SECURITIES EXCHANGE AGREEMENT

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 .

“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.

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.

(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.

(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.

(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.