UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A
(Amendment No. 1)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2002
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission File Number 0-26371
EasyLink Services Corporation
(Exact Name of Registrant as Specified in its Charter)
DELAWARE 13-3787073
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
33 Knightsbridge Road, Piscataway, NJ 08854
(Address of Principal Executive Office) (Zip Code)
(732) 652-3500
(Registrant's Telephone Number Including Area Code)
399 Thornall Street, Edison, NJ 08837
(Former name, former address and former fiscal year,
if changed from last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class Name of Exchange on Which Registered
----------------------------------------------------------------
None.
Securities registered pursuant to Section 12(g) of the Act:
Title of Each Class Name of Exchange on Which Registered
----------------------------------------------------------------
Class A Common Stock, $0.01 par value NASDAQ National Market
Indicate by check whether the registrant (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
Incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K [X]
Indicate by check mark whether the registrant is an accelerated filer (as
defined in Exchange Act Rule 12b-2).
Yes [ ] No [X]
The aggregate market value of the voting stock held by non-affiliates of the
registrant as of June 30, 2002 was $16,267,900.
Indicate the number of outstanding shares of each of the registrants' classes of
common stock as of February 28, 2003: Class A Common Stock, 16,316,802 shares;
and Class B Common Stock, 1,000,000 shares.
Form 10-K Index
Item No. Page No.
Part III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT............... 3
ITEM 11. EXECUTIVE COMPENSATION........................................... 4
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL HOLDERS AND MANAGEMENT
AND RELATED STOCKHOLDER MATTERS.................................. 8
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS................... 12
2
PURPOSE OF FORM 10-K/A
The sole purpose of this amendment is to add required Items 10, 11, 12
and 13 information of Part III to EasyLink Service Corporation ("EasyLink" or
the "Company") Annual Report on Form 10-K for the fiscal year ended December 31,
2002, which was originally filed with the Securities and Exchange Commission on
March 31, 2003, pursuant to General Instruction G(3) of Form 10-K.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
DIRECTORS OF THE REGISTRANT
The names of the directors of the Company, their ages as of February 28,
2003 and certain other information about them are set forth below:
Name Age Position
---- --- --------
Gerald Gorman 47 Chairman, Director
Thomas Murawski 57 Chief Executive Officer and President, Director
George Abi Zeid 50 President - International Operations, Director
Stephen Duff 39 Director
There are no family relationships among any of the directors or executive
officers of the Company.
Gerald Gorman -- Chairman
Mr. Gorman has served as Chairman of EasyLink since founding the Company in
December 1995 and as its Chief Executive Officer from February 1997 to October
2000. Prior to founding EasyLink, Mr. Gorman spent 12 years in the Investment
Banking Division of Donaldson, Lufkin & Jenrette Securities Corporation where he
founded and managed the Satellite Financing Group. Mr. Gorman also held
positions at General Electric Capital Corporation from 1983 to 1985 and at Utah
International from 1982 to 1983. Mr. Gorman received his Bachelor of Mechanical
Engineering degree from Melbourne University and his M.B.A. from Columbia
University.
Thomas Murawski -- Chief Executive Officer and President, Director
Mr. Murawski has served as a member of the Board of Directors since
February 2000. Mr. Murawski has served as Chief Executive Officer of EasyLink
since October, 2000 and as President since June 2002. He served as Chief
Executive Officer of Mail.com Business Messaging Services, Inc., a wholly-owned
subsidiary of the Company from February 2000 to October 2000. Before joining
EasyLink, Mr. Murawski was employed by NetMoves Corporation from November 1991
in the capacity of Chairman, President, CEO and Director. Prior to joining
NetMoves Corporation, Mr. Murawski served as Executive Vice President of Western
Union Corporation, a global telecommunications and financial services company
and President of its Network Services Group. Prior to joining Western Union
Corporation, Mr. Murawski served twenty-three years with ITT Corporation, a
diversified manufacturing and services company. He has held operating
responsibilities in the areas of subsidiary and product line management,
engineering, sales and marketing for both voice and data-oriented businesses.
Mr. Murawski's last position with ITT Corporation was President and General
Manager of ITT World Communications Inc., an international telecommunications
services company.
George Abi Zeid -- President - International Operations, Director
Mr. Abi Zeid has served as a member of the Board of Directors and as
President - International Operations since February 2001. Prior to joining
EasyLink he served as President of Swift Telecommunications, Inc. which he
founded in 1999. Prior to founding Swift Telecommunications, Inc., Mr. Abi Zeid
served as Executive Vice President of Xpedite Systems, Inc, and President of
Xpedite International, a wholly owned subsidiary of Xpedite Systems Inc. (PTEK),
from 1994 until 1998. Mr. Abi Zeid served as President and Chief Executive
Officer of Swift Global, Inc. from the time he founded the company in 1980 until
1994. Prior to founding Swift Global, Inc., Mr. Abi Zeid founded Swift Telex
Inc. in 1978.
Stephen Duff -- Director
Mr. Duff has been a member of the Board of Directors since January, 2001.
Mr. Duff is the Chief Investment Officer of The Clark Estates, Inc. Prior to
joining The Clark Estates in 1995, Mr. Duff was a Vice President of The
Portfolio Group, Inc., a subsidiary of The Chemical Banking Corporation, Inc.
from 1990. Mr. Duff is a 1985 graduate of Stonehill College. Mr. Duff serves on
the Board of The Clara Welch Thanksgiving Home, Inc. (Non-Profit) and on the
Board of Casual Male Retail Group.
3
EXECUTIVE OFFICERS OF THE REGISTRANT
Executive Officers
The following table identifies the current executive officers of EasyLink
and their ages as of February 28, 2003:
Name Age Position
---- --- --------
Gerald Gorman........................... 47 Chairman, Director
Thomas Murawski......................... 57 Chief Executive Officer and President, Director
George Abi Zeid......................... 50 President - International Operations, Director
Debra McClister......................... 48 Executive Vice President and Chief Financial Officer
David Ambrosia.......................... 46 Executive Vice President and General Counsel
For biographical summaries of Gerald Gorman, Thomas Murawski and George Abi
Zeid, see "Directors of the Registrant."
Debra McClister -- Executive Vice President and Chief Financial Officer
Ms. McClister has served as Executive Vice President and Chief Financial
Officer of EasyLink since July 1998. Prior to joining EasyLink, Ms. McClister
held a variety of executive positions at Philips Media, and most recently served
as Chief Operating Officer of Philips Media Software from 1996 to 1997. She was
the Senior Vice President and Chief Financial Officer for Philips Media, North
America from 1995 to 1996, Corporate Vice President and Controller for Philips
Electronics, North America from 1988 to 1995 and she held various positions at
Philips Electronics from 1984 to 1988. Ms. McClister also worked in financial
management for Hitachi America from 1981 to 1984. Ms. McClister received her
B.S. in Commerce from Rider University and is a Certified Public Accountant.
David Ambrosia -- Executive Vice President and General Counsel
Mr. Ambrosia joined EasyLink as Executive Vice President and General
Counsel in May 1999. Prior to joining EasyLink, Mr. Ambrosia was engaged in the
private practice of law in the field of corporate law with an emphasis on
securities offerings and mergers and acquisitions. From January 1990 through
June 1999, he was a partner at Winthrop, Stimson, Putnam & Roberts. From
September 1982 until December 1989, he was an associate at Winthrop, Stimson,
Putnam & Roberts. Mr. Ambrosia received his B.S. from the School of Industrial
and Labor Relations at Cornell University, his M.B.A. from the Johnson Graduate
School of Management at Cornell University and his J.D. from the Cornell Law
School.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires EasyLink's directors, executive
officers and persons who own more than 10% of EasyLink's Class A Common Stock
(collectively, "Reporting Persons") to file with the Securities and Exchange
Commission ("SEC") initial reports of ownership and changes in ownership of
EasyLink's Class A Common Stock. Reporting Persons are required by SEC
regulations to furnish EasyLink with copies of all Section 16(a) reports they
file. To EasyLink's knowledge, based solely on its review of the copies of such
reports received or written representations from certain Reporting Persons that
no other reports were required, EasyLink believes that during 2002 all Reporting
Persons complied with all applicable filing requirements.
ITEM 11. EXECUTIVE COMPENSATION
Executive Compensation
The following table presents certain summary information concerning the
compensation awarded to, earned by, or paid for services rendered to EasyLink in
all capacities during the fiscal year ended December 31, 2002, by the Chief
Executive Officer of EasyLink during 2002, each of the four other most highly
compensated executive officers whose salary and bonus exceeded $100,000 in 2002
and one other person who would otherwise have been included in this table on the
basis of salary and bonus earned for 2002 but whose employment terminated during
2002 (collectively, the "Named Executive Officers"). No other executive who
would otherwise have been included in this table on the basis of salary and
bonus earned for 2002 has resigned or otherwise terminated employment during
2002.
4
SUMMARY COMPENSATION TABLE
Long-Term Compensation Awards
-----------------------------------------
Securities
---------------
Securities
Underlying Underlying Securities
Options to Options to Underlying
purchase purchase Options to
Annual Compensation EasyLink Asia.com, Inc. purchase
------------------------- Class A Class A India.com,
Common Stock Common Stock Inc. Class A All Other
Name and Principal Position Year Salary Bonus (1) (2) Common Stock(2) Compensation
--------------------------- ---- ------ ----- --- --- --------------- ------------
Gerald Gorman..................... 2002 $ 250,000 $ -- -- -- -- $--
Chairman(3) 2001 215,732 -- 55,152 -- -- --
2000 200,000 -- -- 100,000 100,000 --
Thomas Murawski................... 2002 407,698 -- 300,000 -- -- 335,414(6)
Chief Executive Officer 2001 301,180 -- 402,539 -- -- --
and President(4) 2000 236,378(5) -- 82,693 100,000 100,000 --
George Abi Zeid................... 2002 202,404 25,000 -- -- --
President - International 2001 187,461(7) -- -- -- -- --
Operations 2000 -- -- -- -- -- --
Debra McClister................... 2002 204,549 -- 25,000 -- -- --
Executive Vice President and 2001 189,589 -- 40,005 -- -- --
Chief Financial Officer 2000 185,792 -- 42,767 100,000 100,000 --
David Ambrosia.................... 2002 229,262 -- 50,000 -- -- --
Executive Vice President and 2001 192,715 -- 30,812 -- -- --
General Counsel 2000 185,192 -- 36,206 100,000 100,000 --
Bradley Schrader 2002 256,730(8) -- -- -- -- --
President 2001 224,139 25,000 80,001 -- -- --
2000 75,620(9) 120,000 60,002 50,000 50,000 --
---------
(1) All numbers give effect to the one-for-ten reverse stock split of the
Company's Class A and Class B Common Stock effective January 23, 2002.
(2) All of these stock options were cancelled in 2001.
(3) Also served as Chief Executive Officer until October 26, 2000.
(4) Served as Chief Executive Officer of Mail.com Business Messaging Services,
Inc. from February 8, 2000 until October 26, 2000.
(5) Salary did not commence until February 8, 2000.
(6) Represents the outstanding principal of and accrued interest on a loan
from EasyLink to Mr. Murawski forgiven by EasyLink pursuant to the terms
of Mr. Murawski's employment agreement in the aggregate amount of $235,144
plus $100,000 paid to Mr. Murawaski during 2002 as a partial gross-up for
taxes due on the loan forgiveness.
(7) Salary did not commence until February 23,2001.
(8) Employment terminated in May 2002. Compensation includes salary
continuation through December 1, 2002.
(9) Salary did not commence until July 10, 2000.
OPTION GRANTS IN FISCAL YEAR
The following table provides certain information regarding stock options
granted to the Named Executive Officers during the year ended December 31, 2002.
Individual Grants
-----------------------------------------------------
Potential Realizable
Percent of Value at Assumed
Number of Total Options Annual Rates of Stock
Securities Granted to Price Appreciation for
Underlying Employees in Exercise Option Terms(1)
Options Fiscal Year Price Per Expiration ----------------------------
Granted(#)(1) (%) Share(1) Date 5% 10%
------------- ------------ -------- ---------- -- ---
Gerald Gorman 0 0% $ n/a n/a $ n/a $ n/a
Thomas Murawski 300,000 (2) 0.24 .98 06/20/2012 $ 172,822.98 $431,460.72
George Abi Zeid 25,000 (2) 0.02 .98 06/20/2012 $14,401.91 $35,955.06
Debra McClister 25,000 (2) 0.02 .98 06/20/2012 $14,401.91 $35,955.06
David Ambrosia (2)
50,000 0.04 .98 06/20/2012 $28,803.83 $71,910.12
---------
(1) Amounts represent hypothetical gains that could be achieved for the
respective options if exercised at the end of the option term. These
gains are based on assumed rates of stock appreciation of 5% and 10%
compounded annually from the date the respective options were granted
based upon the fair market value on the date of grant. These assumptions
are not intended to forecast future appreciation of EasyLink's stock
price. The amounts reflected in the table may not necessarily be
achieved.
(2) These options may not be exercised on or before June 20, 2003. Upon that
date all of the options will vest.
5
STOCK OPTION EXERCISES AND DECEMBER 31, 2002 STOCK OPTION VALUE TABLE
The following table sets forth certain information concerning stock options
exercised during 2002 by the Named Executive Officers and the number and value
of specified options held by those persons at December 31, 2002. The values of
unexercised in-the-money stock options at December 31, 2002 shown below are
presented pursuant to SEC rules. There is no assurance that the values of
unexercised in-the-money stock options reflected in this table will be realized.
Number of Value of Unexercised
Shares Securities Underlying In-the-Money Options at
Acquired December 31, 2002 December 31, 2002(2)
on Value ----------------------------- -----------------------------
Name Exercise (#) Realized ($)(1) Exercisable Unexercisable Exercisable Unexercisable
---- ------------ --------------- ----------- ------------- ----------- -------------
Gerald Gorman 0 $ 0 110,041 269 0 0
Thomas Murawski 0 0 264,407 496,795 0 0
George Abi Zeid 0 0 - 25,000 0 0
Debra McClister 0 0 74,044 28,874 0 0
Bradley Schrader 0 72,498 0 0 0
0
David Ambrosia 0 0 45,942 65,664 0 0
---------
(1) Amounts disclosed in this column were calculated based on the difference
between the fair market value of the Company's Class A Common Stock on the
date of exercise and the exercise price of the options in accordance with
regulations promulgated under the Securities Exchange Act of 1934, as
amended, and do not reflect amounts actually received by the Named
Executive Officers.
(2) All amounts reflected were determined using a December 31, 2002 price of
$0.64 per share.
Compensation of Directors
Other than reimbursing directors for customary and reasonable expenses of
attending Board of Directors or committee meetings, EasyLink does not currently
compensate directors who are part of the management team. During 2002, three
outside, non-management directors were granted options as compensation for their
serving as board members. On July 9, 2002, Mr. Duff was granted options to
purchase 5,000 shares of Class A Common Stock at an exercise price of $1.04 per
share, vesting on a monthly basis for one year from July 2002 through July 2003,
former director William Donaldson was granted options to purchase 5,000 shares
of Class A Common Stock at an exercise price of $1.04 per share, vesting on a
monthly basis for one year from July 2002 through July 2003 and former director
Stephen Ketchum was granted options to purchase 5,000 shares of Class A Common
Stock at an exercise price of $1.04 per share, vesting on a monthly basis for
one year from July 2002 through July 2003.
Employment, Severance and Other Arrangements
Under Mr. Gorman's current employment agreement, he is entitled to receive
a base salary of $250,000 per year. Mr. Gorman may also receive an annual bonus
payment if determined to be payable by the board of directors based on the
performance of EasyLink and Mr. Gorman. Mr. Gorman's base salary and bonus
amount are adjustable on an annual basis at the sole discretion of the
Compensation Committee. Additionally, Mr. Gorman may also receive an annual
bonus payment if determined to be payable by the board of directors based on the
performance of EasyLink and Mr. Gorman. If a sale of EasyLink occurs before the
termination of Mr. Gorman's employment without cause or within 3 months after a
termination of his employment without cause or within 3 months after Mr. Gorman
terminates his employment as a result of certain changes made in his employment
by EasyLink, he is entitled to receive upon the consummation of the sale a cash
payment equal to 1.5% of the fair market value of the consideration received by
the holders of EasyLink's common stock pursuant to the sale. If any of the
payments to Mr. Gorman would be subject to change of control excise tax
payments, Mr. Gorman is entitled to receive gross-up payments which would
entitle him to retain, after payment of all additional taxes on the gross-up
payments, an amount equal to the amount of the excise tax. A "sale" shall mean
(i) the acquisition by any person, other than Mr. Gorman, of fifty percent or
more of the total voting power of EasyLink's then outstanding voting securities
or (ii) a merger or consolidation of EasyLink with any other corporation or
business entity or a sale, lease or disposition by EasyLink of all or
substantially all of EasyLink's assets in which the holders of voting securities
of EasyLink immediately prior thereto hold less than 50% of the total voting
power represented by the voting securities of the surviving or transferee entity
outstanding immediately after the merger, consolidation, sale, lease or
disposition. Additionally, the agreement provides that after Mr. Gorman leaves
the employ of EasyLink, he will not solicit certain customers of EasyLink with
respect to products or services that are the same or similar to those offered to
such customers by EasyLink or solicit or induce any employee of EasyLink to
leave the employ of EasyLink during the one year period following his employment
or disclose any of its confidential information.
Under Mr. Murawski's current employment agreement, he is entitled to
receive an annual base salary of $450,000. Mr. Murawski may also receive an
annual bonus payment if determined to be payable by the board of directors based
on the performance of EasyLink and Mr. Murawski. If EasyLink terminates Mr.
Murawski's employment without cause at any time within 3 months before and in
contemplation of, or at any time after, the occurrence of a change of control or
he terminates his employment as a result of certain changes in his employment by
EasyLink during the same period, he will be entitled to receive at his option
either (i) continuation of his base salary and participation in EasyLink's
standard health insurance and 401(k) plans for 12 months after the change of
control or (ii) a lump sum equal to 12 months base salary. A "change of control"
shall occur if any person, other than Gerald Gorman, acquires fifty percent or
more of the total voting power of EasyLink's then outstanding voting securities
or a sale of EasyLink occurs. A "sale" of EasyLink for this purpose means a
merger, consolidation or sale of EasyLink's assets in which the holders of
voting securities of EasyLink immediately prior thereto hold less than 50% of
the total voting power represented by the voting securities of the surviving or
transferee entity outstanding immediately after the merger, consolidation or
sale. If a sale of EasyLink occurs before the termination of Mr. Murawski's
employment without cause or within 3 months after a termination of his
employment without cause or within 3 months after Mr. Murawski terminates his
employment as a result of certain changes made in his employment by EasyLink, he
is entitled to receive upon the consummation of the sale a cash payment equal to
2.5% of the fair market value of the consideration received by the holders of
EasyLink's common stock pursuant to the sale. If any of the payments to Mr.
Murawski would be subject to change of control excise tax payments, Mr. Murawski
is entitled to receive gross-up payments which would entitle him to retain,
after payment of all additional taxes on the gross-up payments, an amount equal
to the amount of the excise tax. A portion of Mr. Murawski's options are also
subject to acceleration of vesting upon a change of control. Additionally, the
agreement provides that after Mr. Murawski leaves the employ of EasyLink, he
will not solicit certain customers of EasyLink with respect to products or
services that are the same or similar to those offered to such customers by
EasyLink or solicit or induce any employee of EasyLink to leave the employ of
EasyLink during the one year period following his employment or disclose any of
its confidential information.
6
Under Mr. Abi Zeid's current employment agreement, he is entitled to
receive an annual base salary of $205,000. Mr. Abi Zeid may also receive an
annual bonus payment if determined to be payable by the board of directors based
on the performance of EasyLink and Mr. Abi Zeid. Mr. Abi Zeid's base salary and
bonus amount are adjustable on an annual basis at the sole discretion of the
Compensation Committee. Under the agreement, EasyLink may not terminate Mr. Abi
Zeid without cause until the later of (i) February 23, 2003, (ii) the release of
Mr. Abi Zeid's shares of EasyLink Class A common stock pledged as collateral to
secure the promissory note in the principal amount of $10 million issued by
EasyLink to AT&T Corp., (iii) the repayment in full of the convertible
promissory note in the principal amount of $2,682,964 million issued to Mr. Abi
Zeid and (iv) EasyLink offering to purchase, or arranging for a third party to
offer to purchase, shares of EasyLink Class A common stock held by Mr. Abi Zeid
for a minimum purchase price of $1.00 per share in cash yielding to him minimum
net proceeds of $5 million, and, if he accepts that offer, EasyLink or the third
party having completed such purchase. Mr. Abi Zeid's current employment
agreement provides that after he leaves the employ of EasyLink, he will not work
for a competitor during the one year period following his employment or disclose
any confidential information. Additionally, Mr. Abi Zeid contains
non-competition, non-solicitation and confidentiality provisions.
Under Ms McClister's current employment agreement, she is entitled to
receive an annual base salary of $207,000 which will be reviewed each year, and
an annual bonus between 15%-45% of base annual salary. In the event that
EasyLink is sold to a third party, Ms. McClister's options will be converted
into options to acquire the third party's stock, with an equivalent value and
the same remaining vesting period as her EasyLink options. In the event that Ms.
McClister's position at EasyLink is eliminated, replaced or taken over by the
third party in connection with an acquisition, merger or transfer of a majority
interest, EasyLink will attempt to offer Ms. McClister a comparable senior
management position with the same compensation, commuting and travel
requirements. In the event that such a position is not offered to Ms. McClister,
she will be entitled to a severance package comprised of (a) six months base
salary, (b) annual bonus pro rated for the portion of the year worked and (c)
immediate vesting of 50% of her remaining unvested options. Additionally, her
current employment agreement provides that after Ms. McClister leaves the employ
of EasyLink, she will not work for a competitor during the two year period
following her employment or disclose any confidential information.
Under Mr. Ambrosia's current employment agreement, he receives an annual
base salary of $233,000 which will be reviewed each year, and an annual bonus
between 15%-30% of base annual salary. If an acquisition, merger, consolidation
or transfer of control occurs, Mr. Ambrosia is entitled to severance and other
arrangements, including rights similar to those contained in Ms. McClister's
agreement. Additionally, Mr. Ambrosia's employment agreement provides that after
he leaves our employ, he will not work for a competitor during the two year
period following his employment or disclose any confidential information.
Mr. Schrader's employment terminated during May 2002. Under the terms of
his separation arrangement, Mr. Schrader's base salary continued through
December 1, 2002.
Compensation Committee Interlocks and Insider Participation
EasyLink's Compensation Committee is currently comprised of one
non-management director, Stephen Duff. All decisions relating to the
compensation of EasyLink executive officers are made by the Compensation
Committee.
Mr. Duff is Chief Investment Officer for The Clark Estates, Inc. and is
Treasurer of the general partner of, and a limited partner of, Federal Partners,
L.P. Federal Partners holds a senior convertible note in the principal amount of
$5 million issued to it by EasyLink in connection with a financing in January
2001. Federal Partners and accounts for which The Clark Estates, Inc. provides
management and administrative services were beneficial holders as of February
28, 2003 of 9.35% of the Company's common stock, including shares issuable upon
conversion of the senior convertible note held by Federal Partners but excluding
shares issuable upon the conversion or exercise of other notes, warrants or
options. Federal Partners has agreed to exchange this note for 2.5 million
shares of Class A common stock upon the elimination of specified indebtedness of
the Company. The Clark Estates, Inc. provides management and administrative
services to Federal Partners. In connection with the issuance of the senior
convertible note on January 8, 2001, the Company granted to Federal Partners the
right to designate one director to our Board of Directors so long as Federal
Partners and other persons associated with it owns at least 300,000 shares of
Class A Common Stock, including shares issuable upon conversion of or in payment
of interest on the senior convertible notes. Federal Partners, L.P. designated
Stephen Duff and he was appointed to our Board on January 8, 2001. Through his
limited partnership interest in Federal Partners, L.P., Mr. Duff has an indirect
interest in $10,000 principal amount of the senior convertible notes issued on
January 8, 2001, in 1,943 of the shares of Class A Common Stock held by Federal
Partners. See also "Item 13. Certain Relationships and Related Transactions."
7
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL HOLDERS AND MANAGEMENT
AND RELATED STOCKHOLDER MATTERS
EQUITY COMPENSATION PLAN INFORMATION
The following table provides information as of December 31, 2002 with
respect to shares of our common stock that may be issued under our existing
equity compensation plans.
Year Ended December 31, 2002
---------------------------------------------------------------
Number of securities
Number of remaining available
securities to be for future issuance
issued upon Weighted-average under equity
exercise of exercise price of compensation plans
outstanding outstanding (excluding securities
options, warrants options, warrants reflected in
and rights and rights column (a))
Plan Category (a) (b) (c)
------------- ----------------- ----------------- --------------------
Equity compensation plans approved by security holders 1,969,511 $5.26 424,728
Equity compensation plans not approved by security 803,935 $10.61 39,005
holders (1)
Total: 2,773,446 $6.81 463,733
(1) Includes options to purchase 90,054 shares of Class A common stock at a
weighted average exercise price of $14.33 per share under the Netmoves 1996
Stock Option Plan which were assumed in connection with the acquisition of
Netmoves Corporation by the Company in 2000. Options to purchase 6,070 shares
are available for future grant under this plan.
Non-Security Holder-Approved Equity Compensation Plans
Each of the stock option plans listed in the table below under the sub-heading
"Plans Adopted in Acquisitions" were adopted or assumed in connection with the
acquisition by the Company of the entities after which the plan is named. Except
for the 1996 Netmoves Stock Option Plan, the plan terms and conditions are
substantially the same as the terms of the Company's plans for which shareholder
approval was obtained, except that incentive stock options were not issuable
under such plans. Options under each plan were initially granted to employees of
the acquired entity who became employees of the Company after the acquisition
or, in the case of the 1996 Netmoves Stock Option Plan, were assumed by the
Company. The plans are administered by a Committee of the Board of Directors.
The Plans may be amended by the Board of Directors. The number of shares
underlying outstanding options, the weighted average exercise price and the
number of shares underlying options available for future grant under each plan
are specified in the table below.
The Mail.com 1999 Supplemental Stock Option Plan and the Mail.com 2000
Supplemental Stock Option Plan provide for the grant of options to the Company's
directors, employees and consultants and contain terms and conditions that are
substantially the same as the terms of the Company's plans for which shareholder
approval was obtained, except that incentive stock options are not issuable
under such plans. The plans are administered by the Compensation Committee of
the Board of Directors. The Plans may be amended by the
8
Board of Directors. Under the plans, options that expire unexercised may be
re-granted by the Company to other employees. The number of shares underlying
outstanding options, the weighted average exercise price and the number of
shares underlying options available for future grant under each of these plans
are specified in the table below.
Year Ended December 31, 2002
---------------------------------------------------------------
Number of securities
Number of remaining available
securities to be for future issuance
issued upon Weighted-average under equity
exercise of exercise price of compensation plans
outstanding outstanding (excluding securities
options, warrants options, warrants reflected in
and rights and rights column (a))
Plan (a) (b) (c)
---- ----------------- ----------------- --------------------
Plans Adopted in Acquisitions:
IFan Stock Option Plan - - -
The Allegro Group Stock Option Plan 5,642 $9.84 -
TCOM Stock Option Plan - - -
Lansoft Stock Option Plan 2,768 $16.88 -
Netmoves 2000 Stock Option Plan 52,489 $17.94 4,939
NetMoves 1996 Stock Option Plan 90,054 $14.33 6,070
Other Plans
Mail.com 1999 Supplemental Stock Option Plan 142,216 8.56 7,784
Mail.com 2000 Supplemental Stock Option Plan 179,788 6.06 20,212
The Company granted non-qualified options under individual stock option
agreements to the persons and on the terms indicated in the following table:
EXPIRATION EXERCISE
NAME GRANT DATE DATE SHARES PRICE
-------------- ---------- ---------- ----------- ------------
Gerald Gorman 6/1/96 6/1/06 40,000.00 1.00000000
Gerald Gorman 12/31/96 12/31/06 7,250.00 5.00000000
Gerald Gorman 2/1/97 2/1/07 2,000.00 10.00000000
Frank Graziano 11/14/00 1/31/09 4.00 16.87500000
Frank Graziano 11/14/00 3/31/09 165.00 16.87500000
Frank Graziano 11/14/00 2/28/09 338.00 16.87500000
Dave Milligan 6/1/96 6/1/06 25,000.00 1.00000000
Gary Millin 6/1/96 6/1/06 25,000.00 1.00000000
Gary Millin 12/31/96 12/31/06 9,700.00 5.00000000
Gary Millin 2/1/97 2/1/07 2,000.00 10.00000000
Gary Millin 2/1/97 2/1/07 10,000.00 10.00000000
Thomas Murawski 1/26/01 1/26/11 170,000.00 12.81250000
Charles Walden 2/16/98 2/16/08 39,520.00 35.00000000
Total 330,977.00
COMMON STOCK OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table provides information with respect to the beneficial
ownership of EasyLink's common stock as of February 28, 2003 for:
o each person who EasyLink knows beneficially owns more than 5% of its
Class A Common Stock;
o each of EasyLink's directors, including its Chief Executive Officer;
o EasyLink's four most highly compensated executive officers, other than
its Chief Executive Officer, who were serving as executive officers at
the end of 2002 and one other person who was an executive officer of
the Company during 2002, and
9
o all of EasyLink's executive officers and directors as a group.
For purposes of this table, a person, entity or group is deemed to have
"beneficial ownership" of any shares of Class A Common Stock, including shares
subject to options, warrants or conversion rights, which the person, entity or
group has the right to acquire within 60 days of February 28, 2003. Unless
otherwise noted below, the persons and entities named in the table have sole
voting and sole investment power with respect to all shares beneficially owned,
subject to community property laws where applicable.
For purposes of calculating the percentage of outstanding shares or voting
power held by each person named below, any shares which that person has the
right to acquire within 60 days after February 28, 2003 are deemed to be
outstanding, but shares which may similarly be acquired by other persons are
deemed not to be outstanding.
The total number of shares of Class A Common Stock for purposes of
calculating the percentages of Class A Common Stock beneficially owned includes
1,000,000 shares of Class A Common Stock issuable upon conversion of the
1,000,000 outstanding shares of Class B Common Stock.
10
The total number of votes for purposes of calculating the percentage of
total voting power includes the voting power of 1,000,000 shares of Class B
Common Stock owned by Gerald Gorman. Each share of Class B Common Stock entitles
Mr. Gorman to ten votes.
Number of Percentage Percentage
Shares of Class A of Class A of Total
Name of Beneficial Owner Beneficially Owned Beneficially Owned Voting Power
------------------------ ------------------ ------------------ ------------
Gerald Gorman................................................ 1,278,674 (1) 7.34% 38.90%
33 Knightsbridge Road, Piscataway, NJ
Thomas Murawski.............................................. 313,212 1.78% 1.18%
George Abi Zeid.............................................. 3,050,090 (2) 17.08% 11.36%
262 Glen Head Road, Glen Head NY
Stephen Duff................................................. 13,453 (3) * *
Debra McClister.............................................. 81,278 * *
David Ambrosia............................................... 50,741 * *
Bradley Schrader............................................. 72,498 * *
All directors and executive officers as a group (6 persons).. 4,859,946 27. 45% 52.26%
The Clark Estates, Inc....................................... 1,665,943 (4) 9.35% 6.21%
One Rockefeller Center, New York, NY
Zesiger Capital Group LLC.................................... 1,519,052 (5) 8.20% 5.50%
320 Park Avenue, 30th Floor, New York, New York
AT&T Corp.................................................... 2,423,980 (6) 13.23% 8.87%
One AT&T Way, Bedminster, NJ
---------
* Represents beneficial ownership or voting power of less than 1%.
(1) Includes 1,000,000 shares of Class A Common Stock issuable upon conversion,
on a one for one basis, of Class B Common Stock.
(2) Includes 268,296 shares issuable upon exercise of warrants and 268,296
shares issuable upon conversion of a convertible promissory note in the
principal amount of $2,682,964. Also includes 300,000 shares held by
Telecom International, Inc. Mr. Abi Zeid owns indirectly a majority of the
capital stock of Telecom International, Inc. Excludes shares that may be
issuable in payment of interest on the notes. Also excludes 1,341,482
shares issuable in exchange for the above-referenced convertible promissory
note upon the elimination of specified indebtedness. See Item 13, "Certain
Relationships and Related Transactions."
(3) Mr. Duff is a limited partner of Federal Partners, L.P. Includes 1,943
shares of Class A Common Stock held through his limited partnership
interest and 1,000 shares of Class A Common Stock issuable upon conversion
of senior convertible notes held by Federal Partners. Excludes shares that
may be issuable in payment of interest on the notes. Also excludes 5,000
shares issuable in exchange for the above-referenced senior convertible
notes and 3,846 shares issuable to Federal Partners in a financing, in each
case to be completed upon the elimination of specified indebtedness.
(4) Includes 971,563 shares of Class A Common Stock held by Federal Partners
and 500,000 shares of Class A Common Stock issuable upon conversion of
senior convertible notes held by Federal Partners. Also includes 194,380
shares held by accounts for which The Clark Estates, Inc. provides
management and administrative services. The Clark Estates, Inc. disclaims
beneficial ownership of 971,563 and the 194,380 shares described in this
footnote. Excludes shares that may be issuable in payment of interest on
the notes. The Clark Estates, Inc. provides management and administrative
services to Federal Partners. Also excludes 2,500,000 shares issuable to
Federal Partners in exchange for 2,500,000 shares of Class A common stock
upon the elimination of specified indebtedness. Also excludes 1,923,076
shares of Class A common stock that Federal Partners has committed to
purchase upon the elimination of specified indebtedness. See Item 13,
"Certain Relationships and Related Transactions."
(5) Includes 209,052 shares of Class A Common Stock held by accounts for whom
Zesiger Capital acts as investment adviser and 1,310,000 shares of Class A
Common Stock issuable upon conversion of senior convertible notes held by
accounts for whom Zesiger Capital acts as investment adviser. Zesiger
Capital disclaims beneficial ownership of all of the shares described in
this footnote. Excludes shares that may be issuable in payment of interest
on the notes. Also excludes approximately 4,737,500 shares issuable to the
above-referenced accounts in exchange for $8,125,000 principal amount of
the above-referenced senior convertible notes upon the elimination of
specified indebtedness. See Item 13, "Certain Relationships and Related
Transactions."
(6) Includes 1,000,000 shares of Class A Common Stock issuable upon exercise of
warrants. On February 27, 2003, AT&T and PTEK Holdings, Inc. ("PTEK")
entered into a Share Purchase Agreement regarding the sale of 1,423,980
shares to PTEK for $825,908 and a Note Purchase Agreement regarding the
transfer of a promissory note for $3,174,092 and a warrant to purchase
shares of PTEK Stock. The Company has objected to the proposed transaction.
See Part I, Item 3, Legal Proceedings contained in the Company's Form 10-K
filed March 31, 2003 and subsequent filings with the SEC. The above table
excludes PTEK as a 5% beneficial owner. PTEK may be deemed to beneficially
own the 1,423,980 shares which PTEK has agreed to purchase from AT&T and,
if PTEK and AT&T are deemed to be acting in concert, the 1,000,000
additional shares issuable upon exercise of the warrants.
11
The following table sets forth the number of shares of Class A Common Stock
included in the table above that are issuable upon the exercise of options
exercisable within 60 days of February 28, 2003.
Number of Shares of
Name of Beneficial Owner Class A Common Stock
------------------------ --------------------
Gerald Gorman....................................... 109,792
Thomas Murawski..................................... 311,934
George Abi Zeid..................................... 0
Stephen Duff........................................ 10,000
Debra McClister..................................... 74,477
David Ambrosia...................................... 50,293
Bradley Schrader.................................... 72,498
George Abi Zeid acquired 1,877,618 shares included in the ownership table
above in connection with the acquisition of Swift Telecommunications, Inc.
("STI") by EasyLink pursuant to an agreement and plan of merger dated January
31, 2001. STI acquired AT&T Corp.'s EasyLink Services business on January 31,
2001. In connection with the acquisition of STI by EasyLink, pursuant to a
Pledge Agreement dated January 31, 2001 Mr. Abi Zeid pledged to AT&T Corp. all
of the shares of EasyLink Class A Common Stock that he was entitled to receive
under the agreement and plan of merger to secure a $35 million note issued to
AT&T Corp. by STI and assumed by EasyLink as part of the purchase price for the
EasyLink Services business. As a result of the debt restructuring completed on
November 27, 2001, these shares now secure the $10 million principal amount of
restructure notes issued to AT&T Corp. in exchange for the $35 million note held
by it. Upon the occurrence of an event of default under the terms of the $10
million note or the pledge agreement, AT&T Corp. may exercise all of its
available rights and remedies under the agreement and applicable law. The
exercise of these rights and remedies after an event of default may result in
the transfer of the shares pledged.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Federal Partners, L.P. Financings
Stephen Duff, a director of the Company, is Chief Investment Officer of
The Clark Estates, Inc. and is Treasurer of the general partner of, and a
limited partner of, Federal Partners, L.P. On January 8, 2001, we issued
$5,000,000 principal amount of 10% Senior Convertible Notes due January 8, 2006
to Federal Partners. The note bears interest at the rate of 10% per annum and is
payable semi-annually one half in cash and, at he option of the Company, one
half in shares of Class A common stock valued at the conversion price of $10.00
per share. The Company issued shares to Federal Partners in payment of interest
on this note during 2002. The Clark Estates, Inc. provides management and
administrative services to Federal Partners. Federal Partners and accounts for
which The Clark Estates, Inc. provides management and administrative services
were beneficial holders as of February 28, 2003 of 9.35% of the Company's common
stock, including shares issuable upon conversion of senior convertible notes
held by Federal Partners but excluding shares issuable upon the conversion or
exercise of other notes, warrants or options. On March 20, 2001, we issued to
Federal Partners 300,000 shares of our Class A Common Stock for a purchase price
of $3,000,000, and we committed to issue to Federal Partners an additional
100,000 shares of Class A Common Stock if the closing price of our Class A
Common Stock on the principal securities exchange on which they are traded was
not at or above $100 per share for 5 consecutive days. The additional shares
were issued in 2002. As part of the financing completed on November 27, 2001 in
connection with our debt restructuring, we issued to Federal Partners an
aggregate of 250,369 shares of Class A common stock for a purchase price of
$1,700,000, and we committed to issue to Federal Partners an additional 173,632
shares of Class A Common Stock if the average of the closing prices of our Class
A Common Stock on Nasdaq was not at or above $16.00 per share for the 10
consecutive trading days through year end 2001. The additional shares were
issued in 2002. In connection with the issuance of the senior convertible notes
on January 8, 2001, we granted to Federal Partners the right to designate one
director to our Board of Directors so long as Federal Partners and other persons
associated with it owns at least 300,000 shares of Class A Common Stock,
including shares issuable upon conversion of or in payment of interest on the
senior convertible notes. Federal Partners designated Stephen Duff and he was
appointed to our Board on January 8, 2001. Mr. Duff is Chief Investment Officer
for The Clark Estates, Inc. and is Treasurer and a limited partner of Federal
Partners. Through his limited partnership interest in Federal Partners, Mr. Duff
has an indirect interest in $10,000 principal amount of the senior convertible
notes issued on January 8, 2001 and in 1,943 of the shares of Class A Common
Stock held by Federal Partners.
Federal Partners has agreed to exchange the $5 million note in exchange
for 2.5 million shares of Class A common stock upon the elimination of specified
indebtedness. In addition, upon the elimination of specified indebtedness,
Federal Partners has committed to purchase 1,923,076 shares of Class A common
stock of EasyLink at a purchase price of $.52 per share or $1 million in the
aggregate.
Zesiger Capital LLC Financing
On January 8, 2001, March 13, 2001 and October 11, 2001 we issued an
aggregate of $9,200,000 principal amount of 10% Senior Convertible Notes due
January 8, 2006 to accounts for whom Zesiger Capital Group LLC acts as
investment adviser. The notes bear interest at the rate of 10% per annum payable
semi-annually one half in cash and, at the option of the Company, one half in
shares of Class A common stock valued at the conversion price of $10.00 per
share in the case of $7,900,000 principal amount of notes and $2.50 per share in
the case of $1,300,000 principal amount of notes. The Company issued shares to
these accounts in payment of interest on these notes during 2002. As a result of
ownership of the notes and shares of stock issuable in payment of interest,
these accounts beneficially own 1,519,052 shares representing approximately 8.20
% of the Company's common stock as of February 28, 2003. The Company
subsequently paid $102,500 in cash in exchange for the elimination of $1,025,000
principal amount of these notes. Zesiger Capital, on behalf of the remaining
accounts, has agreed to exchange the remaining notes for an aggregate of
approximately 4.7 million shares of Class A common stock upon the elimination of
specified indebtedness.
12
Acquisition of Swift Telecommunications, Inc.
We acquired Swift Telecommunications, Inc. on February 23, 2001. George
Abi Zeid was the sole shareholder of Swift Telecommunications, Inc ("STI"). In
connection with the acquisition, Mr. Abi Zeid was elected to the Board of
Directors of the Company and was appointed President -- International
Operations. EasyLink paid $835,294 in cash, issued 1,876,618 shares of Class A
Common Stock and issued a promissory note in the original principal amount of
approximately $9.2 million to Mr. Abi Zeid in payment of the purchase price for
the acquisition payable at the closing. Under the merger agreement, EasyLink
also agreed to pay additional contingent consideration to Mr. Abi Zeid equal to
the amount of the net proceeds, after satisfaction of certain liabilities of STI
and its subsidiaries, from the sale or liquidation of the assets of one of STI's
subsidiaries. Pursuant to the debt restructuring completed on November 27, 2001,
EasyLink issued $2,682,964 principal amount of restructure notes, 268,295 shares
of Class A common stock and warrants to purchase 268,295 shares of Class A
common stock in exchange for Mr. Abi Zeid's $9.2 million note. In connection
with the acquisition by STI on January 31, 2001 of the EasyLink Services
business from AT&T Corp., Mr. Abi Zeid pledged to AT&T Corp. under a Pledge
Agreement dated January 31, 2001 all of the shares of EasyLink Class A Common
Stock that he was entitled to receive pursuant to the acquisition to secure a
$35 million note issued to AT&T Corp. by STI and assumed by EasyLink as part of
the purchase price for the EasyLink Services business. As a result of the debt
restructuring completed on November 27, 2001, these shares now secure the $10
million principal amount of restructure notes issued to AT&T Corp. in exchange
for the $35 million note held by it. In connection with the acquisition of STI
on February 23, 2001, EasyLink also entered into a conditional commitment to
acquire the 25% minority interests in two STI subsidiaries for $47,059 in cash,
promissory notes in the aggregate principal amount of approximately $517,647 and
106,826 shares of Class A Common Stock. This transaction is subject to certain
conditions, including satisfactory completion of due diligence, receipt of
regulatory approvals and other customary conditions.
Mr. Abi Zeid has agreed to exchange the promissory note in the
principal amount of $2,682,964 for 1,341,482 shares of Class A common stock upon
the elimination of specified indebtedness and to defer interest payments due to
him in the amount of $283,504.37.
Mr. Abi Zeid also agreed to contribute up to approximately 1.2 million
shares of Class A common stock issuable to him in connection with the November
2001 debt restructuring in order to permit the grant of shares or options to
employees.
Transactions with AT&T
As a result of our acquisition of Swift Telecommunications, Inc. on
February 23, 2001 and the completion of our debt restructuring on November 27,
2001, AT&T Corp. beneficially owns as of February 28, 2003 2,423,980 shares of
Class A common stock, representing approximately 13.23% of our outstanding
common stock and 8.87% of our total voting securities. These percentages include
1 million shares issuable upon the exercise of warrants held by AT&T. AT&T also
holds a note in the original principal amount of $10 million. On February 27,
2003, AT&T and PTEK Holdings, Inc. ("PTEK") entered into a Share Purchase
Agreement regarding the sale of 1,423,980 shares to PTEK for $825,908 and a Note
Purchase Agreement regarding the transfer of the $10 million promissory note for
$3,174,092 and a warrant to purchase shares of PTEK Stock. The Company has
objected to the proposed transaction. See Part I, Item 3, Legal Proceedings
contained in the Company's Form 10-K filed March 31, 2003 and subsequent filings
with the SEC.
Our acquisition of Swift Telecommunications, Inc. included the EasyLink
Services business that Swift had just acquired from AT&T Corp. The EasyLink
Services business acquired from AT&T provided a variety of transaction delivery
services such as EDI and production messaging 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. Under a Transition Services
Agreement, AT&T provided us with a variety of services to enable us to continue
to operate the business pending the transition to EasyLink. We have successfully
transitioned virtually all of the services provided by AT&T under the Transition
Services Agreement to ourselves, including customer service, network operations
center, telex switching equipment and services and office space in a variety of
locations. The Transition Services Agreement expired on January 31, 2003. During
2002, the Company paid AT&T $1,794,743 under the Transition Services Agreement.
The network for the portion of this business relating to EDI and
production messaging services continues to reside on AT&T's premises under an
Equipment Space Sublease Agreement with AT&T but is now being operated and
maintained by EasyLink. The agreement runs through January 31, 2005. We plan to
migrate off the AT&T premises to EasyLink's premises over the next two years.
Effective February 1, 2003, the Company entered into a Professional Services
Agreement with AT&T providing for technical support at the AT&T facility where
the Company's EDI and production messaging services network resides. The
agreement is for a term of six months but may be renewed for an additional six
months at EasyLink's request at the same or reduced level of service.
13
In connection with the acquisition of the EasyLink Services business
from AT&T Corp., we entered into a Master Carrier Agreement with AT&T. Under
this agreement, AT&T will provide us with a variety of telecommunications
services that are required in connection with the provision of our services. The
term of the agreement for network connection services is for 36 months through
May 2005 and the term of the agreement for private line and satellite services
is 36 months through February 2004. Under the agreement, we have a minimum
purchase commitment for network connection services equal to $3 million for each
of the three years of the contract. In addition, we have a minimum purchase
commitment for private line and satellite services equal to $375,000 per month
during the three-year term. If we terminate the network connection services or
the private line and satellite services prior to the end of the term or AT&T
terminates the services for our breach, we must pay to AT&T a termination charge
equal to 50% of the unsatisfied minimum purchase commitment for these services
for the period in which termination occurs plus 50% of the minimum purchase
commitment for each remaining commitment period in the term. During 2002, the
Company paid AT&T in the aggregate $10,139,756 for telecommunications services
under the above-described and other telecommunications services agreements.
During 2002, AT&T purchased $ 2,373,547.92 of services from the
Company.
During 2002, AT&T also paid EasyLink $ 170,302.01 in commission
payments for collections of AT&T accounts receivable that were not transferred
to the Company in connection with the acquisition of the EasyLink Services
business in February 2001.
The Company leased space from AT&T in Morristown, NJ and paid AT&T
$49,000 per month, or $594,000 for the year, in rentals during 2002 under this
lease.
Loan Forgiveness
Pursuant to the terms of Mr. Murawksi's employment arrangement, Mr.
Murawski was entitled to forgiveness during 2002 of principal of and accrued
interest on a loan in the amount of $235,414. Mr. Murawaski received $100,000
during 2002 as a partial gross-up for taxes due on the loan forgiveness. The
loan bore interest at 5% per annum and was incurred to finance the purchase of
stock of Netmoves Corporation upon the exercise of stock options prior to the
acquisition of Netmoves by the Company.
14
Signatures
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized, on April 30, 2003.
EasyLink Services Corporation
(Registrant)
By /s/ THOMAS MURAWSKI
----------------------------------------
(Thomas Murawski, Chief Executive Officer
and President)
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities indicated on April 30, 2003.
/s/ GERALD GORMAN Chairman, Director
------------------------
(Gerald Gorman)
/s/THOMAS MURAWSKI Chief Executive Officer and President,
------------------------ Director (Principal Executive Officer)
(Thomas Murawski)
/s/ GEORGE ABI ZEID President, International Operations,
------------------------ Director
(George Abi Zeid)
/s/ DEBRA L. MCCLISTER Executive Vice President and Chief
------------------------ Financial Officer
(Debra L. McClister) (Principal Accounting and Financial
Officer)
/s/ DAVID AMBROSIA Executive Vice President, General
------------------------ Counsel and Secretary
(David Ambrosia)
/s/ STEPHEN M. DUFF Director
------------------------
(Stephen M. Duff)
15
CERTIFICATION
I, Thomas Murawski, certify that:
(1) I have reviewed this annual report as amended by Form 10-K/A of EasyLink
Services Corporation ("Easylink");
(2) based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary in order
to make the statements made, in light of the circumstances under which such
statements were made, not misleading;
(3) based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition and results of operations of EasyLink as of,
and for, the periods presented in this annual report;
(4) EasyLink's other certifying officer and I:
(A) are responsible for establishing and maintaining internal controls;
(B) have designed such internal controls to ensure that material information
relating to EasyLink and its consolidated subsidiaries is made known to us by
others within those entities, particularly during the period in which this
annual report is being prepared;
(C) have evaluated the effectiveness of EasyLink's internal controls as of a
date within 90 days prior to the filing date of this annual report (the
"Evaluation Date"); and
(D) have presented in this annual report our conclusions about the effectiveness
of our internal controls based on our evaluation as of the Evaluation Date;
(5) EasyLink's other certifying officer and I have disclosed to EasyLink's
auditors and audit committee of EasyLink's Board of Directors (or persons
fulfilling the equivalent function):
(A) all significant deficiencies in the design or operation of internal controls
which could adversely affect EasyLink's ability to record, process, summarize
and report financial data and have identified for EasyLink's auditors any
material weaknesses in internal controls; and
(B) any fraud, whether or not material, that involves management or other
employees who have a significant role in EasyLink's internal controls; and
(6) EasyLink's other certifying officer and I have indicated in this annual
report whether or not there were significant changes in internal controls or in
other factors that could significantly affect internal controls subsequent to
the date of our evaluation, including any corrective actions with regard to
significant deficiencies and material weaknesses.
Date: April 30, 2003 /s/ THOMAS MURAWSKI
-------------------
Thomas Murawski
Chief Executive Officer and President
16
CERTIFICATION
I, Debra McClister, certify that:
(1) I have reviewed this annual report as amended by Form 10-K/A of EasyLink
Services Corporation ("Easylink");
(2) based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary in order
to make the statements made, in light of the circumstances under which such
statements were made, not misleading;
(3) based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition and results of operations of EasyLink as of,
and for, the periods presented in this annual report;
(4) EasyLink's other certifying officer and I:
(A) are responsible for establishing and maintaining internal controls;
(B) have designed such internal controls to ensure that material information
relating to EasyLink and its consolidated subsidiaries is made known to us by
others within those entities, particularly during the period in which this
annual report is being prepared;
(C) have evaluated the effectiveness of EasyLink's internal controls as of a
date within 90 days prior to the filing date of this annual report (the
"Evaluation Date"); and
(D) have presented in this annual report our conclusions about the effectiveness
of our internal controls based on our evaluation as of the Evaluation Date;
(5) EasyLink's other certifying officer and I have disclosed to EasyLink's
auditors and audit committee of EasyLink's Board of Directors (or persons
fulfilling the equivalent function):
(A) all significant deficiencies in the design or operation of internal controls
which could adversely affect EasyLink's ability to record, process, summarize
and report financial data and have identified for EasyLink's auditors any
material weaknesses in internal controls; and
(B) any fraud, whether or not material, that involves management or other
employees who have a significant role in EasyLink's internal controls; and
(6) EasyLink's other certifying officer and I have indicated in this annual
report whether or not there were significant changes in internal controls or in
other factors that could significantly affect internal controls subsequent to
the date of our evaluation, including any corrective actions with regard to
significant deficiencies and material weaknesses.
Date: April 30, 2003 /s/ DEBRA McCLISTER
-------------------
Debra McClister
Executive Vice President and Chief
Financial Officer
17