UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 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): July 27, 2006
EASYLINK SERVICES CORPORATION
(Exact Name of Registrant as Specified in Charter)
Delaware 000-26371 13-3787073
(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
33 Knightsbridge Road, Piscataway, New Jersey 08854
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: 732-652-3500
Not applicable
(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.
On July 27, 2006, EasyLink Services Corporation and its wholly-owned domestic
subsidiary EasyLink Services USA, Inc. (collectively, "EasyLink") entered into a
credit facility (the "Credit Facility") and related documents with CAPCO
Financial Company, a division of Greater Bay Bank N.A. ("CAPCO").
Under the Credit Facility, EasyLink may receive credit advances of up to
$6,000,000, subject to a maximum of 80% to 85% of the value of certain accounts
receivable. The advances will bear interest at a per annum rate equal to Greater
Bay Bank N.A.'s prime rate plus 2.0%.
The Credit Facility has an initial term of 24 months unless terminated by
EasyLink upon 30 days' prior written notice. CAPCO may terminate the Credit
Facility after 12 months upon 90 days' prior written notice if EasyLink should
fail to meet CAPCO's then existing underwriting criteria. There are no financial
covenants under the Credit Facility, but it does contain customary events of
default, including payment defaults, covenant defaults, breaches of
representations and warranties, bankruptcy proceedings and changes of control of
EasyLink. Upon an event of default, the Credit Facility provides that, among
other things, the outstanding obligations under the Credit Facility may be
declared immediately due and payable and interest on outstanding advances will
increase to 5.0% over the interest rate otherwise in effect. All obligations
under the Credit Facility are secured by all of the assets of EasyLink
(excluding capital stock of EasyLink or EasyLink's subsidiaries).
On July 27, 2006, EasyLink drew down an advance of $5.9 million under the Credit
Facility and used the funds to pay off its existing loan balance with Wells
Fargo, along with other fees and expenses. EasyLink's loan facility with Wells
Fargo was terminated upon this payoff.
A copy of the Credit Facility is included herein as Exhibit 10.1 and is
incorporated herein by reference. The foregoing description of the Credit
Facility is qualified in its entirety by reference to the full text of the
Credit Facility.
ITEM 2.03. CREATION OF A DIRECT FINANCIAL OBLIGATION OR AN OBLIGATION UNDER AN
OFF-BALANCE SHEET ARRANGEMENT OF A REGISTRANT.
The information provided under Item 1.01 of this report is incorporated herein
by reference.
ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS.
(d) Exhibits
10.1 Contract of Sale and Security Agreement dated for purposes of reference
July 20, 2006 between EasyLink Services Corporation, EasyLink Services USA, Inc.
and CAPCO Financial Company, a division of Greater Bay Bank N.A.
SIGNATURES
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.
EASYLINK SERVICES CORPORATION
(Registrant)
Date: August 2, 2006 By:/Thomas F. Murawski
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Name: Thomas F. Murawski
Title: Chairman, President and
Chief Executive Officer
EXHIBIT INDEX
Exhibit No. Description
10.1 Contract of Sale and Security Agreement dated for purposes of
reference July 20, 2006 between EasyLink Services Corporation,
EasyLink Services USA, Inc. and CAPCO Financial Company, a
division of Greater Bay Bank N.A.