EXHIBIT 10.5*

CONFIDENTIAL TREATMENT REQUESTED BY
EASYLINK SERVICES INTERNATIONAL CORPORATION
UNDER RULE 24b-2

*CONFIDENTIAL TREATMENT

CONFIDENTIAL PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED PURSUANT TO THE RULES
AND REGULATIONS OF THE SECURITIES AND EXCHANGE COMMISSION. “X” HAS BEEN USED TO
IDENTIFY INFORMATION WHICH IS SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST.

EMPLOYMENT AGREEMENT
 
This Employment Agreement (the “Agreement”) is entered into on September 29,
2011 (the “Effective Date”) between, EasyLink Services International Corporation
(the “Company”) and Patrick A. Harper (“Harper”).
 
In consideration of the mutual covenants and conditions set forth herein, the
parties hereby agree as follows:
 
1.           Employment. The Company hereby employs Harper in the capacity of
Executive Vice President of Global Operations.  Harper accepts such employment
and agrees to perform such services as are customary to such office and as shall
from time to time be assigned to him by the Company’s Chief Executive
Officer.  Harper will perform his duties so as to cause the Business of the
Company to be operated in accordance with an annual operating plan and budget
developed jointly by the Board and the Company and approved by the Board.  For
purposes of this Agreement, the “Business” of the Company is to provide
business-to-business supply chain data interchange in multiple electronic
formats.
 
2.           Term. The employment hereunder shall be for a period commencing on
the Effective Date and ending on November 1, 2012 (the “Employment
Period”).  Unless either party elects not to extend the term of this Agreement
by so notifying the other in writing at least 30 days prior to November 1, 2012
and November 1 of each year thereafter, the Employment Period shall
automatically extend for an additional one year period upon November 1 of each
such year.  Harper’s employment will be on a full-time basis requiring the
devotion of such amount of his productive time as is necessary for the efficient
operation of the Business of the Company.
 
3.           Compensation and Benefits.
 
3.1           Salary.  For the performance of Harper’s duties hereunder, the
Company shall pay Harper (i) an annual base salary in the amount as provided on
Exhibit A, a copy of which is attached hereto and incorporated herein by
reference, payable in accordance with the Company’s standard payroll policies,
which may be changed from time to time (but in no case less frequently than
monthly).

 
 

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3.2           Annual Cash Incentive. Harper will receive the opportunity to earn
an annual cash incentive pursuant to the terms of Exhibit A attached hereto (the
“Annual Cash Incentive”).  The Company agrees to negotiate in good faith a new
Annual Cash Incentive Plan for each year of Harper’s employment subsequent to
Fiscal 2012.  If the Company fails to negotiate a new Cash Incentive Plan for
any year after Fiscal 2012, then the Annual Cash Incentive in effect for the
preceding year will govern.  Notwithstanding any of the provisions of this
Agreement, the Annual Cash Incentive, to the extent payable for any fiscal year
of the Company, will be paid no later than the 15th day of the third month
following the end of the fiscal year of the Company to which the Annual Cash
Incentive relates.
 
3.3           Benefits. The Company shall provide to Harper the benefits as
described on Exhibit B attached hereto.
 
3.4           Reimbursement of Expenses. Harper shall be entitled to be
reimbursed for all actual and reasonable expenses, including but not limited to,
expenses for travel, meals and entertainment, incurred by Harper in connection
with and reasonably related to the furtherance of the Company’s Business, per
Company travel guidelines in effect from time to time. Subject to the Company
travel guidelines in effect from time to time, the Company will reimburse Harper
for such actual and reasonable expenses no later than the last day of the
calendar year following the calendar year in which Harper incurs the
reimbursable expense.
 
3.5           Equity Grants. The parties incorporate the terms of Exhibit A
attached hereto regarding the equity grants described therein, provided however,
that upon any Change of Control of the Company as defined in Section 4 of this
Agreement or if Harper’s employment is terminated under Sections 5.1(b), (d) or
(e) of this Agreement, any of Harper’s equity-based incentive compensation
(whether granted pursuant to this Agreement or otherwise) that has not yet
vested will vest immediately.
 
4.           Change of Control.  For the purposes of this Agreement, the term
“Change of Control” shall mean a change in the beneficial ownership of the
Company’s voting stock pursuant to which:
 
(a)           any “person,” including a “syndicate” or “group” as those terms
are used in Section 13(d)(3) of the Securities Exchange Act of 1934, is or
becomes the beneficial owner, directly or indirectly, of securities of the
Company representing 50% or more of the combined voting power of the Company’s
then outstanding “Voting Securities,” which is any security that ordinarily
possesses the power to vote in the election of the board of directors of a
corporation without the happening of any precondition or contingency; or
 
(b)           the Company is merged or consolidated with another corporation and
immediately after giving effect to the merger or consolidation less than 50% of
the outstanding Voting Securities of the surviving or resulting entity are then
beneficially owned in the aggregate by either the shareholders of the Company
immediately prior to such merger or consolidation, or, if a record date has been
set to determine the shareholders of the Company entitled to vote on such merger
or consolidation, the shareholders of the Company as of such record date; or

 
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(c)           the Company transfers substantially all of its assets to another
corporation, other than a corporation of which the Company owns, directly or
indirectly, at least 50% of the combined voting power of such corporation’s
outstanding voting securities.
 
5.           Termination.
 
5.1           Termination Events. Harper’s employment hereunder will terminate
upon the occurrence of any of the following events:
 
(a)           Death;
 
(b)           Disability:  If Harper is unable perform the duties assigned to
him hereunder for a continuous period exceeding 90 days by reason of injury,
physical or mental illness or other disability, which condition has been
certified by a physician; then, upon written notice to Harper or his personal
representative setting forth specifically the nature of the disability and the
resulting performance failures and Harper’s failure to cure the cited
performance failures within ten days of receipt of such notice, the Company may
discharge Harper; or
 
(c)           Cause:  As used in this Agreement, “Cause” shall mean:
 
 
(i)
Harper’s conviction of (or pleading guilty or nolo contendere to) a felony or
any misdemeanor involving dishonesty or moral turpitude; provided, however, that
prior to discharging Harper for Cause, the Board shall give a written statement
of findings to Harper setting forth specifically the grounds on which Cause is
based, and Harper shall have a period of ten days thereafter to respond in
writing to the Board’s findings; or

 
 
(ii)
Harper’s willful and continued failure to substantially perform his duties with
the Company (other than any failure resulting from death, illness or disability)
that has, or can reasonably be expected to have, a direct and material adverse
monetary effect on the Company, provided that the Board has tendered written
notice to Harper specifying the nature of the misconduct or performance
deficiency and giving Harper 20 days to cure such deficiency.  For purposes of
this subsection (ii), no act or failure to act on Harper’s part shall be
considered “willful” if done, or omitted to be done, by Harper in good faith and
with reasonable belief that Harper’s action or omission was in the best interest
of the Company.  Any act, or failure to act, based upon authority given pursuant
to a resolution duly adopted by the Board or based upon the advice of counsel
for the Company shall be conclusively presumed to be done, or omitted to be
done, by the Employee in good faith and in the best interests of the Company;

 
(d)           Without Cause: The Board may terminate Harper by issuing at least
30 days’ advance written notice, subject to the severance provisions set forth
below;

 
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(e)           By Harper With Cause: Harper may terminate his employment due to
either (i) a material default by the Company in the performance of any of its
obligations hereunder, or (ii) an Adverse Change in Duties (as defined below),
which default or Adverse Change in Duties remains unremedied by the Company for
a period of 30 days following its receipt of written notice thereof from Harper;
provided, however, that Harper must provide written notice to the Company of the
condition which would constitute cause for terminating his employment hereunder
within 90 days of the initial existence of the condition, and, assuming such
default or Adverse Change in Duties remains unremedied by the Company after the
30-day period set forth above, Harper then must terminate his employment within
12 months of the initial existence of the condition; or
 
(f)           By Harper Without Cause: Harper may terminate his employment for
any reason upon the furnishing of at least 30 days’ advance written notice to
the Board.
 
As used herein, “Adverse Change in Duties” means an action or series of actions
taken by the Company, without Harper’s prior written consent, that results in:
 
(1)           A material diminution in Harper’s authority, duties or
responsibilities;
 
(2)           A material diminution in Harper’s base compensation;
 
(3)           A material diminution in the authority, duties or responsibilities
of the supervisor to whom Harper is required to report;
 
(4)           A material diminution in the budget over which Harper retains
authority; and
 
(5)           A material change in the geographic location of the Company, as
located at the time of this Agreement, at which Harper performs his duties.
 
5.2           Effects of Termination and Change of Control.
 
(a)           Upon termination of Harper’s employment hereunder for any reason,
the Company will promptly (but in no event later than 30 days after termination
of engagement) pay Harper all compensation owed to Harper and unpaid through the
date of termination (including, without limitation, salary and employee expense
reimbursements).
 
(b)           In addition, upon any Change of Control of the Company as defined
in Section 4 of this Agreement or if Harper’s employment is terminated under
Sections 5.1 (b), (d) or (e), the Company shall also pay Harper an aggregate
severance amount equal to the sum of (A) Harper’s then-applicable annual base
salary plus (B) the Target Annual Cash Incentive for the fiscal year in which
the termination or Change of Control, as applicable, occurred. Such severance
amount shall be paid in a single lump sum within thirty days of the date of
termination or consummation of a Change of Control, as
applicable.  Notwithstanding anything to the contrary contained in the
foregoing, Harper is entitled to only one such severance payment pursuant to
this Section 5.2(b) regardless of the occurrence of multiple events that would
result in such severance payment.

 
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(c)           The Company shall have the right to offset against any damages
resulting from a breach by Harper of Section 5.3 or Section 6 of this Agreement,
in which case, such offset shall be applied in full against the payments
remaining to be paid to Harper, from earliest to latest, and then to recover any
amounts previously paid.
 
5.3           Restrictive Covenants. Upon termination of Harper’s employment
hereunder for any reason, Harper agrees that for the one-year period following
the termination of employment, Harper will not:
 
(a) directly or indirectly, within a ten-mile radius of Harper’s office at the
Company, whether for his own account or as an individual, employee, director,
consultant or advisor, or in any other capacity whatsoever, provide services
that are substantially similar to the services he provided to the Company to any
person, firm, corporation or other business enterprise that competes with the
Business of the Company, unless he obtains the prior written consent of the
Board;
 
(b) directly or indirectly encourage or solicit, or attempt to encourage or
solicit, on behalf of any person, firm, corporation or other business enterprise
that competes with the Business of the Company, any individual to leave the
Company’s employ for any reason or interfere in any other manner with the
employment relationships at the time existing between the Company and its
current or prospective employees; or
 
(c) induce or attempt to induce, on behalf of any person, firm, corporation or
other business enterprise that competes with the Business of the Company, any
provider, payor, customer, supplier, distributor, licensee or other business
relation of the Company with whom Harper dealt at any time during the two-year
period preceding his termination of employment to cease doing business with the
Company or in any way interfere with the existing business relationship between
any such customer, supplier, distributor, licensee or other business relation
described above and the Company.
 
Harper acknowledges that monetary damages will not be sufficient to compensate
the Company for any economic loss that may be incurred by reason of breach of
the foregoing restrictive covenants.  Accordingly, in the event of any such
breach, the Company shall, in addition to any remedies available to the Company
at law, be entitled to obtain equitable relief in the form of an injunction
precluding Harper from continuing to engage in such breach.
 
In the event that any of the foregoing restrictive covenants are too broad to be
enforceable, the parties request and agree that they may be reduced to such
lesser breadth as may be necessary to make them enforceable.  The covenants in
this Section 5.3 shall be construed as an agreement independent of any other
agreement between the parties.  Harper agrees that the existence of any claim or
cause of action of Harper against the Company, whether predicated upon this
Agreement or otherwise, shall not constitute a defense to the enforcement by the
Company of these covenants.

 
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6.           Confidentiality.  During the term of this Agreement and for 36
months after Harper’s termination of employment with the Company, Harper will
continue to be bound by the terms of that certain Confidentiality Agreement
entered into between Harper and the Company on or about October 21, 2010.
 
7.           General Provisions.
 
7.1           Assignment. Harper may not assign or delegate any of his rights or
obligations under this Agreement.  The Company may assign its rights and
obligations under this Agreement to any successor to the Company through merger,
consolidation, sale or the like.
 
7.2           Entire Agreement. This Agreement contains the entire agreement
between the parties with respect to the subject matter hereof and supersedes any
and all prior agreements between the parties relating to such subject matter.
 
7.3           Modifications. This Agreement may be changed or modified only by
an agreement in writing signed by the party against whom enforcement is sought.
 
7.4           Successors and Assigns. The rights and duties under this Agreement
shall inure to the benefit of, and be binding upon, the parties hereto and their
successors and assigns, legal representatives, heirs, legatees, distributees,
assigns and transferees by operation of law, whether or not any such person or
entity shall have become a party to this Agreement and have agreed in writing to
join and be bound by the terms and conditions hereof.
 
7.5           Governing Law. This Agreement shall be governed by, and construed
in accordance with, the laws of the State of Georgia.
 
7.6           Severability; Partial Invalidity. If any provision of this
Agreement or any instrument or document delivered in connection herewith is held
to be illegal, invalid or unenforceable under present or future laws effective
during the term of this Agreement (the “Offending Provision”), the Offending
Provision shall be fully severable; this Agreement shall be construed and
enforced as if the Offending Provision had never comprised a part of this
Agreement; and the remaining provisions of this Agreement shall remain in full
force and effect and shall not be affected by the Offending Provision or by its
severance from this Agreement.  Furthermore, in lieu of the Offending Provision,
there shall be added automatically as a part of this Agreement a provision as
similar in terms to the Offending Provision as may be possible and be legal,
valid and enforceable.
 
7.7           Further Assurances. The parties will execute such further
instruments and take such further actions as may be reasonably necessary to
carry out the intent of this Agreement.

 
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7.8           Notices. Any notices or other communications required or permitted
hereunder shall be in writing and shall be deemed received by the recipient when
delivered personally or, if mailed, five (5) days after the date of deposit in
the United States mail, certified or registered, postage prepaid and addressed,
in the case of the Company, to:

EasyLink Services International Corporation
6025 The Corners Parkway
Suite 100
Norcross, Georgia 30092

and, in the case of Harper, to:

4382 Karl’s Gate Drive
Marietta, GA  30068

 
or to such other address as either party may later specify by at least ten (10)
days’ advance written notice delivered to the other party in accordance
herewith.
 
7.9           No Waiver. The failure of either party to enforce any provision of
this Agreement shall not be construed as a waiver of that provision, nor prevent
that party thereafter from subsequently enforcing that provision or any other
provision of this Agreement.
 
7.10           Legal Fees and Expenses. In the event of any disputes arising
under or related to this Agreement, the prevailing party shall be entitled to be
paid its reasonable attorneys’ fees and litigation expenses incurred in
connection with such dispute from the other party to such dispute.
 
7.11           Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed to be an original, but all of which together shall
constitute one and the same instrument.
 
7.12           Omnibus 409A Provision. This Agreement is intended to be exempt
from treatment as deferred compensation under Section 409A of the Internal
Revenue Code (the “Code”) and shall be construed and interpreted in accordance
therewith.  All rights to payments under this Agreement shall be treated as
rights to receive a series of separate payments to the fullest extent permitted
by Section 409A of the Code.  Notwithstanding the preceding, the Company shall
not be liable to Harper or any other person if the Internal Revenue Service or
any court or other authority having jurisdiction over such matter determines for
any reason that any payment under this Agreement is subject to taxes, penalties
or interest as a result of failing to comply with Section 409A of the Code.

 
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Notwithstanding any of the provisions of this Agreement, if Harper is a
“specified employee” (within the meaning of Section 409A of the Code), and any
payments hereunder are not otherwise exempt from Section 409A of the Code, then,
to the extent necessary to comply with Section 409A of the Code, no payments may
be made hereunder before the date which is six months after the date of Harper’s
“separation from service” within the meaning of Section 409A of the Code or, if
earlier the date of Harper’s death.  Because the amounts payable hereunder will
be made in all events no later than the 15th day of the third month following
the end of (i) the calendar year or (ii) the fiscal year of the Company in which
Harper terminates employment, whichever is later, then all amounts payable
hereunder should be exempt from Section 409A of the Code as a short-term
deferral.  Consequently, this “specified employee” six-month delay provision
will only be applicable if it is subsequently determined that the amounts to be
paid pursuant to this Agreement are not exempt from Section 409A of the
Code.  For purposes hereof, termination of employment shall be read to mean a
“separation from service” within the meaning of Section 409A of the Code where
it is reasonably anticipated that no further services would be performed after
such date or that the level of bona fide services Harper would perform after
that date (whether as an employee or an independent contractor) would
permanently decrease to no more than 20 percent of the average level of bona
fide services performed over the immediately preceding 36-month period.

 
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and
year first above written.

 
/s/ Patrick A. Harper
 
Patrick A. Harper
     
EasyLink Services International Corporation
      By:
/s/ Glen E. Shipley
   
Name:
Glen E. Shipley
   
Title:
CFO

 
 
 

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EXHIBIT A

Fiscal 2012 Compensation Plan

Mr. Pat Harper, Executive Vice President of Global Operations

 
SALARY FOR FISCAL 2012
 
For Fiscal 2012 (and each fiscal year thereafter, unless otherwise determined by
the Company), the Company shall pay you a salary of $200,000 annually.  The
Company, through the Compensation Committee of the Board of Directors, will
review your salary annually and, in its sole discretion, may increase but not
decrease your salary as appropriate, subject to the approval of the Compensation
Committee of the Board of Directors.
 
ANNUAL CASH INCENTIVE FOR FISCAL 2012
 
You shall have the opportunity to earn an Annual Cash Incentive based on the
Company’s and your personal performance during Fiscal 2012.  The Company,
through the Compensation Committee of the Board of Directors, retains the right
to adjust your Annual Cash Incentive plan at any time as business circumstances
or other factors reasonably dictate.
 
Your targeted Annual Cash Incentive for Fiscal 2012 is $100,000 (“Target Annual
Cash Incentive for 2012”).  With respect to the Annual Cash Incentive for Fiscal
2012, the Compensation Committee will determine the payout of this amount based
on a combination of 50% payout on satisfaction of item 1 of the Company
objectives relating to Company revenue (the “Company Revenue Bonus for 2012”)
and 50% payout on item 2 of the Company objectives relating to Company EBITDA
(the “Company EBITDA Bonus for 2012”), as provided below:
 
COMPANY OBJECTIVES
 
 
1.
Total revenue of $[XXXXXXXXXX] (the “2012 Revenue Target”) – The Company Revenue
Bonus for 2012 will be earned if the Company achieves a minimum total revenue
for Fiscal 2012 equal to the 2012 Revenue Target, in accordance with and subject
to the following.  None of the Company Revenue Bonus for 2012 will be earned if
the Company achieves total revenue for Fiscal 2012 equal to or less than 90% of
the 2012 Revenue Target.  If the Company achieves total revenue for Fiscal 2012
greater than 90% of the 2012 Revenue Target, then the percentage of the Company
Revenue Bonus for 2012 earned will equal approximately (i) 10, times (ii) a
percentage equal to (a) the actual amount of total revenue for Fiscal 2012
divided by the 2012 Revenue Target, minus (b) 0.9.

 
 
2.
EBITDA of $[XXXXXXXXXX] (the “2012 EBITDA Target”) – The Company EBITDA Bonus
for 2012 will be earned if the Company achieves a minimum EBITDA for Fiscal 2012
equal to the 2012 EBITDA Target, in accordance with and subject to the
following.  None of the Company EBITDA Bonus for 2012 will be earned if the
Company achieves EBITDA for Fiscal 2012 equal to or less than 90% of the 2012
EBITDA Target.  If the Company achieves EBITDA for Fiscal 2012 greater than 90%
of the 2012 EBITDA Target, then the percentage of the Company EBITDA Bonus for
2012 earned will equal approximately (i) 10, times (ii) a percentage equal to
(a) the actual amount of EBITDA for Fiscal 2012 divided by the 2012 EBITDA
Target, minus (b) 0.9.  For purposes of this paragraph, EBITDA shall mean net
profit before taxes, interest expense (net of capitalized interest expense),
depreciation expense and amortization expense, all in accordance with GAAP,
excluding stock-based compensation expense, cumulative effect of accounting
changes and one-time, nonrecurring items.

 
 
 

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EXHIBIT B

Benefits
 
You will be eligible to participate in benefit plans and/or programs which the
Company may offer to its employees or executives from time to time.  Your
eligibility for such plans and/or programs will be determined by the terms of
such plans and/or programs.  Among the benefits currently offered by the Company
to its employees are medical and dental insurance and a 401k plan, which are
described below.  Please be advised, however, that the Company reserves the
right to amend, modify, or terminate any of its benefits plans and/or programs
at any time in its sole discretion.  You will be eligible for three weeks
vacation in accordance with the Company’s accrual policy.
 
Medical Insurance.  Currently, the Company offers its employees medical
insurance.  The Company currently contributes a portion of your premium for
employee coverage, and you will be responsible for contributing for additional
family coverage through pre-tax payroll deduction.
 
Dental Insurance.  The Company presently offers its employees dental insurance. 
The Company currently contributes a portion of your premium for employee
coverage, and you will be responsible for contributing for additional family
coverage through pre-tax payroll deduction.
 
401k Plan.  The Company presently offers its employees a 401k plan with a
Company match to be determined annually by the Compensation Committee of the
Board of Directors.   You may elect to contribute pre-tax deferrals through
payroll deduction pursuant to the terms of the 401k plan.

 
 

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