EXHIBIT 10.1*
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.
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
This Amended and Restated Employment Agreement (the “Agreement”) is entered into
on April 1, 2008 (the “Effective Date”) between EasyLink Services International
Corporation (as successor-in-interest to Internet Commerce Corporation) (the
“Company”) and Thomas J. Stallings (“Stallings”). This Agreement amends,
restates and supersedes the Employment Agreement (the “Original Agreement”)
between the Company and Stallings effective as of August 28, 2007 (the “Original
Effective Date”).
In consideration of the mutual covenants and conditions set forth herein, the
parties hereby agree as follows:
1. Employment. The Company hereby employs Stallings in the capacity of Chief
Executive Officer. Stallings 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 Board of Directors of the Company (the “Board”).
Stallings 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 Stallings 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 of two years year,
commencing on the Original Effective Date and ending on the first anniversary of
such date (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 the first anniversary of the Original Effective Date and each
anniversary thereafter, the Employment Period shall automatically extend for an
additional one year upon each such anniversary. Stallings’ 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 Stallings’ duties hereunder, the Company
shall pay Stallings (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. Stallings 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 Stallings’ employment subsequent to
2007. If the Company fails to negotiate a new Cash Incentive Plan for any year
after 2007, 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 Stallings the benefits as described
on Exhibit B attached hereto.
3.4 Reimbursement of Expenses. Stallings 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 Stallings 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 Stallings for
such actual and reasonable expenses no later than the last day of the calendar
year following the calendar year in which Stallings incurs the reimbursable
expense.
3.5 Equity Grants. The parties incorporate the terms of Exhibit A attached
hereto regarding the equity grants, provided however, that upon any Change in
Control of the Company as defined in Section 4 of this Agreement or if
Stallings’ employment is terminated under Sections 5.1(a), (b), (d) or (e) of
this Agreement, any of Stallings’ Equity Grants that have 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 40% 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
(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 40% of the combined voting power of such corporation’s
outstanding voting securities.

 

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5. Termination.
5.1 Termination Events. Stallings’ employment hereunder will terminate upon the
occurrence of any of the following events:
(a) Death;
(b) Disability: If Stallings 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 Stallings or his personal
representative setting forth specifically the nature of the disability and the
resulting performance failures and Stallings’ failure to cure the cited
performance failures within ten days of receipt of such notice, the Company may
discharge Stallings;
(c) Cause: As used in this Agreement, “Cause” shall mean:

  (i)  
Stallings’ 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 Stallings for Cause, the Board shall give a written
statement of findings to Stallings setting forth specifically the grounds on
which Cause is based, and Stallings shall have a period of ten days thereafter
to respond in writing to the Board’s findings; or

  (ii)  
Stallings’ willful and continued failure to substantially perform his duties
with the Company (other than any failure resulting from 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 Stallings specifying the nature of the misconduct or performance
deficiency and giving Stallings 20 days to cure such deficiency. For purposes of
this subsection (ii), no act or failure to act on Stallings’ part shall be
considered “willful” if done, or omitted to be done, by Stallings in good faith
and with reasonable belief that Stallings’ 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 Stallings by issuing at least
30 days’ advance written notice, subject to the severance provisions set forth
below;
(e) By Stallings With Cause: Stallings 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
Stallings; provided, however, that Stallings 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, Stallings then must terminate
his employment within 12 months of the initial existence of the condition; or

 

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(f) By Stallings Without Cause: Stallings 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 Stallings’ prior written consent, that results in:
(1) A material diminution in Stallings’s authority, duties or responsibilities;
(2) A material diminution in Stallings’s base compensation;
(3) A material diminution in the authority, duties or responsibilities of the
supervisor to whom Stallings is required to report;
(4) A material diminution in the budget over which Stallings retains authority;
and
(5) A material change in the geographic location of the Company, as located at
the time of this Agreement, at which Stallings performs his duties.
5.2 Effects of Termination.
(a) Upon termination of Stallings’ employment hereunder for any reason, the
Company will promptly (but in no event later than 30 days after termination of
employment) pay Stallings all compensation owed to Stallings and unpaid through
the date of termination (including, without limitation, salary and employee
expense reimbursements).
(b) In addition, if Stallings’ employment is terminated under Sections 5.1(a),
(b), (d) or (e), the Company shall also pay Stallings an aggregate a severance
amount equal to 12 months of Stallings’ then-applicable base monthly salary plus
any target Annual Cash Incentive that would have accrued for the fiscal year in
which the termination occurred, which aggregate amount shall be paid in equal,
or as nearly equal as practicable, installments in accordance with the Company’s
then-existing standard payroll policies (including payroll deductions) as if the
payments were being made in equal installments over the following 12 months (no
less frequently than monthly), starting with the first payroll payment date
following Stallings’s termination of employment until the 15th day of the
third-month following the end of (i) the calendar year or (ii) the fiscal year
of the Company, whichever is later, which includes the termination of
Stallings’s employment, at which time all remaining amounts shall be paid in a
single lump sum no later than such 15th day of the third-month following the end
of (i) the calendar year or (ii) the fiscal year of the Company, whichever is
later, in which Stallings’s employment terminates, or, if earlier, after all
such payments have been made.
(c) The Company shall have the right to offset against any damages resulting
from a breach by Stallings 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 Stallings, from earliest to latest, and then to recover any
amounts previously paid.
5.3 Restrictive Covenants. Upon termination of Stallings’ employment hereunder
for any reason, Stallings agrees that for the one-year period following the
termination of employment, Stallings will not:

 

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(a) directly or indirectly, within a ten-mile radius of Stallings’ 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 Stallings 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.
Stallings 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 Stallings 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. Stallings agrees that the existence of any claim
or cause of action of Stallings against the Company, whether predicated upon
this Agreement or otherwise, shall not constitute a defense to the enforcement
by the Company of these covenants.
6. Confidentiality. During the term of this Agreement and for 36 months after
Stallings’ termination of employment with the Company, Stallings will continue
to be bound by the terms of that certain Confidentiality Agreement entered into
between Stallings and the Company on or about April 26, 2005.
7. General Provisions.
7.1 Assignment. Stallings 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, including
without limitation that certain Employment Agreement dated August 28, 2007.

 

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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.
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:
6025 The Corners Parkway
Suite 100
Norcross, Georgia 30092
and, in the case of Stallings, to:
63 West Wieuca Road
Atlanta, Georgia 30342
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.

 

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7.10 Legal Fees and Expenses. In the event of any disputes under this Agreement,
each party shall be responsible for his or its own legal fees and expenses that
may be incurred in resolving 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 Stallings 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.
Notwithstanding any of the provisions of this Agreement, if Stallings 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
Stallings’s “separation from service” within the meaning of Section 409A of the
Code or, if earlier the date of Stallings’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 Stallings 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 Stallings 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/ Thomas J. Stallings           Thomas J. Stallings
 
            EasyLink Services International Corporation
 
       
 
  By:   /s/ Glen E. Shipley
 
       
 
      Name: Glen E. Shipley
 
      Title: Chief Financial Officer

 

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EXHIBIT A
2008 and 2009 Compensation Plan
Mr. Thomas J. Stallings, CEO
SALARY
The Company shall pay you a salary of $350,000 annually going to $400,000 upon
the first to occur of (a) the Company reporting three consecutive quarters of
revenue greater than $[XXXXXXXX] or (b) Fiscal 2009. 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
You shall have the opportunity to earn a cash incentive based on the Company’s
and your personal performance during Fiscal 2008 and Fiscal 2009. The Company,
through the Compensation Committee of the Board of Directors, retains the right
to adjust your cash incentive plan at any time as business circumstances or
other factors reasonably dictate.
Your targeted annual incentive compensation for Fiscal 2008 is $350,000. Payment
of 2008 incentive compensation will be at fiscal year end and will be determined
by the Compensation Committee of the Board of Directors by September 15, 2008
(but no later than as set forth in your employment agreement).
Your targeted annual incentive compensation for Fiscal 2009 is $400,000. Payment
of 2009 incentive compensation will be at fiscal year end and will be determined
by the Compensation Committee of the Board of Directors prior to the end of
Fiscal 2009.
With respect to the annual incentive compensation for Fiscal 2008, the
Compensation Committee will determine the payout of this amount based on a
combination of 25% payout on personal objectives and 75% payout on Company
objectives as noted below:
PERSONAL OBJECTIVES

  1.  
Post merger integration of EasyLink Services Corporation.
    2.  
Smart revenue retention.
    3.  
Customer/Staff management.
    4.  
Margin.

 

 

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COMPANY OBJECTIVES

  1.  
Total revenue of $[XXXXXXXX] — half of the executive’s Company Bonus (the
“Revenue Company Bonus”) will be earned if the Company achieves a minimum of
$[XXXXXXXX] in total revenue for FY 2008 (the “Revenue Target”), in accordance
with the following. None of the Revenue Company Bonus will be earned if the
Company achieves less than 91% of the Revenue Target. For each 1% (but not a
fraction thereof) above 90% of the Revenue Target that the Company achieves, 10%
of the Revenue Company Bonus will be earned, so that at 91% of the Revenue
Target, 10% of the Revenue Company Bonus will be earned, at 92% of the Revenue
Target, 20% of the Revenue Company Bonus will be earned, up to 100% of the
Revenue Company Bonus at 100% of the Revenue Target. In addition, for each 1%
(but not a fraction thereof) above 100% of the Revenue Target that the Company
achieves, an additional amount equal to 10% of the Revenue Company Bonus will be
earned.

  2.  
EBITDA of $[XXXXXXXX] — the other half of the executive’s Company Bonus (the
“EBITDA Company Bonus”) will be earned if the Company achieves a minimum of
$[XXXXXXXX] in EBITDA for FY 2008 (the “EBITDA Target”), in accordance with the
following. None of the EBITDA Company Bonus will be earned if the Company
achieves less than 91% of the EBITDA Target. For each 1% (but not a fraction
thereof) above 90% of the EBITDA Target that the Company achieves, 10% of the
EBITDA Company Bonus will be earned, so that at 91% of the EBITDA Target, 10% of
the EBITDA Company Bonus will be earned, at 92% of the EBITDA Target, 20% of the
EBITDA Company Bonus will be earned, up to 100% of the EBITDA Company Bonus at
100% of the EBITDA Target. In addition, for each 1% (but not a fraction thereof)
above 100% of the EBITDA Target that the Company achieves, an additional amount
equal to 10% of the EBITDA Company Bonus will be earned. 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,
incentive compensation expense, cumulative effect of accounting changes and
one-time, nonrecurring items.

SPECIAL BONUS AND LONG TERM STOCK INCENTIVE
On execution of your Original Agreement, you received a special one time bonus
of $300,000 in cash and a special one time grant of 80,000 shares of restricted
Company stock to vest monthly over 2 years. That cash bonus and stock incentive
were made in light of the extraordinary effort required to complete the
acquisition of EasyLink Services Corporation. The restricted stock grant was
granted pursuant to the terms of, and evidenced by, a written agreement entered
into between you and the Company.

 

 

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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, a stock option plan 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 four 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. You may elect
to contribute pre-tax deferrals through payroll deduction pursuant to the terms
of the 401k plan.