SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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)
December 23, 2004
EASYLINK SERVICES CORPORATION
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(Exact name of registrant as specified in its charter)
Delaware 000-26371 13-3787073
(State or other jurisdiction (Commission File Number) (I.R.S. Employer
of incorporation) Identification No.)
33 Knightsbridge Road
Piscataway, NJ 08854
(Address of principal executive offices)
Registrant's telephone number, including area code: (732) 652-3500
N/A
---
Former Name or Former Address, if Changed Since Last Report
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):
[ ] Written communications pursuant to Rule 425 under the Securities Act (17
CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17
CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
ITEM 1.01 (Entry into a Material Definitive Agreement); ITEM 1.02 (Termination
of Material Definitive Agreement); ITEM 5.02(B) (Departure of Director); ITEM
8.01 (Other Events)
On December 23, 2004, EasyLink Services Corporation ("EasyLink" or the
"Company") entered into a domain portfolio purchase agreement with Gerald Gorman
and NJ Domains LLC, an entity formed by Mr. Gorman. Pursuant to the domain
portfolio purchase agreement, on the same date the Company also entered into
amendment no. 2 to Mr. Gorman's employment agreement and a severance agreement
with Mr. Gorman.
Under the domain portfolio purchase agreement, EasyLink has transferred to an
entity formed by Mr. Gorman its rights in 1,177 internet domain names and
related assets not used in its core business. Under the agreement, Mr. Gorman
has paid EasyLink a cash payment of $1 million and will share with EasyLink
revenues derived from the use of the names until the fifth anniversary of the
closing date under the agreement. Under the revenue sharing arrangement,
EasyLink will receive 15% of all domain revenues during the second and third
years after the closing date and 10% during the fourth and fifth years. EasyLink
has retained the option to purchase back from Mr. Gorman at any time during the
fourth and fifth years after the closing date substantially all of the internet
domain names transferred for a price of $4,500,000. Pursuant to the domain
portfolio purchase agreement, Mr. Gorman has also converted all of his 1 million
shares of 10 for 1 super-voting Class B common stock into 1 for 1 standard
voting Class A common stock. Pursuant to the domain portfolio purchase
agreement, he has also agreed to the termination of his employment and has
resigned as an officer and director of EasyLink and its subsidiaries. Under Mr.
Gorman's severance agreement, he will receive $125,000 in annual salary
continuation payable in each of the next two years.
As a result of the conversion of his Class B common stock into Class A common
stock, Mr. Gorman's total voting interest will fall from approximately 19.7% of
the outstanding voting power of the Company's common stock to approximately 2.6%
of the outstanding voting power and the voting power of all other shares of
Class A common stock will increase proportionately. As a result of Mr. Gorman's
resignation from the board of directors, EasyLink will regain compliance with
the Nasdaq requirement that a majority of its board consist of independent
directors.
As a result of the sale of the domain names EasyLink will report a gain before
income taxes of approximately $0.8 million in the 4th quarter of 2004. Revenues
from domain name sales and license fees amounted to approximately $0.4 million
in 2004 through the date of sale.
The respective forms of the domain portfolio purchase agreement, guaranty of
domain portfolio purchase agreement, amendment no. 2 to employment agreement,
severance agreement and releases are attached hereto as Exhibits 10.1 through
10.6, respectively, and are incorporated by reference herein. The foregoing
summary of the terms of the credit agreement and security arrangements is not
complete and is qualified in its entirety by reference to the credit agreement
and the security documents attached hereto as exhibits.
This report may contain statements of a forward-looking nature relating to the
future events or the future financial results of EasyLink. Investors are
cautioned that such statements are only predictions and that actual events or
results may differ materially. In evaluating such statements, investors should
specifically consider the various factors which could cause actual events or
results to differ materially from those indicated from such forward-looking
statements. These factors are described in more detail in the Company's filings
with the Securities and Exchange Commission.
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ITEM 9.01 (C) Exhibits.
The following exhibits are filed herewith:
EXHIBIT NO. DESCRIPTION
----------- -----------
Exhibit 10.1* Domain Portfolio Purchase Agreement made the 23rd day of
December, 2004, by and among Easylink Services Corporation; NJ
Domains LLC; and Gerald Gorman.*
Exhibit 10.2 Guaranty of Domain Portfolio Purchase Agreement made and
delivered the 23rd day of December, 2004, by Gerald Gorman in
favor of EasyLink Services Corporation.
Exhibit 10.3 Amendment No. 2 dated December 23, 2004 to Employment Agreement
dated November 12, 2002 between EasyLink Services Corporation
and Gerald Gorman
Exhibit 10.4 Severance Agreement made the 23rd day of December, 2004, by and
between Gerald Gorman and Easylink Services Corporation.
Exhibit 10.5 Release made and delivered the 23rd day of December, 2004 by
Gerald Gorman in favor of EasyLink Services Corporation.
Exhibit 10.6 Release made and delivered the 23rd day of December, 2004 by
EasyLink Services Corporation in favor of Gerald Gorman.
* Schedules and other attachments are omitted, but will be
furnished supplementally to the Commission upon request.
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SIGNATURE
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: December 28, 2004
EASYLINK SERVICES CORPORATION
By: /s/ Thomas Murawski
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Thomas Murawski, President and
Chief Executive Officer
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INDEX TO EXHIBITS
EXHIBIT NO. DESCRIPTION
----------- -----------
Exhibit 10.1* Domain Portfolio Purchase Agreement made the 23rd day of
December, 2004, by and among Easylink Services Corporation; NJ
Domains LLC; and Gerald Gorman.*
Exhibit 10.2 Guaranty of Domain Portfolio Purchase Agreement made and
delivered the 23rd day of December, 2004, by Gerald Gorman in
favor of EasyLink Services Corporation.
Exhibit 10.3 Amendment No. 2 dated December 23, 2004 to Employment Agreement
dated November 12, 2002 between EasyLink Services Corporation
and Gerald Gorman
Exhibit 10.4 Severance Agreement made the 23rd day of December, 2004, by and
between Gerald Gorman and Easylink Services Corporation.
Exhibit 10.5 Release made and delivered the 23rd day of December, 2004 by
Gerald Gorman in favor of EasyLink Services Corporation.
Exhibit 10.6 Release made and delivered the 23rd day of December, 2004 by
EasyLink Services Corporation in favor of Gerald Gorman.
* Schedules and other attachments are omitted, but will be
furnished supplementally to the Commission upon request.
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