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)
January 28, 2005
EASYLINK SERVICES CORPORATION
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(Exact name of registrant as specified in its charter)
Delaware 000-26371 13-3787073
(State or other jurisdiction (Commission File Number) (I.R.S. Employer
of incorporation) Identification No.)
33 Knightsbridge Road
Piscataway, NJ 08854
(Address of principal executive offices)
Registrant's telephone number, including area code: (732) 652-3500
N/A
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Former Name or Former Address, if Changed Since Last Report
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):
[ ] Written communications pursuant to Rule 425 under the Securities Act (17
CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17
CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
ITEM 1.01 (Entry into a Material Definitive Agreement); ITEM 1.02 (Termination
of Material Definitive Agreement); ITEM 5.02(b) (Departure of Director)
EasyLink Services Corporation ("EasyLink" or the "Company") announced that
George Abi Zeid will resign as an officer and director of EasyLink and its
subsidiaries effective February 4, 2005. Mr. Abi Zeid serves as the Executive
Vice President and President - International Operations of the Company.
On January 28, 2005, the Company and Mr. Abi Zeid entered into a separation
agreement. Under the separation agreement, the Company has agreed to pay Mr. Abi
Zeid $240,000 as a severance payment upon the effective date of his resignation,
an aggregate of $1,960,000 in installments over three years in consideration of
the non-compete and other covenants contained in the separation agreement and
$75,000 of Mr. Abi Zeid's legal expenses. Late payments will bear interest at
the rate of 8% per annum until paid.
Mr. Abi Zeid has agreed to restrictions on the sale of his stock during the two
years after his date of resignation, including a prohibition on the sale of
stock to one of the Company's competitors and on sales in excess of 1 million
shares during each of the first and second 12 month periods following the
resignation date plus in the second 12 month period any shares not sold in the
first 12 month period. Mr. Abi Zeid has reaffirmed the obligations under the
non-compete covenant in his employment agreement and the applicable non-compete
period has been extended from one year to two years after the date of his
resignation.
Mr. Abi Zeid is subject to various standstill provisions for two years after the
resignation date, including restrictions on soliciting proxies or consents from
other shareholders, granting proxies to third parties or consents, acquiring
additional shares of stock and making merger, acquisition or similar proposals
involving EasyLink stock. Mr. Abi Zeid has agreed that, for a period of two
years after the resignation date, at all meetings of stockholders of EasyLink,
he will vote, or grant a proxy to any one or more persons designated by the
Company to vote, all of the shares of EasyLink common stock beneficially owned
by him proportionately in accordance with the votes cast as votes for, as votes
against or as votes withheld, or as abstentions, as the case may be, by
shareholders other than Mr. Abi Zeid on all matters submitted to the
stockholders of the Company.
The standstill and voting covenants will expire if any of the following
conditions exists: the closing price of the Company's common stock shall be less
than $1.75 per share for any ten consecutive days after 18 months after the
resignation date; a majority of EasyLink's board consists of persons who are not
existing directors or persons appointed by existing directors; or Mr. Abi Zeid's
share interest is below 5% of the Company's outstanding shares. If the Company
fails to make any required payment under the separation agreement within 15 days
after receipt of written notice from Mr. Abi Zeid or fails to make a required
payment within two business days after the due date for the payment on at least
3 occasions, the restrictions on the sale of Mr. Abi Zeid's shares and the
standstill and voting covenants will terminate and all remaining payments under
the separation payment may be declared by Mr. Abi Zeid to be immediately due and
payable.
Under applicable law, Mr. Abi Zeid may revoke the separation agreement on or
before February 3, 2005.
Mr. Abi Zeid beneficially owns approximately 9% of the Company's outstanding
Class A common stock, warrants to purchase 268,296 shares at an exercise price
of $6.10 per share and options to purchase 72,000 shares at a weighted average
exercise price of $0.68 per share.
In connection with Mr. Abi Zeid's separation agreement, the Company has also
agreed to make available an aggregate of $200,000 of severance payments for
other employees of the Company.
The form of the separation agreement is attached hereto as Exhibit 10.1 and is
incorporated by reference herein. The foregoing summary of the terms of the
separation agreement is not complete and is qualified in its entirety by
reference to the separation agreement attached hereto as Exhibit 10.1.
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ITEM 9.01 (C) Exhibits.
The following exhibits are filed herewith:
EXHIBIT NO. DESCRIPTION
Exhibit 10.1 Separation Agreement between EasyLink Services
Corporation and George Abi Zeid dated January 28,
2005.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Dated: January 28, 2005
EASYLINK SERVICES CORPORATION
By: s/Thomas Murawski
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Thomas Murawski, President and Chief Executive Officer
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INDEX TO EXHIBITS
EXHIBIT NO. DESCRIPTION
Exhibit 10.1 Separation Agreement between EasyLink Services
Corporation and George Abi Zeid dated January 28,
2005.
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