SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported)
February 14, 2001
Mail.com, Inc.
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(Exact name of registrant as specified in its charter)
Delaware 000-26371 13-3787073
(State or other jurisdiction of (Commission File Number) (I.R.S. Employer
incorporation) Identification No.)
11 Broadway, 6th Floor
New York, NY 10004
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(Address of principal executive offices)
Registrant's telephone number, including area code (212) 425-4200
N/A
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Former Name or Former Address, if Changed Since Last Report
ITEM 5. OTHER EVENTS
Note Exchange
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Mail.com, Inc. ("Mail.com") announced that it has entered into an
additional note exchange agreement (the "Note Exchange Agreement"). Under the
terms of the agreement, Mail.com will issue $4,950,000 principal amount of a new
series of 10% Senior Convertible Notes due January 8, 2006 (the "Exchange
Notes") and 1,420,714 shares of Mail.com Class A common stock (the "Exchange
Shares") in exchange for the cancellation of $21,375,000 principal amount of its
7% Convertible Subordinated Notes due February 1, 2005 (the "Subordinated
Notes"). The completion of the note exchange is subject to compliance with
applicable NASDAQ stock market rules.
The transaction will be implemented in two steps. Initially, the full
$21,375,000 of the Subordinated Notes will be exchanged for $7,481,250 principal
amount of the Exchange Notes. Upon effectiveness of a registration statement
relating to the shares of Mail.com Class A common stock issuable upon conversion
of the Exchange Notes and the Exchange Shares, $2,531,250 in principal amount of
the Exchange Notes will be exchanged for the Exchange Shares, leaving $4,950,000
in principal amount of the Exchange Notes outstanding.
The Exchange Notes are joint and several obligations of Mail.com and
its subsidiaries Mail.com Business Messaging Services, Inc. and The Allegro
Group, Inc. (collectively, the "Companies").
The Exchange Notes bear interest semi-annually at the rate of 10% per
annum. One half of each interest payment is payable in cash and one half is
payable in shares of Mail.com Class A common stock, par value $.01 per share
("Class A common stock"), until 18 months after the date of issuance of the
Exchange Notes. Thereafter, one half of each interest payment may be paid in
shares of Class A common stock at the option of the Companies. For purposes of
determining the number of shares issuable upon payment of interest in shares of
Class A common stock, such shares will be deemed to have a value equal to the
applicable conversion price at the time of payment.
Each of the Exchange Notes is convertible at any time at the option of
the holder into Class A common stock at an initial conversion price equal to
$1.80 per share. The conversion price is subject to anti-dilution adjustments.
In addition, from and after the completion of the exchange of Exchange Notes for
the Exchange Shares, the conversion price will be subject to reduction to $1.50
per share if Mail.com's Class A common stock trades at less than $1.50 for at
least five consecutive trading days at any time after the date of the Note
Exchange Agreement. The Exchange Notes are non-callable for three years except
under certain conditions.
The Companies may, at their option, prepay the Exchange Notes, in whole
or in part, at any time (i) on or after the third anniversary of the closing
date of the financing, (ii) if the closing price of the Class A common stock on
the NASDAQ stock market, or other securities market on which the Class A common
stock is then traded, is at or above $5.00 per share (such amount to be
appropriately adjusted in the event of a stock split, stock dividend, stock
combination or recapitalization or similar event having a similar effect) for 30
consecutive trading days or (iii) Mail.com desires to effect a merger,
consolidation or sale of all or substantially all of its assets in a manner that
is prohibited by the Note Purchase Agreement between Mail.com and the initial
purchasers of the Exchange Notes (the "Note Purchase Agreement") and the holders
of the Exchange Notes fail to consent to a waiver of such prohibition to permit
such merger, consolidation or sale.
The Note Exchange Agreement contains certain customary covenants and
events of default, including certain limitations on the ability of the Companies
to incur additional indebtedness and additional liens on its assets.
The Exchange Notes are unsecured.
Mail.com granted shelf and piggyback resale registration rights to the
holders of the Exchange Notes with respect to the Exchange Shares, the shares of
Class A common stock issuable upon conversion of the Exchange Notes or in
payment of interest on the Exchange Notes pursuant to a Registration Rights
Agreement. If the registration statement filed in connection with a shelf demand
registration under the Registration Rights Agreement shall not become effective
on or before 120 days after the closing date of the issuance of the Exchange
Notes, other than by reason of a material misstatement or omission or alleged
misstatement or omission with respect to information furnished by the holders of
registrable securities under the registration statement for use in the
registration statement or prospectus contained therein, then Mail.com shall pay
to each such holder an amount equal to 1% per month (2% per month if the
registration statement has not become effective initially on or before 240 days
after the closing date of the issuance of the Exchange Notes) of the principal
amount of the Exchange Notes held by such holder (pro rated for partial months)
from such 120th day or 240th day, as applicable, until the registration
statement becomes effective or until the second anniversary of the issuance of
the Exchange Notes.
A copy of the Note Exchange Agreement and the Registration Rights
Agreement are filed herewith as Exhibits 99.1 and 99.2 and are incorporated
herein by reference.
India.com Bridge Funding and Amendment Agreement
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Mail.com has entered into a Bridge Funding and Amendment Agreement (the
"Bridge Funding Agreement"). Under the Bridge Funding Agreement, Mail.com may
borrow up to $5 million from its majority-owned subsidiary India.com pursuant to
a bridge note (the "Bridge Note"). Under the Bridge Funding Agreement, Mail.com
committed to issue to India.com warrants to purchase 200,000 shares of
Mail.com's Class A common stock in consideration of the commitment under the
Bridge Funding Agreement. In addition, India.com will be entitled to receive
warrants to purchase an additional 160,000 shares of Mail.com Class A common
stock for each $1 million drawn down by Mail.com under the Bridge Funding
Agreement.
If drawn upon, any outstanding amounts must be repaid on or before 120
days after the initial advance of funds and out of the proceeds of certain other
fundings of the Company. Advances under the Bridge Note will bear interest at
the rate of 10% per annum. If payments are not made on the Bridge Note when due,
the Bridge Note bears additional interest at the rate of 1% per month and
warrants to purchase additional shares of Mail.com Class A common stock at the
rate of 100,000 shares per month until the payment is made. Obligations under
the Bridge Note will be secured by Mail.com's shares of India.com.
The initial 200,000 Warrants committed to be issued in connection with
the Bridge Funding Agreement have an exercise price of $1.30 per share. Any
additional Warrants issued pursuant to the Bridge Funding Agreement as described
above will have an exercise price based upon the market price of the underlying
Mail.com Class A common stock around the time such Warrants are issued. The
number of shares issuable upon exercise of the Warrants and the exercise price
of the Warrants are subject to adjustment for stock splits, stock dividends,
stock combinations and reclassifications. The exercise price for all of the
Warrants may be paid in cash or by exchanging Warrants to purchase a number of
underlying shares having an aggregate value based on the market price around the
time of exercise equal to the exercise price. All of the Warrants expire
February 2, 2004.
In consideration of the commitments under the Bridge Funding Agreement,
Mail.com agreed to reduce the minimum price at which the holders of shares of
Series A Convertible Exchangeable Preferred Stock of India.com (the "India
Preferred Stock") may exchange such shares for Mail.com Class A common stock.
Under the Exchange Agreement dated September 13, 2000, the holders of India
Preferred Stock have a one-time right during the sixty day period commencing
September 13, 2001 to exchange shares of India Preferred Stock for Mail.com
Class A common stock based on the original purchase price for the India
Preferred Stock divided by the market price of Mail.com stock on September 13,
2001, subject to a floor on the exchange price of $4.50 and a cap of $6.00. The
aggregate original purchase price for the India Preferred Stock was $14.25
million. In consideration of the Bridge Funding Agreement, the period during
which the one-time exchange right may be exercised was changed from the 60 day
period immediately after September 13, 2001 to the 60 day period immediately
after December 31, 2001. In addition, the floor price at which shares of
Mail.com Class A common stock may be issued upon the exchange was reduced from
$4.50 per share to $3.00 per share immediately and will be further reduced to
$1.30 per share for a percentage of the total number of shares of India
Preferred Stock that is equal to the percentage of the Bridge Note drawn down.
A copy of each of the Bridge Funding Agreement and the Amendment to the
Pledge Agreement effecting the pledge securing the Bridge Notes are filed
herewith as Exhibits 99.3 and 99.4 and are incorporated herein by reference. The
form of Bridge Notes and Warrants to be issued pursuant to the Bridge Funding
Agreement are attached as exhibits to the Bridge Funding Agreement.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
Exhibit 99.1 Note Exchange Agreement dated as of February 14, 2001,
by and among Mail.com, Inc., Mail.com Business Messaging
Services, Inc., The Allegro Group, Inc. and the
purchasers listed therein.*
Exhibit 99.2 Registration Rights Agreement dated as of February 14,
2001, by and among Mail.com, Inc. and the holders of
Exchange Notes listed therein.
Exhibit 99.3 Bridge Funding and Amendment Agreement by and among
India.com, Inc., Mail.com, Inc. and the holders of
India.com, Inc. Preferred Stock signatories thereto,
together with the Forms of Bridge Notes and Warrants
issuable pursuant thereto attached as Exhibits thereto.
Exhibit 99.4 Amendment No. 1 to Pledge Agreement by and among
India.com, Inc., Mail.com, Inc., the collateral agent
thereunder and the other parties thereto.
* Disclosure schedules and other attachments to the Note Exchange Agreement are
omitted, but will be furnished supplementally to the Commission upon request.
SIGNATURE
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Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Dated: February 26, 2001
MAIL.COM, INC.
By: s/Thomas Murawski
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Thomas Murawski
Chief Executive Officer
Exhibit Index
Exhibit 99.1 Note Exchange Agreement dated as of February 14, 2001,
by and among Mail.com, Inc., Mail.com Business Messaging
Services, Inc., The Allegro Group, Inc. and the
purchasers listed therein.*
Exhibit 99.2 Registration Rights Agreement dated as of February 14,
2001, by and among Mail.com, Inc. and the holders of
Exchange Notes listed therein.
Exhibit 99.3 Bridge Funding and Amendment Agreement by and among
India.com, Inc., Mail.com, Inc. and the holders of
India.com, Inc. Preferred Stock signatories thereto,
together with the Forms of Bridge Notes and Warrants
issuable pursuant thereto attached as Exhibits thereto.
Exhibit 99.4 Amendment No. 1 to Pledge Agreement by and among
India.com, Inc., Mail.com, Inc., the collateral agent
thereunder and the other parties thereto.
* Disclosure schedules and other attachments to the Note Exchange Agreement are
omitted, but will be furnished supplementally to the Commission upon request.