<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act
of 1934 (Amendment No. )
Filed by the Registrant [ X ]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for use by the Commission only (as permitted by Rule
14a-6(e)(2))
[ X ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
XPEDITE SYSTEMS, INC.
................................................................................
(Name of Registrant as Specified in its Charter)
................................................................................
(Name of Person(s) Filing Proxy Statement if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
[ X ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
1. Title of each class of securities to which transaction applies:
.................................................................
2) Aggregate number of securities to which transaction applies:
.................................................................
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
.................................................................
4) Proposed maximum aggregate value of transaction:
.................................................................
5) Total fee paid:
.................................................................
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
1) Amount previously paid:
.................................................................
2) Form, Schedule or Registration Statement No.:
.................................................................
3) Filing Party:
.................................................................
4) Date Filed:
.................................................................
<PAGE>
XPEDITE SYSTEMS, INC.
-------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON
OCTOBER 1, 1996
-------------------
NOTICE IS HEREBY GIVEN that the Annual Meeting of the Stockholders of
XPEDITE SYSTEMS,
INC., a Delaware corporation (the "Company"), will be held at the Sheraton
Eatontown Hotel and Conference Center, Route 35 & Industrial Way East,
Eatontown, New Jersey 07724, on Tuesday, October 1, 1996, at 10:30 a.m., Eastern
Standard Time, for the following purposes:
1. To elect two Class 3 Directors;
2. To ratify and approve the Officers' Contingent Stock Option Plan;
3. To ratify and approve the Non-Employee Directors' Warrant Plan;
4. To ratify and approve the Company's independent public accountants
for fiscal 1996; and
5. To consider and act upon any other matters which may properly come
before the Annual Meeting and any adjournment thereof.
The Board of Directors has fixed the close of business on August 23, 1996 as
the record date for the determination of the holders of Common Stock entitled to
notice of and to vote at the Annual Meeting.
A list of stockholders entitled to vote at the Annual Meeting will be open
for examination by any stockholder for any purpose germane to the meeting during
ordinary business hours for a period of ten days prior to the Annual Meeting at
the offices of the Company, 446 Highway 35, Eatontown, New Jersey 07724, and
will also be available for examination at the Annual Meeting until its
adjournment.
YOUR ATTENTION IS DIRECTED TO THE ACCOMPANYING PROXY STATEMENT. WE INVITE
ALL STOCKHOLDERS TO ATTEND THE ANNUAL MEETING. TO ENSURE THAT YOUR SHARES WILL
BE VOTED AT THE ANNUAL MEETING, PLEASE COMPLETE, DATE AND SIGN THE ENCLOSED
PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE. IF YOU ATTEND THE ANNUAL
MEETING, YOU MAY VOTE IN PERSON, EVEN THOUGH YOU HAVE SENT IN YOUR PROXY.
By Order of the Board of Directors
Roy B. Andersen, Jr.
President and Chief Executive Officer
Eatontown, New Jersey
August 30, 1996
IMPORTANT
Your vote is important. Whether or not you expect to attend the meeting,
please complete, sign and date the enclosed proxy and promptly return it in the
envelope provided to the Company's transfer agent at First Union National Bank
of North Carolina, Attention: Proxy Tabulation Department, to be received no
later than September 16, 1996. In order to avoid the additional expense to the
Company of further solicitation, we ask your cooperation in mailing in your
proxy promptly.
<PAGE>
PROXY STATEMENT
XPEDITE SYSTEMS, INC.
446 HIGHWAY 35
EATONTOWN, NEW JERSEY 07724
-------------------
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON
OCTOBER 1, 1996
-------------------
SOLICITATION AND REVOCATION OF PROXIES
The enclosed proxy is solicited by and on behalf of the Board of Directors
of XPEDITE SYSTEMS, INC., a Delaware corporation (the "Company"), for use at the
Company's 1996 Annual Meeting of Stockholders to be held on Tuesday, October 1,
1996 at 10:30 a.m., Eastern Standard Time, at the Sheraton Eatontown Hotel and
Conference Center, Route 35 & Industrial Way, Eatontown, New Jersey, and at any
and all adjournments thereof (the "Annual Meeting"), for the purposes set forth
in the accompanying Notice of Annual Meeting of Stockholders.
Any stockholder has the power to revoke his or her proxy at any time before
it is voted. A proxy may be revoked by delivering written notice of revocation
to the Company at its principal office, 446 Highway 35, Eatontown, New Jersey
07724, Attention: Corporate Secretary, by a subsequent proxy executed by the
person executing the prior proxy and presented at the meeting, or by attendance
at the Annual Meeting and voting in person by the person executing the proxy. If
not revoked, the proxy will be voted at the Annual Meeting in accordance with
the instructions indicated on the proxy card by the stockholder or, if no
instructions are indicated, will be voted FOR the slate of directors nominated
herein, FOR the ratification and approval of the Officers' Contingent Stock
Option Plan (the "Officers' Option Plan"), FOR the ratification and approval of
the Non-Employee Directors' Warrant Plan (the "Directors' Warrant Plan") and FOR
the ratification and approval of Ernst & Young LLP as the Company's independent
public accountants, and as to any other matter that may properly be brought
before the Annual Meeting, in accordance with the judgment of the proxy holder.
Abstentions and broker non-votes are each included in the determination of the
number of shares present and voting for the purpose of determining whether a
quorum is present, and each is tabulated separately. In determining whether a
proposal has been approved, abstentions are counted as votes against a proposal
and broker non-votes are not counted as votes for or against a proposal or as
votes present and voting on a proposal.
In addition to solicitation by mail, officers, directors and regular
employees of the Company, who will receive no additional compensation for their
services, may solicit proxies by mail, telegraph or personal calls. All costs of
solicitation will be borne by the Company. The Company has requested brokers and
nominees who hold stock in their name to furnish this proxy material to their
customers and the Company will reimburse such brokers and nominees for their
related out-of-pocket expenses. This Proxy Statement of the Company is being
mailed on or about August 30, 1996 to each stockholder of record as of the close
of business on August 23, 1996.
<PAGE>
VOTING AT THE MEETING
The Company had 8,675,688 shares of Common Stock, par value $.01 per share
(the "Common Stock"), outstanding as of August 23, 1996. Holders of record of
shares of Common Stock at the close of business on August 23, 1996 will be
entitled to notice of and to vote at the Annual Meeting and will be entitled to
one vote for each such share so held of record.
NOMINATION AND ELECTION OF CLASS 3 DIRECTORS
(PROPOSAL 1)
The persons named in the enclosed proxy will vote to elect the two nominees
named below under "Nominees for Class 3 Director" unless instructed otherwise in
the proxy. The persons receiving the greatest number of votes, up to the number
of directors to be elected, shall be the persons elected as the Class 3
Directors. Shares represented by proxies which are marked "withhold authority"
will have the same effect as a vote against the nominees. The Class 3 Directors
are to hold office until the 1999 Annual Meeting of Stockholders and until their
respective successors are duly qualified and elected.
The names and certain information concerning the persons nominated to be
elected as Class 3 Directors by the Board of Directors at the Annual Meeting are
set forth below. THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE
FOR THE ELECTION OF THE NOMINEES NAMED BELOW UNDER "NOMINEES FOR CLASS 3
DIRECTOR". It is intended that shares represented by the proxies will be voted
FOR the election to the Board of Directors of the persons named below unless
authority to vote for the nominees has been withheld in the proxy. Although the
persons nominated have consented to serve as directors if elected, and the Board
of Directors has no reason to believe that the nominees will be unable to serve
as directors, if either nominee withdraws or otherwise becomes unavailable to
serve, the persons named as proxies will vote for any substitute nominee
designated by the Board of Directors. The following information regarding the
Company's directors and executive officers, including nominees, is relevant to
your consideration of the slate proposed by your Board of Directors:
DIRECTORS AND EXECUTIVE OFFICERS
The current directors and executive officers of the Company are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION WITH THE COMPANY
- --------------------------------------- --- ------------------------------------------------------------------
<S> <C> <C>
Roy B. Andersen, Jr. 48 President, Chief Executive Officer and Director
Robert S. Vaters 36 Executive Vice President, Finance, Chief Financial Officer and
Secretary
Dennis Schmaltz 48 Vice President, Operations and Engineering
Max A. Slifer 48 Executive Vice President, North American Operations
George Abi Zeid 42 Executive Vice President, International Operations
John C. Baker(1) 46 Director
Philip A. Campbell(1) 59 Director
Robert Chefitz(2) 36 Director
David Epstein(2) 62 Director
</TABLE>
- ------------------------
(1) Member of Compensation Committee
(2) Member of Audit Committee
The Board of Directors is divided into three classes, with each class
holding office for staggered three-year terms. The terms of Class 1 Directors
Robert Chefitz and Philip A. Campbell expire in 1997, the term of Class 2
Director Roy B. Andersen, Jr. expires in 1998 and the terms of Class 3 Directors
John C. Baker
2
<PAGE>
and David Epstein expire in 1996. All executive officers of the Company are
chosen by the Board of Directors and serve at the Board's discretion. There are
no family relationships among the Company's officers and directors.
ATTENDANCE AT MEETINGS AND BOARD COMMITTEES
During the fiscal year ended December 31, 1995, the Board of Directors held
a total of six meetings. Each member of the Board of Directors attended more
than 75% of the meetings of the Board and of the committees of which he was a
member.
The standing committees of the Board of Directors are the Compensation
Committee and the Audit Committee. The Board of Directors has no nominating
committee or committee performing a similar function.
The Compensation Committee, which met on one occasion in fiscal 1995, is
responsible for determining the compensation of executive officers and the
Company's non-executive officer employee compensation structure. The
Compensation Committee currently consists of John C. Baker and Philip A.
Campbell.
The Audit Committee, which met on one occasion in fiscal 1995, is
responsible for (i) reviewing the Company's financial results and the scope and
results of audits; (ii) evaluating the Company's system of internal controls and
meeting with independent auditors and appropriate Company financial personnel
concerning the Company's system of internal controls; (iii) recommending to the
Board of Directors the appointment of the independent auditors; and (iv)
evaluating the Company's financial reporting activities and the accounting
standards and principles followed. The Audit Committee currently consists of
Robert Chefitz and David Epstein.
NOMINEES FOR CLASS 3 DIRECTOR
The following persons' names will be placed in nomination for election to
the Board of Directors. The shares represented by the proxy cards returned will
be voted FOR the election of these nominees unless you specify otherwise.
JOHN C. BAKER has served as a director of the Company since June 1992. In
September 1995, Mr. Baker founded Baker Capital Corp., a private equity
investment management firm, and serves as its President. From 1981 to 1995, Mr.
Baker was employed by Patricof & Co. Ventures, Inc., a multinational venture
capital company, most recently as Senior Vice President. Mr. Baker is a director
of American Mobile Satellite Corporation, Intermedia Communications, Inc.,
Resource Bancshares Mortgage Group, Inc., FORE Systems, Inc. and several private
companies, including AirNet Communications, Inc.
DAVID EPSTEIN has served as a director of the Company since June 1992. Mr.
Epstein has specialized in the commercial real estate industry since 1963. Mr.
Epstein is currently President and the controlling shareholder of Clarion
Capital Corp., a corporation engaged in the acquisition and syndication of
commercial real estate properties. Mr. Epstein is also a principal shareholder
of First Registry, Inc., a corporation engaged in the acquisition and
syndication of commercial real estate properties, as well as a general partner
in numerous limited partnerships. Mr. Epstein has acted as an advisor to
nationwide retail chains with respect to commercial real estate. Mr. Epstein
owns several shopping centers in Connecticut, New York and Michigan, in addition
to industrial properties.
OTHER DIRECTORS AND EXECUTIVE OFFICERS
ROY B. ANDERSEN, JR. is the Company's Chief Executive Officer and has been
President and a Director of the Company since its formation in July 1988. From
February 1987 until July 1988, Mr. Andersen served as Executive Vice President
and Chief Operating Officer of Electronic Courier Systems, Inc. From 1980 to
1987, Mr. Andersen was employed by Western Union, where he helped develop its
EasyLink electronic mail service. At Western Union, Mr. Andersen served as Vice
President of Telex and EasyLink marketing
3
<PAGE>
from 1986 to 1987. Mr. Andersen also served as the Vice Chairman of the
Electronic Mail Association of America, a professional electronic mail
association, from 1985 to 1987.
ROBERT S. VATERS has served as Executive Vice President, Finance, Chief
Financial Officer and Secretary since June 1996. From April 1993 until June
1996, Mr. Vaters was employed by Young & Rubicam, Inc. where he served as a
Senior Vice President and Treasurer. From 1989 to 1993, Mr. Vaters served as
Vice President and Treasurer of Sequa Capital Corporation. Prior to 1989, Mr.
Vaters spent seven years as a commercial banker. Mr. Vaters is a director of
Rockford Industries.
DENNIS SCHMALTZ has served as Vice President of Operations and Engineering,
since the inception of the Company. Prior to joining the Company he was employed
by Telentry Systems, Inc. in 1985 and as director of development of Electronic
Courier Systems, Inc. from March 1986 to July 1988. Prior to joining Telentry
Systems, Inc., Mr. Schmaltz was employed by Onetix, Inc., which was involved in
the development of the original technology utilized by the Company to convert
word processing documents to fax documents.
MAX A. SLIFER has served as Executive Vice President of North American
Operations of the Company since June 1994. From 1989 to 1994, Mr. Slifer was the
Company's Vice President of Sales and Marketing. Prior to joining the Company,
he served in various sales management positions with Western Union. From 1987 to
1988, he served as Western Union's Vice President of sales and distribution and
prior to that was Western Union's national Vice President of cellular telephone
sales and regional Vice President of sales. Mr. Slifer joined Western Union in
1974.
GEORGE ABI ZEID has served as the Company's Executive Vice President of
International Operations since November 1995. Mr. Abi Zeid founded Swift in
1980, and was its President and Chief Executive Officer from its formation until
November 1995. Mr. Abi Zeid also served as the President and Chief Operating
Officer of each of ViTel, from January 1995, and Comwave, from November 1994,
until they were acquired by the Company in November 1995.
PHILIP A. CAMPBELL has served as a director of the Company since April 1996.
Mr. Campbell has served since April 1995 as Chairman of Tele-Resources
International, Inc., a telecommunications consulting and investment firm. Mr.
Campbell was engaged in private consulting from May 1994 to April 1995. From
July 1991 to May 1994, Mr. Campbell served as Chairman of CDC Communications,
Inc., a telecommunications consulting firm. From January 1988 to January 1991,
Mr. Campbell served as a Director, Vice Chairman and Chief Financial Officer of
Bell Atlantic Corporation. From February 1959 to January 1988, Mr. Campbell
served in a variety of positions with Bell Atlantic Corporation (including
service as a Director of Bell Atlantic Corporation and as President of Bell
Atlantic Network Services Inc. from July 1983 to January 1988), New Jersey Bell
Telephone Company, Indiana Bell Telephone Company, Illinois Bell Telephone
Company and AT&T.
ROBERT CHEFITZ has served as a director of the Company since June 1992. Mr.
Chefitz joined Patricof & Co. Ventures, Inc., a multinational venture capital
company, in 1987. He has been a Vice President of Patricof & Co. Ventures, Inc.
since 1991. Previously, Mr. Chefitz was a Senior Associate with Golder, Thoma &
Cressey, an investment firm. Mr. Chefitz is a director of Langer BioMechanics,
Inc., as well as several private companies.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the beneficial
ownership of the Company's Common Stock as of August 23, 1996, by all persons
known by the Company to own beneficially more than five percent (5%) of the
Company's Common Stock, each director, the Chief Executive Officer of the
Company, the Named Executive Officers identified in the Summary Compensation
Table on page 7
4
<PAGE>
of this proxy statement and two additional executive officers of the Company,
and all directors and executive officers of the Company as a group.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY
OWNED
----------------------
NAME OF BENEFICIAL OWNER NUMBER PERCENT
- ----------------------------------------------------- --------- -------
<S> <C> <C>
Robert Chefitz....................................... 1,774,171(1)(2) 20.4%
Patricof & Co. Ventures, Inc.
445 Park Avenue
New York, NY 10022
APA Excelsior III, L.P............................... 1,121,882(3) 12.9%
c/o Patricof & Co. Ventures, Inc.
445 Park Avenue
New York, NY 10022
Finance Management Ltd. ............................. 598,379 6.9%
2100-1066 West Hastings Street
Vancouver, BC V6E 3X1
Canada
David Epstein........................................ 545,895 6.3%
830 Post Road East
Westport, CT 06880
Roy B. Andersen, Jr.(4).............................. 259,950(5) 2.9%
George Abi Zeid(6)................................... 223,150 2.6%
Max A. Slifer(7)..................................... 144,025(5) 1.7%
Dennis Schmaltz(8)................................... 143,270(5) 1.7%
Stuart S. Levy(9).................................... 67,075(5) *
John C. Baker........................................ 25,000(2) *
Philip A. Campbell................................... 8,333(2) *
Robert S. Vaters(10)................................. 5,000(5) *
All officers and directors as a group (9 persons).... 3,128,794(11) 34.5%
</TABLE>
- ------------------------
* Less than one percent (1%).
(1) Includes 1,121,882 shares owned by APA Excelsior III, L.P., 427,634 shares
owned by Coutts & Co. (Jersey), Ltd., Custodian for APA Excelsior
III/Offshore, L.P., 142,417 shares owned by APA/Fostin Pennsylvania Venture
Capital Fund, L.P. and 57,238 shares owned by CIN Venture Nominees, Ltd.
(the foregoing, collectively, the "Capital Funds"), as to which Mr. Chefitz
disclaims beneficial ownership. Mr. Chefitz, a director of the Company, is a
general partner of, or an officer of the general partner of, each of the
Capital Funds.
(2) Includes shares issuable upon exercise of warrants exercisable on or prior
to October 22, 1996, as follows: Robert Chefitz--25,000 shares; David
Epstein--25,000 shares; John C. Baker--25,000 shares; and Philip A.
Campbell--8,333 shares.
(3) Does not include any shares owned by the other Capital Funds. APA Excelsior
III, L.P. is an affiliate of Patricof & Co. Ventures, Inc.
(4) Mr. Andersen is President and Chief Executive Officer and a director of the
Company.
(5) Includes shares issuable upon exercise of stock options exercisable on or
prior to October 22, 1996, as follows: Roy B. Andersen, Jr.--163,700 shares;
Max A. Slifer--35,725 shares; Dennis Schmaltz-- 94,955 shares; Stuart S.
Levy--42,575 shares; and Robert S. Vaters--5,000 shares.
(6) Mr. Abi Zeid is Executive Vice President of International Operations of the
Company.
5
<PAGE>
(7) Mr. Slifer is the Company's Executive Vice President of North American
Operations.
(8) Mr. Schmaltz is Vice President of Operations and Engineering of the Company.
(9) Mr. Levy was the Company's Vice President, Finance and Chief Financial
Officer, and is presently serving in a general finance capacity with the
Company.
(10) Mr. Vaters is Executive Vice President, Finance and Chief Financial Officer
of the Company.
(11) Includes 1,749,171 shares of Common Stock owned by the Capital Funds, as to
which Mr. Chefitz disclaims beneficial ownership. Also includes 382,713
shares of Common Stock issuable upon the exercise of stock options and
warrants that are exercisable on or prior to October 22, 1996.
6
<PAGE>
EXECUTIVE COMPENSATION
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION. The following table
provides certain summary information concerning compensation paid or accrued by
the Company to or on behalf of the Company's Chief Executive Officer and the
three executive officers of the Company who received an annual salary and bonus
in excess of $100,000 (the "Named Executive Officers") for the year ended
December 31, 1995:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
--------------------------------- -------------
OTHER SECURITIES
ANNUAL UNDERLYING
SALARY BONUS COMPENSATION OPTIONS
NAME AND PRINCIPAL POSITION YEAR ($) ($) ($) (#)
- -------------------------------------- --------- --------- --------- ----------- -------------
<S> <C> <C> <C> <C> <C>
Roy B. Andersen, Jr., President and
Chief Executive Officer............. 1995 $ 204,908 $ 134,531 $ 348 80,000
1994 189,857 142,500 85,368(1) 37,500
1993 174,248 100,000 589 20,000
Max A. Slifer, Executive Vice
President-- North American
Operations.......................... 1995 $ 164,289 83,225 4,548 14,000
1994 144,782 79,800 4,548 30,000
1993 116,025 46,800 1,098 20,000
Dennis Schmaltz, Vice President--
Operations and Engineering.......... 1995 $ 140,234 73,780 1,188 13,000
1994 129,824 71,200 768 30,000
1993 113,872 45,500 1,507 20,000
Stuart S. Levy(2)..................... 1995 $ 130,494 69,037 576 13,000
1994 120,789 66,800 576 37,500
1993 99,231 43,300 480 40,000
</TABLE>
- ------------------------
(1) Includes relocation expenses in the amount of $84,600.
(2) Mr. Levy was the Company's Vice President, Finance and Chief Financial
Officer, and is presently serving in a general finance capacity with the
Company.
The Named Executive Officers' salaries were determined in accordance with
such individuals' employment agreements. Bonus and option compensation were
determined by the Compensation Committee of the Board of Directors. Mr. Andersen
did not participate in the determination of his bonus or option compensation.
7
<PAGE>
STOCK OPTIONS. The following table contains information concerning the
stock options granted during 1995 to the Named Executive Officers. All grants
were made under the Company's 1993 Incentive Stock Option Plan (the "1993
Plan").
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
-------------------------------------------------- VALUE AT ASSUMED
NUMBER OF ANNUAL RATES OF STOCK
SECURITIES % OF TOTAL PRICE
UNDERLYING OPTIONS EXERCISE APPRECIATION FOR
OPTIONS GRANTED TO OR BASE OPTION TERM(2)
GRANTED EMPLOYEES IN PRICE EXPIRATION ---------------------
NAME (#) FISCAL YEAR ($/SH)(I) DATE 5%($) 10%($)
- ---------------------------------------- ----------- ------------- --------- ----------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
Roy B. Andersen, Jr. ................... 30,000 17.6% $ 14.00 07/03/05 $ 73,300 $ 116,718
50,000 29.3% $ 14.625 11/20/05 $ 71,264 $ 113,476
Max A. Slifer........................... 14,000 8.2% $ 14.00 07/03/05 $ 34,207 $ 54,469
Dennis Schmaltz......................... 13,000 7.6% $ 14.00 07/03/05 $ 31,763 $ 50,578
Stuart S. Levy.......................... 13,000 7.6% $ 14.00 07/03/05 $ 31,763 $ 50,578
</TABLE>
- ------------------------
(1) All options were granted at market value at the date of grant for a term of
ten years, subject to vesting and to earlier termination in certain
instances relating to termination of employment.
(2) Calculation of potential realizable value is based on the closing price of
the Common Stock at December 29, 1995, minus the exercise price per share,
times the number of options held by the named executive officer, increased
at the indicated rate and compounded annually through the stated expiration
date. These gains are based on arbitrary compounded rates of growth of stock
prices mandated by the Securities and Exchange Commission of 5% and 10% per
year from the date the option was granted over the full option term. These
rates do not represent the Company's estimate or projection of future prices
of the Common Stock. There is no assurance that the value that may be
realized by any Named Executive Officer upon exercise of his options will be
at or near the value estimated in the foregoing table.
OPTIONS EXERCISED AND HOLDINGS. The following table sets forth information
concerning the exercise of options during the last fiscal year and unexercised
options held as of December 31, 1995 by the Named Executive Officers.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS AT IN-THE-MONEY OPTIONS AT
SHARES VALUE FISCAL YEAR-END (#) FISCAL YEAR-END ($)(2)
ACQUIRED ON REALIZED -------------------------- ---------------------------
NAME EXERCISE(#) ($)(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------------------- ----------- ---------- ----------- ------------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
Roy B. Andersen, Jr............ 0 -- 116,650 132,850 $ 1,160,750 $ 926,750
Max A. Slifer.................. 0 -- 60,950 55,850 $ 596,550 $ 531,450
Dennis Schmaltz................ 0 -- 70,230 55,150 $ 739,800 $ 530,400
Stuart S. Levy................. 10,000 $ 150,000 33,900 36,600 $ 129,600 $ 208,650
</TABLE>
- ------------------------
(1) Calculation of value realized is based on the closing price of the Common
Stock at December 29, 1995, minus the exercise price per share, times the
number of shares acquired upon the exercise of stock options by the Named
Executive Officer.
(2) Calculation of the value of unexercised in-the-money options at December 31,
1995, is based on the closing price of the Common Stock at December 29,
1995, minus the exercise price per share of the options granted, times the
number of options held by the Named Executive Officer.
8
<PAGE>
EMPLOYMENT AGREEMENTS
As discussed more particularly below, the Company has entered into
employment agreements with each of the Named Executive Officers. Such employment
agreements prohibit the Named Executive Officers from competing with the Company
for a period of one year after termination of employment. Each of such
agreements provides that in the event the executive is unable, as a result of
mental or physical incapacity, to perform his duties on behalf of the Company,
his participation in the Company's benefit plans will continue for six months
after such incapacity occurs. Each of such agreements also provides that upon
the termination of such agreement by the Company under certain circumstances, or
upon the termination of such agreement by the executive under certain
circumstances (including upon a change in control of the Company), the executive
will continue to receive the benefits provided for under his agreement as well
as payments of salary and bonus, for a specified period following termination of
employment. Such agreements also provide for a monthly car allowance. The
agreements of Messrs. Andersen and Schmaltz also provide that, upon an event of
termination of employment, such executives' non-vested options may become
immediately exercisable.
Under the terms of Mr. Andersen's agreement, he is entitled to receive an
annual base salary in an amount equal to $130,000, or such greater amount as may
be fixed by the Board of Directors. Mr. Andersen currently receives a base
salary of $275,000. The agreement also provides that Mr. Andersen may receive a
bonus at the discretion of the Board of Directors. Mr. Andersen's employment
agreement, entered into as of October 1, 1988, presently expires on September
30, 1996, and has an automatic renewal provision of two years.
Under the terms of Mr. Slifer's agreement, he is entitled to receive an
annual base salary in an amount equal to $93,000, or such greater amount as may
be fixed by the Board of Directors. Mr. Slifer currently receives a base salary
of $205,000. The agreement also provides that Mr. Slifer may receive a bonus at
the discretion of the Board of Directors. Mr. Slifer's employment agreement,
entered into as of May 1, 1990, presently expires on December 31, 1996, and has
an automatic renewal provision of one year.
Under the terms of Mr. Schmaltz's agreement, he is entitled to receive an
annual base salary in an amount equal to $86,000, or such greater amount as may
be fixed by the Board of Directors. Mr. Schmaltz currently receives a base
salary of $175,000. The agreement also provides that Mr. Schmaltz may receive a
bonus at the discretion of the Board of Directors. Mr. Schmaltz's employment
agreement, entered into as of October 1, 1988, presently expires on September
30, 1996, and has an automatic renewal provision of one year.
Under the terms of Mr. Levy's agreement, he is entitled to receive an annual
base salary in an amount equal to $121,000, or such greater amount as may be
fixed by the Board of Directors. Mr. Levy currently receives a base salary of
$175,000. The agreement also provides that Mr. Levy may receive a bonus at the
discretion of the Board of Directors. Mr. Levy's employment agreement, entered
into as of January 1, 1993, presently expires on December 31, 1996.
In addition to the employment agreements with the Named Executive Officers,
the Company also has entered into employment agreements with Messrs. Abi Zeid
and Vaters. Under the terms of Mr. Abi Zeid's agreement, he is entitled to
receive an annual base salary in an amount equal to $250,000. In addition, Mr.
Abi Zeid is entitled to receive an annual bonus of up to eighty percent (80%) of
his annual salary, as may be determined by the Board of Directors of the Company
or a committee designated by the Board. Mr. Abi Zeid's employment agreement was
entered into as of November 20, 1995, and expires on November 19, 1998. The
total annual salary and bonus paid by the Company to Mr. Abi Zeid in 1995 did
not exceed $100,000, and accordingly, Mr. Abi Zeid is not included among the
Named Executive Officers for purposes of the preceding tables. Mr. Abi Zeid's
employment agreement prohibits him from competing with the Company for a period
of two years after termination of employment. Such agreement also provides that
upon the termination of such agreement by the Company under certain
circumstances, or upon the termination of such agreement by Mr. Abi Zeid under
certain circumstances (including upon a
9
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change in control of the Company), Mr. Abi Zeid will continue to receive the
benefits provided for under his agreement as well as payments of salary and
bonus, for a specified period following termination of employment. See "Certain
Relationships and Related Transactions".
Under the terms of Mr. Vaters' agreement, entered into as of June 27, 1996,
he is entitled to receive an annual base salary in an amount equal to $175,000,
or such greater amount as may be fixed by the Board of Directors. In addition,
Mr. Vaters is entitled to receive an annual bonus at the discretion of the Board
of Directors or a committee designated by the Board. Mr. Vaters' employment
agreement expires on June 26, 1997, and has an automatic renewal provision of
one year. Mr. Vaters' employment agreement prohibits him from competing with the
Company for a period of one year after termination of employment. Such agreement
also provides that upon the termination of such agreement by the Company under
certain circumstances, or upon the termination of such agreement by Mr. Vaters
under certain circumstances (including upon a change in control of the Company),
Mr. Vaters will continue to receive salary and benefits as provided in his
agreement for a specified period following termination of employment.
COMPENSATION OF DIRECTORS
Each member of the Board of Directors who is not an officer or an owner, or
the representative of an owner, of more than 5% of the outstanding Common Stock
of the Company receives compensation of $1,000 per meeting for serving on the
Board of Directors. The Company also reimburses directors for any expenses
incurred in attending meetings of the Board of Directors and the committees
thereof. In addition, in April 1996 each non-employee director of the Company
was granted a warrant to purchase 25,000 shares of Common Stock at a purchase
price of $17.50 per share, which was the fair market value of the Common Stock
on the date of grant. See "Ratification and Approval of the Non-Employee
Directors' Warrant Plan".
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During the fiscal year ended December 31, 1995, the Compensation Committee
of the Company's Board of Directors consisted of John C. Baker and Paul Leslie
Hammond. Neither Mr. Baker nor Mr. Hammond is, nor has either of them ever been,
an executive officer of the Company.
Pursuant to an Agreement and Plan of Merger, dated as of November 20, 1995
(the "Merger Agreement"), among the Company, SGC Acquisition Corp., a Delaware
corporation which was the wholly-owned subsidiary of the Company ("SGC"), and
Swift Global Communications Inc. ("Swift"), the Company consummated the merger
of SGC with and into Swift (the "Merger"), as a result of which Swift became a
wholly-owned subsidiary of the Company. The Merger became effective upon the
filing of Articles of Merger with respect thereto with the Secretary of State of
the State of Delaware on November 20, 1995 (the "Effective Date"). On the
Effective Date, the outstanding common stock of Swift was converted by virtue of
the Merger into the right to receive consideration consisting of an aggregate of
$4,162,500 in cash and 1,214,819 shares of Common Stock of the Company.
Pursuant to a Stock Purchase Agreement, dated as of November 20, 1995 (the
"ViTel Purchase Agreement"), among the Company, ViTel International Holding
Company, Inc. ("ViTel"), and the stockholders of ViTel identified therein, the
Company consummated the acquisition of 100% of the outstanding shares of common
stock of ViTel (the "ViTel Shares"). The acquisition of the ViTel Shares became
effective upon the closing of the transaction on November 20, 1995. The purchase
price for the ViTel Shares consisted of an aggregate of $34,366,030 in cash and
$5,133,375 original principal amount of subordinated promissory notes of the
Company.
Pursuant to a Stock Purchase Agreement, dated as of November 20, 1995
(together with the Merger Agreement and the ViTel Purchase Agreement, the
"Acquisition Agreements"), among the Company, Comwave Communications AG
("Comwave" and, collectively with Swift and ViTel, the "SVC Companies"), and
Computainer Systems (Global) Inc., a British Virgin Islands corporation which
was the sole
10
<PAGE>
shareholder of Comwave, the Company consummated the acquisition of 100% of the
outstanding shares of Comwave (the "Comwave Shares"). The acquisition of the
Comwave Shares became effective upon the closing of the transaction on November
20, 1995. The purchase price for the Comwave Shares consisted of an aggregate of
$10,221,470 in cash and 34,181 shares of Common Stock of the Company.
A Shareholders Agreement executed in November 1995 pursuant to the
Acquisition Agreements grants certain stockholders of the Company (the "New
Stockholders") the right to designate a nominee to serve as a member of the
Board of Directors of the Company. Paul Leslie Hammond was nominated by the New
Stockholders to serve as a member of the Board of Directors and was elected to
the Board at the 1995 Annual Meeting of Stockholders pursuant to the
Shareholders Agreement. In 1996, the Company was informed that two foreign
individuals, who may be beneficial owners of certain of the entities (the
"Former SVC Shareholders") from which the Company acquired the SVC Companies,
are the subjects of a criminal investigation in Thailand relating to the alleged
embezzlement of funds from the Bangkok Bank of Commerce, and that certain of
such funds may have been used by the Former SVC Shareholders to purchase
interests in the SVC Companies prior to the sale of the SVC Companies to the
Company. The Company has been informed that such individuals maintain their
innocence with regard to all such charges, and the Company does not believe that
such investigation will have any material adverse effect on the Company.
Nonetheless, Mr. Hammond agreed to resign from the Board of Directors in June
1996 and the New Stockholders have agreed to suspend their right to designate a
nominee to serve as a member of the Board of Directors of the Company until such
time as the Board of Directors determines, in good faith, that the investigation
in Thailand is no longer pending. The term of the Shareholders Agreement extends
for three years, subject to earlier termination in certain circumstances.
Mr. Hammond also served as the representative of the New Stockholders in
connection with certain post-closing communications to the selling stockholders
contemplated by the Acquisition Agreements, and was the representative of the
New Stockholders on the Company's Board of Directors. Mr. Hammond had and has no
ownership interest in Swift, ViTel or Comwave.
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
During the fiscal year ended December 31, 1995, the Compensation Committee
consisted of John C. Baker and Paul Leslie Hammond. The Committee is charged
with reviewing and approving compensation of the Company's executives. The
Company's executive compensation program consists of three main components: base
salary, potential for an annual bonus based on performance, and the opportunity
to receive stock options exercisable for the purchase of Common Stock of the
Company. The Compensation Committee is charged with the responsibility of
granting stock options to employees.
The Company has previously entered into employment agreements with each of
the Named Executive Officers covered in the Summary Compensation Table above.
See "Executive Compensation--Employment Agreements." Each of such persons
receives a base salary with increases at the discretion of the Compensation
Committee and is eligible to receive a bonus in accordance with such contracts
at the discretion of the Compensation Committee. In general, bonuses are
calculated using as criteria the Company's performance and the performance of
the executive during the relevant year.
The Company's executives are eligible to receive stock options in accordance
with the Company's stock option plans. The objectives of such participation are
to align the long-term interests of executives and stockholders by encouraging
executives to develop and maintain a significant, long-term stock ownership
position in the Company. The Compensation Committee has the responsibility of
granting stock options to executives and other employees. In granting stock
options, the Compensation Committee takes into account Company performance and
individual performance. Company performance is measured by increases in earnings
and, to a lesser extent, increases in revenues, and individual performance is
measured by the individuals' contributions to such enhanced performance.
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<PAGE>
The Company's President and Chief Executive Officer, Roy B. Andersen, Jr.,
received compensation in 1995 determined in accordance with the provisions of
his employment agreement with the Company. See "Executive
Compensation--Employment Agreements." Mr. Andersen's base salary for 1995 was
increased from the 1994 level based on the Committee's judgment as to the
appropriate amount to be paid to Mr. Andersen taking into consideration, among
other things, (i) the achievement by the Company of increased operating income,
EBITDA and earnings for 1994 and (ii) the successful completion of the
acquisition of the SVC Companies in 1995. Mr. Andersen's bonus for 1995 was
determined by the Compensation Committee based on the Compensation Committee's
judgment as to the appropriate bonus to be paid to Mr. Andersen taking into
consideration, among other things, (i) the overall increase in the Company's
financial strength in 1995 (including, but not limited to, the fact that
earnings per share (excluding the write-off of in-process research and
development) increased from $0.71 in 1994 to $0.92 in 1995 and EBITDA increased
from $8.0 million in 1994 to $12.0 million in 1995) and (ii) the completion of
the acquisition of the SVC Companies. The award in 1995 of stock options to Mr.
Andersen to purchase 80,000 shares of the Company's Common Stock was based on,
among other things, the closing of the acquisition of the SVC Companies.
John C. Baker
Paul Leslie Hammond
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<PAGE>
PERFORMANCE GRAPH
The following graph compares the Company's cumulative total return to
stockholders since the closing of its initial public offering on February 14,
1994, with that of the Standard & Poor's 500 Stock Index (the "S&P 500 Index")
and a peer group index (the "Peer Group Index") consisting of those public
companies traded on an exchange and listed under the same standard industry
classification code as the Company (SIC No. 7379: Computer Related Services, Not
Elsewhere Classified). The total return calculations set forth below assume $100
invested on February 14, 1994, in each of the Company, the S&P 500 Index and the
Peer Group Index, with reinvestment of dividends into additional shares of the
same class of securities at the frequency with which dividends were paid on such
securities through December 31, 1995. Historical results are not necessarily
indicative of future performance.
COMPARISON OF CUMULATIVE TOTAL RETURN
AMONG THE COMPANY, THE S&P 500 INDEX
AND THE PEER GROUP INDEX
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
DOLLARS
<S> <C> <C> <C>
XPEDITE SYSTEMS, INC. PEER GROUP INDEX S&P 500 INDEX
2/14/94 100.00 100.00 100.00
12/31/94 117.39 120.58 97.99
12/31/95 89.86 142.18 134.82
</TABLE>
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's executive officers, directors and 10%
stockholders to file reports regarding initial ownership and changes in
ownership with the Securities and Exchange Commission and the Nasdaq Stock
Market. Executive officers, directors and 10% stockholders are required by
Securities and Exchange Commission regulations to furnish the Company with
copies of all Section 16(a) forms they file. The Company's information regarding
compliance with Section 16(a) is based solely on a review of the copies of such
reports furnished to the Company by the Company's executive officers, directors
and 10% stockholders.
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<PAGE>
The Company is not aware of any noncompliance with the requirements of Section
16(a) to file reports during 1995.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In connection with the acquisition by the Company of the SVC Companies in
November 1995, Mr. Abi Zeid received consideration in the amount of $728,149
together with 223,150 shares of Common Stock of the Company as a stockholder of
Swift in connection with the Merger. Mr. Abi Zeid also received a fee in the
amount of $1,750,000 in connection with consulting services performed in
connection with the completion of the Merger. In addition, following the
consummation of the Merger, Mr. Abi Zeid was employed by the Company as
Executive Vice President of International Operations of the Company. See
"Security Ownership of Certain Beneficial Owners and Management" and "Executive
Compensation-- Employment Agreements".
RATIFICATION AND APPROVAL OF
THE OFFICERS' CONTINGENT STOCK OPTION PLAN
(PROPOSAL 2)
Subject to approval by the Company's stockholders, the Compensation
Committee adopted the Officers' Option Plan on April 22, 1996. Ratification and
approval of the Officers' Option Plan will require the affirmative vote of the
holders of a majority of the outstanding shares of Common Stock present or
represented at the Annual Meeting and entitled to vote thereat.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE
PROPOSAL TO RATIFY AND APPROVE THE ADOPTION OF THE OFFICERS' OPTION PLAN.
The essential features of the Officers' Option Plan are summarized below.
The summary does not purport to be a complete description of the Officers'
Option Plan. Any stockholder of the Company may obtain a copy of the form of
Nonqualified Stock Option Agreement which sets forth the terms of the Officers'
Option Plan upon written request to the Secretary of the Company.
GENERAL PURPOSE
In order to advance the interests of the Company and its stockholders by
motivating and retaining highly competent officers, the Compensation Committee
adopted the Officers' Option Plan to provide such individuals with an
opportunity to acquire or increase their proprietary interest in the Company by
granting them nonqualified stock options upon the achievement by the Company of
certain financial performance targets established by the Compensation Committee.
The Officers' Option Plan provides for the grant by the Company of
nonqualified stock options for up to a maximum aggregate 200,000 shares of
Common Stock of the Company to certain officers of the Company (the "Officer
Participants"), as follows: Roy B. Andersen, Jr.--80,000 shares; Max A. Slifer--
40,000 shares; Dennis Schmaltz--40,000 shares; and Robert S. Vaters--20,000
shares. Mr. Vaters was granted such options upon his employment with the Company
in June 1996, and all of such options are subject to the achievement by the
Company of the financial performance targets applicable to the Second Tranche
described below. Such amounts represent the maximum number of options which may
be granted if the Company achieves the financial performance targets established
for both tranches of the option grants, as described more fully below. The
dollar value to the Officer Participants of such grants is not determinable as
of the date of this proxy statement, because it cannot be determined with
sufficient certainty how many options granted to an Officer Participant will
vest during his tenure with the Company or, with respect to options to be
granted under the Second Tranche, when, if ever, the Company will achieve the
financial performance targets to which such grants are subject. Options with
respect to the remaining 20,000 shares authorized under the Officers' Option
Plan have not yet been granted.
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<PAGE>
Options under the Officers' Option Plan may be granted in two tranches,
subject to the achievement by the Company of certain financial performance
targets established by the Compensation Committee. An option with respect to
fifty percent (50%) of the maximum aggregate number of shares which the Officer
Participant is eligible to receive (the "First Tranche") will be granted in the
event that either (x) the average of the last sale price of the Common Stock
reported in the Nasdaq National Market for each trading day during any
consecutive period of ninety (90) calendar days commencing on or after April 22,
1996 but no later than December 31, 1996, is greater than $22.50 per share, as
adjusted for any stock splits, stock dividends and combinations of shares
occurring after the date of the option grant, or (y) there occurs prior to
December 31, 1996 the closing of an offering and sale of Common Stock for the
account of the Company in an underwritten public offering pursuant to an
effective registration statement under the Securities Act of 1933, as amended
(the "Securities Act"), in which the price to the public is at least equal to
$22.50 per share. The Company achieved the financial performance targets for
grant of the First Tranche on July 21, 1996, and such options were granted to
the Officer Participants as of that date.
An option with respect to the remaining fifty percent (50%) of the maximum
aggregate number of shares which the Officer Participant is eligible to receive
(the "Second Tranche") will be granted in the event that the average of the last
sale price of the Common Stock reported in the Nasdaq National Market for each
trading day during any consecutive period of ninety (90) calendar days
commencing on or after April 22, 1996 but no later than December 31, 1997, is
greater than $30.00 per share, as adjusted for any stock splits, stock dividends
and combinations of shares occurring after the date of the option grant;
PROVIDED, HOWEVER, that fifty percent (50%) of the Second Tranche will be
granted to the Executive in the event of an acquisition of all of the
outstanding Common Stock or a merger or consolidation of the Company where the
Company is not the surviving corporation, in either case announced or completed
prior to December 31, 1997, and the price per share paid by the acquiring entity
for the Common Stock acquired in such transaction is greater than $28.00 per
share but less than $30.00 per share, as adjusted for any stock splits, stock
dividends and combinations of shares occurring after the date of the option
grant.
In the event that the conditions precedent to the issuance of either the
First Tranche or the Second Tranche are not achieved within the time periods
specified, then the First Tranche or the Second Tranche, as the case may be,
shall not be issued to the Officer Participants and the Officer Participants
shall have no right to receive the same from the Company.
In the event of an acquisition of a majority of the outstanding Common Stock
or a merger or consolidation of the Company where the Company is not the
surviving corporation, the price per share paid by the acquiring entity for the
Common Stock acquired in such transaction shall be used to determine whether the
price-per-share thresholds for the First Tranche and the Second Tranche have
been achieved, and the requirement that such price be an average maintained for
90 consecutive days shall not apply.
Shares issuable under the Officers' Option Plan are issued by the Company
and are not purchased in the open market by the Company. In connection with such
issuances, no fees, commissions or other charges are paid. On August 23, 1996,
the closing price per share of the Company's Common Stock on the Nasdaq Stock
Market was $18.50.
The Officers' Option Plan is not subject to any of the provisions of the
Employee Retirement Income Security Act of 1974, as amended, and is not a
qualified deferred compensation plan under Section 401(a) of the Internal
Revenue Code of 1986, as amended (the "Code").
ADMINISTRATION
The Officers' Option Plan is administered by the the Compensation Committee,
which selected the Officer Participants and determined the number of options to
be granted to such persons, and is responsible for the interpretation and
construction of all terms and conditions of each option. Determinations by the
Compensation Committee are final and binding upon all of the Officer
Participants.
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<PAGE>
TERMS AND CONDITIONS OF OPTIONS
OPTION AGREEMENT; CONDITIONS. Each option granted under the Officers'
Option Plan is evidenced by a written agreement dated as of the date of grant
and executed by the Company and the Officer Participant, setting forth the
number of options granted and the other terms and conditions applicable to the
option grant.
No option may be assigned or transferred by an Officer Participant other
than by will or by the laws of descent and distribution. During the lifetime of
the Officer Participant, any option granted to him may be exercised only by him.
An Officer Participant or transferee of an option has no rights as a
stockholder with respect to any shares of Common Stock subject to the option
prior to the purchase of the shares by exercise of the Option.
OPTION PRICE. The exercise price per share of Common Stock granted pursuant
to an option is zero ($0).
EXERCISE PERIOD; OPTION TERM. Except as otherwise set forth in the option
agreement, options granted under the Officers' Option Plan vest in equal monthly
installments of 1/48 of the number of options granted in each of the next
succeeding 48 months commencing in the calendar month following the date of
grant. Unexercised options expire on the earlier of five years from the date of
grant or three months after the termination of employment of the Officer
Participant (except in the case of death or disability of the Officer
Participant, in which event the option expires one year after the date of death
or disability).
METHOD OF EXERCISE; WITHHOLDING TAX. Options granted under the Officers'
Option Plan are exercisable by delivering written notice of exercise to the
Company at its principal office in Eatontown, New Jersey.
In the event that the Company determines that it is required to withhold
state or federal income tax as a result of the exercise of an option, the
Officer Participant may be required as a condition to exercise to make
arrangements satisfactory to the Company to enable it to satisfy such
withholding requirements. Payment of such withholding requirements may be made,
in the discretion of the Compensation Committee, (i) in cash, (ii) by delivery
of shares of Common Stock registered in the name of the Officer Participant, or
by the Company not issuing such number of shares subject to the option, having a
fair market value at the time of exercise equal to the amount to be withheld, or
(iii) any combination of (i) and (ii) above; provided, however, that certain
restrictions on payment of withholding requirements may apply in the event that
the Officer Participant is subject to Section 16(b) of the Exchange Act.
CERTAIN ADJUSTMENTS. Subject to any required action by the Board of
Directors or the stockholders, or both, the number of shares of Common Stock
covered by each outstanding option under the Officers' Option Plan shall be
proportionately adjusted for any increase or decrease in the number of issued
shares of Common Stock resulting from a subdivision or consolidation of shares
of Common Stock or the payment of a stock dividend (but only if paid in Shares),
a stock split or any other increase or decrease in the number of issued shares
of Common Stock effected without receipt of consideration by the Company. In
addition, subject to any required action by the Board or the stockholders, or
both, if the Company shall merge with another corporation and the Company is the
surviving corporation in such merger and under the terms of such merger the
shares of Common Stock outstanding immediately prior to the merger remain
outstanding and unchanged, each outstanding option shall continue to apply to
the Common Stock subject thereto and shall also pertain and apply to any
additional securities and other property, if any, to which a holder of the
number of shares of Common Stock subject to the option would have been entitled
as a result of the merger. Adjustments under the Officers' Option Plan are made
by the Compensation Committee, whose determination as to what adjustments shall
be made, and the extent thereof, is final, binding and conclusive.
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<PAGE>
RIGHTS IN THE EVENT OF SALE, MERGER OR OTHER REORGANIZATION. In the event
of a merger or consolidation where the Company is not the surviving corporation,
and the agreement of merger or consolidation does not provide for the
substitution for the unexercised portion of the option of a new option on
substantially the same terms (including the exercise price thereof), or for the
assumption of the option by the surviving corporation, or in the event of the
sale or transfer of assets, liquidation or dissolution and the plan of
liquidation or dissolution or agreement of sale does not make special provision
for the option, the Officer Participants shall have the right immediately prior
to the effective date of such merger, consolidation, sale or transfer of assets,
liquidation or dissolution to exercise their options in whole or in part without
regard to the four-year vesting schedule set forth in the option agreement. If
not so exercised, the option shall terminate at the time of any such merger,
consolidation, sale or transfer of assets, liquidation or dissolution.
In the event the option is assumed by the surviving corporation in a merger
or consolidation where the Company is not the surviving corporation, or a new
option on substantially the same terms (including the exercise price thereof) is
substituted by the surviving corporation for the unexercised portion of the
option, or other special provision is made for continuation of the option in the
event of the sale or transfer of assets, liquidation or dissolution, if (i) the
Officer Participant is terminated by the surviving corporation without "cause"
(as defined below), (ii) the Officer Participant suffers a reduction in the
annual rate of base salary or level of participation in any bonus or incentive
plan for which he is eligible, relative to the amount thereof paid to the
Officer Participant by the Company prior to the transaction, or (iii) the
Officer Participant suffers a material diminution in his position, duties,
responsibility or authority, relative to the level thereof enjoyed by him during
his employment by the Company prior to the transaction, then and in such event
vesting of options granted to the Officer Participant shall accelerate and such
options shall be fully exercisable by the Officer Participant without regard to
the four-year vesting schedule set forth in the option agreement. Termination of
employment for "cause" includes, but is not limited to, dismissal as a result of
the conviction of the Officer Participant of any crime or offense involving
money or other property of the Company or its subsidiaries or which constitutes
a felony in the jurisdiction involved, gross negligence, gross incompetence or
willful misconduct of the Officer Participant in the performance of his duties
or willful failure or refusal of the Officer Participant to perform his duties.
In no event, however, may any option which becomes exercisable in this
manner in connection with a merger, consolidation, sale or transfer of assets,
liquidation or dissolution be exercised, in whole or in part, later than the
expiration date set forth in the option agreement.
RIGHTS IN THE EVENT OF TERMINATION OF EMPLOYMENT. In the event of the
termination of employment of an Officer Participant by reason of total and
permanent disability or death, vesting of options granted to the Officer
Participant shall accelerate and such options shall be fully exercisable
(without regard to the four-year vesting schedule set forth in the option
agreement) by the Officer Participant or, in the case of death, by the person or
persons acquiring the right, by will or by the laws of descent and distribution,
to exercise the Officer Participant's options, for a period not to exceed the
lesser of the remaining option term or one year after the date of such
disability or death. At the end of such period, any options of such Officer
Participant remaining unexercised will expire. "Total and permanent disability"
means the inability to engage in any substantial gainful activity by reason of
any medically determinable physical or mental impairment which can be expected
to result in death or which has lasted or can be expected to last for a
continuous period of not less than twelve months.
In the event that an Officer Participant's employment is terminated for
cause, the Company may notify the Officer Participant that any options not
exercised prior to the termination are cancelled.
In the event that an Officer Participant's employment with the Company
terminates other than by reason of total and permanent disability or death,
voluntary termination of employment by the Officer Participant or termination by
the Company for cause, vesting of options granted to the Officer Participant
shall accelerate and such options shall be fully exercisable (without regard to
the four-year vesting schedule
17
<PAGE>
set forth in the option agreement) by the Officer Participant for a period not
to exceed the lesser of the remaining option term or three months after the date
of such termination. At the end of such period, any options of such Officer
Participant remaining unexercised will expire.
NO RIGHT OF CONTINUED EMPLOYMENT. Neither the Officers' Option Plan nor any
option granted thereunder confers upon any person the right to continued
employment by the Company.
AMENDMENT OF OPTION AGREEMENTS. The Compensation Committee may not amend or
modify an option agreement executed by the Company and an Officer Participant
without the consent of the Officer Participant.
SUMMARY OF FEDERAL INCOME TAX CONSEQUENCES
The following discussion is intended only as brief and general description
of the federal income tax consequences of participation in the Officers' Option
Plan and does not all of the tax consequences that may be relevant to an Officer
Participant in light of his particular tax circumstances. The discussion is
based on the provisions of the Code, and regulations, administrative rulings and
judicial decisions now in effect (or, in the case of certain Treasury
regulations, proposed), all of which are subject to change at any time (possibly
with retroactive effect) or different interpretations. The discussion does not
address tax consequences under the laws of any state or local jurisdiction and
the tax treatment of each Officer Participant will depend in part upon his
particular tax situation.
An Officer Participant will not recognize any income upon the grant of an
option under the Officers' Option Plan. The Officer Participant will recognize
ordinary income in the amount of the fair market value of the shares of Common
Stock underlying the options on the date the options vest, whether or not the
options are exercised. The Company is entitled to a tax deduction for federal
income tax purposes at the time, and in the amount, of the ordinary income
recognized by the Officer Participant. Under the Officers' Option Plan, the
Company has the power to withhold, or require an Officer Participant to remit to
the Company, an amount sufficient to satisfy federal and state withholding tax
requirements with respect to any options that vest under the Officers' Option
Plan.
RATIFICATION AND APPROVAL OF THE
NON-EMPLOYEE DIRECTORS' WARRANT PLAN
(PROPOSAL 3)
Subject to approval by the Company's stockholders, the Compensation
Committee adopted the Directors' Warrant Plan in April 1996. Ratification and
approval of the Directors' Warrant Plan will require the affirmative vote of the
holders of a majority of the outstanding shares of Common Stock present or
represented at the Annual Meeting and entitled to vote thereat.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE
PROPOSAL TO RATIFY AND APPROVE THE ADOPTION OF THE DIRECTORS' WARRANT PLAN.
The essential features of the Directors' Warrant Plan are summarized below.
The summary does not purport to be a complete description of the Directors'
Warrant Plan. Any stockholder of the Company may obtain a copy of the form of
Warrant which sets forth the terms of the Directors' Warrant Plan upon written
request to the Secretary of the Company.
GENERAL PURPOSE
In order to advance the interests of the Company and its stockholders by
enhancing the ability of the Company to attract and retain well-qualified
persons to serve as directors of the Company, the Compensation Committee adopted
the Directors' Warrant Plan to provide such individuals with an incentive to
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acquire or increase their proprietary interest in the Company by issuing them
warrants to purchase Common Stock.
The Directors' Warrant Plan provides for the issuance by the Company of
warrants to purchase up to an aggregate of 116,666 shares of Common Stock of the
Company at a purchase price of $17.50 per share to the non-employee directors of
the Company (the "Director Participants"), as follows: John C. Baker-- 25,000
shares; Philip A. Campbell--25,000 shares; Robert Chefitz--25,000 shares; David
Epstein--25,000 shares; and Paul Leslie Hammond--16,666 shares (Mr. Hammond
resigned prior to vesting of an additional 8,334 shares under his warrant). The
warrants issued to Messrs. Baker, Chefitz, Epstein and Hammond are fully vested.
The warrant issued to Mr. Campbell vests in three equal installments on April
23, 1996, January 1, 1997 and January 1, 1998. Accordingly, based on the closing
price of the Common Stock of $18.50 per share on August 23, 1996, minus the
exercise price per share of the warrant, the aggregate value of the warrant
issued to each of Messrs. Baker, Chefitz and Epstein was $25,000; the aggregate
value of the warrant issued to Mr. Hammond was $16,666; and the aggregate value
of the exercisable portion of the warrant issued to Mr. Campbell was $8,333.
Shares issuable under the Directors' Warrant Plan are issued by the Company
and are not purchased in the open market by the Company. In connection with such
issuances, no fees, commissions or other charges are paid.
The Directors' Warrant Plan is not subject to any of the provisions of the
Employee Retirement Income Security Act of 1974, as amended, and is not a
qualified deferred compensation plan under Section 401(a) of the Code.
TERMS AND CONDITIONS OF WARRANTS
Each warrant issued under the Directors' Warrant Plan is evidenced by a
written agreement dated as of the date of issuance and executed by the Company
and the warrantholder, setting forth the number of warrants issued and the other
terms and conditions applicable to the warrant.
EXERCISE, ISSUANCE AND PAYMENT. Each warrant issued under the Directors'
Warrant Plan is exercisable upon surrender of the warrant to the Company and
payment to the Company in cash or by certified check or official bank check of
an amount equal to $17.50 multiplied by the number of shares of Common Stock to
be acquired upon such exercise. If upon exercise of the warrant fewer than all
of the shares of Common Stock evidenced by the warrant are purchased prior to
the expiration date of the warrant, one or more new warrants substantially in
the form of, and on the terms in, the original warrant will be issued for the
remaining number of shares of Stock not purchased.
TERM. Warrants issued under the Directors' Warrant Plan expire at 5:00 p.m.
Eastern time on April 23, 2006, to the extent not exercised prior to such date.
NO VOTING OR DIVIDEND RIGHTS. A Director Participant has no right to vote
or to consent or to receive notice as a stockholder in respect of meetings of
stockholders for the election of directors of the Company or any other matters
or any rights whatsoever as a stockholder of the Company, and no cash dividends
shall be payable or accrued in respect of the warrant or the shares of Common
Stock purchasable thereunder until, and only to the extent that, the warrant is
exercised for shares of Common Stock of the Company.
RESTRICTIONS ON TRANSFERABILITY. The warrant and the Common Stock issuable
upon exercise thereof is not transferable except in compliance with the
Securities Act and applicable state securities and Blue Sky laws. Any transfer
of the warrant or the Common Stock issuable upon exercise thereof is subject to
the prior delivery to the Company of a legal opinion of counsel to the
warrantholder in form and substance reasonably satisfactory to the Company to
the effect that such transfer is in compliance with applicable laws, including
federal and state securities laws. Common Stock issued upon exercise of any
warrant under the Directors' Warrant Plan shall include a legend setting forth
the foregoing restrictions.
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RATIFICATION AND APPROVAL OF
THE COMPANY'S INDEPENDENT PUBLIC ACCOUNTANTS
(PROPOSAL 4)
The Board of Directors has selected Ernst & Young LLP to audit the financial
statements of the Company for the year ended December 31, 1996. Ernst & Young
LLP has audited the Company's financial statements since 1990.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE
PROPOSAL TO RATIFY AND APPROVE THE SELECTION OF ERNST & YOUNG LLP AS THE
COMPANY'S INDEPENDENT PUBLIC ACCOUNTANTS FOR FISCAL 1996.
A representative of Ernst & Young LLP will be present at the Annual Meeting
to respond to any questions and to make a statement on behalf of his firm, if he
so desires.
TRANSACTION OF OTHER BUSINESS
As of the date of this Proxy Statement, the Board of Directors is not aware
of any matters other than those set forth herein and in the Notice of Annual
Meeting of Stockholders that will come before the meeting. Should any other
matters arise requiring the vote of stockholders, it is intended that proxies
will be voted in respect thereto in accordance with the best judgment of the
person or persons voting the proxies.
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FUTURE STOCKHOLDER PROPOSALS
The Company must receive at its principal office before May 1, 1997, any
proposal which a stockholder wishes to submit to the 1997 Annual Meeting of
Stockholders, if the proposal is to be considered by the Board of Directors for
inclusion in the proxy materials for that annual meeting.
-------------------
Please return your proxy as soon as possible. Unless a quorum consisting of
a majority of the outstanding shares entitled to vote is represented at the
meeting, no business can be transacted. Therefore, please be sure to date and
sign your proxy exactly as your name appears on your stock certificate and
return it in the enclosed prepaid return envelope. Please act promptly to ensure
that you will be represented at the Annual Meeting.
THE COMPANY WILL PROVIDE WITHOUT CHARGE, ON THE WRITTEN REQUEST OF ANY
BENEFICIAL OWNER OF SHARES ENTITLED TO VOTE AT THE ANNUAL MEETING OF
STOCKHOLDERS, A COPY WITHOUT EXHIBITS OF THE COMPANY'S ANNUAL REPORT ON
FORM 10-K AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION FOR THE
FISCAL YEAR ENDED DECEMBER 31, 1995. REQUESTS SHOULD BE MAILED TO THE
SECRETARY, XPEDITE SYSTEMS, INC., 446 HIGHWAY 35, EATONTOWN, NEW JERSEY
07724. THE ANNUAL REPORT ON FORM 10-K IS NOT SOLICITING MATERIAL AND IS
NOT INCORPORATED IN THIS DOCUMENT BY REFERENCE.
By Order of the Board of Directors
Roy B. Andersen, Jr.
President and Chief Executive Officer
August 30, 1996
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XPEDITE SYSTEMS, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS
OCTOBER 1, 1996
Roy B. Andersen, Jr. and Robert S. Vaters, and each of them, with full power
of substitution, are hereby authorized to represent and to vote as directed on
this proxy the shares of Common Stock of Xpedite Systems, Inc. held of record by
the undersigned on August 23, 1996, at the Annual Meeting of Stockholders to be
held on October 1, 1996, and at any adjournments, as if the undersigned were
present and voting at the meeting.
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED BY THE
STOCKHOLDER. WHERE NO DIRECTION IS GIVEN WHEN THE DULY EXECUTED PROXY IS
RETURNED, SUCH SHARES WILL BE VOTED FOR EACH OF THE PROPOSALS SET FORTH ON THIS
PROXY.
Whether or not you expect to attend the meeting, you are urged to execute
and return this proxy, which may be revoked at any time prior to its use.
<TABLE>
<S> <C>
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE
ENCLOSED ENVELOPE. VOTES MUST BE INDICATED (X) IN BLACK OR BLUE INK.
1. ELECTION OF NOMINEES JOHN C. BAKER AND DAVID EPSTEIN AS CLASS 3
DIRECTORS OF THE COMPANY
FOR ALL NOMINEES / /
WITHHOLD AUTHORITY TO VOTE FOR ALL NOMINEES / /
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR EITHER NOMINEE, WRITE HIS NAME IN THE SPACE PROVIDED.)
- ---------------------------------
2. RATIFICATION AND APPROVAL OF OFFICERS' CONTINGENT STOCK OPTION PLAN
FOR / / AGAINST / / ABSTAIN / /
(CONTINUED, AND TO BE SIGNED AND DATED ON REVERSE SIDE.)
</TABLE>
<PAGE>
3. RATIFICATION AND APPROVAL OF NON-EMPLOYEE DIRECTORS' WARRANT PLAN
FOR / / AGAINST / / ABSTAIN
/ /
4. RATIFICATION AND APPROVAL OF ERNST & YOUNG LLP AS INDEPENDENT PUBLIC
ACCOUNTANTS FOR FISCAL 1996
FOR / / AGAINST / / ABSTAIN
/ /
NOTE: Signatures should agree with the
names stencilled hereon. When signing
as executor, administrator, trustee,
guardian or attorney, please give the
title as such. For joint accounts or
co-fiduciaries, all joint owners or
co-managers should sign.
Dated: _________________________, 1996
______________________________________
______________________________________
