SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): August 19, 1999
TALK.COM INC.
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(Exact name of registrant as specified in its charter)
Delaware
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(State or other jurisdiction of incorporation)
0-26728 23-2827736
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Commission File Number (IRS Employer Identification No.)
12020 Sunrise Valley Drive, Reston VA 22091
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(Address of principal executive offices) (Zip Code)
703-391-7500
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Registrant's telephone number,
including area code
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Item 5. Other Events.
STOCKHOLDER RIGHTS PLAN. On August 19, 1999, Talk.com Inc.
announced that its Board of Directors had adopted a Stockholder Rights Plan and
declared a dividend of rights to purchase shares of Talk.com Inc. Series A
Junior Participating Preferred Stock, par value $0.01 per share, to Talk.com
Inc. stockholders of record on August 30, 1999. This action is further described
in the press release included as Exhibit 99.1 to this report, which description
is incorporated herein by reference.
AOL INVESTMENT AGREEMENT. Talk.com Inc. has received a letter from
America Online, Inc. ("AOL") indicating that it does not intend in the near term
to exercise certain rights under its Investment Agreement with Talk.com to
require Talk.com to reimburse AOL for shortfalls on sales of the Talk.com shares
that it acquired in January 1999. As previously reported, in connection with the
acquisition by AOL of 4,121,372 shares of Talk.com common stock, Talk.com agreed
in the Investment Agreement to reimburse AOL for certain losses AOL may incur on
the sale of any of these shares for less than $19 per share during the period
from June 1, 1999 to September 30, 2000. To date, AOL has not exercised these
rights to seek shortfall reimbursement from Talk.com and, in a letter to
Talk.com dated August 25, 1999, AOL stated that it did not intend to exercise
these reimbursement rights any earlier than December 31, 1999. Talk.com
understands that AOL has made no decision regarding the exercise of these rights
after December 31, 1999. A copy of the AOL letter is included as Exhibit 99.2 to
this report.
<PAGE>
Item 7. Financial Statements and Exhibits.
(c) Exhibits
99.1 Press release dated August 19, 1999.
99.2 Letter dated August 26, 1999 from America Online, Inc. to Talk.com.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
TALK.COM INC.
Dated: August 25, 1999 By: /s/ Aloysius T. Lawn, IV
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Name: Aloysius T. Lawn, IV
Title: Secretary and General Counsel
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EXHIBIT LIST
99.1 Press release dated August 19, 1999.
99.2 Letter dated August 25, 1999 from America Online, Inc. to Talk.com.
Exhibit 99.1
RESTON, Va., Aug. 19 /PRNewswire/ -- The Board of Directors of Talk.com
(Nasdaq: TALK) has adopted a Stockholders Rights Plan pursuant to which the
Company will distribute one Preferred Stock Purchase Right (at an exercise price
of $55.00) for each outstanding share of Talk.com common stock. The Rights will
be exercisable only if a person or group either acquires 20% or more of Talk.com
common stock or announces a tender offer to acquire 20% or more of the common
stock of the Company or upon the Company's Board of Directors declaration that a
15% or more stockholder is an "Adverse Person." The Rights plan is intended to
encourage a person or a group interested in acquiring the Company to negotiate
with the Board of Directors.
In making today's announcement Gabe Battista, Chairman and Chief
Executive Officer at Talk.com, stated, "We're confident about the future of
Talk.com and believe this plan will help ensure protection of stockholder value,
particularly during any period in which the stock price may not reflect fair
value. This is a proven approach to encourage potential purchasers to work with
our Board."
The Company is not aware of any unsolicited offer or takeover attempt.
The Rights are not being distributed in response to any specific effort to
acquire control of Talk.com, and the Board is not aware of any such effort. The
Rights are not intended to prevent a takeover which is in the best interest of
all the stockholders, but are designed to assure that all Talk.com stockholders
realize the long-term value of their investment, receive fair and equal
treatment, to guard against abusive tactics to gain control of the Company and
to encourage anyone, or group seeking to acquire the Company to negotiate with
the Board prior to attempting such a move.
Talk.com will be entitled to redeem the Rights at $.001 per Right at
any time prior to or during a specified period of time after public announcement
that a person, or group, has acquired 20% or more of Talk.com's Common Stock or
the Company's Board of Directors declaration that a 15% or more stockholder is
an Adverse Person. The Rights will be distributed on or about September 3, 1999
to stockholders of record on August 30, 1999. Details of the Rights distribution
are contained in a letter that is being mailed to all Talk.com stockholders.
About Talk.com
Talk.com is the industry leader in telecommunications that uniquely
taps the reach and efficiency of the Internet to market its telecom services and
to support its customers. Monthly phone costs are billed automatically via
credit card, and billing records are available online in "real-time," allowing
consumer and business users to closely monitor telecom charges and transform
their phone bills into personal online phone directories. The Company has more
than 1.2 million active online accounts and has established an industry-leading
efficiency rating as measured by revenues per employee of $1 million. In August
of this year, Talk.com was ranked second in customer satisfaction by J.D.
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Power and Associates, the global leader in quality and satisfaction
measurements. Talk.com broke new ground when it signed its marketing agreement
with America Online (NYSE: AOL) and further established its leadership position
through marketing partnerships with other prominent entities, including Prodigy,
Wired Digital and Compuserve.
The Company is further differentiated by its high-end Lucent-switched
telephone network, user-friendly interface, proprietary online billing system
and convenient service -- all provided with among the lowest consumer
long-distance rates in the country: five cents per minute for the first month,
and nine cents per minute thereafter for all domestic calls. The Company is led
by Chairman and Chief Executive Officer, Gabe Battista, who formerly headed the
Internet domain registration leader, Network Solutions and, the prominent long
distance provider, Cable & Wireless USA. For further information, please visit
the Company online at: www.Talk.com.
For more information, contact:
Ed Meyercord John B. Dinsmore
Talk.com Feldman Communications
215.862.1244 (t) 410.571.8900 (t)
215.862.1085 (f) 410.571.2820 (f)
www.talk.com [email protected]
www.feldmancommunications.com
"Safe Harbor" Statement under the Private Securities Litigation Reform
Act of 1995: Statements in this press release regarding Talk.com's business
which are not historical facts are "forward-looking statements" that involve
risks and uncertainties. For a discussion of such risks and uncertainties, which
could cause actual results to differ from those contained in the forward-looking
statements, see "Risk Factors" in the Company's Annual Report or Form 10-K for
the most recently ended fiscal year.
Exhibit 99.2
[AMERICA ONLINE LETTERHEAD]
August 25, 1999
Mr. Gabriel Battista
Chief Executive Officer
Talk.com, Inc.
12020 Sunrise Valley Drive
Reston, VA 22091
Re: Investment Agreement between Talk.com, Inc. and America Online, Inc.
dated as of December 31, 1998, as amended on February 22, 1999
(the "Investment Agreement")
Dear Mr. Battista:
This letter confirms that America Online does not intend to exercise
its rights to receive a Make Whole Amount (as defined in the Investment
Agreement) pursuant to Section 5.1(b) of the Investment Agreement before
December 31, 1999.
Sincerely,
/s/ J. Michael Kelly
J. Michael Kelly
cc: Sheila A. Clark
Lennert J. Leader
Robert W. Pittman
