Registration No. 333-59776
As filed with the Securities and Exchange Commission on May 22, 2001
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
EasyLink Services Corporation
(Exact name of registrant as specified in its charter)
DELAWARE 13-3780773
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification Number)
399 Thornall Street
Edison, NJ 08837
(732) 906-2000
(Address, including zip code, and telephone number,
including area code, of registrant's principal
executive offices)
David W. Ambrosia, Esq.
Executive Vice President and General Counsel
EasyLink Services Corporation
399 Thornall Street
Edison, NJ 08837
(732) 906-2000
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copies to:
Ronald A. Fleming, Jr., Esq.
Pillsbury Winthrop LLP
One Battery Park Plaza
New York, New York 10004
(212) 858-1143
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Approximate date of commencement of proposed sale to the public: From time
to time after the effective date of this registration statement.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. |_|
If any of the securities being registered on this form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. |X|
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. |_|
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. |_|
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. |_|
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Pursuant to Rule 429(a) of the Securities Act of 1933, as amended, a combined
prospectus is being used in this registration statement, and pursuant to Rule
429(b) of the Securities Act of 1933, as amended, the earlier registration
statements to which the combined prospectus relates are the Company's Form S-3
Registration Statement filed on August 4, 2001 (Registration File No. 333-43060)
and Form S-3 Registration Statement filed on July 11, 2000, as amended on August
2, 2000 (Registration File No. 333-41156).
CALCULATION OF REGISTRATION FEE
=========================================================================================================
Title of each class of Amount to be Proposed maximum Proposed maximum Amount of
securities to be registered(1) offering price per aggregate offering registration
registered (2) unit(3) price(3) fee(3)
Class A Common Stock,
par value $0.01 per
share 42,266,695 $ 0.58 $ 24,514,683 $ (3)(4)
=========================================================================================================
(1) Includes 38,603,721 shares issuable upon conversion of outstanding senior
convertible notes or mandatorily issuable in payment of a portion of the
interest on such notes. The notes are convertible into Class A common
stock, $0.01 par value per share, of EasyLink Services Corporation at
various conversion prices, each of which is subject to adjustment under
certain circumstances. This registration statement includes such
additional shares of Class A common stock as may be issuable pursuant to
such adjustments.
(2) Pursuant to Rule 429 of the General Rules and Regulations under the
Securities Act of 1933, as amended, the prospectus which constitutes part
of this registration statement also relates to the remaining 811,944
shares of common stock registered on Form S-3 (File No. 333-43060) and
Form S-3 (File No. 333-41156), which registration statements are still
effective. Filing fees of $240.58 and $1,165.73, respectively, were
previously paid for the registration of those 811,944 shares.
(3) Estimated in accordance with Rule 457(c) under the Securities Act solely
for the purpose of computing the registration fee based upon the average
of the high and low prices of the Class A common stock on May 18, 2001, as
quoted on the Nasdaq National Market.
(4) On April 27, 2001, an aggregate of 40,034,256 shares was registered at a
proposed maximum offering price per unit estimated pursuant to Rule 457(c)
under the Securities Act of $0.635 for which EasyLink Services paid a
registration fee of $6,355. This Amendment No. 1 registers an additional
2,232,439 shares at a proposed maximum offering price per unit of $ 0.58,
estimated as described in footnote 3 above and requiring an additional
registration fee of $ 558.11.
The registrant hereby amends this registration statement on such date or dates
as may be necessary to delay its effective date until the registrant shall file
a further amendment which specifically states that this registration statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until this registration statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
ii
The information in the prospectus is not complete and may be changed. We may not
sell these securities until a registration statement relating to these
securities filed with the Securities and Exchange Commission is effective. This
prospectus is not an offer to sell these securities, and it is not soliciting an
offer to buy these securities in any state where the offer or sale is not
permitted.
Subject to Completion, Dated May 22, 2001
PROSPECTUS
43,078,639 Shares
EasyLink Services Corporation
Class A common stock
----------------------
This prospectus relates to the offering of our Class A common stock held
by selling stockholders or issuable upon conversion of or in payment of a
portion of the interest on our outstanding senior convertible notes held by
other selling stockholders. The selling stockholders may sell the shares from
time to time. We will pay certain of the expenses of this offering; however,
except with respect to 185,686 of the shares covered by this prospectus,
EasyLink Services is not responsible for the cost of brokerage commissions and
discounts. We will not receive any proceeds from the sale of shares by the
selling stockholders.
The selling stockholders may offer and sell all of the shares in the
over-the-counter market or on one or more exchanges. The selling stockholders
may sell the shares at the then prevailing market price for the shares or in
negotiated transactions.
Our Class A common stock is listed on the Nasdaq National Market under the
symbol "EASY." On May 21, 2001, the closing price of our Class A common stock on
the Nasdaq National Market was $0.60 per share.
This investment involves risk. You should purchase only if you can afford
a complete loss. See "Risk Factors" beginning on page 6.
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Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
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The date of this prospectus is May , 2001
TABLE OF CONTENTS
Page
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Incorporation of Documents By Reference................................ 2
Where You Can Get More Information..................................... 3
Cautionary Statements Regarding Forward-Looking Statements............. 3
Prospectus Summary..................................................... 4
Risk Factors........................................................... 6
Use of Proceeds........................................................ 23
Description of Capital Stock........................................... 23
Selling Stockholders................................................... 27
Plan of Distribution................................................... 31
Legal Matters.......................................................... 32
Experts................................................................ 32
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You should rely only on the information contained in this prospectus. We
have not authorized anyone to provide you with information different from that
contained in this prospectus. The selling stockholders are offering to sell, and
seeking offers to buy, the Class A common stock only in jurisdictions where
offers and sales are permitted. The information contained in this prospectus is
accurate only as of the date of this prospectus, regardless of the time of
delivery of this prospectus or the date of any sale of the Class A common stock.
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Information contained on our Web sites will not be deemed to be part of this
prospectus.
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INCORPORATION OF DOCUMENTS BY REFERENCE
We furnish our stockholders with annual reports containing audited
financial statements and other appropriate reports. We also file annual,
quarterly and current reports, proxy statements and other information with the
Securities and Exchange Commission. Instead of repeating in this prospectus
information that we have already filed with the Securities and Exchange
Commission, rules of the Securities and Exchange Commission permit us to
"incorporate by reference" the information we file with them. These rules mean
that we can disclose important information to you by referring you to those
documents that we have previously filed with the Securities and Exchange
Commission. These documents are considered to be part of this prospectus. Any
documents that we file with the Securities and Exchange Commission in the future
will also be considered to be part of this prospectus and will automatically
update and supersede the information in this prospectus. We incorporate by
reference the documents listed below and any future filings we make with the
Securities and Exchange Commission under Sections 13(a), 13(c), 14, or 15(d) of
the Securities Exchange Act of 1934 until the selling stockholders sell all of
the Class A common stock offered by this prospectus.
o Our Annual Report on Form 10-K for the fiscal year ended December
31, 2000, filed with the Commission on April 2, 2001;
o Our Quarterly Report on Form 10-Q for the fiscal quarter ended March
31, 2001;
o Our Current Reports on Form 8-K and all amendments thereto on Form
8-K/A filed with the
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Commission on August 23, 1999, November 3, 1999, February 11, 2000,
March 28, 2000, April 24, 2000, May 26, 2000, January 10, 2001,
January 17, 2001, February 7, 2001, February 8, 2001, February 13,
2001, February 26, 2001, March 9, 2001, March 26, 2001, May 9, 2001
and May 18, 2001 and
o Our Definitive Proxy Statement filed on April 27, 2001.
WHERE YOU CAN GET MORE INFORMATION
We have filed a registration statement with the Securities and Exchange
Commission to register the Class A common stock that the selling stockholders
are offering to you. This prospectus is part of that registration statement. As
allowed by the Securities and Exchange Commission's rules, we have not included
in this prospectus all of the information that is included in the registration
statement. At your oral or written request, we will provide to you, without
charge, a copy of the registration statement or any of the exhibits to the
registration statement or any or all of the other information that has been
incorporated by reference in this prospectus but not delivered with this
prospectus. If you want more information, write or call us at:
EasyLink Services Corporation
399 Thornall Street
Edison, NJ 08837
Telephone: (732) 906-2000
Attention: Investor Relations
You may also obtain a copy of any filing we have made with the Securities
and Exchange Commission directly from the Securities and Exchange Commission.
You may either:
o read and copy reports, proxy and information statements or other
information we have filed with the Securities and Exchange
Commission at the Securities and Exchange Commission's public
reference room at 450 Fifth Street N.W., Washington, D.C 20549.
o obtain copies of reports, proxy and information statements and other
information that we have filed with the Securities and Exchange
Commission on the Securities and Exchange Commission's Internet web
site at http://www.sec.gov.
You can get more information about the Securities and Exchange
Commission's public reference room by calling the Securities and Exchange
Commission at 1-800-SEC-0330.
CAUTIONARY STATEMENTS REGARDING FORWARD-LOOKING STATEMENTS
We make forward-looking statements within the "safe harbor" provisions of
the Private Securities Litigation Reform Act of 1995 throughout this prospectus.
These statements relate to our future plans, objectives, expectations and
intentions. These statements may be identified by the use of words such as
"expects," "anticipates," "intends," "believes," "estimates," "plans" and
similar expressions. Our actual results could differ materially from those
discussed in these statements. Factors that could contribute to such differences
include, but are not limited to, those discussed in the "Risk Factors" section
of this prospectus.
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PROSPECTUS SUMMARY
This summary highlights information contained elsewhere or incorporated by
reference in this prospectus. This is not intended to be a complete description
of the matters covered in this prospectus and is subject to and qualified in its
entirety by reference to the more detailed information and financial statements,
including the notes thereto, appearing elsewhere or incorporated by reference in
this prospectus.
Our company
EasyLink Services Corporation, formerly Mail.com, Inc., is a leading
global provider of outsourced messaging services to enterprises and service
providers. EasyLink combines the businesses of Mail.com Business Messaging
Services, Swift Telecommunications, Inc. and the Easylink Services business
acquired from AT&T Corp. by Swift Telecommunications. As a result of this
combination, we offer a comprehensive portfolio of messaging services to
thousands of business customers worldwide including the majority of the Fortune
500. By leveraging these relationships, we believe that we are positioned to
grow in both of the major sectors of the messaging services industry.
Through continued expansion of our messaging services lines of business
and selling multiple services to our large customer base, we seek to establish a
position in the emerging managed and hosted e-mail markets while expanding our
already established position in the message delivery services market. Because
the essential communications computer network companies need to do business in
today's 24x7x365 environment is common across all messaging services, EasyLink
is further positioned to benefit from the scale this business combination
created.
Our services include:
o e-mail and groupware services through which we host and operate on
our premises our customer's e-mail and groupware systems such as
Microsoft Exchange, Novell GroupWise and other Internet e-mail
services which allow users to send and receive their e-mail from any
location connected to the Internet;
o virus protection, unsolicited e-mail or spam control and content
filtering services that protect a customer's e-mail system from
messages before they enter or leave the corporate network;
o message delivery services such as electronic data interchange or
"EDI," telex, desktop fax, broadcast messaging and production
messaging services; and
o professional services such as managed messaging services support,
on-site messaging applications management, help desk and staff
augmentation services.
We provide services on a managed basis that enable our customers to
provide e-mail and groupware, virus protection, spam control and content
filtering and message delivery services to their customers or employees. We
derive revenue from license fees, monthly per-user fees, per-message charges,
per-minute charges and consulting fees.
Other operations
We previously operated an advertising network business. On October 26,
2000, we announced our intention to sell this business to focus exclusively on
our established outsourced messaging business. On
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March 30, 2001, we completed the sale of the advertising network business to
Net2Phone, Inc. Included in the sale were our rights to provide e-mail-based
advertising and permission marketing solutions to advertisers, as well as our
rights to provide e-mail services directly to consumers at the www.mail.com Web
site and in partnership with other Web sites.
In March 2000, we formed WORLD.com, Inc. to develop the Company's
portfolio of domain names into independent Web properties, and subsequently
acquired or formed its subsidiaries Asia.com, Inc. and India.com, Inc. in which
WORLD.com is the majority owner. In November 2000, the Company announced its
intention to sell all assets not related to its core outsourced messaging
business, including Asia.com, Inc., India.com, Inc. and its portfolio of domain
names. On May 3, 2001, our majority-owned subsidiary Asia.com, Inc. completed
the sale of its business to an investor group.
We are a Delaware corporation. Our principal executive offices are located
at 399 Thornall Street, Edison, NJ 08837. Our phone number is (732) 906-2000.
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RISK FACTORS
Before you invest in our Class A common stock, you should carefully
consider the risks described below and the other information included or
incorporated by reference in this prospectus.
We have only a limited operating history, we are involved in a new and unproven
industry and we have determined to focus on our core outsourced messaging
business.
We have only a limited operating history upon which you can evaluate our
business and our prospects. We have offered a commercial email service since
November 1996 under the name iName. We changed our company name to Mail.com,
Inc. in January 1999. In February 2000, we acquired NetMoves Corporation, a
provider of a variety of Internet message delivery services to businesses. In
March 2000, we formed WORLD.com to develop and operate our domain name
properties as independent Web sites. In the fourth quarter of 2000, we announced
our intention to focus exclusively on our outsourced messaging business and to
sell all assets not related to this business. In February 2001, we acquired
Swift Telecommunications, Inc. which had contemporaneously acquired the EasyLink
Services business from AT&T Corp. The EasyLink Services business is a provider
of outsourced e-mail services and of message delivery services such as
electronic data interchange or EDI, fax and telex services. Swift is a provider
of telex services. On March 30, 2001, we announced that we had sold our
advertising network business to Net2Phone, Inc. and on May 3, 2001 our Asia.com,
Inc. subsidiary completed the sale of its business. Our success will depend in
part upon our ability to maintain or expand our sales of message delivery
services such as EDI and fax services to enterprises, the development of a
viable market for fee-based e-mail and groupware services on an outsourced
basis, our ability to compete successfully in those markets and our ability to
successfully sell our non-core assets on favorable terms. For the reasons
discussed in more detail below, there are substantial obstacles to our achieving
and sustaining profitability.
We have incurred losses since inception and expect to incur substantial losses
in the future.
We have generated only limited revenues to date. We have not achieved
profitability in any period, and we may not be able to achieve or sustain
profitability. We incurred a net loss of $68.6 million for the first quarter of
2001 and $229.5 million for the year ended December 31, 2000. We had an
accumulated deficit of $375.7 million as of March 31, 2001. We expect to
continue to incur substantial net losses and negative operating cash flow for
the foreseeable future. We intend to expand our sales and marketing operations,
upgrade and enhance our technology, continue our international expansion, and
improve and expand our management information and other internal systems. We
intend to continue to make strategic acquisitions and investments, which may
result in significant amortization of goodwill and other expenses. We are making
these expenditures in anticipation of higher revenues, but there will be a delay
in realizing higher revenues even if we are successful. If we do not succeed in
substantially increasing our revenues or integrating the EasyLink Services and
Swift businesses with our historical business, our losses will continue
indefinitely and will increase.
If we are unable to raise necessary capital in the future, we may be unable to
fund necessary expenditures.
We anticipate the need to raise additional capital in the near future. At
March 31, 2001, we had $16.6 million of cash and cash equivalents. Our principal
commitments consist of subordinated convertible notes, senior convertible notes,
notes payable, obligations under capital leases, domain asset purchase
obligations, accounts payable and other current obligations and commitments for
capital expenditures. For the year ended December 31, 2000, we received a report
from our independent accountants containing an explanatory paragraph stating
that we suffered recurring losses from operations since inception and have a
working capital deficiency that raise substantial doubt about
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our ability to continue as a going concern. We believe that we will need
additional financing to meet cash requirements for our operations, and the
availability of such financing when needed, on terms acceptable to us, or if at
all, is uncertain. If we are unable to raise additional financing or generate
sufficient cash flow, we may be unable to continue as a going concern.
If we raise additional funds by issuing equity securities or debt
convertible into equity securities, stockholders may experience dilution of
their ownership interest. The amount of dilution resulting from issuance of
additional shares of Class A common stock and securities convertible into Class
A common stock and the potential dilution that may result from future issuances
has significantly increased in light of the decline in our stock price.
Moreover, we could issue preferred stock that has rights senior to those of the
Class A common stock. Some of our stockholders have registration rights that
could interfere with our ability to raise needed capital. If we raise funds by
issuing debt, our lenders may place limitations on our operations, including our
ability to pay dividends.
We intend to sell all of our assets not related to our core outsourced messaging
business but may experience difficulty completing any or all of such sales on
favorable terms or at all.
We recently announced our intention to sell all of our non-core assets,
including our advertising network business, our Asia.com, Inc. and India.com,
Inc. subsidiaries and our portfolio of Internet domain names. On March 30, 2001,
we completed the sale of our advertising network business to Net2Phone. On May
3, 2001, our Asia.com, Inc. subsidiary completed the sale of its business. We
cannot assure you that we will be able to sell all or any of our remaining
non-core assets on favorable terms or at all. We also cannot assure you as to
the timing or the terms and conditions of the sale of any of these assets or the
form or amount of consideration (if any) that may be received. The realizable
value of these assets may ultimately prove to be less than the carrying value
currently reflected in our consolidated financial statements. Moreover, if the
sales are not successfully completed, the market price of our common stock may
decline to the extent that the current market price reflects a market assumption
that such sales will be successfully completed. To the extent that we receive
non-cash consideration in any of these sales, we may not be able to liquidate
this consideration or otherwise turn it into cash for a period of time after we
receive it or at all.
We intend to continue to acquire, or make strategic investments in, other
businesses and acquire or license technology and other assets and we may have
difficulty integrating these businesses or generating an acceptable return.
We have completed a number of acquisitions and strategic investments since
our initial public offering. For example, we acquired NetMoves Corporation, a
provider of a variety of message delivery services to businesses, and The
Allegro Group, Inc., a provider of email and email related services, such as
virus blocking and content screening, to businesses. We recently acquired Swift
Telecommunications, Inc. and the EasyLink Services business that it had
contemporaneously acquired from AT&T Corp. We will continue our efforts to
acquire or make strategic investments in businesses and to acquire or license
technology and other assets, and any of these acquisitions may be material to
us. We cannot assure you that acquisition or licensing opportunities will
continue to be available on terms acceptable to us or at all. Such acquisitions
involve risks, including:
o inability to raise the required capital;
o difficulty in assimilating the acquired operations and personnel;
o inability to retain any acquired member or customer accounts;
disruption of our ongoing business;
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o the need for additional capital to fund losses of acquired
businesses;
o inability to successfully incorporate acquired technology into our
service offerings and maintain uniform standards, controls,
procedures and policies; and
o lack of the necessary experience to enter new markets.
We may not successfully overcome problems encountered in connection with
potential acquisitions. In addition, an acquisition could materially impair our
operating results by diluting our stockholders' equity, causing us to incur
additional debt or requiring us to amortize acquisition expenses and acquired
assets.
We may be unable to successfully integrate the EasyLink Services business
acquired from AT&T.
On February 23, 2001, we completed the acquisition of Swift
Telecommunications, Inc. which had contemporaneously acquired the EasyLink
Services business of AT&T Corp. The EasyLink Services business acquired from
AT&T provides a variety of messaging services such as e-mail, EDI, fax and telex
services. This business was a division of AT&T and was not a separate
independent operating entity. We hired only a portion of the employees of the
business. The messaging network for this business resides on AT&T's managed
network and is being operated and maintained for EasyLink by AT&T pursuant to a
Transition Services Agreement. In addition, AT&T will continue to provide a
variety of business and administrative functions for the business. We plan to
migrate off the AT&T network to the EasyLink network and to assume
responsibility for these other functions over the next two years.
Under the Transition Services Agreement, we are purchasing a variety of
services from AT&T to enable us to continue to operate the business pending the
transition to EasyLink. See Part I. Item 1. Business -- Transition Services
Agreement and Master Carrier Agreement with AT&T Corp. -- in our Form 10-K for
the year ended December 31, 2000 filed on April 2, 2001.
We cannot assure you that we will be able to successfully transition the
EasyLink Services network and other operations from AT&T to us, or successfully
integrate them into our operations, in a timely manner or without incurring
substantial unforeseen expense. Even if successfully transitioned and
integrated, we may be unable to operate the business at expense levels that are
ultimately profitable for us. Our inability to successfully transition,
integrate or operate the network and operations of the EasyLink Services
business will result in a material adverse effect on our business, results of
operations and financial condition.
We have incurred significant indebtedness for money borrowed.
As of March 31, 2001, we had approximately $139 million principal amount
of outstanding indebtedness for borrowed money and capital leases. We may incur
substantial additional indebtedness in the future. The level of our
indebtedness, among other things, could (1) make it difficult for us to make
payments on our indebtedness, (2) make it difficult to obtain any necessary
financing in the future for working capital, capital expenditures, debt service
requirements or other purposes, (3) limit our flexibility in planning for, or
reacting to changes in, our business, and (4) make us more vulnerable in the
event of a downturn in our business.
We may be unable to pay debt service on our indebtedness for money borrowed and
other obligations.
We had an operating loss and negative cash flow during the fourth quarter
of 2000 and for the year
8
ended December 31, 2000 and expect to incur substantial losses and negative cash
flows for the foreseeable future. In addition, we have a substantial amount of
outstanding accounts payable and other obligations. Accordingly, cash generated
by our operations would have been insufficient to pay the amount of interest
payable annually on our outstanding indebtedness or to pay our other
obligations. We cannot assure you that we will be able to pay interest and other
amounts due on our outstanding indebtedness, or our other obligations, on the
scheduled dates or at all. If our cash flow and cash balances are inadequate to
meet our obligations, we could face substantial liquidity problems. We cannot
assure you that the proposed sale of our remaining non-core assets will not
negatively impact our cash flow available to service our debt. If we are unable
to generate sufficient cash flow or otherwise obtain funds necessary to make
required payments, or if we otherwise fail to comply with any covenants in our
indebtedness, we would be in default under these obligations, which would permit
these lenders to accelerate the maturity of the obligations and could cause
defaults under our indebtedness. Any such default could have a material adverse
effect on our business, results of operations and financial condition. We cannot
assure you that we would be able to repay amounts due on our indebtedness if
payment of the indebtedness were accelerated following the occurrence of an
event of default under, or certain other events specified in, the indenture for
the convertible notes, including any deemed sale of all or substantially all of
our assets.
Outsourcing of e-mail and groupware services and message delivery services may
not prove to be viable businesses.
An important part of our business strategy is to leverage our existing
global customer base and global network by continuing to provide the best
message delivery services today and by offering these customers managed e-mail
and other messaging services in the future. The market for managed e-mail,
groupware services and other messaging services such as virus protection, spam
control and content filtering services and professional messaging services is
only beginning to develop. Our success will depend on the continued expansion of
the market for outsourced message delivery services such as EDI and fax services
and the development of viable markets for the outsourcing of managed e-mail and
groupware services, services to protect corporate e-mail systems from viruses,
spam and offensive content and related professional messaging services. Each of
these developments is somewhat speculative.
There are significant obstacles to the development of a sizable market for
messaging services outsourcing. Outsourcing is one of the principal methods by
which we will attempt to reach the size we believe is necessary to be
successful. Security and the reliability of the Internet, however, are likely to
be of concern to enterprises and service providers deciding whether to outsource
their messaging services or to continue to provide it themselves. These concerns
are likely to be particularly strong at larger businesses and service providers,
which are better able to afford the costs of maintaining their own systems.
While we intend to focus exclusively on our outsourced messaging services, we
cannot be sure that we will be able to maintain or expand our business customer
base or that we will be able to sell managed messaging services such as e-mail
and groupware hosting services, virus protection, spam control or content
filtering services or professional services to this customer base. In addition,
the sales cycle for managed messaging services such as hosting services is
lengthy and could delay our ability to generate revenues in the managed
messaging services market. As part of our business strategy, we plan to offer
additional outsourced messaging and other services to existing customers. We
cannot assure you that these customers will purchase these services or will
purchase them at prices that we wish to charge. Furthermore, we may not be able
to generate significant additional revenues by providing our outsourced e-mail
and groupware services to businesses. Standards for pricing in the business
e-mail and groupware services market are not yet well defined and some
businesses and service providers may not be willing to pay the fees we wish to
charge. We cannot assure you that the fees we intend to charge will be
sufficient to offset the related costs of providing these services.
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We may fail to meet market expectations because of fluctuations in our quarterly
operating results, which would cause our stock price to decline.
Although we intend to steadily increase our spending and investment to
support our planned growth, our revenues (and some of our costs) will be much
less predictable. This is likely to result in significant fluctuations in our
quarterly results, and to limit the value of quarter-to-quarter comparisons.
Because of our limited operating history, the emerging nature of our industry
and our planned sale of our non-core assets, we anticipate that securities
analysts will have difficulty in accurately forecasting our results. It is
likely that our operating results in some quarters will be below market
expectations. In this event, the price of our Class A common stock is likely to
decline.
The following are among the factors that could cause significant fluctuations in
our operating results:
o incurrence of other cash and non-cash accounting charges, including
charges resulting from acquisitions or dispositions of assets,
including from the disposition of non-core assets such as our
Asia.com and India.com subsidiaries, and write-downs of impaired
assets;
o non-cash charges associated with repriced stock options;
o system outages, delays in obtaining new equipment or problems with
planned upgrades;
o disruption or impairment of the Internet;
o demand for outsourced messaging services;
o attracting and retaining customers and maintaining customer
satisfaction;
o introduction of new or enhanced services by us or our competitors;
o changes in our pricing policy or that of our competitors;
o changes in governmental regulation of the Internet and messaging in
particular; and
o general economic and market conditions.
Other such factors in our non-core businesses include:
o incurrence of additional expenditures without receipt of offsetting
revenues pending the sale of these businesses.
We expect significant stock based compensation charges related to repriced
options.
In light of the decline in our stock price and in an effort to retain our
employee base, on November 14, 2000, the Company offered to certain of its
employees, officers and directors, other than Gerald Gorman, the right to
reprice certain outstanding stock options to an exercise price equal to the
closing price of the Company's Class A common stock on NASDAQ on November 14,
2000. Options to purchase 6,327,986 shares were repriced. The repriced options
vest at the same rate that they would have vested under their original terms
except that shares issuable upon exercise of these options may not be sold until
after November 14, 2001. In March 2000, Financial Accounting Standards Board
("FASB") issued FASB Interpretation No. 44, "Accounting for Certain Transactions
Involving Stock Compensation,
10
an interpretation of APB Opinion No. 25" ("Interpretation"). Among other issues,
this Interpretation clarifies (a) the definition of employee for purposes of
applying Opinion 25, (b) the criteria for determining whether a plan qualifies
as a noncompensatory plan, (c) the accounting consequence of various
modifications to the terms of a previously fixed stock option or award, and (d)
the accounting for an exchange of stock compensation awards in a business
combination. As a result, under the Interpretation, stock options repriced after
December 15, 1998 are subject to variable plan accounting treatment. This
guidance requires the Company to remeasure compensation cost for outstanding
repriced options each reporting period based on changes in the market value of
the underlying common stock. Depending upon movements in the market value of the
Company's common stock, this accounting treatment may result in significant
non-cash compensation charges in future periods.
Several of our competitors have substantially greater resources, longer
operating histories, larger customer bases and broader product offerings.
Our business is, and we believe will continue to be, intensely
competitive. See "Part I Item 1- Business -Competition in our Form 10-K for the
year ended December 31, 2000 filed on April 2, 2001."
Many of our competitors have greater market presence, engineering and
marketing capabilities, and financial, technological and personnel resources
than those available to us. As a result, they may be able to develop and expand
their communications and network infrastructures more quickly, adapt more
swiftly to new or emerging technologies and changes in customer requirements,
take advantage of acquisition and other opportunities more readily, and devote
greater resources to the marketing and sale of their products and services. In
addition, current and potential competitors have established or may establish
cooperative relationships among themselves or with third parties to increase the
ability of their services to address the needs of our current and prospective
customers. Accordingly, it is possible that new competitors or alliances among
competitors may emerge and rapidly acquire significant market share. In addition
to direct competitors, many of our larger potential customers may seek to
internally fulfill their messaging needs through the deployment of their own on
premises messaging systems.
Some of our competitors provide a variety of business services and
products such as Internet access and other telecommunications services, browser
software, homepage design, Web site hosting and software and hardware solutions
in addition to messaging services. The ability of these competitors to offer a
broader suite of complementary services may give them a considerable advantage
over us.
The level of competition is likely to increase as current competitors
increase the sophistication of their offerings and as new participants enter the
market. In the future, as we expand our service offerings, we expect to
encounter increased competition in the development and delivery of these
services. We may not be able to compete successfully against our current or
future competitors.
Our rapid expansion is straining our existing resources, and if we are not able
to manage our growth effectively, our business and operating results will
suffer.
We have aggressively expanded our operations in anticipation of continued
growth in our business and as a result of our acquisitions. We have also
developed the technology and infrastructure to offer a range of services in the
market for outsourced messaging services. At the same time, we announced our
intention to sell all of our non-core assets, including our advertising network
business, our World.com subsidiaries Asia.com and India.com and our portfolio of
domain names. This expansion and the decision to sell all of our non-core assets
has placed, and we expect it to continue to place, a significant strain on our
managerial, operational and financial resources. If we cannot manage our growth
or the sale of non-core assets effectively, our business, operating results and
financial condition will suffer.
11
It is difficult to retain key personnel and attract additional qualified
employees in our business and the loss of key personnel and the burden of
attracting additional qualified employees may impede the operation and growth of
our business and cause our revenues to decline.
Our future success depends to a significant extent on the continued
service of our key technical, sales and senior management personnel, but they
have no contractual obligation to remain with us. In particular, our success
depends on the continued service of Gerald Gorman, our Chairman, Thomas
Murawski, our Chief Executive Officer, Brad Schrader, our President, and Debra
McClister, our Executive Vice President and Chief Financial Officer. The loss of
the services of Messrs. Gorman, Murawski or Schrader or of Ms. McClister, or
several other key employees, would impede the operation and growth of our
business. The successful disposition of our non-core businesses depends on the
continued services of Gary Millin, Chief Executive Officer of World.com.
To manage our existing business and handle any future growth, we will have
to attract, retain and motivate additional highly skilled employees. In
particular, we will need to hire and retain qualified salespeople if we are to
meet our sales goals. We will also need to hire and retain additional
experienced and skilled technical personnel in order to meet the increasing
technical demands of our expanding business. Competition for employees in
messaging-related businesses is intense. We have in the past experienced, and
expect to continue to experience, difficulty in hiring and retaining employees
with appropriate qualifications. If we are unable to do so, our management may
not be able to effectively manage our business, exploit opportunities and
respond to competitive challenges.
Our business is heavily dependent on technology, including technology that has
not yet been proven reliable at high traffic levels and technology that we do
not control.
The performance of our computer systems is critical to the quality of
service we are able to provide to our customers. If our services are unavailable
or fail to perform to their satisfaction, they may cease using our service. In
addition, our agreements with several of our customers establish minimum
performance standards. If we fail to meet these standards, our customers could
terminate their relationships with us and assert claims for monetary damages.
We need to upgrade our computer systems to accommodate increases in messaging
traffic and to accommodate increases in the usage of our services, but we may
not be able to do so while maintaining our current level of service, or at all.
We must continue to expand and adapt our computer systems as the number of
customers and the amount of information they wish to transmit increases and as
their requirements change, and as we further develop our messaging services.
Because we have only been providing some of our services such as managed e-mail
and groupware services for a limited time, and because our computer systems for
these services have not been tested at greater capacities, we cannot guarantee
the ability of our computer systems to connect and manage a substantially larger
number of customers or meet the needs of business customers at high transmission
speeds. If we cannot provide the necessary service while maintaining expected
performance, our business would suffer and our ability to generate revenues
through our services would be impaired.
The expansion and adaptation of our computer systems will require
substantial financial, operational and managerial resources. We may not be able
to accurately project the timing of increases in email traffic or other customer
requirements. In addition, the very process of upgrading our computer systems is
likely to cause service disruptions. This is because we will have to take
various elements of the network out of service in order to install some
upgrades.
12
Our computer systems may fail and interrupt our service.
Our customers have in the past experienced interruptions in our services.
We believe that these interruptions will continue to occur from time to time.
These interruptions are due to hardware failures, unsolicited bulk emails that
overload our system and other computer system failures. In particular, we have
experienced outages and delays in email delivery and access to our email service
related to disk failures, the implementation of changes to our computer system,
insufficient storage capacity and other problems. These failures have resulted
and may continue to result in significant disruptions to our service. Although
we plan to install backup computers and implement procedures to reduce the
impact of future malfunctions in these systems, the presence of these and other
single points of failure in our network increases the risk of service
interruptions. Some aspects of our computer systems are not redundant. These
include our database system and our email storage system, which stores emails
and other data. In addition, substantially all of our computer and
communications systems relating to our email services other than the systems
located and operated by AT&T Corp. under our Transition Services Agreement with
them are currently located in our primary data centers in Manhattan, Edison, New
Jersey and Dayton, Ohio. We currently do not have alternate sites from which we
could conduct these operations in the event of a disaster. Our computer and
communications hardware is vulnerable to damage or interruption from fire,
flood, earthquake, power loss, telecommunications failure and similar events.
Our services would be suspended for a significant period of time if any of our
primary data centers was severely damaged or destroyed. We might also lose
stored emails and other customer files, causing significant customer
dissatisfaction and possibly giving rise to claims for monetary damages.
Our services will become less desirable or obsolete if we are unable to keep up
with the rapid changes characteristic of our business.
Our success will depend on our ability to enhance our existing services
and to introduce new services in order to adapt to rapidly changing
technologies, industry standards and customer demands. To compete successfully,
we will have to accurately anticipate changes in business and consumer demand
and add new features to our services very rapidly. We also have to regularly
upgrade our software to ensure that it remains compatible with the wide and
changing variety of Web browsers and other software used by our customers. We
may not be able to integrate the necessary technology into our computer systems
on a timely basis or without degrading the performance of our existing services.
We cannot be sure that, once integrated, new technology will function as
expected. Delays in introducing effective new services could cause existing and
potential customers to forego use of our services and to use instead those of
our competitors.
Our business will suffer if we are unable to provide adequate security for our
service, or if our service is impaired by security measures imposed by third
parties.
Security is a critical issue for any outsourced messaging service, and
presents a number of challenges for us.
If we are unable to maintain the security of our service, our reputation
and our ability to attract and retain customers may suffer, and we may be
exposed to liability. Third parties may attempt to breach our security or that
of our customers whose networks we may maintain or for whom we provide services.
If they are successful, they could obtain information that is sensitive or
confidential to a customer or otherwise disrupt a customer's operations or
obtain confidential information, including our customer's profiles, passwords,
financial account information, credit card numbers, stored email or other
personal or business information. Our customers or their employees may assert
claims for money damages for any breach in our security and any breach could
harm our reputation.
13
Our computers are vulnerable to computer viruses, physical or electronic
break-ins and similar incursions, which could lead to interruptions, delays or
loss of data. We expect to expend significant capital and other resources to
license or create encryption and other technologies to protect against security
breaches or to alleviate problems caused by any breach. Nevertheless, these
measures may prove ineffective. Our failure to prevent security breaches may
expose us to liability and may adversely affect our ability to attract and
retain customers and develop our business market.
Security measures taken by others may interfere with the efficient
operation of our service, which may harm our reputation, adversely impact our
ability to attract and retain customers. "Firewalls" and similar network
security software employed by many ISPs, employers and schools can interfere
with the operation of our services.
We are dependent on licensed technology.
We license a significant amount of technology from third parties,
including technology related to our managed e-mail and groupware services, virus
protection, spam control and content filtering services, Internet fax services,
billing processes and database. We anticipate that we will need to license
additional technology to remain competitive. We may not be able to license these
technologies on commercially reasonable terms or at all. Third-party licenses
expose us to increased risks, including risks relating to the integration of new
technology, the diversion of resources from the development of our own
proprietary technology, a greater need to generate revenues sufficient to offset
associated license costs, and the possible termination of or failure to renew an
important license by the third-party licensor.
If the Internet and other third-party networks on which we depend to deliver our
services become ineffective as a means of transmitting data, the benefits of our
service may be severely undermined.
Our business depends on the effectiveness of the Internet as a means of
transmitting data. The recent growth in the use of the Internet has caused
frequent interruptions and delays in accessing and transmitting data over the
Internet. Any deterioration in the performance of the Internet as a whole could
undermine the benefits of our services. Therefore, our success depends on
improvements being made to the entire Internet infrastructure to alleviate
overloading and congestion. We also depend on telecommunications network
suppliers such as AT&T Corp., Worldcom, MFS, BBN Planet and UUNET for a variety
of telecommunications and Internet services.
Pending the transition of the network and operations for the EasyLink
Services business acquired from AT&T, we are dependent on the services being
provided to us under our Transition Services Agreement with AT&T. See "Risk
Factors - We May Be Unable to Successfully Integrate the EasyLink Services
Business Acquired From AT&T."
Gerald Gorman controls EasyLink and will be able to prevent a change of control.
Gerald Gorman, our Chairman, beneficially owned as of April 30, 2001 Class
A and Class B common stock representing approximately 57% of the voting power of
our outstanding common stock. Each share of Class B common stock entitles the
holder to 10 votes on any matter submitted to the stockholders. As a result of
his share ownership, Mr. Gorman will be able to determine the outcome of all
matters requiring stockholder approval, including the election of directors,
amendment of our charter and approval of significant corporate transactions. Mr.
Gorman will be in a position to prevent a change in control of EasyLinkServices
even if the other stockholders were in favor of the transaction.
We have agreed to permit Federal Partners, L.P., a holder of our senior
convertible notes and Class A common stock, to designate one member of our board
of directors. In addition, in connection with the
14
acquisition of Swift Telecommunications, Inc., we agreed to appoint George Abi
Zeid, the former sole shareholder of Swift, as a director and as our President
of International Operations. In addition, we and Mr. Gorman have agreed to
permit our stockholders who formerly held our preferred stock to designate a
total of three members of our board of directors. Currently, such former holders
of our preferred stock have no designee on our board.
Our charter contains provisions that could deter or make more expensive a
takeover of EasyLink. These provisions include the ability to issue "blank
check" preferred stock without stockholder approval.
Our goal of building brand identity is likely to be difficult and expensive.
We announced on April 2, 2001 that we have changed our corporate name to
EasyLink Services Corporation to more accurately reflect the strengths,
relationships and solutions that we offer. We believe that a quality brand
identity will be essential if we are to develop our business services market. We
do not have experience with some of the types of marketing that we are currently
using. If our marketing efforts cost more than anticipated or if we cannot
increase our brand awareness, our losses will increase and our ability to
succeed will be seriously impeded.
Our expansion into international markets is subject to significant risks and our
losses may increase and our operating results may suffer if our revenues from
international operations do not exceed the costs of those operations.
We intend to continue to expand into international markets and to expend
significant financial and managerial resources to do so. We have limited
experience in international operations and may not be able to compete
effectively in international markets. If our revenues from international
operations do not exceed the expense of establishing and maintaining these
operations, our losses will increase and our operating results will suffer. We
face significant risks inherent in conducting business internationally, such as:
o uncertain demand in foreign markets for messaging services;
o difficulties and costs of staffing and managing international
operations;
o differing technology standards;
o difficulties in collecting accounts receivable and longer collection
periods;
o economic instability and fluctuations in currency exchange rates and
imposition of currency exchange controls;
o potentially adverse tax consequences;
o regulatory limitations on the activities in which we can engage and
foreign ownership limitations on our ability to hold an interest in
entities through which we wish to conduct business;
o political instability, unexpected changes in regulatory
requirements, and reduced protection for intellectual property
rights in some countries;
o export restrictions, and
15
o difficulties in enforcing contracts and potentially adverse
consequences.
Regulation of messaging services and Internet use is evolving and may adversely
impact our business.
There are currently few laws or regulations that specifically regulate
activity on the Internet. However, laws and regulations may be adopted in the
future that address issues such as user privacy, pricing, and the
characteristics and quality of products and services. For example, the
Telecommunications Act of 1996 restricts the types of information and content
transmitted over the Internet. Several telecommunications companies have
petitioned the FCC to regulate ISPs and online service providers in a manner
similar to long distance telephone carriers and to impose access fees on these
companies. This could increase the cost of transmitting data over the Internet.
Any new laws or regulations relating to the Internet could adversely affect our
business.
Moreover, the extent to which existing laws relating to issues such as
property ownership, pornography, libel and personal privacy are applicable to
the Internet is uncertain. We could face liability for defamation, copyright,
patent or trademark infringement and other claims based on the content of the
email or fax transmitted over our system. We may also face liability for
unsolicited commercial and other email and fax messages sent by users of our
services. We do not and cannot screen all the content generated and received by
users of our services. Some foreign governments, such as Germany, have enforced
laws and regulations related to content distributed over the Internet that are
more strict than those currently in place in the United States. We may be
subject to legal proceedings and damage claims if we are found to have violated
laws relating to email content.
A majority of our services are currently classified by the FCC as
"information services," and therefore are exempt from public utility regulation.
To the extent that we are permitted to offer all of our services as a single
"bundle of interrelated products," then the whole bundle is currently exempt
from regulation as a "hybrid service." If considered independent of the bundle,
however, our fax-to-fax services, when conducted over circuit-switched network
lines, and our telex services, qualify as "telecommunications services," and
would thus be subject to federal regulation. Moreover, while the FCC has until
now exercised forebearance in regulating IP communications, it has indicated
that it might regulate certain IP communications as "telecommunications
services" in the future. There can be no assurance that the FCC will not change
its regulatory classification system and thereby subject us to unexpected and
burdensome additional regulation. In addition, a variety of states regulate
certain of our services when provided on an instrastate basis.
We obtained authorizations from the FCC to provide such telecommunications
services in conjunction with our acquisition of these telecommunications
services from Netmoves, and are classified as a "non-dominant interexchange
carrier." While the FCC has generally chosen not to exercise its statutory power
to closely regulate the charges or practices of non-dominant carriers, it will
act upon complaints against such carriers for failure to comply with statutory
obligations or with the FCC's rules, regulations and policies - to the extent
that such services are, in the FCC's view, subject to regulation.
Continued changes in telecommunications regulations may significantly
reduce the cost of domestic and international calls. To the extent that the cost
of domestic and international calls decreases, we will face increased
competition for our fax services which may have a material adverse effect on our
business, financial condition or results in operations.
In connection with the deployment of Internet-capable nodes in countries
throughout the world, we are required to satisfy a variety of foreign regulatory
requirements. We intend to explore and seek to comply with these requirements on
a country-by-country basis as the deployment of Internet-capable fax
16
nodes continues. There can be no assurance that we will be able to satisfy the
regulatory requirements in each of the countries currently targeted for node
deployment, and the failure to satisfy such requirements may prevent us from
installing Internet-capable fax nodes in such countries. The failure to deploy a
number of such nodes could have a material adverse effect on our business,
operating results and financial condition.
Our fax nodes and our faxLauncher service utilize encryption technology in
connection with the routing of customer documents through the Internet. The
export of such encryption technology is regulated by the United States
government. We have authority for the export of such encryption technology other
than to Cuba, Iran, Iraq, Libya, North Korea, and Rwanda. Nevertheless, there
can be no assurance that such authority will not be revoked or modified at any
time for any particular jurisdiction or in general. In addition, there can be no
assurance that such export controls, either in their current form or as may be
subsequently enacted, will not limit our ability to distribute our services
outside of the United States or electronically. While we take precautions
against unlawful exportation of our software, the global nature of the Internet
makes it virtually impossible to effectively control the distribution of our
services. Moreover, future Federal or state legislation or regulation may
further limit levels of encryption or authentication technology. Any such export
restrictions, the unlawful exportation of our services, or new legislation or
regulation could have a material adverse effect on our business, financial
condition and results of operations.
The legal structure and scope of operations of our subsidiaries in some
foreign countries may be subject to restrictions which could result in severe
limits to our ability to conduct business in these countries and this could have
a material adverse effect on our financial position, results of operations and
cash flows. To the extent that we develop or offer messaging services in foreign
countries, we will be subject to the laws and regulations of these countries.
The laws and regulations relating to the Internet in many countries are evolving
and in many cases are unclear as to their application. For example, in India,
the PRC and other countries we may be subject to licensing requirements with
respect to the activities in which we propose to engage and we may also be
subject to foreign ownership limitations or other approval requirements that
preclude our ownership interests or limit our ownership interests to up to 49%
of the entities through which we propose to conduct any regulated activities. If
these limitations apply to our activities, including our activities conducted
through our subsidiaries, our opportunities to generate revenue will be reduced,
our ability to compete successfully in these markets will be adversely affected,
our ability to raise capital in the private and public markets may be adversely
affected and the value of our investments and acquisitions in these markets may
decline. Moreover, to the extent we are limited in our ability to engage in
certain activities or are required to contract for these services from a
licensed or authorized third party, our costs of providing our services will
increase and our ability to generate profits may be adversely affected.
Our intellectual property rights are critical to our success, but may be
difficult to protect.
We regard our copyrights, service marks, trademarks, trade secrets, domain
names and similar intellectual property as critical to our success. We rely on
trademark and copyright law, trade secret protection and confidentiality and/or
license agreements with our employees, customers, strategic partners and others
to protect our proprietary rights. Despite our precautions, unauthorized third
parties may improperly obtain and use information that we regard as proprietary.
Third parties may submit false registration data attempting to transfer key
domain names to their control. Our failure to pay annual registration fees for
key domain names may result in the loss of these domains to third parties. Third
parties have challenged our rights to use some of our domain names, and we
expect that they will continue to do so, which may affect the value that we can
derive from the planned disposition of the domain names included among our
non-core assets.
17
The status of United States patent protection for software products is not
well defined and will evolve as additional patents are granted. If we apply for
a patent in the future, we do not know if our application will be issued with
the scope of the claims we seek, if at all. The laws of some foreign countries
do not protect proprietary rights to the same extent as do the laws of the
United States. Our means of protecting our proprietary rights in the United
States or abroad may not be adequate and competitors may independently develop
similar technology.
Third parties may infringe or misappropriate our copyrights, trademarks
and similar proprietary rights. In addition, other parties have asserted and may
in the future assert infringement claims against us. We cannot be certain that
our services do not infringe issued patents. Because patent applications in the
United States are not publicly disclosed until the patent is issued,
applications may have been filed which relate to our services.
We have been and may continue to be subject to legal proceedings and
claims from time to time in the ordinary course of our business, including
claims related to the use of our domain names and claims of alleged infringement
of the trademarks and other intellectual property rights of third parties. Third
parties have challenged our rights to register and use some of our domain names
based on trademark principles and on the recently enacted Anticybersquatting
Consumer Protection Act. If domain names become more valuable to businesses and
other persons, we expect that third parties will continue to challenge some of
our domain names and that the number of these challenges may increase. In
addition, the existing or future laws of some countries, in particular countries
in Europe, may limit or prohibit the use in those countries or elsewhere of some
of our geographic names that contain the names of a city in those countries or
the name of those countries. Intellectual property litigation is expensive and
time-consuming and could divert management's attention away from running our
business. These claims and the potential for such claims may reduce the value
that we can expect to receive from the disposition of our domain names.
A substantial amount of our common stock may come onto the market in the future,
which could depress our stock price.
Sales of a substantial number of shares of our common stock in the public
market could cause the market price of our Class A common stock to decline. As
of April 30, 2001, we had an aggregate of 87,501,766 shares of Class A and Class
B common stock outstanding. In addition, we are obligated to issue an additional
1,000,000 shares of our Class A common stock subject to certain conditions if
the closing price of our Class A common stock has not traded at or above $10 per
share for five consecutive days. As of April 30, we had options to purchase
approximately 12.7 million shares of Class A common stock outstanding. As of
April 30, 2001, we had warrants to purchase 1,071,233 shares of Class A common
stock outstanding. As of April 30, 2001, after giving effect to our recent note
exchanges and senior note issuances, we had approximately 30,798,598 shares of
Class A common stock issuable upon conversion of outstanding senior convertible
notes at exercise prices ranging from $1 per share to $1.75 per share and up to
an additional 7,699,649 shares of Class A common stock issuable over five years
in payment of a portion of the interest on such senior notes. In addition, we
had 1,271,504 shares of Class A common stock issuable upon conversion of our
remaining outstanding 7% Convertible Subordinated Notes due 2005 at an exercise
price of $18.95 per share. In addition, the holders of Series A Preferred Stock
of our India.com subsidiary have the right during the 60 day period commencing
December 31, 2000 to exchange such preferred stock for shares of our Class A
common stock based on the original purchase price of such stock, which in the
aggregate was $14.25 million, divided by the closing price of our Class A common
stock around December 31, 2001. Under the original exchange agreement, the
exchange price was subject to a floor of $4.50. In consideration of a $5 million
bridge funding arrangement provided to us by India.com during the first quarter
of 2001, the exchange price floor was initially reduced to $3.00 and is subject
to further reduction to $1.25 for the percentage of shares of Series
18
A preferred stock equal to the percentage of the India.com bridge loan drawn
down. As of April 30, 2001, 2001, 80% of the $5 million bridge loan has been
drawn down. If the full amount of the India.com bridge loan is drawn down, and
all of the shares of preferred stock are exchanged and the closing price of our
Class A common stock around December 31, 2001 is $1.25 per share or less, then
we would be obligated to issue 10,961,538 shares of Class A common stock.
As of April 30, 2001, approximately 58,197,428 shares of Class A common
stock and Class B common stock were freely tradable, in some cases subject to
the volume and manner of sale limitations contained in Rule 144. As of such
date, approximately 29,304,338 shares of Class A common stock will become
available for sale at various later dates upon the expiration of one-year
holding periods or upon the expiration of any other applicable restrictions on
resale. We are likely to issue large amounts of additional Class A common stock,
which may also be sold and which could adversely affect the price of our stock.
As of April 30, 2001, the holders of approximately 28,474,756 shares of
outstanding Class A common stock and the holders of approximately 51,731,289
shares of Class A common stock issuable upon conversion of our outstanding
senior or subordinated convertible notes, issuable in payment of interest over
the next five years on our senior convertible notes, issuable upon exercise of
the exchange right held by holders of India.com preferred stock and issuable
upon exercise of the warrants issued to India.com, had the right, subject to
various conditions, to require us to file registration statements covering their
shares, or to include their shares in registration statements that we may file
for ourselves or for other stockholders. By exercising their registration rights
and selling a large number of shares, these holders could cause the price of the
Class A common stock to fall. An undetermined number of these shares have been
sold publicly pursuant to Rule 144.
Our Class A common stock may be subject to delisting from the Nasdaq National
Market.
Our Class A common stock faces potential delisting from the Nasdaq
National Market which could hurt the liquidity of our Class A common stock. We
may be unable to comply with the standards for continued listing on the Nasdaq
National Market. These standards require, among other things, that our Class A
common stock have a minimum bid price of $1 and state that a deficiency shall
exist if such minimum bid price remains below $1 for a period of thirty
consecutive business days. In addition, if our stock price is below $5 per
share, we must maintain minimum net tangible assets of at least $4 million. In
lieu of the minimum net tangible assets requirement, under a proposed Nasdaq
rule currently in effect under a "pilot program" until July 1, 2001, we may
instead comply with a $10 million total stockholders' equity requirement. We
cannot assure you that the proposed rule will be adopted or that the pilot
program will be extended if the proposed rule is not adopted by July 1, 2001.
The minimum bid price of our stock has been below $1 during various periods
during the fourth quarter of 2000 and the first quarter of 2001 and has been
below $1 during the period from March 14, 2001 through March 31, 2001. In
addition, as of December 31, 2000, the company did not have a minimum tangible
net assets of $4 million. We received a notice from NASDAQ advising us that if
we do not demonstrate compliance with the $1 minimum bid requirement for at
least 10 consecutive trading days, or a longer period as determined by Nasdaq,
on or before July 23, 2001, our Class A common stock will be delisted. In this
event, we would be entitled to appeal the determination of the staff of Nasdaq.
No assurance can be given that such an appeal, if taken, would be successful. If
our common stock were to be delisted from trading on the Nasdaq National Market
and were neither re-listed thereon nor listed for trading on the Nasdaq Small
Cap Market or other recognized securities exchange, trading, if any, in the
Class A common stock may continue to be conducted on the OTC Bulletin Board or
in the non-Nasdaq over-the-counter market. Delisting would result in limited
release of the market price of the Class A common stock and limited news
coverage of EasyLink and could restrict investors' interest in our Class A
common stock and materially adversely affect the trading market and prices for
our Class A common stock and our ability to issue additional
19
securities or to secure additional financing.
Our stock price has been volatile and we expect that it will continue to be
volatile.
Our stock price has been volatile since our initial public offering and we
expect that it will continue to be volatile. As discussed above, our financial
results are difficult to predict and could fluctuate significantly. In addition,
the market prices of securities of Internet-related companies have been highly
volatile. A stock's price is often influenced by rapidly changing perceptions
about the future of the Internet or the results of other Internet or technology
companies, rather than specific developments relating to the issuer of that
particular stock. As a result of volatility in our stock price, a securities
class action may be brought against us. Class-action litigation could result in
substantial costs and divert our management's attention and resources.
We have continuing obligations in connection with the sale of our advertising
network business.
On March 30, 2001, we completed the sale of our advertising network
business to Net2Phone, Inc. Included in the sale were our rights to provide
e-mail-based advertising and permission marketing solutions to advertisers, as
well as our rights to provide e-mail services directly to consumers at the
www.mail.com Web site and in partnership with other Web sites. In connection
with the sale, we entered into a hosting agreement under which we will host or
arrange to host the consumer e-mailboxes for Net2Phone for a minimum of one
year. We plan to transition the hosting of the consumer e-mail boxes to a third
party provider in the near future.
A portion of the payments payable to us by Net2Phone under our hosting
agreement with them are conditioned upon the successful transition of the
hosting of the consumer e-mail boxes to the third party provider as well as the
assignment to Net2Phone of our contracts to provide consumer e-mail services for
third party Web sites. We cannot assure you that we will successfully complete
the transition to the third party provider or that the contracts with the third
party Web sites will be successfully assigned to Net2Phone. If we do not satisfy
or we experience delays in these transition and assignment requirements, our
payments under the hosting agreement with Net2Phone will be reduced or delayed.
If we do not successfully transition to the third-party provider, we will
continue to be obligated to host or arrange for the hosting of the consumer
e-mail boxes for Net2Phone. Moreover, even after transition to a third party
provider and assignment of our contracts with third party Web sites to
Net2Phone, we may nonetheless remain liable for our obligations under these
contracts. Accordingly, we may have liability if there is a breach on the part
of the third party to which we transition the hosting or on the part of
Net2Phone under the third party Web site agreements that are assigned to them.
We intend to sell our India.com, Inc. subsidiary and our portfolio of domain
names. Until a sale or other disposition is completed, the following special
risks will continue to apply to these operations:
The limited installed personal computer base and high cost of accessing the
Internet in India limits the pool of potential customers for India.com.
The market penetration rates of personal computers and on-line access in
India are far lower than such rates in the United States. Alternate methods of
obtaining access to the Internet, such as through cable television modems or
set-top boxes for televisions, are currently unavailable in India. There can be
no assurance that the number or penetration rate of personal computers in India
will increase rapidly or at all or that alternate means of accessing the
Internet will develop and become widely available in India.
Our growth is limited by the cost to Indian consumers of obtaining the
hardware, software and communications links necessary to connect to the Internet
in India. If the overall costs required to access
20
the Internet do not significantly decrease, most of India's population will not
be able to afford to use our services. The failure of a significant number of
additional Indian consumers to obtain affordable access to the Internet would
make it very difficult to execute our business plan.
We are relying on electronic commerce as a significant part of India.com's
future revenue, but the Internet has not yet been proven as an effective
commerce medium in India.
India.com's revenue growth depends in part on the increasing acceptance
and use of electronic commerce in India. The Internet may not become a viable
commercial marketplace in India for various reasons, many of which are beyond
our control, including:
o inexperience with the Internet as a sales and distribution channel;
o inadequate development of the necessary infrastructure to facilitate
electronic commerce;
o concerns about security, reliability, cost, ease of deployment,
administration and quality of service associated with conducting
business over the Internet; and
o inexperience with credit card usage or with other means of
electronic payment.
Underdeveloped telecommunications infrastructure and unclear telecommunications
regulations have limited and may continue to limit the growth of the Internet
market in India.
The telecommunications infrastructure in India is not well developed. The
underdeveloped Internet infrastructure in India has limited the growth of
Internet usage there. If the necessary Internet infrastructure is not developed,
or is not developed on a timely basis, future growth of the Internet in India
will be limited and our business could be harmed.
Our India.com business may be adversely affected by Indian government regulation
of Internet companies.
India has recently begun to regulate its Internet sector by making
pronouncements or enacting regulations regarding various Internet activities in
India and the legality of foreign investment in the Indian Internet sector.
There are substantial uncertainties regarding the proper interpretation of
current and future Indian Internet laws and regulations.
The Indian government is attempting to liberalize this sector and has
enacted or is currently considering enacting new legislation in that regard. For
example, Press Note No. 7 (2000 series) dated July 14, 2000, permits 100%
foreign investment in business-to-business e-commerce companies, subject to the
condition that "such investing companies" divest 26% of their equity in favor of
the Indian public in five years, if "these companies" are listed in other parts
of the world. It remains unclear as to whether the referenced listing is of the
Indian subsidiary or of the investor company. For retail e-commerce companies,
51% foreign equity investment is permitted. Press Note No. 8 (2000 series) dated
August 29, 2000, removes the earlier restriction on automatic approvals in cases
where a foreign investor had a previous or existing joint venture or technology
transfer/trademark agreements in the same or allied field in India for all
proposals relating to information technology.
In the telecom sector, the present cap on foreign equity is 49% and a
license is required to provide such services. However, the license required for
ISPs has been waived until October 31, 2003. Also, in Press Note No. 9 (2000
series) dated September 8, 2000 the Indian government recently permitted 100%
21
foreign direct investment in relation to certain activities including:
o ISPs not providing gateways (applicable both for satellite and
submarine cables);
o Infrastructure providers providing dark fiber (IP category 1);
o Electronic mail; and
o Voice mail.
However, the above activities are still subject to the 26% divestment
rule, certain security restrictions and other regulations.
The government has also recently passed the Information Technology Act,
2000 which focuses on recognizing and regulating electronic transactions and
records, affecting:
o authentication of digital records;
o legal recognition of electronic records and digital signatures;
o attribution, acknowledgment and dispatch of electronic records;
o secure electronic records and digital signatures; and
o regulation of certifying authorities.
More legislation that is presently being discussed is a draft Information
Communication and Entertainment Bill, 2000 ("ICE Bill") that would govern the
rapid convergence of broadcasting, telecommunications and information
technologies. The ICE Bill contemplates the establishment of a Communication
Commission to license and regulate the provision of network facilities, network
services, application services or content application services and ownership of
wireless apparatus.
It is unclear how the ICE Bill, if enacted, or any of the legislation
previously discussed, will affect India.com's business and operations. Further,
political instability could halt or delay the liberalization of the Indian
economy and adversely affect business and economic conditions in India generally
and our business in particular. Although during the past decade, the government
of India has pursued policies of economic liberalization, including
significantly relaxing restrictions on the private sector and further reforms
are still expected under the current policy to promote the information
technology and software industries, political uncertainty still exists and a
significant change in India's economic liberalization and deregulation policies
could adversely affect business and economic conditions in India generally and
our India.com business in particular. Our Asia.com and India.com properties
developed by WORLD.com compete with the major business and consumer portals and
other providers of Internet services in the markets in which they operate.
The interpretation and application of existing Indian laws and regulations
and the possible new laws or regulations have created substantial uncertainties
regarding the legality of existing and future foreign investments in, and the
businesses and activities of, Indian Internet businesses, including our
India.com business. Accordingly, it is possible that the relevant Indian
authorities could, at any time, assert that any portion or all of India.com's
existing or future ownership structure and businesses violates Indian laws and
regulations. It is also possible that the new laws or regulations governing the
Indian Internet sector
22
that may be adopted in the future will prohibit or restrict foreign investment
in, or other aspects of, any of India.com's current or proposed businesses and
operations. In addition, these new laws and regulations may be retroactively
applied to India.com.
If India.com or any of its Indian-based subsidiaries is found to be in
violation of any existing or future Indian laws or regulations, the relevant
Indian authorities would have broad discretion in dealing with such a violation,
including, without limitation, the following:
o levying fines;
o revoking our business license;
o requiring us to restructure our ownership structure or operations;
and
o requiring us to discontinue any portion or all of our Internet
business.
USE OF PROCEEDS
The selling stockholders will receive all of the proceeds from the sale of
our Class A common stock under this prospectus. We will not receive any proceeds
from these sales.
DESCRIPTION OF CAPITAL STOCK
The following descriptions of our capital stock and the relevant
provisions of our amended and restated certificate of incorporation, as amended,
and bylaws are summaries and are qualified by reference to our amended and
restated certificate of incorporation, as amended, and our bylaws.
We are authorized to issue up to 150,000,000 shares of Class A common
stock, par value $.01 per share, 10,000,000 shares of Class B common stock, par
value $.01 per share, and 60,000,000 shares of preferred stock, par value $.01
per share.
23
Common stock
As of April 30, 2001, we had approximately 87,501,766 shares of Class A
common stock outstanding held of record by approximately 400 stockholders and
10,000,000 shares of Class B common stock outstanding held entirely by Gerald
Gorman, our Chairman.
All of the issued and outstanding shares of our Class A common stock are
fully paid and nonassessable. Except as described below, the issued and
outstanding shares of our Class A common stock and Class B common stock
generally have identical rights. In addition, under our amended and restated
certificate of incorporation, as amended, holders of Class A common stock have
no preemptive or other subscription rights to purchase shares of our stock, nor
are they entitled to the benefits of any redemption or sinking fund provisions.
Voting rights
The holders of our Class A common stock are entitled to one vote per share
on all matters to be voted on by stockholders generally, including the election
of directors. The holder of our Class B common stock is entitled to ten votes
per share on all matters to be voted on by stockholders generally, including the
election of directors. In addition to any class vote that may be required under
law or our amended and restated certificate of incorporation, as amended, all
classes of capital stock entitled to vote generally on any matter vote together
as a single class. There are no cumulative voting rights. Accordingly, holders
of a majority of the total votes entitled to vote in an election of directors
will be able to elect all of the directors standing for election.
Please see "Risk Factors - Gerald Gorman controls EasyLink and will be
able to prevent a change of control."
Liquidation preferences
If we are liquidated, dissolved or wound up, the holders of our Class A
common stock and Class B common stock will be entitled to receive distributions
only after satisfaction of all liabilities and the prior rights of any
outstanding class of preferred stock. If we are liquidated, dissolved or wound
up, our assets legally available after satisfaction of all of our liabilities
shall be distributed to the holders of our Class A common stock and Class B
common stock pro rata based on the respective numbers of shares of Class A
common stock held by these holders or issuable to them upon conversion of Class
B common stock.
Conversion rights/mandatory conversion
Holders of our Class A common stock have no conversion rights. Holders of
our Class B common stock may convert each share into one share of Class A common
stock. In addition, the holder of Class B common stock has contractually agreed
with the former holders of Class C preferred stock and Class E preferred stock
and some former holders of Class A preferred stock that he will not transfer his
shares of Class B common stock in the form of Class B common stock unless such
holders have had the opportunity within specified time periods to dispose of
their shares of Class A common stock issuable upon conversion of their preferred
stock at specified prices. As a result, until this condition has been satisfied
or the former holders of a majority in interest of each class of preferred stock
otherwise consent in writing, the holder of Class B common stock must convert
shares of Class B common stock into shares of Class A common stock prior to
transfer.
Dividends
24
The holders of both classes of our common stock are entitled to receive
equal non-cumulative dividends when and as declared from time to time by the
board of directors, subject to any preferential dividend rights of any
outstanding preferred stock.
Preferred stock
Under our amended and restated certificate of incorporation, as amended,
the board of directors is authorized, without further stockholder approval, to
issue up to 60,000,000 shares of preferred stock in one or more classes or
series. The board also has the authority to fix or alter the designations,
preferences, rights and any qualifications, limitations or restrictions of the
shares of each such class or series, including dividend rights, conversion
rights, voting rights, terms of redemption and liquidation preferences.
Preferred stock could thus be issued quickly with terms that could delay or
prevent a change of control of EasyLink or make removal of management more
difficult. Additionally, the issuance of preferred stock may decrease the market
price of our Class A common stock and may adversely affect the voting and other
rights of the holders of our Class A common stock. Currently, we do not have any
preferred stock outstanding and have no plans to create or issue any shares of
any new class or series of preferred stock.
Anti-takeover effects of certain provisions of Delaware law and our amended and
restated certificate of incorporation, as amended, and bylaws
We are subject to the provisions of Section 203 of the General Corporation
Law of the State of Delaware. Generally, Section 203 prohibits a publicly-held
Delaware corporation from engaging in a "business combination" with an
"interested stockholder" for a period of three years after the time of the
transaction in which the person became an interested stockholder, unless the
interested stockholder attained that status with the approval of the board of
directors or unless the business combination is approved in a prescribed manner.
A "business combination" includes mergers, asset sales and other transactions
resulting in a financial benefit to the interested stockholder. Generally, an
"interested stockholder" is a person who, together with affiliates and
associates, owns, or within three years did own, 15% or more of a corporation's
voting stock. This statute could prohibit or delay the accomplishment of mergers
or other takeovers or changes in control with respect to EasyLink and,
accordingly, may discourage attempts to acquire EasyLink.
In addition, provisions of the amended and restated certificate, as
amended, and bylaws, which provisions are summarized in the following
paragraphs, may be deemed to have an anti-takeover effect. These provisions may
delay, defer or prevent a tender offer or takeover attempt that a stockholder
might consider to be in its best interests, including those attempts that might
result in a premium over the market price for the shares held by stockholders.
Board of Directors vacancies. Our bylaws authorize the board of directors
to fill vacant directorships or increase the size of the board of directors.
This may prevent a stockholder from removing incumbent directors and
simultaneously gaining control of the board of directors by filling the
resulting vacancies created by such removal with its own nominees.
Special meetings of stockholders. Our bylaws provide that special meetings
of stockholders of EasyLink may be called at any time by the Chairman of the
board, the Vice Chairman of the board, if any, the President, if any, or the
board of directors. Written notice of the meeting must be given not less than 10
nor more than 60 days before the date of the meeting.
Authorized but unissued shares. The authorized but unissued shares of our
common stock and preferred stock are available for future issuance without
stockholder approval, subject to the limitations
25
imposed by The Nasdaq National Market. These additional shares may be utilized
for a variety of corporate purposes, including future public offerings to raise
additional capital, corporate acquisitions and employee benefit plans. The
existence of authorized but unissued and unreserved common stock and preferred
stock could render more difficult or discourage an attempt to obtain control of
EasyLink by means of a proxy contest, tender offer, merger or otherwise.
The General Corporation Law of the State of Delaware provides generally
that, in addition to the approval of the board of directors, the affirmative
vote of a majority of the shares entitled to vote on any matter is required to
amend a corporation's certificate of incorporation unless a corporation's
certificate of incorporation requires a greater percentage.
Transfer agent and registrar
The transfer agent and registrar for our Class A common stock is American
Stock Transfer and Trust Company.
26
SELLING STOCKHOLDERS
The table below sets forth information with respect to the beneficial
ownership of our Class A common stock by the selling stockholders immediately
prior to this offering and as adjusted to reflect the sale of shares of our
Class A common stock in the offering. All information with respect to the
beneficial ownership has been furnished by the respective selling stockholders.
Percentages are based on the 87,501,766 shares of Class A common stock and Class
B common stock outstanding on April 30, 2001.
Holders of Senior Convertible Notes
Number of Number of Number of Percentage of
Shares Shares Offered Shares to be Shares to be
Beneficially by this Held After Held After
Selling Stockholder Owned(1) Prospectus(1)(2) Offering Offering(3)
------------------- -------- ---------------- -------- -----------
Federal Partners, L.P. (4) 9,756,944(5) 9,756,944 0 *
Public Employee Retirement System of Idaho 2,259,569 2,259,569 0 *
City of Milford Pension & Retirement Fund 645,492 645,492 0 *
Morgan Trust Co.of the Bahamas Ltd. as Trustee
U/A/D 11/30/93 430,361 430,361 0 *
Wells Family LLC 430,333 430,333 0 *
Albert L. Zesiger 392,665 392,665 0 *
Roanoke College 322,764 322,764 0 *
Domenic J. Mizio 322,764 322,764 0 *
NFIB Corporate Account 269,063 269,063 0 *
City of Stamford Firemen's Pension Fund 268,951 268,951 0 *
Barrie Ramsay Zesiger 268,951 268,951 0 *
Wolfson Investment Partners LP 215,167 215,167 0 *
Dean Witter Foundation 215,167 215,167 0 *
National Federation of Independent Business
Employee Pension Trust 215,139 215,139 0 *
The Jenifer Altman Foundation 188,260 188,260 0 *
Theeuwes Family Trust, Felix Theeuwes Trustee 161,382 161,382 0 *
Susan Uris Halpern 161,382 161,382 0 *
Andrew Heiskell 161,354 161,354 0 *
Meehan Foundation 118,388 118,388 0 *
The Meehan Investment Partnership I, L.P. 107,597 107,597 0 *
Murray Capital, LLC 107,597 107,597 0 *
Mary C. Anderson 107,597 107,597 0 *
Butler Family LLC 107,569 107,569 0 *
William B. Lazar 80,691 80,691 0 *
Psychology Associates 80,691 80,691 0 *
Peter Looram 80,691 80,691 0 *
Nicola Zesiger Mullen 80,691 80,691 0 *
Lazar Foundation 80,691 80,691 0 *
Jeanne L. Morency 80,691 80,691 0 *
Helen Hunt 80,691 80,691 0 *
HBL Charitable Unitrust 80,691 80,691 0 *
David Zesiger 80,691 80,691 0 *
Asphalt Green, Inc. 80,691 80,691 0 *
Alexa Zesiger Carver 80,691 80,691 0 *
A. Carey Zesiger 80,691 80,691 0 *
Leonard Kingsley 53,813 53,813 0 *
Donald and Dan-Thanh Devivo 26,892 26,892 0 *
John J. & Catherine H. Kayola 16,138 16,138 0 *
Mary I. Estabil 10,763 10,763 0 *
27
James F. Cleary 10,763 10,763 0 *
Frederick Landman 1,152,500 1,152,500 0 *
The Waterproof Partnership, L.P. 287,847 287,847 0 *
Sapient Corporation 57,625 57,625 0 *
Peoples Benefit Life Insurance Co. (Teamsters
Separate Account) 223,529 223,529 0 *
Peoples Benefit Life Insurance Company 248,365 248,365 0 *
Retail Clerks Pension Trust #2 745,096 745,096 0 *
St. Albans Partners Ltd. 745,096 745,096 0 *
Yield Strategies Fund I, L.P. 496,731 496,731 0 *
Bank Of America Pension Plan 794,769 794,769 0 *
Circlet (IMA) Limited 741,371 741,371 0 *
General Motors Welfare Benefit Trust (ST-VEBA) 156,470 156,470 0 *
Newberg Family Trust 124,183 124,183 0 *
Woodmont Investments Limited 124,183 124,183 0 *
JMG Capital Partners, L.P. 1,988,910 1,988,910 0 *
JMG Triton Offshore Fund Limited 3,292,580 3,292,580 0 *
Deutsche Banc Alex. Brown Inc. 184,500 184,500 0 *
Deutsche Bank AG, London Branch 599,625 599,625 0 *
The Common Fund F/A/O Absolute Return Fund 71,033 71,033 0 *
Helix Convertible Opportunities Fund, Ltd. 250,920 250,920 0 *
Helix Convertible Opportunities, L.P. 323,798 323,798 0 *
BNP Cooper Neff Convertible Strategies Fund, L.P. 56,457 56,457 0 *
BNP Paribas Equity Strategies, S.N.C 847,593 847,593 0 *
J. N. Industries Inc. 76,577(6) 73,800 2,777 *
Merced Partners Limited Partnership 461,250 461,250 0 *
Fir Tree Institutional Value Fund, L.P. 1,586,593 1,586,593 0 *
Fir Tree Recovery Master Fund, L.P. 291,666 291,666 0 *
Fir Tree Value Fund, L.P. 4,011,328 4,011,328 0 *
Fir Tree Value Partners, LDC 344,786 344,786 0 *
Other Holders
Number of Number of Number of Percentage of
Shares Shares Offered Shares to be Shares to be
Beneficially by this Held After Held After
Selling Stockholder Owned Prospectus(2) Offering Offering
------------------- -------- ---------------- -------- --------
Bantu, Inc. (7) 445,744 445,744 0 *
3Cube, Inc. (8) 144,632 64,549 80,083 *
STD, Inc. (9) 185,686 185,686 0 *
Edd Helms Group, Inc. (10) 13,750 13,750 0 *
Madison Avenue Technology Group, Inc.(11) 102,215 102,215 0 *
SG Cowen Securities Corporation(12) 317,460 317,460 0 *
Aligned Investments Limited(13) 781,639 211,041 570,598 *
K. Digvijay Singh(14) 75,900(15) 75,900 0 *
Arvindra Kanwal(16) 30,000(15) 30,000 0 *
Sandeep Dalal(17) 38,125(15) 38,125 0 *
James Ting(18) 1,372,465(15) 1,134,583 237,882 *
Robert Tsang(18) 618,200(15) 486,250 131,950 *
Prasad Investment (19) 261,333(20) 261,333 0 *
Allan Kwan (21) 582,633 47,856 534,777 *
Po Ling Shiu(22) 14,040 8,827 5,213 *
Wai Ming Chu(22) 10,038 10,038 0 *
Tyson Li(22) 30,970 30,970 0 *
Sing Keung Lam(22) 56,421 42,743 13,678 *
28
Yin Nei Kwok(22) 3,049 3,049 0 *
Ming Fat Lam(22) 4,404 4,404 0 *
Alexandra Rehak(22) 16,489 16,489 0 *
Dee Han "Lanna" Ng(22) 7,498 7,498 0 *
Chi Feng Sze(22) 10,585 10,585 0 *
Albert Lam(22) 63,689 63,689 0 *
David Yen(23) 430,074 19,868 410,206 *
Brent Lee(22) 15,388 15,388 0 *
Li Wang(22) 9,930 9,930 0 *
Frank Meng(22) 38,389 38,389 0 *
Hua Cao(22) 16,241 16,241 0 *
Michael Hiu(22) 1,048 1,048 0 *
Donald Ee(22) 24,511 24,511 0 *
Kee Hong Lu(22) 969 969 0 *
Lawrence Chai(22) 45,811 32,133 13,678 *
Shu-Hui Liu(22) 4,954 4,954 0 *
Tiffany Chang(22) 7,527 7,527 0 *
Chun-Yuan Yeh(22) 11,259 2,925 8,334 *
Po-Yu Liu (22) 6,799 1,935 4,864 *
Tsung Hsi Lee(22) 3,502 1,759 1,743 *
Yi-Nan Tsai(22) 3,906 3,383 523 *
Yu-Chun Hsiao(22) 1,772 1,772 0 *
Chia-Yung Chou (22) 2,475 1,952 523 *
Yueh Fong Hsieh (22) 2,335 1,482 853 *
Kuo-Hsiang Chang (22) 1,980 1,980 0 *
Pao Lung Chang(22) 26 26 0 *
Pei-Chen Teresa Lin(22) 1,614 1,614 0 *
Yi-Hsuan Lin(22) 1,745 1,745 0 *
Ya-Ling Yeh(22) 3,251 3,251 0 *
Yu-Chien Jeng(22) 1,152 1,152 0 *
Ching-Yi Chen(22) 1,887 1,887 0 *
Yi-Yi Tsung(22) 1,489 1,489 0 *
Hsin-Ying Chen(22) 1,113 1,113 0 *
I-Hung Lin(22) 2,432 2,432 0 *
Ren-Rung Iau(22) 123 123 0 *
Chih-Hao Chen(22) 369 369 0 *
Pei Chun Lin(22) 1,277 1,277 0 *
Wu-Chuan Chen(22) 4,303 4,303 0 *
Hsiu Ru Ko (22) 1,639 1,639 0 *
Chen-Ching Wang(22) 3,850 3,850 0 *
Yuan Shun Sun(22) 3,110 3,110 0 *
Li-Fang Lin(22) 1,423 1,423 0 *
Tsan Hsien Yang(22) 1,605 1,605 0 *
Yu-Shyan Chiu(22) 1,113 1,113 0 *
Vigers Design Limited(24) 5,191 5,191 0 *
Ching Yuen So(24) 5,114 5,114 0 *
Chia-Chin Charles Chu(24) 4,894 4,894 0 *
Seconom Limited(24) 1,110 1,110 0 *
Chi-Hung Lin(24) 3,040 3,040 0 *
Vignette Asia Pte Ltd. 16,888 16,888 0 *
GameSpy Industries, Inc. 604,230 604,230 0 *
----------
* Less than one percent
(1) Except as otherwise disclosed in other footnotes below, the number of
shares beneficially owned by the holders of senior convertible notes
represents shares issuable upon conversion of our Senior Convertible Notes
or mandatorily issuable in
29
payment of a portion of the interest on our Senior Convertible Notes.
The conversion price is subject to adjustment and, as a result, the number
of shares may increase.
(2) This prospectus also covers any additional shares of Class A common stock
that become issuable as a result of a stock split, stock dividend or
similar transaction that results in an increase in the number of our
outstanding shares of common stock.
(3) In accordance with the rules of the SEC, the percentage of Class A common
stock outstanding owned by each selling stockholder is calculated as
follows: (a) the numerator is the number of shares of Class A common stock
held by that selling stockholder upon conversion of all Senior Convertible
Notes owned by that selling stockholder and (b) the denominator includes
the number of shares of Class A common stock and Class B common stock
outstanding and the number of shares of Class A common stock held by that
selling securityholder upon conversion of all notes owned by that selling
securityholder.
(4) Stephen Duff, a director of EasyLink, is Treasurer and a limited partner
of Federal Partners, L.P. Mr. Duff is also the Senior Investment Manager
of The Clark Estates, Inc. The Clark Estates, Inc. provides management and
administrative services to Federal Partners.
(5) Includes 3,000,000 shares of our Class A common stock and an additional
1,000,000 shares of Class A Common Stock we committed to issue to Federal
Partners if the closing price of our Class A Common Stock on the principal
securities exchange on which they are traded is not at or above $10 per
share for 5 consecutive days on or before December 31, 2001. Excludes
1,943,800 shares of Class A common stock not being sold pursuant to this
prospectus that are held by accounts for which The Clark Estates, Inc.
provides management and administrative services.
(6) Includes 2,777 shares of our Class A common stock held by J.N. Industries.
(7) Concurrently with our investment in Bantu, we purchased source code and
entered into a related development agreement
(8) We have received a technology license from 3Cube, Inc. that allows us to
offer Web-based and email to fax services across our network of Web sites
and ISP partners and our business customers.
(9) Doing business as Software Tool and Die. Barry Shein, President of STD, is
an advisor to our board of directors and we have entered into an
indemnification agreement with him to indemnify him from liabilities
arising out of his capacity as an advisor.
(10) In 2000, we purchased phone number from Edd Helms Group, Inc.
(11) In July 2000, we entered into a preferred list hosting agreement with
Madison Avenue Technology Group that appointed us as a preferred reseller
of CheetahMail's list host management services.
(12) SG Cowen Securities Corporation acted as an underwriter in connection with
our initial public offering in June 1999, as an initial purchaser in
connection with the issuance of our 7% convertible subordinated debentures
in January 2000 and as our financial advisor in connection with the sale
of our advertising network business completed in March 2001.
(13) Aligned Investments was a principal stockholder of Huelink Corporation
Limited, which was acquired by our majority-owned subsidiary Asia.com,
Inc. on June 1, 2000. Allen Huie, the principal stockholder of Aligned
Investments became a director of Asia.com, Inc. upon the acquisition of
Huelink Corporation Limited.
(14) Former director and chief executive officer of India.com, Inc., a
majority-owned subsidiary of EasyLink.
(15) Excludes shares issuable upon the exercise of employee stock options.
(16) Former President - Content of India.com, Inc., a majority-owned subsidiary
of EasyLink.
(17) Former President - U.S. Operations and Alliances and Acquisitions of
India.com, Inc., a majority-owned subsidiary of EasyLink.
(18) Former shareholder of TCom, Inc. EasyLink acquired TCom on October 18,
1999 in a merger. Since the merger, this selling stockholder has been
employed by EasyLink in various capacities.
(19) Prasad Investment sold MyIndia.com Inc. to our majority-owned subsidiary
India.com, Inc. in February 2001.
(20) Includes 65,333 potentially issuable as contingent payments in connection
with the acquisition described in footnote 19 above.
(21) Chief executive officer and director of our majority-owned subsidiary
Asia.com, Inc. Mr. Kwan was an indirect principal stockholder of Huelink
Corporation Limited, which was acquired by our majority-owned subsidiary
Asia.com, Inc. on June 1, 2000.
(22) Former employee of a subsidiary of Asia.com, Inc., a majority-owned
subsidiary of EasyLink.
(23) Former employee of a subsidiary of Asia.com, Inc., a majority-owned
subsidiary of EasyLink. Mr. Yen was an indirect principal stockholder of
Huelink Corporation Limited, which was acquired by our majority-owned
subsidiary Asia.com, Inc. on June 1, 2000.
(24) Former vendor of a subsidiary of Asia.com, Inc., a majority-owned
subsidiary of EasyLink.
30
PLAN OF DISTRIBUTION
The selling stockholders may offer and sell the Class A common stock
covered by this prospectus from time to time. The selling stockholders'
pledgees, donees, transferees or other successors in interest that receive such
Class A common stock as a gift, partnership distribution or other non-sale
related transfer may likewise offer and sell Class A common stock from time to
time. The selling stockholders will act independently of us in making decisions
with respect to the timing, manner and size of each sale. The selling
stockholders may sell the Class A common stock on one or more exchanges,
including the Nasdaq National Market, or in the over-the-counter market or
otherwise, at prices and at terms then prevailing or at prices related to the
then current market prices or in negotiated transactions.
The selling stockholders may sell the Class A common stock by one or more
of the following means of distribution:
o a block trade in which the broker-dealer so engaged will attempt to
sell the shares as agent, but may purchase and resell a portion of
the block as principal to facilitate the transaction;
o purchases by a broker-dealer as principal and resale by such
broker-dealer for its own account pursuant to this prospectus; and
o ordinary brokerage transactions and transactions in which the broker
solicits purchasers.
We may amend this prospectus from time to time to describe a specific plan
of distribution. In connection with distributions of the Class A common stock or
otherwise, the selling stockholders may enter into hedging transactions with
broker-dealers or other financial institutions. In connection with such
transactions, broker-dealers or other financial institutions may engage in short
sales of our Class A common stock in the course of hedging the positions they
assume with the selling stockholders. The selling stockholders may also sell our
Class A common stock short and redeliver the shares covered by this prospectus
to close out such short positions. The selling stockholders may also enter into
option or other transactions with broker-dealers or other financial institutions
which require the delivery to such broker-dealer or other financial institution
of the Class A common stock offered under this prospectus, which Class A common
stock such broker-dealer or other financial institution may resell pursuant to
this prospectus (as supplemented or amended to reflect such transaction). The
selling stockholders may also pledge the shares of Class A common stock
registered hereunder to a broker-dealer or other financial institution and, upon
a default, such broker-dealer or other financial institution may effect sales of
the pledged Class A common stock pursuant to this prospectus (as supplemented or
amended to reflect such transaction). In addition, the selling stockholders may
also sell the Class A common stock under Rule 144 rather than pursuant to this
prospectus if the shares so qualify for resale under Rule 144.
In effecting sales, brokers, dealers or agents engaged by the selling
stockholders may arrange for other brokers or dealers to participate. Brokers,
dealers or agents may receive commissions, discounts or concessions from the
selling stockholders in amounts to be negotiated prior to the sale. Such brokers
or dealers and any other participating brokers or dealers may be deemed to be
"underwriters" within the meaning of the Securities Act in connection with such
sales, and any such commission, discount or concession may be deemed to be
underwriting discounts or commissions under the Securities Act. We will pay all
expenses incident to the offering and sale of the Class A common stock covered
by this prospectus to the public other than any commissions and discounts of
underwriters, dealers or agents and any transfer taxes. In the case of sales by
STD, Inc., we will pay any commissions and discounts of underwriters, dealers or
agents if the average sales price of the shares sold by STD, Inc. is below
$16.00 per share.
31
In order to comply with the securities laws of certain states, if
applicable, the Class A common stock will be sold in such jurisdictions only
through registered or licensed brokers or dealers. In addition, in certain
states the Class A common stock may not be sold unless they have been registered
or qualified for sale in the applicable state or an exemption from the
registration or qualification requirement is available and is complied with.
Under applicable rules and regulations under the Exchange Act, any person
engaged in a distribution of the shares may not simultaneously engage in
market-making activities with respect to our common stock for the applicable
period under Regulation M of the Exchange Act prior to the commencement of such
distribution. In addition and without limiting the foregoing, the selling
stockholders will be subject to applicable provisions of the Exchange Act and
the rules and regulations thereunder, including, without limitation, Regulation
M, which provisions may limit the timing of purchases and sales of the shares by
the selling stockholders. All of the foregoing may affect the marketability of
the shares.
No dealer, salesperson or other person is authorized to give any
information or to represent anything not contained or incorporated by reference
in this prospectus. You must not rely on any unauthorized information or
representations. This prospectus is an offer to sell only the shares offered by
this prospectus, but only under the circumstances and in jurisdictions where it
is lawful to do so. The information contained in this prospectus is current only
as of its date.
LEGAL MATTERS
The validity of the Class A common stock offered in this prospectus has
been passed upon by David Ambrosia, our General Counsel. As of the date hereof,
Mr. Ambrosia owned 4,475 shares of our Class A common stock and held options to
purchase 308,030 shares of our Class A common stock.
EXPERTS
The consolidated financial statements appearing in our Annual Report on
Form 10-K for the year ended December 31, 2000, have been audited by KPMG LLP,
independent accountants, as set forth in their report thereon, incorporated
herein by reference. Such consolidated financial statements are incorporated by
reference in reliance upon such report given on the authority of such firm as
experts in accounting and auditing. The report of KPMG LLP covering the December
31, 2000 consolidated financial statements, dated February 15, 2001, contains an
explanatory paragraph that states that the Company has suffered recurring losses
from operations since inception and has a working capital deficiency that raise
substantial doubt about the entity's ability to continue as a going concern. The
consolidated financial statements do not include any adjustments that might
result from the outcome of that uncertainty.
The consolidated financial statements of The Allegro Group, Inc. appearing
in our Amendment to Current Report on Form 8-K/A, dated October 26, 1999, have
been audited by KPMG LLP, independent accountants, as set forth in their reports
thereon incorporated herein by reference. Such consolidated financial statements
are incorporated by reference in reliance upon such report given on the
authority of such firm as experts in accounting and auditing.
The consolidated financial statements of Asia.com, Inc. (formerly
eLong.com, Inc.) (a development stage enterprise) incorporated in this
prospectus by reference to our Amendment to Current Report on Form 8-K/A, dated
May 26, 2000, have been audited by KPMG, independent public accountants, as
indicated in their report with respect thereto and have been incorporated by
reference herein in reliance upon the authority of said firm as experts in
accounting and auditing. The report of KPMG concerning the December 31, 1999
consolidated financial statements, dated May 24, 2000, contains an emphasis
32
paragraph that states the group's operations are subject to extensive regulation
and supervision by the People's Republic of China ("PRC") government. The laws
and regulations pertaining to Internet content provider businesses in the PRC
are evolving and may be subject to change.
The combined balance sheet of Swift Telecommunications, Inc. as of
December 31, 2000 and the related combined statements of operations,
stockholder's deficit and comprehensive loss and cash flows for the year ended
December 31, 2000 incorporated in this prospectus by reference to our Amendment
to Current Report on Form 8-K/A, dated May 9, 2001, have been so incorporated in
reliance on the report of KPMG, independent accountants, given on the authority
of said firm as experts in auditing and accounting.
The financial statements incorporated in this Amendment No. 1 to Form S-3
Registration Statement by reference to our Amendment to Current Report on Form
8-K/A of NetMoves Corporation (formerly FaxSav Incorporated), filed on April
24, 2000, have been so incorporated in reliance on the report of
PricewaterhouseCoopers LLP, independent accountants, given on the authority of
said firm as experts in auditing and accounting.
The combined financial statements incorporated in this Amendment No. 1 to
Form S-3 Registration Statement by reference to our Amendment to Current Report
on Form 8-K/A of AT&T EasyLink Services, dated May 9, 2001, have been so
incorporated in reliance on the report of PricewaterhouseCoopers LLP,
independent accountants, given on the authority of said firm as experts in
auditing and accounting.
33
PART II. INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
Registration fee $ 6,913
Accounting fees and expenses 20,000
Legal fees and expenses 0
Miscellaneous expenses 1,100
-------
Total: $28,013
Item 15. Indemnification of Directors and Officers.
Section 145 of Delaware General Corporation Law empowers the Company to
indemnify any person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action, suit, or proceeding, whether
civil, criminal, administrative or investigative (other than an action by or in
the right of the corporation) by reason of the fact that such person is or was a
director, officer, employee or agent of the corporation or is or was serving at
the request of the corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise,
against expenses (including attorney's fees), judgments, fines and amounts paid
in settlement actually and reasonably incurred by such person in connection with
such action, suit or proceeding if such person acted in good faith and in a
manner such person reasonably believed to be in or not opposed to the best
interests of the corporation, and with respect to any criminal action or
proceeding, had no reasonable cause to believe that such person's conduct was
unlawful. The termination of any cause of action, suit or proceeding by
judgment, order, settlement, conviction, or upon plea of nolo contendre or its
equivalent, does not, of itself, create a presumption that such person did not
act in good faith and in a manner that such person reasonably believed to be in
or not opposed to the best interests of the corporation, and, with respect to
any criminal action or proceeding, had reasonable cause to believe that such
person's conduct was unlawful.
As permitted by Section 145 of the Delaware General Corporation Law, the
registrant's amended and restated certificate of incorporation, as amended
provides that a director of the Company will not be personally liable to the
Company or its stockholders for monetary damages for breach of fiduciary duty as
a director, except for any breach of the director's duty of loyalty to the
Company or its stockholders; for acts or omissions not in good faith or that
involve intentional misconduct or a knowing violation of law; for the unlawful
payment of dividends or unlawful stock repurchases under Section 174 of the
Delaware General Corporation Law; or for any transaction from which the director
derived an improper personal benefit.
The bylaws of the Company provide that the Company shall indemnify
directors, officers and employees for such liabilities in such manner, under
such circumstances and to such extent as permitted by Section 145 of the
Delaware General Corporation Law, as now enacted or hereafter amended and that
the Company shall advance all reasonable costs and expenses (including
attorney's fees) incurred in defending any action, suit or proceeding to all
persons entitled to such indemnification, all in the manner, under the
circumstances and to the extent permitted by Section 145 of the Delaware General
Corporation Law, as now enacted or hereafter amended.
The Company has entered into indemnity agreements with each of its
directors and executive officers to give them additional contractual assurances
regarding the scope of the indemnification described above and to provide
additional procedural protections. In addition, the Company has obtained
II-1
directors' and officers' insurance providing indemnification for directors,
officers and key employees for various liabilities.
At present, there is no pending litigation or proceeding involving any
director, officer, employee or agent as to which indemnification will be
required or permitted under the certificate of incorporation. The registrant is
not aware of any threatened litigation or proceeding that may result in a claim
for such indemnification.
Item 16. Exhibits.
Exhibit No. Description
----------- -----------
5 Opinion of David W. Ambrosia.
23.1 Consent of KPMG LLP.
23.2 Consent of KPMG.
23.3 Consent of KPMG.
23.4 Consent of PricewaterhouseCoopers LLP.
23.5 Consent of David W. Ambrosia (included in Exhibit 5).
24 Power of Attorney*
----------
*Previously filed.
Item 17. Undertakings.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made of the securities registered hereby, a post-effective amendment to
this registration statement;
(i) To include any prospectus required by Section 10(a)(3) of
the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or in
the aggregate, represent a fundamental change in the information set
forth in this registration statement. Notwithstanding the foregoing,
any increase or decrease in volume of securities offered (if the
total dollar value of securities offered would not exceed that which
was registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b) if, in
the aggregate, the changes in volume and price represent no more
than 20 percent change in the maximum aggregate offering price set
forth in the "Calculation of Registration Fee" table in this
registration statement; and
II-2
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in this registration
statement or any material change to such information in this
registration statement;
provided, however, that the undertakings set forth in paragraphs (i) and
(ii) above do not apply if the information required to be included in a
post-effective amendment by those paragraphs is contained in periodic
reports filed with or furnished to the Commission by the registrant
pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of
1934 that are incorporated by reference in this registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
herein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at
the termination of the offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
(d) The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities
Act of 1933, the information omitted from the form of prospectus filed as
part of this Registration Statement in reliance upon Rule 430A and
contained in a form of prospectus filed by the Registrant pursuant to Rule
424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be
part of this Registration Statement as of the time it was effective.
(2) For the purpose of determining any liability under the
Securities Act of 1933, each post-effective amendment that contains a form
of prospectus shall be deemed to be a new registration statement relating
to the securities offered therein, and the offering of such securities at
that time shall be deemed to be initial bona fide offering thereof.
II-3
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Edison, State of New Jersey, on May 22, 2001.
EasyLink Services Corporation
By /s/ Thomas Murawski
--------------------------------------
Thomas Murawski
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
NAME TITLE DATE
---- ----- ----
*
-------------------------- Chief Executive Officer May 22, 2001
(Thomas Murawski) and Director (principal
executive officer)
* Chairman and Director May 22, 2001
--------------------------
(Gerald Gorman)
* Director May 22, 2001
--------------------------
(Gary Millin)
* Executive Vice President May 22, 2001
-------------------------- and Chief Financial
(Debra McClister) Officer (principal
accounting and financial
officer)
* Director May 22, 2001
--------------------------
(George Abi Zeid)
* Director May 22, 2001
--------------------------
(William Donaldson)
* Director May 22, 2001
--------------------------
(Stephen Duff)
* Director May 22, 2001
--------------------------
(Stephen Ketchum)
* Director May 22, 2001
--------------------------
(Jack Kuehler)
II-4
*By: /s/ Thomas Murawski
------------------------------
Thomas Murawski
ATTORNEY-IN-FACT
II-5
EXHIBIT INDEX
Exhibit No. Description
----------- -----------
5 Opinion of David W. Ambrosia.
23.1 Consent of KPMG LLP.
23.2 Consent of KPMG.
23.3 Consent of KPMG.
23.4 Consent of PricewaterhouseCoopers LLP.
23.5 Consent of David W. Ambrosia (included in Exhibit 5).
24 Power of Attorney*
----------
*Previously filed.