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)
February 7, 2005
EASYLINK SERVICES CORPORATION
-----------------------------
(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
---
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), 5.02(d) (Election of
new directors)
Appointment of Directors and Committee Members
EasyLink Services Corporation ("EasyLink" or the "Company") today announced that
the board of directors of the Company on February 8, 2005 elected Peter J.
Holzer and Eric J. Zahler as members of its board of directors. The board of
directors of the Company has determined that Mr. Holzer and Mr. Zahler are
independent directors as defined in Rule 4200(a)(15) under the rules of the
Nasdaq.
There is no arrangement or understanding between Mr. Holzer or Mr. Zahler and
any other persons pursuant to which he was selected as a director.
Eric Zahler and John Petrillo will serve on the audit committee of EasyLink's
board, together with existing members Dennis Raney and George Knapp. Peter
Holzer will serve on the compensation committee of EasyLink's board, together
with existing members Robert Casale and George Knapp. Mr. Casale will no longer
serve on the audit committee.
There is no transaction, or series of similar transactions, since the beginning
of the Company's last fiscal year, or any currently proposed transaction, or
series of similar transactions, to which the Company or any of its subsidiaries
was or is to be a party, in which the amount involved exceeds $60,000 and in
which Mr. Holzer or Mr. Zahler had, or will have, a direct or indirect material
interest.
In connection with the appointment of Messrs. Holzer and Zahler as directors, on
February 8, 2005 the Board of Directors granted each of Mr. Holzer and Mr.
Zahler options to purchase 20,000 shares of the Company's Class A common stock,
par value $0.01 per share. The exercise price of the options is $1.23 per share,
the closing price of the Company's Class A common stock on the Nasdaq stock
market on the date of grant. The options vest 25% on the first anniversary of
the date of grant and then 1/12th (8.33%) quarterly over the three year period
after the first anniversary. If a change of control occurs and Mr. Holzer or Mr.
Zahler does not continue to serve as a director of the surviving corporation or
its parent entity, then the portion of his options that would have vested in
that vesting year (25%) will vest immediately upon the change of control.
As a director of the Company, each of Mr. Holzer and Mr. Zahler has also
received a pro rated portion of the director's annual retainer fee in the amount
of $3,333 (representing one third of the annual $10,000 fee currently in effect)
and is entitled to receive $1,000 for each board meeting that he attends, $750
for each committee meeting that he attends and $500 for each telephonic board or
committee meeting in which he participates. If Mr. Holzer or Mr. Zahler serves
as the Chair of a committee, he will also be entitled to receive a $3,000 annual
fee. The annual retainer fee, committee chair fee and committee meeting fee will
increase to $15,000, $5,000 and $1,000, respectively, immediately after the
Company's 2005 annual meeting of stockholders. Each director will also be
entitled to an annual grant of options to purchase 5,000 shares of the Company's
Class A common stock awarded pursuant to the terms of the Company's stock option
plans (which will be increased to 10,000 after the Company's 2005 annual meeting
of stockholders). See also the disclosure under "Director Compensation" below,
which is incorporated herein by reference.
On February 8, 2005, the Company also entered into its standard form of
indemnification agreement for directors and officers with each of Mr. Holzer and
Mr. Zahler. Under this agreement, the Company has agreed to indemnify Mr. Holzer
and Mr. Zahler for expenses, judgments, fines and amounts paid in settlement in
connection with third party proceedings and proceedings by or in the right of
the Company.
The form of letter delivered to each of Mr. Holzer and Mr. Zahler regarding his
appointment and compensation as a director, the Company's form of option
agreement governing his options and the Company's form of indemnification
agreement for directors and officers entered into with him are attached hereto
or incorporated by reference as an exhibit herein as Exhibits 99.1, 99.2, 99.3
and 99.4, respectively, and these exhibits are incorporated herein by reference.
The foregoing summary of the terms of the options granted to, and the
indemnification agreement entered into with, each of Mr. Holzer and Mr. Zahler
is not complete and is qualified in its entirety by reference to the applicable
appointment letter, stock option agreement or indemnification agreement attached
hereto or incorporated herein by reference as an exhibit.
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Director Compensation
On February 7, 2005, the Compensation Committee of the Board of Directors
revised the compensation package for directors effective immediately after the
Company's 2005 annual meeting of stockholders. Under the revised compensation
arrangements, each non-management director will be entitled to receive the
following fees and other benefits:
FEE OR BENEFIT CURRENT REVISED
Annual Retainer Fee $10,000 $15,000
Regular Board Meeting Fees (6 at $6,000 $6,000
$1,000 per meeting)
Committee Chair Annual Fee $3,000 $5,000
Regular Committee Meeting Fees $3,000 $4,000
(4 at $750 - increased to $1,000 -
per meeting)
Telephonic Board & Committee $500 $500
Meeting Fees (Per Meeting)
Initial Stock Option Grant 20,000* 30,000*
Annual Stock Option Grant 5,000* 10,000*
* The exercise price of the options is fixed at the closing price of the
Company's Class A common stock on the Nasdaq stock market on the date of grant.
The options vest 25% on the first anniversary of the date of grant and then
1/12th (8.33%) quarterly over the three year period after the first anniversary.
If a change of control occurs and the director does not continue to serve as a
director of the surviving corporation or its parent entity, then the portion of
his options that would have vested in that vesting year (25%) will vest
immediately upon the change of control.
Upon the effectiveness of the revised compensation arrangements, each
non-management director will be entitled to receive a grant of options to
purchase 10,000 shares due to the increase in the initial stock option grant
component of the compensation package and options to purchase 10,000 shares
pursuant to the annual stock option grant component.
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Item 9.01(c). Exhibits
99.1 Letter dated February 9, 2005 from EasyLink Services Corporation to
Peter Holzer.
99.2 Letter dated February 9, 2005 from EasyLink Services Corporation to
Eric Zahler.
99.3 Form of Stock Option Agreement applicable to the options granted to
Peter Holzer and Eric Zahler.
99.4 Form of Indemnification Agreement for directors and officers entered
into with Peter Holzer and Eric Zahler.
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: February 10, 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
99.1 Letter dated February 9, 2005 from EasyLink Services
Corporation to Peter Holzer.
99.2 Letter dated February 9, 2005 from EasyLink Services
Corporation to Eric Zahler.
99.3 Form of Stock Option Agreement applicable to the options
granted to Peter Holzer and Eric Zahler (incorporated by
reference to Exhibit 99.2 of the Company's Form 8-K
filed January 20, 2005).
99.4 Form of Indemnification Agreement for directors and
officers entered into with Peter Holzer and Eric Zahler
(incorporated by reference to Exhibit 10.1 of the
Company's Quarterly Report on Form 10-Q filed May 15,
2003).
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