificates surrendered shall have entitled such
holder to purchase. If this Rights Certificate shall be exercised in part, the holder shall be
entitled to receive upon surrender hereof another Rights Certificate or Rights Certificates for the
number of whole Rights not exercised.



Subject to the provisions of the Rights Agreement, the Rights evidenced by this Certificate
may, in each case at the option of the Company, be (i) redeemed by the Company at its option at a
redemption price of $0.001 per Right or (ii) exchanged in whole or in part for Common Shares or
other securities of the Company. Immediately upon the action of the Board of Directors of the
Company authorizing redemption, the Rights will terminate and the only right of the holders of
Rights will be to receive the redemption price.



No fractional Preferred Shares will be issued upon the exercise of any Right or Rights
evidenced hereby (other than fractions which are integral multiples of one one-thousandth of a
Preferred Share, which may, at the election of the Company, be evidenced by depositary receipts),
but in lieu thereof a cash payment will be made, as provided in the Rights Agreement.



No holder of this Rights Certificate shall be entitled to vote or receive dividends or be
deemed for any purpose the holder of Preferred Shares or of any other securities of the Company
which may at any time be issuable on the exercise hereof, nor shall anything contained in the
Rights Agreement or herein be construed to confer upon the holder hereof, as such, any of the
rights of a stockholder of the Company or any right to vote for the election of directors or upon
any matter submitted to stockholders at any meeting thereof, or to give or withhold consent to any
corporate action, or, to receive notice of meetings or other actions affecting stockholders (except
as provided in the Rights Agreement), or to receive dividends or subscription rights, or otherwise,
until the Right or Rights evidenced by this Rights Certificate shall have been exercised as
provided in the Rights Agreement.



This Rights Certificate shall not be valid or obligatory for any purpose until it shall have
been countersigned manually or by facsimile signature by the Rights Agent.


 


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WITNESS the facsimile signature of the proper officers of the Company and its corporate seal.



Dated as of                                ,      




	 	 	 	 	 	 	 	 	 	 	 
	ATTEST:	 	EASYLINK SERVICES INTERNATIONAL CORPORATION	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	Secretary	 	By:	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	 	 	 	 	Name:	 	 	 	 
	Countersigned:
	 	 	 	Title:	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	[RIGHTS AGENT]	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By:
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 
	 

	 	Authorized Signature	 	 	 	 	 	 	 	 





 


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[Form of Reverse Side of Rights Certificate]




FORM OF ASSIGNMENT




(To be executed by the registered holder if such




holder desires to transfer the Rights Certificate.)




FOR VALUE RECEIVED       
                       
hereby sells, assigns and transfers
unto                      
                       



(Please print name and address of transferee)




this Rights Certificate, together with all right, title and interest therein, and does hereby
irrevocably constitute and appoint                      Attorney, to transfer the within Rights
Certificate on the books of the within-named Company, with full power of substitution.



Dated                     ,                     




                                                            

Signature




Signature Guaranteed:



Certificate





The undersigned hereby certifies by checking the appropriate boxes that:



(1) this
Rights Certificate [_____] is [_____] is not being sold, assigned and transferred by or
on behalf of a Person who is or was an Acquiring Person or an Affiliate or Associate of any such
Acquiring Person (as such terms are defined in the Rights Agreement); and



(2) after due inquiry and to
the best knowledge of the undersigned, it [______] did [______] did not
acquire the Rights evidenced by this Rights Certificate from any Person who is, was or subsequently
became an Acquiring Person or an Affiliate or Associate of an Acquiring Person.



Dated                     ,                     




                                                            

Signature




Signature Guaranteed:


 


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NOTICE




The signature to the foregoing Assignment and Certificate must correspond to the name as
written upon the face of this Rights Certificate in every particular, without alteration or
enlargement or any change whatsoever.



FORM OF ELECTION TO PURCHASE




(To be executed if holder desires to exercise Rights represented by the Rights Certificate.)




TO: EASYLINK SERVICES INTERNATIONAL CORPORATION




The undersigned hereby irrevocably elects to exercise                      Rights represented by this
Rights Certificate to purchase the Preferred Shares issuable upon the exercise of the Rights (or
such other securities of the Company or of any other person which may be issuable upon the exercise
of the Rights) and requests that certificates for such shares (or other securities) be issued in
the name of and delivered to:



Please insert social security

or other identifying number:                                                             




 




(Please print name and address)



 




If such number of Rights shall not be all the Rights evidenced by this Rights Certificate, a
new Rights Certificate for the balance of such Rights shall be registered in the name of and
delivered to:



Please insert social security

or other identifying number:                                                             




 




(Please print name and address)



 





Dated                     ,                     




 

Signature




Signature Guaranteed:


 


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Certificate





The undersigned hereby certifies by checking the appropriate boxes that:



(1) the
Rights evidenced by this Rights Certificate [_____] are
[_____] are not being exercised
by or on behalf of a Person who is or was an Acquiring Person or an Affiliate or Associate of any
such Acquiring Person (as such terms are defined in the Rights Agreement); and



(2) after
due inquiry and to the best knowledge of the undersigned, it
[_____] did [_____] did
not acquire the Rights evidenced by this Rights Certificate from any Person who is, was or became
an Acquiring Person or an Affiliate or Associate of an Acquiring Person.



Dated                     ,                     




                                                            

Signature




Signature Guaranteed:



NOTICE




The signature to the foregoing Election to Purchase and Certificate must correspond to the
name as written upon the face of this Rights Certificate in every particular, without alteration or
enlargement or any change whatsoever.




 


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Exhibit C




SUMMARY OF RIGHTS TO PURCHASE PREFERRED SHARES




On August 25, 2009, the board of directors of EasyLink Services International Corporation
(“ESIC”), a Delaware corporation, adopted a stockholder rights agreement and declared a dividend
distribution of one right for each outstanding share of class A common stock to stockholders of
record at the close of business on September 8, 2009. The description and terms of the rights are
set forth in a Stockholder Rights Agreement, by and between ESIC and American Stock Transfer and
Trust Company, LLC, as rights agent, dated as of August 25, 2009 (the “Stockholder Rights
Agreement”). The ESIC board of directors also adopted resolutions on August 25, 2009 providing for
the issuance of a series of preferred stock of ESIC, par value $.01 per share, designated as Series
F Junior Participating Preferred Stock, as set forth in a Certificate of the Powers, Designations,
Preferences and Relative, Participating, Optional and Other Special Rights of the Series F Junior
Participating Preferred Stock (the “Certificate of Designations”). The Certificate of Designations
became effective on August 31, 2009.



The ESIC board of directors adopted the Stockholder Rights Agreement in an effort to protect
stockholders from coercive or otherwise unfair takeover tactics and to preserve stockholder value
by attempting to protect against a possible limitation on ESIC’s ability to use its net operating
loss carryforwards (the “NOLs”) and certain other tax benefits to reduce potential future U.S.
federal income tax obligations. Previously, ESIC had experienced substantial operating losses, and
under the Internal Revenue Code of 1986, as amended (the “Code”), and the regulations promulgated
by the United States Department of the Treasury thereunder (the “related Treasury regulations”),
ESIC may “carry forward” these losses in certain circumstances to offset any current and future
earnings and thus reduce ESIC’s federal income tax liability, subject to certain requirements and
restrictions. To the extent that the NOLs do not otherwise become limited, ESIC believes that it
will be able to carry forward a significant amount of NOLs, and therefore these NOLs could be a
substantial asset to ESIC. However, if ESIC experiences an “ownership change,” as defined in
Section 382 of the Code and the related Treasury regulations, its ability to fully utilize the NOLs
and certain other tax benefits on an annual basis will be substantially limited, and the timing of
the usage of the NOLs and such other benefits could be substantially delayed, which could therefore
significantly impair the value of those assets.



The Stockholder Rights Agreement is intended to act as a deterrent to any person or group,
together with its affiliates and associates, being or becoming the beneficial owner of 4.9% or more
of ESIC securities (such person or group is referred to as an “acquiring person”). The term
“acquiring person” does not include:




	 	•	 	ESIC, any subsidiary of ESIC, any employee benefit plan or other compensation
arrangement of ESIC or of any subsidiary of ESIC or any entity organized, appointed or
established by ESIC or any subsidiary of ESIC for or pursuant to the terms of any such
plan or compensation arrangement;






	 	•	 	any grandfathered person (as defined below);




 


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	 	•	 	any exempted person (as defined below);






	 	•	 	any person or group who becomes the beneficial owner of 4.9% or more of ESIC
securities as a result of an “exempted transaction”; or






	 	•	 	any person whom or which the ESIC board of directors in good faith determines has
inadvertently acquired beneficial ownership of 4.9% or more of ESIC securities, so long
as such person promptly enters into, and delivers to ESIC, an irrevocable commitment to
divest as promptly as practicable, and thereafter divests as promptly as practicable a
sufficient number of ESIC securities so that such person would no longer be a
beneficial owner of 4.9% or more of ESIC securities.





A stockholder who together with its affiliates and associates beneficially owned 4.9% or more
of ESIC securities as of August 25, 2009 is deemed not to be an “acquiring person,” so long as such
stockholder, together with all affiliates and associates of such person, does not acquire any
additional shares of ESIC securities without the prior written approval of ESIC, other than
pursuant to or as a result of (a) a reduction in the amount of ESIC securities outstanding; (b) the
exercise of any options, warrants, rights or similar interests to purchase ESIC securities granted
by ESIC to its directors, officers and employees; (c) any unilateral grant of any ESIC securities
by ESIC or (d) any issuance of ESIC securities by ESIC or any stock dividend, stock split or
similar transaction effected by ESIC in which all holders of ESIC securities are treated equally.
Such a stockholder is a “grandfathered person” for purposes of the Stockholder Rights Agreement.



The board of directors of ESIC may, in its sole discretion, exempt any person or group who
would otherwise be an acquiring person from being deemed an acquiring person for purposes of the
Stockholder Rights Agreement if it determines at any time prior to the time at which the rights are
no longer redeemable that the beneficial ownership of such Person would not jeopardize, endanger or
limit (in timing or amount) the availability of ESIC’s NOLs and other tax benefits. Any such
person or group is an “exempted person” under the Stockholder Rights Agreement. The board of
directors, in its sole discretion, may subsequently make a contrary determination and such person
would then become an acquiring person.



An “exempted transaction” is a transaction that the board of directors determines is an
exempted transaction and, unlike the determination of an exempted person, such determination is
irrevocable.



The Rights. Each right entitles its holder, under the circumstances described below, to
purchase from ESIC one one-thousandth (1/1000th) of a share of ESIC Series F Junior
Participating Preferred Stock at a purchase price of $13 per right, subject to adjustment. ESIC
class A common stock issued while the Stockholder Rights Agreement is in effect will be issued with
rights attached.


 


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Initially, the rights will be associated with shares of class A common stock and evidenced by
class A common stock certificates, which will contain a notation incorporating the Stockholder
Rights Agreement by reference, and will be transferable with and only with the underlying shares of
ESIC class A common stock. Subject to certain exceptions, the rights
become exercisable and trade separately from the shares of ESIC class A common stock only upon
the “distribution date,” which occurs upon the earlier of:




	 	•	 	10 days following a public announcement that a person or group of persons has become
an acquiring person or such earlier date as a majority of the ESIC board of directors
becomes aware of the existence of an acquiring person (the “share acquisition date”)
(unless, prior to the expiration of ESIC’s right to redeem the rights, such person or
group is determined by the board of directors to be an “exempted person”; in which case
the share acquisition date will be deemed not to have occurred); or






	 	•	 	10 business days (or later date if determined by the ESIC board of directors prior
to such time as any person or group becomes an acquiring person) following the
commencement of a tender offer or exchange offer which, if consummated, would result in
a person or group becoming an acquiring person.





Until the distribution date, the surrender for transfer of any shares of ESIC class A common
stock outstanding will also constitute the transfer of the rights associated with those shares.



As soon as practicable after the distribution date, separate certificates or book-entry
statements will be mailed to holders of record of ESIC class A common stock as of the close of
business on the distribution date. From and after the distribution date, the separate rights
certificates or book-entry statements alone will represent the rights. Except as otherwise
provided in the Stockholder Rights Agreement, only shares of ESIC class A common stock issued prior
to the distribution date will be issued with rights.



Expiration. The rights are not exercisable until the distribution date and, unless earlier
redeemed or exchanged by ESIC as described below, will expire upon the earliest of:




	 	•	 	the close of business on September 8, 2019;






	 	•	 	the close of business on the effective date of the repeal of Section 382 of the Code
or any successor statute if the ESIC board of directors determines that the Stockholder
Rights Agreement is no longer necessary or desirable for the preservation of certain
tax benefits;






	 	•	 	the close of business on the first day of a taxable year to which the ESIC board of
directors determines that certain tax benefits may not be carried forward; and






	 	•	 	the close of business on the date on which the ESIC board of directors determines
that the Stockholder Rights Agreement is no longer in the best interests of ESIC and
its stockholders.




 


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Effects of Triggering Event. If a person or group becomes an acquiring person (a “flip-in
event”), each holder of a right (other than any acquiring person, affiliates and associates of an
acquiring person and certain transferees of an acquiring person, whose rights automatically
become null and void) will have the right to receive, upon exercise, ESIC class A common stock
having a value equal to two times the purchase price of the right. If an insufficient number of
shares of ESIC class A common stock are available for issuance, then the ESIC board of directors is
required to substitute cash, property or other securities of ESIC for the ESIC class A common
stock. The rights may not be exercised following a flip-in event while ESIC has the ability to
cause the rights to be redeemed, as described later in this summary.



For example, at a purchase price of $13 per right, each right not owned by an acquiring person
(or by affiliates and associates of an acquiring person or by certain transferees of an acquiring
person) following a flip-in event would entitle its holder to purchase $26 worth of ESIC class A
common stock (or other consideration, as noted above) for $13. Assuming that the ESIC class A
common stock had a per share value of $2.60 at that time, the holder of each valid right would be
entitled to purchase ten shares of ESIC class A common stock for $13.



Flip-Over Right. If, after an acquiring person obtains 20% or more of ESIC class A common
stock, (a) ESIC merges into another entity, (b) an acquiring entity merges into ESIC or (c) ESIC
sells more than 50% of ESIC’s assets, cash flow or earning power, then each Right (other than
Rights owned by an acquiring person or its affiliates or associates or certain of its transferees)
will entitle the holder thereof to purchase, for the purchase price, a number of shares of common
stock of the person engaging in the transaction having a then current market value of twice the
purchase price.



Exchange Right. At any time after there is an acquiring person and prior to the acquisition
by the acquiring person of 50% or more of the outstanding shares of ESIC class A common stock, ESIC
may exchange the rights (other than rights owned by the acquiring person, affiliates and associates
thereof and certain transferees thereof, which will have become void), in whole or in part, at an
exchange ratio of, at its option, either (a) one share of ESIC class A common stock, or one
one-thousandth of a share of ESIC Series F Junior Participating Preferred Stock (or of a share of a
class or series of ESIC preferred stock having equivalent rights, preferences and privileges), per
right (subject to adjustment), or (b) that number of shares of ESIC class A common stock obtained
by dividing (i) an amount equal to (A) the aggregate market price on the date of such event of the
number of shares of class A common stock to be issued upon the exercise of each right, minus (B)
the purchase price of the right, by (ii) the then current market value per share of class A common
stock on the earlier of (A) the date on which any person or group becomes an acquiring person or
(B) the date of commencement of a tender or exchange offer by any person or group (other than a
grandfathered person, an exempted person, ESIC, any subsidiary of ESIC, any employee benefit plan
of ESIC or of any subsidiary of ESIC, or any person organized, appointed or established by ESIC for
or pursuant to the terms of any such plan), if upon consummation thereof such person or group would
become an acquiring person, per right (subject to adjustment). In the event that there is not
sufficient shares of ESIC class A common stock issued but not outstanding or authorized but
unissued to effect the foregoing exchange, ESIC, at its sole election, may take all such actions as
may be necessary to authorize additional shares of class A common stock for issuance upon exchange
of the rights or, to the extent that there are insufficient shares of ESIC class A common stock
available, substitute cash, property or other securities of ESIC for shares of ESIC class A common
stock.


 


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Adjustments. The purchase price payable, and the number of shares of preferred stock or other
securities or property issuable, upon exercise of the rights are subject to adjustment from time to
time to prevent dilution:




	 	•	 	in the event of a stock dividend on, or a subdivision, combination or
reclassification of, the shares of preferred stock;






	 	•	 	if holders of the shares of preferred stock are granted certain rights, options or
warrants to subscribe for shares of preferred stock or convertible securities at less
than the current market price of the shares of preferred stock; or






	 	•	 	upon the distribution to holders of shares of the preferred stock of evidences of
indebtedness or assets (excluding regular quarterly cash dividends) or of subscription
rights or warrants (other than those referred to above).





With certain exceptions, no adjustment in the purchase price will be required until cumulative
adjustments amount to at least 1% of the purchase price. No fractional shares of preferred stock
will be issued, and, in lieu thereof, an adjustment in cash will be made based on the market price
of the shares of preferred stock on the last trading day prior to the date of exercise.



Redemption. In general, ESIC may redeem the rights in whole, but not in part, at a price of
$0.001 per right (subject to adjustment and payable in cash, shares of ESIC class A common stock or
other consideration deemed appropriate by the ESIC board of directors) at any time until ten days
following the share acquisition date. Immediately upon the action of the ESIC board of directors
authorizing any redemption, the rights will terminate, and the only right of the holders of rights
will be to receive the redemption price.



Stockholder Rights; Tax Effects. Until a right is exercised, its holder will have no rights
as a stockholder of ESIC, including, without limitation, the right to vote or to receive dividends.
While the distribution of the rights will not result in the recognition of taxable income by ESIC
or its stockholders, stockholders may, depending upon the circumstances, recognize taxable income
in the event that the rights become exercisable for shares of ESIC class A common stock (or other
consideration) as set forth above or in the event the rights are redeemed.



Amendment. The terms of the rights may be amended by the ESIC board of directors without the
consent of the holders of the rights, including, without limitation, to extend the expiration date
of the Stockholder Rights Agreement and to increase or decrease the purchase price. Once there is
an acquiring person, however, no amendment can adversely affect the interests of the holders of the
rights (other than the acquiring person or affiliates or associates of the acquiring person).



A copy of the Stockholder Rights Agreement is available free of charge from ESIC. This
description of the rights does not purport to be complete and is qualified in its entirety by
reference to the Stockholder Rights Agreement, which is incorporated herein by reference.




 


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