Exhibit 10.7





EXHIBIT 10.7




SECURITIES EXCHANGE AGREEMENT




This Securities Exchange Agreement is entered into and dated as of May 19, 2009 (this
“Agreement”), by and among EasyLink Services International Corporation, a Delaware corporation (the
“Company”), and each of the purchasers identified on the signature pages hereto (each, a
“Purchaser” and, collectively, the “Purchasers”).



WHEREAS, Internet Commerce Corporation, the Company’s predecessor, and the Purchasers entered
into a Securities Purchase Agreement, dated as of May 3, 2007, pursuant to which, among other
things, the Purchasers agreed to purchase from the Company certain Notes, Additional Investment
Rights and Warrants, as the same was amended by the Amendment to Securities Purchase Agreement,
dated as of August 20, 2007, the Consent and Release Agreement, dated as of October 24, 2007, the
Second Amendment to Securities Purchase Agreement, dated as of December 18, 2007, the Third
Amendment to Securities Purchase Agreement, dated as of February 22, 2008, and the Fourth Amendment
to Securities Purchase Agreement, dated as of December 31, 2008 (as so amended, the “Purchase
Agreement”);



WHEREAS, pursuant to the Purchase Agreement, the Company issued and sold to the Purchasers
certain Notes, Additional Investment Rights and Warrants (as such terms are defined in the Purchase
Agreement);



WHEREAS, the Company now wishes to exchange all of the remaining outstanding Notes, Additional
Investment Rights and Warrants for the Securities (as defined herein), the Cash Principal Repayment
(as defined herein) and the Cash Interest Repayment (as defined herein) (such transactions are
referred to herein as the “Exchange”); and



WHEREAS, the Purchasers have agreed to the Exchange, subject to the terms and conditions set
forth herein;



NOW, THEREFORE, in consideration of the mutual agreements, provisions and covenants contained
herein, and for other valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:



ARTICLE I.

DEFINITIONS




1.1 Definitions. Except as set forth in this Section 1.1, capitalized terms used but
not defined herein shall have the respective meanings ascribed to such terms in the Purchase
Agreement.




“Agreement” has the meaning set forth in the introduction.




“Business Day” means any day except Saturday, Sunday and any day that shall be a
federal legal holiday or a day on which banking institutions in the State of New York are
authorized or required by law or other governmental action to close.


 


 









 






“Cash Interest Repayment” means a payment in an amount equal to all accrued but unpaid
interest on the Notes as of the Closing Date.




“Cash Principal Repayment” means a payment in the amount of $30,000,000.




“Closing” means the consummation of the transactions set forth in Sections 2.1, 2.2 and
2.3 pursuant to Section 6.1.




“Closing Date” means the date of the Closing.




“Common Shares” has the meaning set forth in Section 2.1(c).




“Common Stock” means the class A common stock of the Company, par value $0.01 per
share.




“Company” has the meaning set forth in the introduction.




“Company Material Adverse Effect” means any material adverse effect on the business,
earnings, operations, assets, liabilities, properties, condition (financial or otherwise),
prospects, results of operations or net worth of the Company and it Subsidiaries, taken as a
whole.




“Eligible Market” means any of the New York Stock Exchange, the Nasdaq Global Market or
the Nasdaq Capital Market or any successor thereto.




“Law” means any statutes, laws (including common law), rules, ordinances, regulations,
codes, orders, judgments, injunctions, writs, decrees, applicable to the Company or any of
its Subsidiaries, as applicable, or their respective properties or assets.




“New Warrants” means the Common Stock purchase warrants in the form attached hereto as
Exhibit A.




“Purchase Agreement” has the meaning set forth in the preamble.




“Purchaser” and “Purchasers” have the meanings set forth in the introduction.




“Required Approvals” has the meaning set forth in Section 3.1(d).




“Securities” means the Common Shares, the Series E Preferred Shares, the New Warrants
and the Underlying Shares issued or issuable (as applicable) to the applicable Purchasers
pursuant to the Transaction Documents.




“Senior Indebtedness Facility” has the meaning set forth in Section 5.2(d).




“Series E Preferred Certificate of Designations” means the Certificate of the Powers,
Designations, Preferences and Relative, Participating, Optional and Other Special Rights of
the Series E Redeemable Preferred Stock in the form attached hereto as Exhibit B.


 


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“Series E Preferred Shares” has the meaning set forth in Section 2.1(e).




“Series E Preferred Stock” the Series E Redeemable Preferred Stock of the Company,
$0.01 par value per share, created pursuant to the Series E Preferred Certificate of
Designations.




“Trading Days” means (a) any day on which the Common Stock is listed or quoted and
traded on its primary Trading Market, or (b) if the Common Stock is not then listed or
quoted and traded on any Trading Market, then any Business Day.




“Trading Market” means Nasdaq Global Market or any other primary Eligible Market or any
national securities exchange, market or trading or quotation facility on which the Common
Stock is then listed or quoted.




“Transaction Documents” means this Agreement, the New Warrants and the Series E
Certificate of Designations.




“Underlying Shares” means the shares of Common Stock issuable upon exercise of the New
Warrants.



ARTICLE II.

EXCHANGE OF NOTES, ADDITIONAL INVESTMENT RIGHTS AND WARRANTS




2.1 Exchange of Notes, Additional Investment Rights and Warrants. Subject to the
terms and conditions set forth in this Agreement, at the Closing, the Company shall:




(a) pay to the Purchasers the Cash Principal Repayment by wire transfer of immediately
available funds to bank accounts designated by the Purchasers in writing;




(b) pay to the Purchasers the Cash Interest Repayment by wire transfer of immediately
available funds to bank accounts designated by the Purchasers in writing;




(c) issue 1,980,426 shares of Common Stock in the aggregate (collectively, the “Common
Shares”), which shall be divided among and registered in the names of the Purchasers as set
forth on Schedule 2.1;




(d) issue New Warrants to purchase up to 2,841,892 shares of Common Stock in the
aggregate, which shall be divided among and registered in the names of the Purchasers as set
forth on Schedule 2.1; and




(e) issue to the Purchasers up to 10,000 shares of Series E Preferred Stock
(collectively, the “Series E Preferred Shares”), which shall be divided among and registered
in the names of the Purchasers as set forth on Schedule 2.1; provided,
however, that the aggregate number of Series E Preferred Shares issued shall be
reduced by one share for each $1,000 or fraction thereof of all principal payments made by
the Company with respect to the Notes after February 17, 2009 but prior to Closing;
provided, further, that the value of any fractional share of Series E
Preferred remaining following the
foregoing adjustment shall be paid by the Company to the Purchasers in cash, and no
fractional share of Series E Preferred shall be issued.


 


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2.2 Cancellation of Notes, Additional Investment Rights and Warrants. Subject to the
terms and conditions set forth in this Agreement, at the Closing:




(a) the Notes shall automatically be deemed repaid in full and cancelled;




(b) the Additional Investment Rights shall automatically be deemed cancelled; and




(c) the Warrants shall automatically be deemed cancelled.



2.3 Waiver of Penalties; Termination of Security Interests and Agreements. Subject to
the terms and conditions set forth in this Agreement, at the Closing:




(a) the Purchasers shall be deemed to have waived any rights to any prepayment or
repurchase penalties pursuant to the Purchase Agreement or the Notes;




(b) the Purchasers shall provide the Company with a payoff letter authorizing the
Company to release all existing security interests they hold in the assets of the Company
and its Subsidiaries; and




(c) the Company and the Purchasers shall be deemed to have mutually terminated the
Purchase Agreement and the Security Agreements.



ARTICLE III.

REPRESENTATIONS AND WARRANTIES




3.1 Representations and Warranties of the Company. Except as set forth in the
Schedules to this Agreement, the Company hereby represents and warrants to the Purchasers, as of
the date hereof and as of the Closing Date, as follows:




(a) Organization and Qualification. The Company is an entity duly
incorporated, validly existing and in good standing under the laws of the State of Delaware,
with the requisite power and authority to own and use its properties and assets and to carry
on its business as currently conducted. The Company is not in violation of any of the
provisions of its certificate of incorporation or bylaws. The Company is duly qualified to
conduct business and is in good standing as a foreign corporation in each jurisdiction in
which the nature of the business conducted or property owned by it makes such qualification
necessary, except where the failure to be so qualified or in good standing, as the case may
be, could not, individually or in the aggregate, (i) adversely affect the legality, validity
or enforceability of any Transaction Document, (ii) adversely impair the Company’s ability
to perform fully on a timely basis its obligations under any of the Transaction Documents or
(iii) adversely affect the business, earnings, operations, assets, liabilities, properties,
condition (financial or otherwise), prospects, results of operations or net worth of the
Company and it Subsidiaries, taken as a whole.


 


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(b) Authorization; Enforcement. The Company has the requisite corporate power
and authority to enter into and to consummate the transactions contemplated by the
Transaction Documents and otherwise to carry out its obligations hereunder and thereunder.
The execution and delivery by the Company of the Transaction Documents and the consummation
by it of the transactions contemplated hereunder and thereunder have been duly authorized by
all necessary corporate action on the part of the Company, and no further consent or action
is required by the Company, the Company’s Board of Directors or its stockholders including
pursuant to any rules or regulations of the Trading Market. Each Transaction Document has
been duly executed by the Company, and when delivered in accordance with the terms hereof,
will constitute the valid and binding obligation of the Company enforceable against the
Company in accordance with its terms.




(c) No Conflicts. The execution, delivery and performance of the Transaction
Documents by the Company and the consummation by the Company of the transactions
contemplated hereby and thereby do not and will not (i) conflict with or violate any
provision of the Company’s certificate of incorporation or bylaws, (ii) conflict with, or
constitute a default (or an event that with notice or lapse of time or both would become a
default) under, or give to others any rights of termination, amendment, acceleration or
cancellation (with or without notice, lapse of time or both) of, any agreement, credit
facility, debt or other instrument (evidencing a Company debt or otherwise) or other
understanding to which the Company is a party or by which any property or asset of the
Company is bound or affected, or (iii) result in a violation of any law, rule, regulation,
order, judgment, injunction, decree or other restriction of any Governmental Authority to
which the Company is subject (including federal and state securities laws and regulations),
or by which any property or asset of the Company is bound or affected; except in the case of
clause (ii) or (iii) above, as could not, individually or in the aggregate, have, or could
reasonably be expected to result in, a Company Material Adverse Effect.




(d) Filings, Consents and Approvals. The Company is not required to obtain any
consent, waiver, authorization or order of, give any notice to, or make any filing or
registration with, any Governmental Authority or other Person in connection with the
execution, delivery and performance by the Company of the Transaction Documents, other than
the filing of a Notification: Change in the Number of Shares Outstanding with the Trading
Market, the filing of a Notice of Sale of Securities on Form D with the Commission under
Regulation D of the Securities Act and applicable Blue Sky filings, each of which shall be
made as promptly as practicable following the Closing (collectively, the “Required
Approvals”).




(e) Issuance of the Securities. The Securities have been duly authorized. The
Common Shares, the Series E Preferred Shares and the New Warrants have been, and the
Underlying Shares, when issued in accordance with the terms of the New Warrants, will be,
validly issued. The Common Shares, the Series E Preferred Shares and the New Warrants are,
and the Underlying Shares, when issued in accordance with the terms of the New Warrants,
will be, fully paid and nonassessable and free of preemptive or similar rights. Subject to
the receipt of the Required Approvals, the Common Shares, the Series
E Preferred Shares and the New Warrants have been, and the Underlying Shares, when
issued in accordance with the terms of the New Warrants, will be, issued in compliance with
applicable securities laws, rules and regulations. The issuance and exchange of the
Securities contemplated hereby does not conflict with or violate any rules or regulations of
the Trading Market. The Company has reserved from its duly authorized capital stock the
maximum number of shares of Common Stock to be issued to the Purchasers upon exercise of the
New Warrants.


 


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(f) Capitalization. The number of shares and type of all authorized, issued
and outstanding securities of the Company immediately prior to and after giving effect to
the transactions contemplated hereby are as specified in Schedule 3.1(f). All
outstanding shares of capital stock of the Company have been duly authorized and are validly
issued, fully paid and nonassessable. Other than as set forth in Schedule 3.1(f) and except
for the Securities, there is no outstanding, and there has not been reserved for issuance
any: (i) share of capital stock or other voting securities of the Company, (ii) options,
warrants, scrip rights to subscribe to, calls or commitments of any character whatsoever
relating to, or securities, rights or obligations convertible into or exchangeable for, or
giving any Person any right to subscribe for or acquire, any securities of the Company,
(iii) contracts, commitments, understandings or arrangements by which the Company is or may
become bound to issue additional securities of the Company or (iv) securities or rights
convertible or exchangeable into securities of the Company; No securities of the Company
are entitled to preemptive or similar rights, and no Person has any right of first refusal,
preemptive right, right of participation, or any similar right to participate in the
transactions contemplated by the Transaction Documents. The issue and sale of the
Securities will not obligate the Company to issue any securities to any Person (other than
the Purchasers) and will not result in a right of any holder of securities of the Company to
adjust the exercise, conversion, exchange or reset price under such securities. The
Company’s Form 10-K for the year ended July 31, 2008 (the “10-K Filings”) filed with the
Commission contains a list of all of the Company’s and its Subsidiaries’ respective equity
compensation plans as reflected on the Closing Date. There is no outstanding obligation of
the Company to repurchase, redeem or otherwise acquire any of their securities. There is no
stockholder agreement, voting trust or other agreement or understanding to which the Company
is a party or by which the Company is bound relating to the voting, purchase, transfer or
registration of any securities of the Company.




(g) SEC Reports; Financial Statements. The Company has filed all reports,
forms, schedules, statements and other documents required to be filed by it under the
Securities Act and the Exchange Act, including pursuant to Section 13(a) or 15(d) thereof,
since January 1, 2008 (or such shorter period as the Company was required by law to file
such materials) (the foregoing materials, as supplemented or amended since the time of
filing, and together with all information incorporated by reference therein, being
collectively referred to herein as the “SEC Reports” and, together with the Schedules to
this Agreement, the “Disclosure Materials”) on a timely basis or has received a valid
extension of such time of filing and has filed any such SEC Reports prior to the expiration
of any such extension. As of their respective dates, the SEC Reports complied in all
material respects with the requirements of the Securities Act and the Exchange Act and the
rules and regulations of the Commission promulgated thereunder,
and none of the SEC Reports, when filed, contained any untrue statement of a material
fact or omitted to state a material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances under which they were made,
not misleading. The financial statements of the Company included in the SEC Reports comply
in all material respects with applicable accounting requirements and the rules and
regulations of the Commission with respect thereto as in effect at the time of filing. Such
financial statements have been prepared in accordance with GAAP consistently applied during
the periods involved, except as may be otherwise specified in such financial statements or
the notes thereto, and fairly present in all material respects the financial position of the
Company and its consolidated Subsidiaries as of and for the dates thereof and the results of
operations and cash flows for the periods then ended, subject, in the case of unaudited
statements, to normal, immaterial (individually and in the aggregate), year-end audit
adjustments and the absence of footnotes.


 


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(h) Material Changes. Since July 31, 2008 (except as disclosed in the SEC
Reports) (i) each of the Company and its Subsidiaries has conducted its business in the
ordinary course consistent with past practice, (ii) there has been no event, occurrence or
development that has had or that could reasonably be expected to result in a Company
Material Adverse Effect, (iii) except for the Senior Indebtedness Facility, neither the
Company nor any of its Subsidiaries has incurred any material liabilities (contingent or
otherwise), (iv) the Company has not altered its method of accounting or the identity of its
auditors and (v) the Company has not declared or made any dividend or distribution of cash
or other property to its stockholders or purchased, redeemed or made any agreements to
purchase or redeem any shares of its capital stock.




(i) Subsidiaries. Each Subsidiary of the Company is duly organized, validly
existing and in good standing (to the extent the concept of good standing is applicable)
under the Laws of the jurisdiction of its incorporation or organization, has all requisite
corporate power and authority to own its properties and to carry on its businesses as now
conducted and is qualified to do business in every jurisdiction in which its ownership of
property or the conduct of its businesses as now conducted requires it to qualify, except
where the failure to be qualified as a foreign corporation would not have, either
individually or in the aggregate, a Company Material Adverse Effect. All of the Subsidiaries
are wholly owned by the Company and, except for the shares of capital stock of the
Subsidiaries owned by the Company, there are: (i) no outstanding, and there has not been
reserved for issuance to any other Person any, shares of capital stock or other voting
securities of any Subsidiary, (ii) no outstanding, and there has not been reserved for
issuance to any other Person any, options, warrants, scrip rights to subscribe to, calls or
commitments of any character whatsoever relating to, or securities, rights or obligations
convertible into or exchangeable for, or giving any Person any right to subscribe for or
acquire, any securities of any Subsidiary, (iii) no contracts, commitments, understandings
or arrangements by which any Subsidiary is or may become bound to issue additional
securities or (iv) no outstanding, and there has not been reserved for issuance to any other
Person any, securities or rights convertible or exchangeable into securities of any
Subsidiary.


 


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(j) Litigation. There is no action, suit, hearing, claim, investigation,
arbitration or proceeding pending or, to the Company’s knowledge, threatened against the
Company or any of its Subsidiaries or their respective assets or properties, or their
respective officers and directors, in their capacity as such, before or by any court,
arbitrator or Governmental Authority that, if adversely determined, would reasonably be
expected to have a Company Material Adverse Effect or, as of the date of this Agreement,
which challenges this Agreement or the transactions contemplated by this Agreement.




(k) No Brokers; Commissions. No Person is entitled to any brokerage, finder’s
or similar compensation in connection with the transactions contemplated by this Agreement
or the other Transaction Documents based on any arrangement or agreement made by or on
behalf of the Company for which the Company could become liable or obligated; No commission
or other remuneration is paid or given directly or indirectly by the Company for soliciting
the Exchange.



3.2 Representations and Warranties of the Purchasers. Each Purchaser hereby, as to
itself only and for no other Purchaser, represents and warrants to the Company as follows:




(a) Organization; Authority. Such Purchaser is an entity duly organized,
validly existing and in good standing under the laws of the jurisdiction of its organization
with the requisite corporate, limited liability company or partnership power and authority
to enter into and to consummate the transactions contemplated by the Transaction Documents
and otherwise to carry out its obligations hereunder and thereunder. The execution,
delivery and performance by such Purchaser of the Transaction Documents to which it is a
party have been duly authorized by all necessary corporate or, if such Purchaser is not a
corporation, such partnership, limited liability company or other applicable like action, on
the part of such Purchaser. Each of the Transaction Documents to which such Purchaser is a
party has been duly executed by such Purchaser and, when delivered by such Purchaser in
accordance with terms hereof, will constitute the valid and legally binding obligation of
such Purchaser, enforceable against it in accordance with its terms.




(b) Investment Intent. Such Purchaser is acquiring the Securities as principal
for its own account for investment purposes and not with a view to distributing or reselling
such Securities or any part thereof in violation of applicable securities laws, without
prejudice, however, to such Purchaser’s right at all times to sell or otherwise dispose of
all or any part of such Securities in compliance with applicable federal and state
securities laws. Nothing contained herein shall be deemed a representation or warranty by
such Purchaser to hold the Securities for any period of time. Such Purchaser understands
that the Securities have not been registered under the Securities Act, and therefore the
Securities may not be sold, assigned or transferred unless (i) a registration statement
under the Securities Act is in effect with respect thereto or (ii) an exemption from
registration is available.


 


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(c) Purchaser Status. At the time such Purchaser was offered the Securities,
it was, and at the date hereof it is, an “accredited investor” as defined in Rule 501(a)
under the Securities Act.




(d) Experience of such Purchaser. Such Purchaser, either alone or together
with its representatives, has such knowledge, sophistication and experience in business and
financial matters so as to be capable of evaluating the merits and risks of the prospective
investment in the Securities, and has so evaluated the merits and risks of such investment.
Such Purchaser is able to bear the economic risk of an investment in the Securities and, at
the present time, is able to afford a complete loss of such investment.




(e) General Solicitation. Such Purchaser is not purchasing the Securities as a
result of any advertisement, article, notice or other communication regarding the Securities
published in any newspaper, magazine or similar media or broadcast over television or radio
or presented at any seminar or any other general solicitation or general advertisement.




(f) No Brokers; Commissions. No Person is entitled to any brokerage, finder’s
or similar compensation in connection with the transactions contemplated by this Agreement
or the other Transaction Documents based on any arrangement or agreement made by or on
behalf of the such Purchaser for which such Purchaser could become liable or obligated; No
commission or other remuneration is paid or given directly or indirectly by such Purchaser
for soliciting the Exchange.



ARTICLE IV.

OTHER AGREEMENTS OF THE PARTIES




4.1 Conduct Pending Closing. From the date hereof until the earlier to occur of (i)
the Closing and (ii) the termination of this Agreement pursuant to Section 7.1 below, the
Purchasers shall not exercise the Additional Investment Rights in whole or in part, exercise the
Warrants in whole or in part, or demand registration of any securities pursuant to the registration
rights provisions of the Purchase Agreement.




4.2 No Transfer Restrictions.




(a) The Purchasers may freely sell, assign, transfer, bequest or otherwise dispose of
any of the Securities in compliance with any applicable securities Laws.




(b) The Company acknowledges and agrees that a Purchaser may from time to time pledge
or grant a security interest in some or all of the Securities in connection with a bona fide
margin agreement secured by the Securities and, if required under the terms of such
agreement, such Purchaser may transfer pledged or secured Securities to the pledgees or
secured parties. Such a pledge or transfer would not be subject to approval of the Company
and no legal opinion of the pledgee, secured party or pledgor shall be required in
connection therewith. Further, no notice shall be required of such pledge. At the
appropriate Purchaser’s expense, the Company will execute and deliver such reasonable
documentation as a pledgee or secured party of Securities may reasonably request in
connection with a pledge or transfer of the Securities.


 


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4.3 Further Assurances. If, at any time after the Closing Date, any further action is
necessary or desirable to carry out the purposes of the Transaction Documents or consummate the
transactions contemplated thereby, the Company and the Purchasers hereby agree to take all such
lawful and necessary actions.



ARTICLE V.

CONDITIONS




5.1 Conditions Precedent to the Obligations of the Purchasers. The obligation of each
Purchaser to consummate the transactions contemplated hereby at the Closing is subject to the
satisfaction or waiver by such Purchaser, at or before the Closing, of each of the following
conditions:




(a) Representations and Warranties. The representations and warranties of the
Company contained herein shall be true and correct in all material respects (provided that
the representations and warranties modified by “materiality” shall be true and correct in
all respects) as of the date made and as of the Closing as though made on and as of such
date;




(b) Performance. The Company and each other Purchaser shall have performed,
satisfied and complied in all material respects with all covenants, agreements and
conditions required by the Transaction Documents to be performed, satisfied or complied with
by it at or prior to the Closing or at all times prior to the Closing, as applicable;




(c) No Injunction. No statute, rule, regulation, executive order, decree,
ruling or injunction shall have been enacted, entered, promulgated or endorsed by any
Governmental Authority of competent jurisdiction that prohibits the consummation of any of
the transactions contemplated by the Transaction Documents;




(d) No Suspensions of Trading in Common Stock; Listing. Trading in the Common
Stock shall not have been suspended by the Commission or any Trading Market (except for any
suspensions of trading of not more than one Trading Day solely to permit dissemination of
material information regarding the Company) at any time since the date of execution of this
Agreement, and the Common Stock shall have been at all times since such date listed for
trading on an Eligible Market.




(e) Company Material Adverse Effect. No Company Material Adverse Effect shall
have occurred since the date of this Agreement.




(f) Legal Opinion. The Purchasers shall have received a customary opinion in
the form agreed by the parties addressed to the Purchasers and dated the Closing Date, of
Troutman Sanders LLP, counsel to Company.


 


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5.2 Conditions Precedent to the Obligations of the Company. The obligation of the
Company to consummate the transactions contemplated hereby at the Closing is subject to the
satisfaction or waiver by the Company, at or before the Closing, of each of the following
conditions:




(a) Representations and Warranties. The representations and warranties of the
Purchasers contained herein shall be true and correct in all material respects as of the
date made and as of the Closing Date as though made on and as of such date;




(b) Performance. The Purchasers shall have performed, satisfied and complied
in all material respects with all covenants, agreements and conditions required by the
Transaction Documents to be performed, satisfied or complied with by the Purchasers at or
prior to the Closing;




(c) No Injunction. No statute, rule, regulation, executive order, decree,
ruling or injunction shall have been enacted, entered, promulgated or endorsed by any
Governmental Authority of competent jurisdiction that prohibits the consummation of any of
the transactions contemplated by the Transaction Documents;




(d) Senior Indebtedness Facility. The Company shall have secured, closed and
had funded a senior indebtedness facility deemed suitable by the Company in its sole
discretion (the “Senior Indebtedness Facility"), in a minimum amount of $30 million.



ARTICLE VI.

CLOSING




6.1 Closing. Subject to the terms and conditions set forth in this Agreement, at the
Closing, the Company and the Purchasers shall perform those actions set forth in Sections 2.1, 2.2
and 2.3 of this Agreement. The Closing shall take place simultaneously with the closing and
funding of the Senior Indebtedness Facility at the offices of Troutman Sanders LLP, 600 Peachtree
Street, NE, Atlanta, Georgia 30308 or at such other location or time as the parties to this
Agreement may agree in writing.




6.2 Closing Deliveries.




(a) At the Closing, the Company shall deliver or cause to be delivered to the
Purchasers the following:




(i) the Cash Principal Repayment, the Cash Interest Repayment, the Common
Shares, the New Warrants and the Series E Preferred Shares, as set forth in Section
2.1;




(ii) a certificate dated as of the Closing Date and signed by the Chief
Executive Officer of the Company certifying as to the fulfillment of each of the
conditions set forth in Sections 5.1(a), (b) and (d);




(iii) a certificate of the Secretary of the Company dated as of the Closing
Date certifying: (1) that attached thereto is a true and complete copy of the
Certificate of Incorporation of the Company in effect on the Closing Date; (2) that
attached thereto is a true and complete copy of the By-laws of the Company in effect
on the Closing Date; (3) that attached thereto is a true and complete copy of all
resolutions adopted by the Board of Directors of the Company authorizing the
execution, delivery and performance of this Agreement and the other
Transaction Documents, and that all such resolutions are in full force and
effect and are all the resolutions adopted in connection with the transactions
contemplated by this Agreement and the other Transaction Documents; and (4) the
signatures and titles of the officers of the Company executing each of the
Transaction Documents;


 


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(iv) the legal opinion pursuant to Section 5.1(f); and




(v) any other document reasonably requested by the Purchasers.




(b) At the Closing, each Purchaser shall deliver or cause to be delivered to the
Company the following:




(i) the original Notes marked “Repaid in Full” and “Cancelled”;




(ii) the original Additional Investment Rights marked “Cancelled”;




(iii) the original Warrants marked “Cancelled”;




(iv) a certificate dated as of the Closing Date and signed by the Chief
Financial Officer of each Purchaser certifying as to the fulfillment of each of the
conditions set forth in Sections 5.2(a) and (b);




(v) a payoff letter authorizing the Company to release all existing security
interests the Purchasers hold in the assets of the Company and its subsidiaries in
all jurisdictions in which the Purchasers perfected and protected the liens and
security interests created under the Security Agreements;




(vi) each of the physical stock certificates of the Subsidiaries of the Company
in the possession of the Purchasers (or if any such certificates is not available, a
loss affidavit), along with an undated stock power for each of such certificate,
executed in blank; and




(vii) any other document reasonably requested by the Company.



ARTICLE VII.

MISCELLANEOUS





7.1 Termination.




(a) This Agreement may be terminated and the transactions contemplated hereby may be
abandoned at any time prior to the Closing:




(i) by the mutual written consent of the Company and each Purchaser;


 


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(ii) by any Purchaser or the Company if the Closing has not been consummated by
June 30, 2009 (such date shall be referred to herein as the “Outside Date”);
provided, however, that the right to terminate this Agreement
under this Section 7.1(a)(ii) shall not be available to any party that has
breached in any material respect its obligations under this Agreement in any manner
that shall have proximately caused the Closing not to occur on or before the Outside
Date;




(iii) by any Purchaser (if such Purchaser is not in material breach of its
obligations or its representations and warranties under this Agreement) if (A) the
Company is in material breach of its obligations under this Agreement, which breach
remains uncured after 30 days’ notice of such breach by any Purchaser, or (B) if
facts exist which render impossible one or more of the conditions set forth in
Section 5.1 by the Outside Date;




(iv) by the Company (if the Company is not in material breach of its
obligations or its representations and warranties under this Agreement) if (A) any
Purchaser is in material breach of its obligations under this Agreement, which
breach remains uncured after 30 days’ notice of such breach by the Company, or (B)
if facts exist which render impossible one or more of the conditions set forth in
Section 5.2 by the Outside Date; or




(v) by written notice of either the Purchasers or the Company, if a court or
Governmental Authority of competent jurisdiction shall have enacted, issued,
promulgated, enforced or entered any statute, law, ordinance, rule, regulation,
judgment, decree, injunction or other order that is in effect and permanently
enjoins or otherwise prohibits the consummation of the transactions contemplated
hereby, which statute, law, ordinance, rule, regulation, judgment, decree,
injunction or order is final and nonappealable.




(b) No termination of this Agreement shall affect the right of any party to sue for any
breach by the other party (or parties).



7.2 Fees and Expenses. At the Closing, the Company shall pay to the Purchasers the
reasonable legal, accounting and other and fees and expenses incurred by them in connection with
the negotiation, preparation, execution, delivery and performance of the Transaction Documents.
The Company shall pay all transfer agent fees, stamp taxes and other taxes and duties levied in
connection with the issuance of any Securities.



7.3 Entire Agreement. The Transaction Documents, together with the Exhibits and
Schedules thereto, contain the entire understanding of the parties with respect to the subject
matter hereof and supersede all prior agreements and understandings, oral or written, with respect
to such matters, which the parties acknowledge have been merged into such documents, exhibits and
schedules.


 


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7.4 Notices. Any and all notices or other communications or deliveries required or
permitted to be provided hereunder shall be in writing and shall be deemed given and effective on
the earliest of (i) the date of transmission, if such notice or communication is delivered via
facsimile at the facsimile number specified in this Section prior to 6:30 p.m. (New York City time)
on a Trading Day, (ii) the Trading Day after the date of transmission, if such notice or
communication is delivered via facsimile at the facsimile number specified in this Section
later than 6:30 p.m. (New York City time) on any date and earlier than 11:59 p.m. (New York City
time) on such date, (iii) the Trading Day following the date of mailing, if sent by nationally
recognized overnight courier service, specifying next business day delivery, or (iv) upon actual
receipt by the party to whom such notice is required to be given if delivered by hand. The
addresses for such notices and communications are as follows:



	 	 	 
	If to the Company:

	 	EasyLink Services International Corporation
	 

	 	6025 The Corners Parkway, Suite 100

Norcross, GA 30092

Attention: Glen Shipley

Fax No.: (678) 229-9087
	 
	 	 
	With a copy to:

	 	Troutman Sanders LLP
	 

	 	Bank of America Plaza

600 Peachtree Street, NE

Atlanta, GA 30308

Attention: Larry W. Shackelford, Esq.

Fax No.: (404) 962-6548
	 
	 	 
	If to the Purchasers:

	 	To the address set forth under such
Purchaser’s name on the signature pages
attached hereto.






or such other address as may be designated in writing hereafter, in the same manner, by such Person
by two Trading Days’ prior notice to the other party in accordance with this Section 7.4.



7.5 Amendments; Waivers. No provision of this Agreement may be waived or amended
except in a written instrument signed by the Company and the Purchasers. No waiver of any default
with respect to any provision, condition or requirement of this Agreement shall be deemed to be a
continuing waiver in the future or a waiver of any subsequent default or a waiver of any other
provision, condition or requirement hereof, nor shall any delay or omission of any party to
exercise any right hereunder in any manner impair the exercise of any such right.



7.6 Construction. The headings herein are for convenience only, do not constitute a
part of this Agreement and shall not be deemed to limit or affect any of the provisions hereof.
The language used in this Agreement will be deemed to be the language chosen by the parties to
express their mutual intent, and no rules of strict construction will be applied against any party.



7.7 Successors and Assigns. This Agreement shall be binding upon and inure to the
benefit of the parties and their successors and permitted assigns. No party may assign this
Agreement or any rights or obligations hereunder without the prior written consent of the other
parties to this Agreement and any attempt to make any such assignment without such consent shall be
null and void; provided, however, that no consent shall be required in connection with the
assignment by a party of any of its right and obligations hereunder to any of its Affiliates.
Notwithstanding anything to the contrary herein, Securities may be pledged to any Person in
connection with a bona fide margin account or other loan or financing arrangement secured by
such Securities.


 


14









 





7.8 No Third-Party Beneficiaries. This Agreement is intended for the benefit of the
parties hereto and their respective successors and permitted assigns and is not for the benefit of,
nor may any provision hereof be enforced by, any other Person.



7.9 Governing Law; Jurisdiction; Waiver of Jury Trial. THIS AGREEMENT AND ALL MATTERS
ARISING OUT OF OR RELATED TO THIS AGREEMENT SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, AND
GOVERNED BY, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO ITS CONFLICT OF LAW PRINCIPLES
(OTHER THAN SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK). ANY JUDICIAL
PROCEEDING BROUGHT AGAINST ANY OF THE PARTIES HERETO WITH RESPECT TO THIS AGREEMENT SHALL BE
BROUGHT IN THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK SITTING IN NEW
YORK COUNTY OR THE COMMERCIAL DIVISION, CIVIL BRANCH OF THE SUPREME COURT OF THE STATE OF NEW YORK
SITTING IN NEW YORK COUNTY, AND ANY APPELLATE COURT FROM ANY THEREOF, IRRESPECTIVE OF WHERE SUCH
PARTY MAY BE LOCATED AT THE TIME OF SUCH PROCEEDING, AND BY EXECUTION AND DELIVERY OF THIS
AGREEMENT, EACH OF THE PARTIES HERETO HEREBY CONSENTS TO THE EXCLUSIVE JURISDICTION OF SUCH COURTS
AND WAIVES ANY DEFENSE OR OPPOSITION TO SUCH JURISDICTION. EACH PARTY HERETO HEREBY IRREVOCABLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN
ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY.



7.10 Survival. The representations, warranties, agreements and covenants contained
herein shall survive the Closing and the delivery and/or exercise of the Securities, as applicable,
until the date of the filing of the Company’s Form 10-K for the year ended July 31, 2009; provided,
however, that the representations and warranties contained in Clauses (a), (b), (e) and (k) of
Section 3.1 shall survive indefinitely. All covenants requiring performance prior to Closing shall
expire on the Closing Date.



7.11 Execution. This Agreement may be executed in two or more counterparts, all of
which when taken together shall be considered one and the same agreement and shall become effective
when counterparts have been signed by each party and delivered to the other parties, it being
understood that all parties need not sign the same counterpart. In the event that any signature is
delivered by facsimile transmission, such signature shall create a valid and binding obligation of
the party executing (or on whose behalf such signature is executed) the same with the same force
and effect as if such facsimile signature page were an original thereof.



7.12 Severability. If any provision of this Agreement is held to be invalid or
unenforceable in any respect, the validity and enforceability of the remaining terms and provisions
of this Agreement shall not in any way be affected or impaired thereby, and the parties will
attempt in good faith to agree upon a valid and enforceable provision that is a
reasonable substitute therefor, and upon so agreeing, shall incorporate such substitute
provision in this Agreement.


 


15









 





7.13 Replacement of Securities. If any certificate or instrument evidencing any
Securities is mutilated, lost, stolen or destroyed, the Company shall issue or cause to be issued
in exchange and substitution for and upon cancellation thereof, or in lieu of and substitution
therefor, a new certificate or instrument, but only upon receipt of evidence reasonably
satisfactory to the Company of such loss, theft or destruction and customary and reasonable
indemnity, if requested. The applicants for a new certificate or instrument under such
circumstances shall also pay any reasonable third-party costs associated with the issuance of such
replacement Securities.



7.14 Remedies. In addition to being entitled to exercise all rights provided herein
or granted by law, including recovery of damages, each of the Purchasers and the Company will be
entitled to specific performance under the Transaction Documents. The parties agree that monetary
damages may not be adequate compensation for any loss incurred by reason of any breach of
obligations described in the foregoing sentence and hereby agrees to waive in any action for
specific performance of any such obligation the defense that a remedy at law would be adequate.




7.15 Indemnification.



(a) The Company agrees from and after the Closing Date to indemnify, defend and hold harmless
the Purchasers and all of their respective officers, managers, directors, shareholders, members,
Affiliates, employees and agents (the “Indemnified Persons”) from and against any direct
liabilities, costs, damages, deficiencies, penalties, fines or other losses or expenses incurred by
such Indemnified Persons, but not including any loss of profits, consequential, exemplary or
punitive damages (collectively, “Loss”) actually incurred by the Indemnified Persons arising out of
or resulting from (i) any breach by the Company of any representation or warranty contained in
Section 3.1 of this Agreement and (ii) any breach by the Company of any covenant of the Company
contained in Article IV of this Agreement; provided, that, in each case, the relevant Indemnified
Person has submitted to the Company a Notice of Claim or Third-Party Notice, as applicable, in
respect thereof prior to the date of expiration of the applicable survival period specified in
Section 7.10 (an “Indemnification Claim”).



(b) If any Indemnified Person shall claim indemnification hereunder for any claim (other than
a third-party claim) for which indemnification is provided in Section 7.15(a) above, the
Indemnified Person shall promptly, and in any event within fifteen (15) days after it first becomes
aware of facts that give rise to the basis for such claim, give written notice (a “Notice of
Claim”) to the Company, setting forth the basis for such claim and the nature and estimated amount
of the claim, all in reasonable detail. If the Company disputes any claim set forth in the Notice
of Claim, it may, at any time, deliver to the Indemnified Person that has given the Notice of Claim
a written notice indicating its dispute of such Notice of Claim.


 


16









 





(c) If an Indemnified Person shall claim indemnification hereunder arising from any claim or
demand of a third party for which indemnification is provided in Section 7.15(a) above, the
Indemnified Person shall promptly, and in any event within fifteen (15) days
after it first becomes aware of facts that give rise to the basis for such claim, give written
notice (a “Third-Party Notice”) to the Company, of the basis for such claim, setting forth the
nature of the claim or demand in reasonable detail. The Company, upon notice to the Indemnified
Person, may at any time after receiving a Third-Party Notice, at its own cost and through counsel
of its choosing, defend any claim or demand set forth in a Third-Party Notice. The Company shall
from time to time apprise the Indemnified Person of the status of the claim, liability or expense
and any resulting suit, proceeding or enforcement action and shall furnish the Indemnified Person
with such documents and information filed or delivered in connection with such claim, liability or
expense as the Indemnified Person may reasonably request. The Indemnified Person shall not admit
any liability to any third party in connection with any matter that is the subject of a Notice of
Claim and shall cooperate fully in the manner requested by the Company in the defense of such
claim. Notwithstanding anything herein stated, the Indemnified Person shall at all times have the
right to fully participate in such defense at its own expense directly or through counsel. In the
event the Company elects not to undertake the defense of a claim or fails to pursue diligently the
defense of such claim and the Indemnified Person litigates or otherwise contests or settles the
claim, then, the Company shall promptly reimburse the Indemnified Person for all Losses, including
without limitation any amounts paid to litigate or otherwise contest or settle such claim and all
amounts paid in satisfaction of a judgment against the Indemnified Person in contesting such claim
and in providing its right to indemnification hereunder, all in accordance with the provisions of
this Section 7.15(c). No claim will be settled by the Company or the Indemnified Person without
the consent of the other, which consent will not be unreasonably withheld or delayed;
provided, however, that the Company shall not be required to obtain the consent of
the Indemnified Person to a settlement if (i) such settlement would not involve relief other than
monetary damages and (ii) the Indemnified Person shall be fully released from all liability
relating to such claim in connection with such settlement.



[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.

SIGNATURE PAGES FOLLOW.]



 


17









 





IN WITNESS WHEREOF, the parties hereto have caused this Securities Exchange Agreement to be
duly executed and delivered by their respective authorized signatories as of the date first
indicated above.



	 	 	 	 	 
	 	EASYLINK SERVICES INTERNATIONAL CORPORATION

 	 
	 	By:  	/s/ Glen E. Shipley
 	 
	 	 	Name:  	Glen E. Shipley 	 
	 	 	Title:  	Chief Financial Officer 	 



[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.

SIGNATURE PAGES OF PURCHASERS FOLLOW.]




 


 









 







	 	 	 	 	 
	 	PURCHASERS:




YORK CAPITAL MANAGEMENT, L.P.

 	 
	 	By:  	Dinan Management, LLC, its general partner
 	 
	 	 	 
	 	By:  	/s/ Adam J. Semler
 	 
	 	 	Name:  	Adam J. Semler 	 
	 	 	Title:  	Chief Financial Officer 	 



Address for Notice:

York Capital Management, L.P.

c/o York Capital Management

767 Fifth Avenue

17th Floor

New York, NY 10153

Facsimile No.: (212) 300-1302

Attn.: Adam J. Semler, Chief Financial Officer




With a copy to:




Proskauer Rose LLP

1585 Broadway

New York, NY 10036-8299

Facsimile No.: (212) 969-2900

Attn: Adam J. Kansler, Esq.



 


 









 




	 	 	 	 	 
	 	PURCHASERS:




YORK INVESTMENT LIMITED

 	 
	 	By:  	York Offshore Holdings, Ltd., its investment manager
 	 
	 	 	 
	 	By:  	/s/ Adam J. Semler
 	 
	 	 	Name:  	Adam J. Semler 	 
	 	 	Title:  	Director 	 



Address for Notice:

York Investment Limited

c/o York Capital Management

767 Fifth Avenue

17th Floor

New York, NY 10153

Facsimile No.: (212) 300-1302

Attn.: Adam J. Semler, Chief Financial Officer




With a copy to:




Proskauer Rose LLP

1585 Broadway

New York, NY 10036-8299

Facsimile No.: (212) 969-2900

Attn: Adam J. Kansler, Esq.



 


 









 




	 	 	 	 	 
	 	PURCHASERS:




YORK SELECT, L.P.

 	 
	 	By:  	York Select Domestic Holdings, LLC, its general partner
 	 
	 	 	 
	 	By:  	/s/ Adam J. Semler
 	 
	 	 	Name:  	Adam J. Semler 	 
	 	 	Title:  	Chief Financial Officer 	 



Address for Notice:

York Select, L.P.

c/o York Capital Management

767 Fifth Avenue

17th Floor

New York, NY 10153

Facsimile No.: (212) 300-1302

Attn.: Adam J. Semler, Chief Financial Officer




With a copy to:




Proskauer Rose LLP

1585 Broadway

New York, NY 10036-8299

Facsimile No.: (212) 969-2900

Attn: Adam J. Kansler, Esq.



 


 









 




	 	 	 	 	 
	 	PURCHASERS:




YORK SELECT UNIT TRUST

 	 
	 	By:  	York Select Offshore Holdings, LLC,
its investment manager
 	 
	 	 	 
	 	By:  	/s/ Adam J. Semler
 	 
	 	 	Name:  	Adam J. Semler 	 
	 	 	Title:  	Chief Financial Officer 	 



Address for Notice:

York Select Unit Trust

c/o York Capital Management

767 Fifth Avenue

17th Floor

New York, NY 10153

Facsimile No.: (212) 300-1302

Attn.: Adam J. Semler, Chief Financial Officer




With a copy to:



Proskauer Rose LLP

1585 Broadway

New York, NY 10036-8299

Facsimile No.: (212) 969-2900

Attn: Adam J. Kansler, Esq.



 


 









 





	 	 	 	 	 
	 	PURCHASERS:




YORK CREDIT OPPORTUNITIES FUND, L.P.

 	 
	 	By:  	York Credit Opportunities Domestic Holdings, LLC, 

its general partner
 	 
	 	 	 
	 	By:  	/s/ Adam J. Semler
 	 
	 	 	Name:  	Adam J. Semler 	 
	 	 	Title:  	Chief Financial Officer 	 



Address for Notice:

York Credit Opportunities Fund, L.P.

c/o York Capital Management

767 Fifth Avenue

17th Floor

New York, NY 10153

Facsimile No.: (212) 300-1302

Attn.: Adam J. Semler, Chief Financial Officer




With a copy to:




Proskauer Rose LLP

1585 Broadway

New York, NY 10036-8299

Facsimile No.: (212) 969-2900

Attn: Adam J. Kansler, Esq.