SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
(Rule 13d-101)
Under the Securities Exchange Act of 1934
(Amendment No. 6)*
Xpedite Systems, Inc.
- --------------------------------------------------------------------------------
(Name of Issuer)
Common Stock, par value $.01 per share
- --------------------------------------------------------------------------------
(Title of Class of Securities)
893929100
- --------------------------------------------------------------------------------
(CUSIP Number)
Robert S. Vaters
c/o Xpedite Systems, Inc.
446 Highway 35, Eatontown, New Jersey 07724; Telephone (908) 389-3900
- --------------------------------------------------------------------------------
(Name, Address and Telephone Number of Person Authorized to Receive Notices
and Communications)
August 8, 1997
- --------------------------------------------------------------------------------
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box. / /
Note: Six copies of this statement, including all exhibits, should be filed with
the Commission. See Rule 13d-1(a) for other parties to whom copies are to be
sent.
(Continued on following pages)
(Page 1 of 36 Pages)
- ------------
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to the "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
<PAGE>
SCHEDULE 13D
- ------------------------------------------ -------------------------------
CUSIP No. 893929100 Page 2 of 36 Pages
- ------------------------------------------ -------------------------------
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
SS. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Robert S. Vaters; SS. No. ###-##-####
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) /X/
(b) / /
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
PF
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDING IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) / /
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States
- --------------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES 25,000
BENEFICIALLY -------------------------------------------------
OWNED BY 8 SHARED VOTING POWER
EACH 0
REPORTING -------------------------------------------------
PERSON 9 SOLE DISPOSITIVE POWER
WITH 25,000
-------------------------------------------------
10 SHARED DISPOSITIVE POWER
0
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
25,000
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES* /X/ Excludes shares beneficially owned by the other persons
joining in the filing of this Schedule 13D as to which beneficial
ownership is disclaimed.
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0.3%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
IN
- --------------------------------------------------------------------------------
<PAGE>
SCHEDULE 13D
- ------------------------------------------ -------------------------------
CUSIP No. 893929100 Page 3 of 36 Pages
- ------------------------------------------ -------------------------------
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
SS. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Roy B. Andersen, Jr.; SS. No. ###-##-####
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) /X/
(b) / /
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
PF
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDING IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) / /
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States
- --------------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES 308,032
BENEFICIALLY -------------------------------------------------
OWNED BY 8 SHARED VOTING POWER
EACH 0
REPORTING -------------------------------------------------
PERSON 9 SOLE DISPOSITIVE POWER
WITH 308,032
-------------------------------------------------
10 SHARED DISPOSITIVE POWER
0
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
308,032
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES* /X/ Excludes shares beneficially owned by the other persons
joining in the filing of this Schedule 13D as to which beneficial
ownership is disclaimed.
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
3.3%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
IN
- --------------------------------------------------------------------------------
<PAGE>
SCHEDULE 13D
- ------------------------------------------ -------------------------------
CUSIP No. 893929100 Page 4 of 36 Pages
- ------------------------------------------ -------------------------------
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
SS. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Vincent DeVita; SS. No. ###-##-####
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) /X/
(b) / /
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
PF
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDING IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) / /
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States
- --------------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES 7,250
BENEFICIALLY -------------------------------------------------
OWNED BY 8 SHARED VOTING POWER
EACH
REPORTING -------------------------------------------------
PERSON 9 SOLE DISPOSITIVE POWER
WITH 7,250
-------------------------------------------------
10 SHARED DISPOSITIVE POWER
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
7,250
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES* / / Excludes shares beneficially owned by the other persons
joining in the filing of this Schedule 13D as to which beneficial
ownership is disclaimed.
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0.1%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
IN
- --------------------------------------------------------------------------------
<PAGE>
SCHEDULE 13D
- ------------------------------------------ -------------------------------
CUSIP No. 893929100 Page 5 of 36 Pages
- ------------------------------------------ -------------------------------
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
SS. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Max A. Slifer; SS. No. ###-##-####
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) /X/
(b) / /
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
PF
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDING IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) /X/
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States
- --------------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES 172,085
BENEFICIALLY -------------------------------------------------
OWNED BY 8 SHARED VOTING POWER
EACH 0
REPORTING -------------------------------------------------
PERSON 9 SOLE DISPOSITIVE POWER
WITH 172,085
-------------------------------------------------
10 SHARED DISPOSITIVE POWER
0
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
172,085
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES* /X/ Excludes shares beneficially owned by the other persons
joining in the filing of this Schedule 13D as to which beneficial
ownership is disclaimed.
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
1.8%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
IN
- --------------------------------------------------------------------------------
<PAGE>
SCHEDULE 13D
- ------------------------------------------ -------------------------------
CUSIP No. 893929100 Page 6 of 36 Pages
- ------------------------------------------ -------------------------------
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
SS. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Dennis Schmaltz; SS. No. ###-##-####
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) /X/
(b)
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
PF
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDING IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) /X/
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States
- --------------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES 171,139
BENEFICIALLY -------------------------------------------------
OWNED BY 8 SHARED VOTING POWER
EACH 0
REPORTING -------------------------------------------------
PERSON 9 SOLE DISPOSITIVE POWER
WITH 171,139
-------------------------------------------------
10 SHARED DISPOSITIVE POWER
0
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
171,139
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES* /X/ Excludes shares beneficially owned by the other persons
joining in the filing of this Schedule 13D as to which beneficial
ownership is disclaimed.
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
1.8%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
IN
- --------------------------------------------------------------------------------
<PAGE>
SCHEDULE 13D
- ------------------------------------------ -------------------------------
CUSIP No. 893929100 Page 7 of 36 Pages
- ------------------------------------------ -------------------------------
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
SS. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
UBS Partners LLC; I.R.S. No. 13-3952900
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) /X/
(b) / /
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
Not applicable
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDING IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) / /
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
- --------------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES 0
BENEFICIALLY -------------------------------------------------
OWNED BY 8 SHARED VOTING POWER
EACH 0
REPORTING -------------------------------------------------
PERSON 9 SOLE DISPOSITIVE POWER
WITH 0
-------------------------------------------------
10 SHARED DISPOSITIVE POWER
0
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
0
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES* /X/ Excludes shares beneficially owned by the other persons
joining in the filing of this Schedule 13D as to which beneficial
ownership is disclaimed.
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
OO
- --------------------------------------------------------------------------------
<PAGE>
SCHEDULE 13D
- ------------------------------------------ -------------------------------
CUSIP No. 893929100 Page 8 of 36 Pages
- ------------------------------------------ -------------------------------
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
SS. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Fenway Partners, Inc.; I.R.S. No. ###-##-####
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) /X/
(b) / /
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
Not applicable
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDING IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) / /
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
- --------------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES 0
BENEFICIALLY -------------------------------------------------
OWNED BY 8 SHARED VOTING POWER
EACH 0
REPORTING -------------------------------------------------
PERSON 9 SOLE DISPOSITIVE POWER
WITH 0
-------------------------------------------------
10 SHARED DISPOSITIVE POWER
0
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
0
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES* /X/ Excludes shares beneficially owned by the other persons
joining in the filing of this Schedule 13D as to which beneficial
ownership is disclaimed.
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
CO
- --------------------------------------------------------------------------------
<PAGE>
SCHEDULE 13D
- ------------------------------------------ -------------------------------
CUSIP No. 893929100 Page 9 of 36 Pages
- ------------------------------------------ -------------------------------
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
SS. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Xpedite Acquisition Corp.
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) /X/
(b) / /
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
Not applicable
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDING IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) / /
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
- --------------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES 0
BENEFICIALLY -------------------------------------------------
OWNED BY 8 SHARED VOTING POWER
EACH 0
REPORTING -------------------------------------------------
PERSON 9 SOLE DISPOSITIVE POWER
WITH 0
-------------------------------------------------
10 SHARED DISPOSITIVE POWER
0
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
0
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES* /X/ Excludes shares beneficially owned by the other persons
joining in the filing of this Schedule 13D as to which beneficial
ownership is disclaimed.
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
CO
- --------------------------------------------------------------------------------
<PAGE>
AMENDMENT NO. 2 TO
SCHEDULE 13D
This Amendment No. 6 amends and supplements the statement on Schedule
13D dated February 11, 1997 filed by Roy B. Andersen, Jr., Robert S. Vaters,
Dennis Schmaltz, Max A. Slifer and George Abi Zeid, as subsequently amended and
filed by Roy B. Andersen, Jr., Robert S. Vaters, Dennis schmaltz, Max A. Slifer,
Vincent DeVita, UBS Partners, LLC and Fenway Partners, Inc., relating to the
common stock, par value $.01 per share (the "Common Stock"), of Xpedite Systems,
Inc., a Delaware corporation ("Xpedite" or the "Company"). Capitalized terms
used herein without definition have the meanings assigned to such terms in the
initial filing or a previous amendment thereto.
Item 2 is amended as follows:
Item 2. IDENTITY AND BACKGROUND
This Amendment is being filed by (i) Roy B. Andersen, Jr., (ii) Robert
S. Vaters, (iii) Dennis Schmaltz, (iv) Max A. Slifer, (v) Vincent DeVita ((i)
through (v) collectively, the "Management Buyers"), (vi) UBS Partners LLC ("UBS
Partners"), (vii) Fenway Partners, Inc. ("Fenway") and (viii) Xpedite
Acquisition Corp. ("XAC"). The foregoing persons are collectively referred to
herein as the "Reporting Persons." The Reporting Persons may be deemed to
constitute a group within the meaning of Rule 13d-1(f) under the Securities
Exchange Act of 1934, as amended, by reason of their acting together for the
purpose of the transaction described in Item 4 below.
(i) Information regarding the identity and background of Mr. Andersen,
Mr. Vaters, Mr. Schmaltz, Mr. Slifer, Mr. Devita, UBS Partners and Fenway is
contained in the original filing or a previous amendment thereto.
-9-
<PAGE>
A revised list of the executive officers of UBS Partners appears on
Appendix 1. The present principal occupation or employment of each of such
executive officers of UBS Partners is set forth on Appendix 1 or Appendix 1 to
Amendment No. 2 to Schedule 13D filed on July 7, 1997. During the past five
years, none of such executive officers has been convicted in a criminal
proceeding (excluding traffic violations and similar misdemeanors). During the
past five years, none of such executive officers has been a party to a civil
proceeding of a judicial or administrative body of competent jurisdiction as a
result of which such person was or is subject to a judgment, decree or final
order enjoining future violations of, or prohibiting or mandating activities
subject to, federal and state securities laws or finding any violation with
respect to such laws. Each of such executive officers is a citizen of the United
States.
(ii) A list of the directors and executive officers of XAC appears on
Appendix 2. Each of UBS Partners and Fenway owns 50% of XAC. XAC was formed
solely for the purpose of merging with and into Xpedite.
-10-
<PAGE>
The address of the principal business office of XAC is 299 Park
Avenue, New York, New York 10171. The address of each of the directors and
executive officers of XAC is set forth on Appendix 2.
During the past five years, none of XAC nor any of the directors or
executive officers of XAC has been convicted in a criminal proceeding (excluding
traffic violations and similar misdemeanors).
During the past five years, none of XAC nor any of the directors or
executive officers of XAC has been a party to a civil proceeding of a judicial
or administrative body of competent jurisdiction as a result of which such
person was or is subject to a judgment, decree or final order enjoining future
violations of, or prohibiting or mandating activities subject to, federal and
state securities laws or finding any violation with respect to such laws.
XAC is a Delaware corporation. Each director and executive officer of
XAC is a citizen of the United States.
Item 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
Item 3 is amended by adding the following:
"See Item 4 for information with respect to source and amount of funds
to be used in connection with the consummation of the Merger (as defined
below)."
Item 4. PURPOSE OF TRANSACTION
Item 4 is amended as follows:
On August 8, 1997, Xpedite and XAC entered into an Agreement and Plan
of Merger (the "Merger Agreement") under which XAC will merge with and into
Xpedite (the "Merger") for a cash purchase price of $23.25 per share (including
shares issued upon the exercise of incentive stock options) of Xpedite common
stock, $0.01 par value per share (the "Common Stock"). The Merger Agreement is
filed herewith as Exhibit 3 and is incorporated by reference herein.
Concurrently with the execution of the Merger Agreement, certain
stockholders of Xpedite, including members of the Board of Directors, the
Management Buyers, certain funds managed by Patricof & Co. Ventures, Inc.
("Patricof"), and David, Stuart, and Robert Epstein (collectively, the "Epstein
Family"), each entered into individual Stockholder Agreements (each, a
"Stockholder Agreement"), dated as of August 8, 1997 with Xpedite and XAC. Each
Stockholder Agreement provides, among other things, that the stockholder party
thereto will vote his or its shares, among other things, in favor of the Merger,
the approval of the Merger Agreement and the approval of certain amendments to
Xpedite's certificate of incorporation. Pursuant to the Stockholder Agreement,
each stockholder gives XAC his or its irrevocable proxy to vote his or its
shares, among other things, in favor of the matters referred to above and agrees
to certain restrictions on transfer with respect to his or its shares. There are
an aggregate of 3,604,483 shares of Common Stock and 560,363 options and
warrants to acquire Common Stock subject to the Stockholder Agreements, which,
assuming no options or warrants are exercised, represents approximately 40% of
the outstanding Common Stock and, assuming all outstanding options and warrants
are exercised, represents approximately 42% of the outstanding Common Stock. A
form of Stockholder Agreement is filed herewith as Exhibit 4 and is incorporated
by reference herein.
11
<PAGE>
The Merger Agreement is subject to completion of contemplated
financing and the simultaneous closing of the acquisition by Xpedite of 100% of
the share capital of Xpedite's U.K. affiliate, Xpedite Systems Limited, for $87
million, and requires Xpedite shareholder and regulatory approvals. The closing
of the Merger Agreement is also subject to, among other things, there being no
change by any regulatory body or in accounting standards or interpretations that
would materially and adversely affect Xpedite's ability to account for the
Merger using "recap accounting". To assist Xpedite in qualifying for "recap
accounting" treatment, the Management Buyers have agreed to retain an aggregate
of 320,860 shares of Common Stock in the Merger in lieu of receiving cash
therefor. In connection with the stockholder vote on the Merger Agreement,
Xpedite stockholders will be offered the opportunity to retain all, but not less
than all, of their shares of Xpedite Common Stock in the Merger in lieu of
receiving cash therefor. The Merger Agreement provides that an aggregate of
205,000 shares of Xpedite common stock may be retained in the Merger by
stockholders other than the Management Buyers; in the event holders of more than
205,000 shares of Xpedite Common Stock elect to retain their shares, the number
of shares to be retained by such stockholders will be reduced on a pro rata
basis to an aggregate of 205,000 shares. If holders of fewer than 205,000 shares
of Xpedite Common Stock elect to retain their shares, the Epstein family and
Patricof have agreed to retain on a pro rata basis a number of their shares of
Xpedite common stock equal to 205,000 minus the number of shares of Xpedite
Common Stock that stockholders other than the Management Buyers have elected to
retain.
The contemplated financing for the Merger is evidenced by commitment
letters (the "Commitment Letters") submitted to the Company for (a) up to $129.5
million of senior secured bank financing to be provided by Goldman Sachs Credit
Partners L.P. ("GSCP") and Union Bank of Switzerland ("UBS"), (b) up to $150
million of bridge financing to be provided by UBS, which will be refinanced with
subordinated debt financing to be underwritten by UBS Securities LLC ("UBS
Securities") and (c) equity financing to be provided by UBS Partners and Fenway.
The Commitment Letters are filed herewith as Exhibits 5 through 8 and are
incorporated by reference herein.
12
<PAGE>
At the present time, other than the actions described in the preceding
paragraph, the Reporting Persons have no specific plans or proposals that would
relate to or result in any of the actions specified in clauses (a) through (j)
of Item 4. However, the Reporting Persons may consider any such plans or
proposals in the future, if deemed appropriate. If the Merger is consummated it
is expected that the membership of the board of directors, charter, bylaws, and
capitalization of the Company would be changed and there is a possibility that
the Common Stock would no longer be listed on NASDAQ or any other public
securities market and that the Common Stock would be deregistered under the
Securities Exchange Act of 1934, as amended.
Item 7. MATERIAL TO BE FILED AS EXHIBITS
1. Joint filing agreement of the Reporting Persons dated
August 13, 1997.
2. Power of Attorney (included in Exhibit 1).
3. Agreement and Plan of Merger, dated as of August 8, 1997, by and
between Xpedite and XAC.*
4. Stockholder Agreement, dated as of August 8, 1997, among Xpedite,
XAC and Roy B. Andersen, Jr.*
5. Senior Facility Commitment Letter, dated August 6, 1997, from GSCP,
UBS Securities and UBS to UBS Partners and Fenway.
6. Bridge Loan Commitment Letter, dated August 6, 1997, from UBS to
UBS Partners and Fenway.
7. Engagement Letter, dated August 6,1997, from UBS Securities to UBS
Partners and Fenway.
8. Equity Commitment Lettter, dated July 7, 1997, from UBS Partners
and Fenway to Xpedite
- ---------------
* Incorporated by reference to Xpedite's Current Report on Form 8-K filed
with the Securities and Exchange Commission on August 12, 1997.
-13-
<PAGE>
SIGNATURE
-----------
After reasonable inquiry and to the best of our knowledge and belief,
the undersigned certify that the information set forth in this statement is
true, complete and correct.
Dated: August 13, 1997
/s/ Roy B. Andersen, Jr.
--------------------------------------
Roy B. Andersen, Jr.*
/s/ Robert S. Vaters
--------------------------------------
Robert S. Vaters
/s/ Dennis Schmaltz
--------------------------------------
Dennis Schmaltz*
/s/ Max A. Slifer
--------------------------------------
Max A. Slifer*
/s/ Vincent DeVita
--------------------------------------
Vincent DeVita*
*By: Robert S. Vaters
As Attorney-in-Fact
14
<PAGE>
XPEDITE ACQUISITION CORP.
/s/ Michael Greene
By:-----------------------------------
Name: Michael Greene
Title: President
UBS PARTNERS LLC
/s/ Michael Greene
By:-----------------------------------
Name: Michael Greene
Title: Managing Director
/s/ James A. Breckenridge
By:-----------------------------------
Name: James A. Breckenridge
Title: Vice President
FENWAY PARTNERS, INC.
/s/ Russell W. Steenberg
By:-----------------------------------
Name: Russell W. Steenberg
Title: Managing Director
15
<PAGE>
Appendix 1
UBS PARTNERS LLC
OFFICERS
<TABLE>
<CAPTION>
<S> <C> <C>
Name Title Address
Justin Maccarone President and Managing Director 299 Park Avenue, New York, NY 10171
Robert Dinerstein Senior Managing Director/Secretary 299 Park Avenue, New York, NY 10171
Michael Greene Managing Director/Vice President/Treasurer 299 Park Avenue, New York, NY 10171
Charles J. Delaney Managing Director 299 Park Avenue, New York, NY 10171
George Duarte Managing Director 299 Park Avenue, New York, NY 10171
Marc A. Unger Vice President/Chief Financial Officer 299 Park Avenue, New York, NY 10171
James Breckenridge Vice President 299 Park Avenue, New York, NY 10171
David Drabik Assistant Treasurer 299 Park Avenue, New York, NY 10171
Sandra Costin Assistant Secretary 299 Park Avenue, New York, NY 10171
Barbara Blanck Assistant Secretary 299 Park Avenue, New York, NY 10171
</TABLE>
<PAGE>
Appendix 2
XPEDITE ACQUISITION CORP.
BOARD OF DIRECTORS
Name Address
Michael Greene c/o UBS Partners LLC
299 Park Avenue, New York, NY 10171
Russell W. Steenberg c/o Fenway Partners, Inc.
152 West 57th Street, 59th Floor
New York, NY 10019
OFFICERS
Name Title Address
Michael Greene President c/o UBS Partners LLC
299 Park Avenue, New York, NY 10171
James A. Breckenridge Vice President, c/o UBS Partners LLC
Treasurer and 299 Park Avenue, New York, NY 10171
Secretary
16
<PAGE>
EXHIBIT INDEX
Exhibit Page
1. Joint filing agreement of the Reporting Persons dated
August 13, 1997.
2. Power of Attorney (included in Exhibit 1).
3. Agreement and Plan of Merger, dated as of August 8, 1997,
by and between Xpedite and XAC.*
4. Stockholder Agreement, dated as of of August 8, 1997,
among Xpedite, XAC and Roy B. Andersen, Jr.*
5. Senior Facility Commitment Letter, dated August 6, 1997,
from GSCP, UBS Securities and UBS to UBS Partners and Fenway.
6. Bridge Loan Commitment Letter, dated August 6, 1997,
from UBS to UBS Partners and Fenway.
7. Engagement Letter, dated August 6,1997,
from UBS Securities to UBS Partners and Fenway.
8. Equity Commitment Lettter, dated July 7, 1997,
from UBS Partners and Fenway to Xpedite
- ---------------
* Incorporated by reference to Xpedite's Current Report on Form 8-K filed
with the Securities and Exchange Commission on August 12, 1997.
-29-
Exhibit 1
AGREEMENT TO FILE JOINT
STATEMENT ON SCHEDULE 13D
AGREEMENT, this 13th day of August 1997, by and among Roy B. Andersen, Jr.,
Robert S. Vaters, Dennis Schmaltz, Max A. Slifer, Vincent DeVita, Xpedite
Acquisition Corp., UBS Partners LLC and Fenway Partners, Inc. (collectively, the
"Reporting Persons").
W I T N E S S E T H :
WHEREAS, the Reporting Persons may be deemed to have held beneficial
ownership of, in the aggregate, more than five percent of the shares of the
common stock, $.01 par value per share (the "Common Stock"), of Xpedite Systems,
Inc., as of the date hereof;
WHEREAS, the Common Stock has been registered by Xpedite Systems, Inc.
under Section 12(g) of the Securities Exchange Act of 1934, as amended (the
"Act");
WHEREAS, pursuant to Rule 13d-1 under the Act, when any person or group
acquires more than five percent of such a class of registered equity securities
it shall file with the Securities and Exchange Commission a statement on
Schedule 13D or 13G under certain circumstances;
WHEREAS, Rule 13d-1(f) under the Act provides that whenever two or more
persons are required to file a statement with respect to the same securities,
only one such statement need be filed, provided such persons agree in writing
that such statement is filed on behalf of each of them;
WHEREAS, certain of the Reporting Persons have previously executed and
delivered that certain Agreement to File Joint Statement on Schedule 13D dated
July 7, 1997 (the "Original Agreement") and hereby desire to amend and restate
in its entirety the Original Agreement;
NOW THEREFORE, in consideration of the premises and the mutual
covenants and agreements contained herein, the parties hereby agree as follows:
Each of the Reporting Persons hereby agrees, in accordance with Rule
13d-1(f) under the Act, to file statements on Schedule 13D (the "Statements")
with respect to the Common Stock beneficially owned or deemed to be beneficially
owned by each of them pursuant to Section 13(d) of the Act and the rules
thereunder.
Each of the Reporting Persons hereby agrees that those Statements shall
be filed on behalf of each of them and that a copy of this Agreement shall be
filed as an Exhibit thereto in accordance with Rule 13d-(1)(f)(i) under the Act.
Each of Roy B. Andersen, Jr., Robert S. Vaters, Dennis Schmaltz, Max A.
Slifer, Vincent DeVita, UBS Partners LLC and Fenway Partners, Inc. agrees that
the Original Agreement is hereby amended and restated in its entirety.
Each of Roy B. Andersen, Jr., Robert S. Vaters, Dennis Schmaltz, Max A.
Slifer and Vincent DeVita hereby constitutes and appoints Roy B. Andersen
<PAGE>
and Robert S. Vaters their true and lawful attorney-in-fact and agent, for them
and in their name to sign the Statements and any amendment thereto granting to
such attorneys-in-fact and agents full power to do and perform each and every
act relating to this Statement and any amendment to this Statement, as fully and
to all intents and purposes as such persons might or could do in person, hereby
ratifying and confirming all that such attorneys-in-fact and agents may lawfully
do or cause to be done by virtue hereof.
This Agreement and the filing of the Statements shall not be construed
to be an admission that any of the Reporting Persons is a member of a "group"
pursuant to Section 13(d) of the Act and the rules thereunder consisting of one
or more such persons, except for purposes of acquiring Common Stock as set forth
in the Statement to which this Agreement is an Exhibit.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
/s/ Roy B. Andersen
---------------------------------------
Roy B. Andersen
/s/ Robert S. Vaters
---------------------------------------
Robert S. Vaters
/s/ Dennis Schmaltz
---------------------------------------
Dennis Schmaltz
/s/ Max A. Slifer
---------------------------------------
Max A. Slifer
/s/ Vincent DeVita
---------------------------------------
Vincent DeVita
<PAGE>
XPEDITE ACQUISITION CORP.
/s/ Michael Greene
By:-----------------------------------
Name: Michael Greene
Title: President
UBS PARTNERS LLC
/s/ Michael Greene
By:-----------------------------------
Name: Michael Greene
Title: Managing Director
/s/ James A. Breckenridge
By:-----------------------------------
Name: James A. Breckenridge
Title: Vice President
FENWAY PARTNERS, INC.
/s/ Russell W. Steenberg
By:-----------------------------------
Name: Russell W. Steenberg
Title: Managing Director
GOLDMAN SACHS CREDIT PARTNERS L.P. UNION BANK OF SWITZERLAND
C/O GOLDMAN, SACHS & CO. 299 PARK AVENUE
85 BROAD STREET NEW YORK, NEW YORK 10171
NEW YORK, NEW YORK 10004
PERSONAL & CONFIDENTIAL
August 6, 1997
UBS Partners, LLC
299 Park Avenue
New York, New York 10171
Attention: Michael Greene
Fenway Partners, Inc.
152 West 57th Street
New York, New York 10019
Attention: Russell W. Steenberg
Attention:
Re: SENIOR FACILITIES FOR XPEDITE SYSTEMS, INC.
-------------------------------------------
Gentlemen:
You have advised us that UBS Partners LLC ("UBSP"), Fenway Partners, Inc.
("FENWAY PARTNERS"), certain management investors and certain non-management
investors who have been identified to us (collectively the "INVESTORS") propose
to acquire through a merger with a newly-formed corporation, substantially all
of the outstanding capital stock of Xpedite Systems, Inc. (the "COMPANY") and to
cause the Company to simultaneously acquire the Company's U.K. affiliate
(together with the Company's German and French affiliates, the "AFFILIATES";
such merger and acquisitions being collectively referred to herein as the
"ACQUISITION") For the purposes of this letter, the terms "you" and "your" mean
and refer to UBS Partners LLC and Fenway Partners, Inc., severally in accordance
with their respective equity commitments in the acquisition vehicle as
identified to us.
While certain of the terms and conditions of the Acquisition are yet to be
determined, you have advised us that you propose to finance the Acquisition, the
refinancing of certain indebtedness of the Company and its subsidiaries and the
on-going working capital
<PAGE>
UBS Partners LLC
Fenway Partners, Inc.
August 6, 1997
Page 2
requirements of Company and its subsidiaries with (x) up to $129.5 million of
senior secured credit facilities (the "SENIOR FACILITIES") to be made available
to the Company and a U.K. subsidiary thereof, (y) up to $150 million of
subordinated bridge financing (the "SUBORDINATED DEBT") to be issued by the
Company and (z) equity to be provided by the Investors (or other persons
previously identified to us) in an amount and on terms acceptable to us.
Subject to the terms and conditions contained in this letter and the attached
Annex A and Annex B (this "COMMITMENT LETTER"), each of Goldman Sachs Credit
Partners L.P. ("GSCP") and Union Bank of Switzerland ("UBS") is pleased to
confirm its commitment to provide one-half of the $129.5 million of Senior
Facilities (such commitments to be allocated ratably among the facilities
comprising the Senior Facilities). Our fees for such services are set forth in a
separate fee letter (the "FEE LETTER") entered into by GSCP and UBS and dated
July 3, 1997. In addition, on the terms and subject to the conditions of this
Commitment Letter, GSCP shall act as Syndication Agent, UBS shall act as
Administrative Agent and Documentation Agent, and GSCP and UBS Securities LLC
shall act as Arrangers with respect, in each case, to the Senior Facilities.
Each of GSCP's and UBS's commitment is subject, in its discretion, to the
following conditions: (i) there shall not have been, (y) since December 31,
1996, any adverse change in or affecting or (z) any new information or
additional developments which comes to our attention after the date of this
Commitment Letter concerning events described to us prior to the date hereof
which, in either case, GSCP or UBS reasonably believes may have a material
adverse effect on, the general affairs, management, financial position,
shareholders' equity or results of operations or prospects of the Company and
its subsidiaries and the Affiliates, taken as a whole, (ii) there shall not have
been any disruption or adverse change in the financial or capital markets or in
the market for loan syndications in particular, which in any such case under
clause (i) or (ii) GSCP or UBS, in its respective judgment, reasonably deems
material. Each of GSCP's and UBS's commitment is also subject, in its
discretion, to the satisfactory negotiation, execution and delivery of
appropriate loan documents relating to the Senior Facilities, including, without
limitation, a credit agreement, guaranties, security agreements, pledge
agreements, real property security agreements, opinions of counsel and other
related definitive documents (collectively, the "LOAN DOCUMENTS") to be based
upon and substantially consistent with the terms set forth in this Commitment
Letter; and (iv) completion of our due diligence efforts with respect to foreign
regulatory and structural matters relevant to the transactions described in this
Commitment Letter and GSCP's satisfaction with the results thereof.
<PAGE>
UBS Partners LLC
Fenway Partners, Inc.
August 6, 1997
Page 3
The terms of this Commitment Letter are intended as an outline of certain of the
material terms of the Senior Facilities, but do not include all of the terms,
conditions, covenants, representations, warranties, default clauses and other
provisions that will be contained in the Loan Documents. The Loan Documents
shall include, in addition, provisions that are customary or typical for
financings of this type and other provisions that GSCP may reasonably determine
to be appropriate in the context of the proposed transactions and not
inconsistent with this Commitment Letter.
GSCP and UBS intend and reserve the right to syndicate their respective portions
of the Senior Facilities to the Lenders. GSCP and UBS will select the Lenders
with the consent of and in consultation with the Company, not to be unreasonably
withheld. GSCP and UBS will lead the syndication of the Senior Facilities,
including determining the timing of all offers to potential Lenders, the
acceptance of commitments, the amounts offered and the compensation provided to
each Lender from the amounts to be paid to GSCP and UBS pursuant to the terms of
this Commitment Letter and the Fee Letter. GSCP and UBS will determine the final
commitment allocations and will notify you of such determinations.
You agree to cooperate (both before and after initial funding) with GSCP and UBS
in connection with (i) the preparation of an information package regarding the
business, operations and prospects of the Company and its subsidiaries, such
cooperation to include, without limitation, the delivery of all information in
your possession prepared by or on behalf of the Company and its subsidiaries and
relating to the transactions contemplated hereunder that is deemed reasonably
necessary by GSCP to complete the syndication of the Senior Facilities, (ii) the
presentation of such information package in meetings and other communications
with prospective Lenders in connection with the syndication of the Senior
Facilities and (iii) facilitating assignments to additional Lenders. You
acknowledge that neither GSCP nor UBS shall be responsible for the contents of
such information package and presentation and that GSCP and UBS will be using
and relying upon the information contained in such information package and
presentation without independent verification thereof. In addition, you
represent and covenant that, to the best of your knowledge, all information
provided directly or indirectly by you to GSCP, UBS, or the Lenders in
connection with the transactions contemplated hereunder is and will be complete
and correct in all material respects and does not and will not contain any
untrue statement of a material fact or omit to state a material fact necessary
to make the statements contained therein not misleading.
<PAGE>
UBS Partners LLC
Fenway Partners, Inc.
August 6, 1997
Page 4
In connection with arrangements such as this, it is our firm policy to receive
indemnification. You agree to the provisions with respect to our indemnity and
other matters set forth in Annex A. Your obligations under the immediately
preceding sentence, Annex A and otherwise under this Commitment Letter and the
Fee Letter shall immediately and automatically terminate upon the "Closing Date"
(as each term is used in Annex B) .
You also agree, jointly and severally, to reimburse us periodically for our
reasonable out-of-pocket expenses, including the reasonable fees and
disbursements of our attorneys and any other consultants or advisors that we
retain, plus any sales, use or similar taxes (including additions to such taxes,
if any) arising in connection with any matter referred to in this Commitment
Letter or the Fee Letter (in each case, whether incurred before or after the
date hereof) except to the extent incurred after you have terminated this
Commitment Letter.
Please note that this Commitment Letter, the Fee Letter and any written or oral
advice provided by GSCP or UBS in connection with this arrangement is
exclusively for the information of the Investors and the Company and its
advisors and stockholders and may not be disclosed to any other third party or
circulated or referred to publicly without our prior written consent, except
that the Commitment Letter and the Fee Letter may be disclosed as, and solely to
the extent, required by law and may be disclosed to your attorneys, accountants
and other advisors so long as they agree to be bound by the foregoing
restrictions.
As you know, each of GSCP and UBS may from time to time effect transactions, for
its own account or the account of customers, and hold positions in loans or
options on loans of the Company and other companies that may be the subject of
this arrangement. In addition, each of Goldman, Sachs & Co. and UBS Securities
LLC is a full service securities firm and as such may from time to time effect
transactions, for its own account or the account of customers, and hold
positions in securities or options on securities of the Company and other
companies that may be the subject of this arrangement. In addition, GSCP and UBS
may employ the services of their respective affiliates in providing certain
services hereunder and may exchange with such affiliates information concerning
the Company and other companies that may be the subject of this arrangement, and
such affiliates shall be entitled to the benefits afforded to GSCP and UBS
hereunder.
<PAGE>
UBS Partners LLC
Fenway Partners, Inc.
August 6, 1997
Page 5
GSCP's and UBS's commitment hereunder shall terminate on December 31, 1997
unless the closing of the Senior Facilities, on the terms and subject to the
conditions contained herein, shall have been consummated.
[Remainder of this page intentionally left blank.]
<PAGE>
UBS Partners LLC
Fenway Partners, Inc.
August 6, 1997
Page 6
Please confirm that the foregoing is in accordance with your understanding by
signing and returning to GSCP and UBS the enclosed copy of this Commitment
Letter and the Fee Letter, on or before the close of business on August 8, 1997,
whereupon this Commitment Letter and the Fee Letter shall become binding
agreements between us. If not signed and returned as described in the preceding
sentence by such date, this offer will terminate on such date. We look forward
to working with you on this assignment.
This Commitment Letter supersedes the previous commitment letter addressed to
you and sent by us dated July 3, 1997; provided that, the Fee Letter dated July
3, 1997 shall remain in full force and effect, references to the Commitment
Letter contained therein shall apply to this letter and the fees and other
amounts payable thereunder shall be payable with respect to the financing
contemplated by this letter.
Very truly yours,
GOLDMAN SACHS CREDIT PARTNERS L.P.
By: Ed Forst
-------------------------------
Authorized Signatory
UBS SECURITIES LLC
ON ITS OWN BEHALF AND AS AGENT FOR
UNION BANK OF SWITZERLAND
NEW YORK BRANCH
By: /s/ JEAN SMITH
-------------------------------
Name: JEAN SMITH
Title: Managing Director
By: /s/ ANDREW GOULD
-------------------------------
Name: Andrew Gould
Title: Managing Director
<PAGE>
UBS Partners LLC
Fenway Partners, Inc.
August 6, 1997
Page 7
ACCEPTED AS OF THE DATE ABOVE:
UBS PARTNERS LLC
By: /s/ MICHAEL GREENE
----------------------------
Name: Michael Greene
Title: Managing Director
By: /s/ JAMES A. BRECKENRIDGE
----------------------------
Name: James A. Breckenridge
Title: Vice President
FENWAY PARTNERS, INC.
/s/ RUSSELL W. STEENBERG
By: --------------------------
Name: Russell W. Steenberg
Title: Managing Director
<PAGE>
ANNEX A
In the event that GSCP or UBS becomes involved in any capacity in any action,
proceeding or investigation brought by or against any person, including, without
limitation, stockholders of the Company, in connection with or as a result of
either this arrangement or any matter referred to in this Commitment Letter or
the Fee Letter (together, the "LETTERS"), UBSP and Fenway Partners
(collectively, the "PRINCIPAL INVESTORS") will periodically reimburse GSCP for
its reasonable legal and other expenses (including the cost of any investigation
and preparation) incurred in connection therewith; provided, however, that if
GSCP or UBS, as the case may be, is found in any such action, proceeding or
investigation to have acted with gross negligence or in bad faith in performing
the services which are the subject of the Letters, GSCP or UBS, as the case may
be, shall repay such portion of such reimbursed amounts that is attributable to
expenses incurred in relation to the act or omission of GSCP or UBS, as the case
may be, which is the subject of such finding. The Principal Investors also
agree, jointly and severally, to indemnify and hold GSCP harmless against any
and all losses, claims, damages or liabilities of GSCP and/or UBS, as the case
may be, to any person in connection with or as a result of either this
arrangement or any matter referred to in the Letters, except to the extent that
any such loss, claim, damage or liability results from the gross negligence or
bad faith of GSCP or UBS, as the case may be, in performing the services that
are the subject of the Letters. If for any reason the foregoing indemnification
is unavailable to GSCP or UBS, as the case may be, or insufficient to hold it
harmless, then each of the Principal Investors shall contribute to the amount
paid or payable by GSCP or UBS, as the case may be, as a result of such loss,
claim, damage or liability in such proportion as is appropriate to reflect the
relative economic interests of each Principal Investor and its stockholders on
the one hand and GSCP or UBS, as the case may be, on the other hand in the
matters contemplated by the Letters as well as the relative fault of such
Principal Investor and GSCP or UBS, as the case may be, with respect to such
loss, claim, damage or liability and any other relevant equitable
considerations. The reimbursement, indemnity and contribution obligations of the
Principal Investor under this paragraph shall be in addition to any liability
which such Principal Investor may otherwise have, shall extend upon the same
terms and conditions to any affiliate of GSCP or UBS, as the case may be, and
their respective partners, directors, agents, employees and controlling persons
(if any), as the case may be, and shall be binding upon and inure to the benefit
of any successors, assigns, heirs and personal representatives of such Principal
Investor, GSCP, UBS, any such affiliate and any such person. Except as otherwise
specifically provided above, each of the Principal Investors also agrees that
none of GSCP, UBS, or any of such affiliates, partners, directors, agents,
employees or controlling persons shall have any liability to the Principal
Investor, any person asserting claims on behalf of or in right of the Company or
any other person in connection with or as a result of either this arrangement or
any matter referred to in the Letters except to the extent that any losses,
claims, damages, liabilities or expenses incurred by the Principal Investor
result from the gross negligence or bad faith of GSCP, or UBS, as the case may
be, in performing the services that are the subject of the Letters. Any right to
trial by jury with respect to any action or proceeding
Annex A-1
<PAGE>
arising in connection with or as a result of either this arrangement or any
matter referred to in the Letters is hereby waived by the parties hereto. Each
of the Principal Investors agrees that any suit or proceeding arising out of
either this arrangement or any matter referred to in the Letters may be brought
in the U.S. District Court for the Southern District of New York or, if that
court does not have subject matter jurisdiction, in any state court located in
the City of New York, and the Principal Investor agrees to submit to the
jurisdiction of, and to venue in, such courts. If any person is entitled to
indemnification under this Annex A (the "INDEMNIFIED PERSON") with respect to
any action or proceeding brought by a third party, the Principal Investors shall
be entitled to assume the defense of any such action or proceeding with counsel
satisfactory to the Indemnified Person who shall not, except with the consent of
such Indemnified Person, be counsel to the Principal Investors. Upon assumption
by the Principal Investors of the defense of any such action or proceeding, the
Indemnified Person shall have the right to participate in such action or
proceeding and to retain its own counsel but the Principal Investors shall not
be liable for any legal fees or expenses subsequently incurred by such
Indemnified Person in connection with the defense thereof unless (i) the
Principal Investors have agreed to pay such fees and expenses, (ii) the
Principal Investors shall have failed to employ counsel reasonably satisfactory
to the Indemnified Person in a timely manner, or (iii) the Indemnified Person
shall have been advised by counsel that representation of the Indemnified Person
by counsel provided by the Principal Investors pursuant to the foregoing would
be inappropriate due to actual or potential conflicting interest between the
Principal Investors and the Indemnified Person, including situations in which
there are one or more legal defenses available to the Indemnified Person that
are different from or additional to those available to the Principal Investors,
the Principal Investors shall consent to the terms of any compromise or
settlement of any action defended by the Principal Investors in accordance with
the foregoing without the prior consent of the Indemnified Person. The
provisions of this Annex A shall survive any termination or completion of the
arrangement provided by the Letters; PROVIDED that the Principal Investors'
obligations under this Annex A shall immediately and automatically terminate
upon the "Closing Date" (as defined in Annex B). This Commitment Letter shall be
governed by and construed in accordance with the laws of the State of New York
without regard to principles of conflicts of laws.
Annex A-2
<PAGE>
ANNEX B
SENIOR FACILITIES INDICATIVE TERM SHEET
BORROWER: The Company and a U.K. subsidiary ("NEWCO")
of the Company formed to acquire the
Company's U.K. affiliate (collectively, the
"BORROWER").
GUARANTORS: Each of the Borrower's subsidiaries
(collectively, the "GUARANTORS") (other than,
as to any U.S. Borrower, any foreign
subsidiaries if a guaranty by such subsidiary
would have adverse tax consequences) shall
guaranty all obligations under the Senior
Facilities.
SYNDICATION AGENT: Goldman Sachs Credit Partners L.P. ("GSCP").
ADMINISTRATIVE Union Bank of Switzerland ("UBS").
AGENT AND
DOCUMENTATION
AGENT:
ARRANGERS: GSCP and UBS Securities LLC
LENDERS: GSCP, UBS and/or other financial institutions
selected by GSCP and UBS Securities LLC with
the consent of and in consultation with the
Company, not to be unreasonably withheld.
AMOUNT OF SENIOR
FACILITIES: Up to $129.5 million of senior secured
financing (the "SENIOR FACILITIES") to
include:
(i) $78 million term loan facility (the
"TERM LOANS") allocated as follows:
- $25 million term loan Facility
("TERM LOAN A");
- $53 million term loan facility
("TERM LOAN B");
Annex B-1
<PAGE>
(ii) $20 million revolving credit facility
(the "REVOLVING FACILITY) including a
$5 million letter of credit
subfacility and a $5 million swing
line facility; and
(iii) $31.5 million letter of credit
facility (the "LETTER OF CREDIT
FACILITY"). Drawings made under the
Letter of Credit Facility not
immediately reimbursed shall be
treated for all purposes as
additional amounts outstanding under
Term Loan B.
Portions of the Senior Facilities may be, and all amounts
advanced to Newco shall be, made available in British Pound
Sterling under arrangements to be negotiated and reasonably
satisfactory to Arrangers and the Company.
PURPOSE/USE OF
PROCEEDS: Term Loans: To finance the Acquisition, to repay certain
existing indebtedness of the Borrower and its subsidiaries
as of the Closing Date and to pay related transaction costs.
Revolving Facility: To finance the Borrower's and its
subsidi-aries' working capital needs (including intercompany
loans subject to terms and conditions to be mutually agreed
upon).
Letter of Credit Facility: To provide credit support for the
obligation) to make certain deferred payments to the former
owners of one or more of the Affiliates.
MATURITIES:
Term Loan A: Five and one-half years
following the Closing Date
Term Loan B:
Seven years following the
Closing Date
Revolving Facility: Five and
one-half years following of the
Closing Date
Letter of Credit Facility: Available through the first
anniversary of the Closing
Date
Annex B-2
<PAGE>
CLOSING DATE: The date and time on or before December 31, 1997 on which
the initial borrowings under the Senior Facilities are made.
AMORTIZATION:
TERM LOAN A:
- -----------
Year 1 $1.5 million (6 month grace period)
Year 2 $3.5 million
Year 3 $4.5 million
Year 4 $5.5 million
Year 5 $6.5 million
Year 5-1/2 $3.5 million
TERM LOAN B:
- -----------
Year 1 $0.25 million (6 month grace period)
Year 2 $0.50 million
Year 3 $0.50 million
Year 4 $0.50 million
Year 5 $0.50 million
Year 6 $25.375 million
Year 7 $25.375 million
LETTER OF CREDIT:
-----------------
Drawings under the Letter of Credit Facility that are not
otherwise repaid, shall be treated as additional amounts
outstanding under Term Loan B for all purposes and required
to be amortized in amounts and on dates proportionate to the
amounts required to be amortized with respect to Term Loan B
as set forth above.
No amortization will be required with respect to the
Revolving Facility.
INTEREST RATE: All amounts outstanding under the Senior Facilities shall
bear interest, at the Borrower's option, as follows:
A. With respect to the outstanding principal balance
of Term Loan A:
(i) at the Base Rate plus 1.50% per annum;
or
Annex B-3
<PAGE>
(ii) at the reserve adjusted Eurodollar Rate
plus 2.50% per annum.
B. With respect to the outstanding principal balance
of Term Loan B (and any unpaid drawings under
the Letter of Credit Facility):
(i) at the Base Rate plus 2.00% per annum;
or
(ii) at the reserve adjusted Eurodollar Rate
plus 3.00% per annum.
C. With respect to the outstanding principal balance
of loans made under the Revolving Facility:
(i) at the Base Rate plus 1.50% per annum;
or
(ii) at the reserve adjusted Eurodollar Rate
plus 2.50% per annum.
Interest rates applicable to Term Loan A and loans made
under the Revolving Facility shall be subject to reduction
based upon performance criteria to be mutually agreed upon.
As used herein, the terms "Base Rate" and "reserve adjusted
Eurodollar Rate" shall have meanings customary and
appropriate for financings of this type, and the basis for
calculating accrued interest and the interest periods for
loans bearing interest at the reserve adjusted Eurodollar
Rate shall be customary and appropriate for financings of
this type. Upon the occurrence of a payment default,
interest on outstanding amounts shall accrue at a rate equal
to the rate otherwise applicable to such amounts plus an
additional two percentage points (2.00%) per annum and shall
be payable on demand.
INTEREST PAYMENTS:
Quarterly for loans bearing interest with reference to the
Base Rate; on the last day of selected interest periods
(which shall be one, two, three and six months) for loans
bearing interest with reference to the reserve adjusted
Eurodollar Rate (and at the end of every three months, in
the case of interest periods of longer than three months);
and (except in the case of Loans under the Revolving
Facility) upon prepayment, in each case
Annex B-4
<PAGE>
payable in arrears and computed on the basis of a 360-day
year (a 365-day year for loans bearing interest with
reference to the Base Rate).
HEDGING
ARRANGEMENTS: Within 60 days after the Closing Date, the Borrower will
obtain interest rate protection through interest rate swaps,
caps or other agreements satisfactory to Arrangers and
Administrative Agent against increases in the interest rates
with respect to not less than 50% of the Term Loans and the
face amount of Letters of Credit outstanding under the
Letter of Credit Facility and for a period of not less than
three years. GSCP or its designated affiliate shall be given
an opportunity (but shall not have any obligation) to
provide such interest rate protection on market terms and
conditions.
LETTER OF
CREDIT FEES: 3.00% p.a. of the face amount for letters of credit
outstanding under the Letter of Credit Facility, plus
standard issuance and administrative charges. Any drawings
under such Letter of Credit Facility not immediately repaid
shall be treated as additional amounts outstanding under
Term Loan B. A fee equal to the applicable interest rate
margin on loans bearing interest with reference to the
reserve adjusted Eurodollar Rate and outstanding under the
Revolving Facility shall be charged with respect to letters
of credit issued under the letter of credit subfacility
under the Revolving Facility, plus standard issuance and
administrative charges.
FUNDING PROTECTION: Customary for transactions of this type, including breakage
costs, gross-up for withholding, compensation for increased
costs and compliance with capital adequacy and other
regulatory restrictions.
COMMITMENT FEES: Commitment fees equal to .50% per annum times the daily
average unused portion of the Revolving Facility shall
accrue from the Closing Date and shall be payable quarterly
in arrears on the unused portion of the Revolving Facility
(issued and outstanding letters of credit to be deemed a
"used" portion of the Revolving Facility for this purpose).
Annex B-5
<PAGE>
VOLUNTARY
PREPAYMENTS: The Senior Facilities may be voluntarily prepaid in whole or
in part, without premium or penalty (provided that loans
bearing interest with reference to the reserve adjusted
Eurodollar Rate shall be prepayable only on the last day of
the related interest period unless the Borrower concurrently
pays any "broken funding costs"). Voluntary prepayments of
Term Loan A and Term Loan B shall be applied pro rata
between Term Loan A and Term Loan B and further applied,
FIRST to the next four scheduled amortization payments
thereon and SECOND pro rata to the remaining scheduled
amortization payments.
MANDATORY
PREPAYMENTS: The Borrower shall make the following mandatory prepayments
(subject to certain basket amounts and exceptions to be
negotiated in the definitive Loan Documents):
1. ASSET SALES - prepayments in the amount of all of the
net after-tax cash proceeds of the sale or other
disposition of any property or assets of the Company or
its subsidiaries, other than net cash proceeds of sales
or other disposi- tions of assets in the ordinary
course of business, or in contemplation of replacement
of such assets, payable no later than the first
Business Day following the date of receipt;
2. EQUITY AND DEBT OFFERINGS - prepayments in an amount
equal to 100% of the net cash proceeds received from
the issuance of equity securities and certain debt
offer- ings of (or capital contributions made to) the
Company, (EXCLUDING capital contributions of equity
purchases by the Investors or debt offerings otherwise
permitted under the Loan Documents) payable no later
than the first Business Day following the date of
receipt;
3. EXCESS CASH FLOW - prepayments in an amount equal to
75% of excess cash flow (to be mutually agreed upon)
subject to reduction to 50%, based upon achievement of
a certain leverage ratio to be mutually agreed upon,
payable annually on a date to be determined; and
4. INSURANCE, CONDEMNATION PROCEEDS, OTHER EXTRAORDINARY
PAYMENTS - prepayments in an amount equal to such
proceeds (subject to certain exceptions to be
negotiated).
Annex B-6
<PAGE>
All such prepayments shall be applied to repay, FIRST, the
next four scheduled amortization payments on the Term Loans
(applied between Term Loan A and Term Loan B, pro rata) and
then pro rata to subsequent scheduled amortization payments
thereon, (applied between Term Loan A and Term Loan B, pro
rata) (provided that, at the option of holders of Term Loan
B, amounts otherwise required to be used to repay Term Loan
B shall be applied to make further repayments on Term Loan
A) and, following payment in full of the Term Loans SECOND,
outstanding loans under the Revolving Facility (and to
reduce the commitments thereunder).
SECURITY: The Senior Facilities and each Guarantee will be secured by
first priority security interests in substantially all
assets (subject to exceptions to be mutually agreed upon)
including, without limitation, all personal, real and mixed
property (including, without limitation, contract rights) of
the Borrower and the Guarantors and a pledge of the stock of
the Borrower and each of its subsidiaries; PROVIDED that, as
to security for the obligations of any U.S. Borrower, only
65% of the voting stock of Company's foreign subsidiaries
shall be required to be pledged if and to the extent such
pledge would result in adverse tax consequences. All
security arrangements shall be in form and substance
satisfactory to Arrangers and Administrative Agent.
REPRESENTATIONS AND Customary and appropriate including, without limitation, due
WARRANTIES: organization and authorization, execution, delivery and
enforce-ability of the Loan Documents, financial condition,
no material adverse change, title to properties, liens,
litigation, payment of taxes, compliance with laws,
environmental and ERISA and pension matters, consents and
approvals and full disclosure.
COVENANTS: Customary and appropriate affirmative and negative
covenants, including, without limitation, financial
covenants with respect to minimum EBITDA, maximum capital
expenditures, minimum interest coverage and a maximum
leverage. Other covenants will include, without limitation,
limitations on other indebtedness, liens, negative pledge,
investments, guarantees, restricted junior payments
(dividends, redemptions and payments on subordinated debt),
mergers and sales of assets, capital expenditures, leases,
transactions with affiliates, including exceptions and
baskets to be mutually agreed upon. The Company or a
Annex B-7
<PAGE>
subsidiary thereof shall be permitted to purchase the
Company's German and French affiliates post-closing on terms
to be included in Loan Documents.
EVENTS OF DEFAULT: Customary and appropriate (and subject to customary notice
and cure provisions to be mutually agreed upon) including,
without limitation, failure to make payments when due,
defaults under other agreements or instruments of
indebtedness, noncompliance with covenants, breaches of
representations and warranties, bankruptcy, judgments in
excess of specified amounts, ERISA and pension matters,
impairment of security interests in collateral, invalidity
of guarantees, and "changes of control" (to be defined in a
mutually agreed upon manner).
CONDITIONS PRECEDENT 1. SATISFACTORY DOCUMENTATION. The definitive
TO INITIAL documenta- tion evidencing the Senior Facilities
BORROWINGS: shall be prepared by counsel to the Arrangers and
shall be in form and substance satisfactory to the
Arrangers and the Lenders.
2. ACQUISITION STRUCTURE AND DOCUMENTATION. The
structure utilized to consummate the Acquisition
(including, without limitation, the requisite
level of shareholder consent), the terms thereof,
and the definitive documen- tation relating
thereto (the "DEFINITIVE ACQUISITION DOCU- MENTS
") shall be in form and substance satisfactory to
the Arrangers and the Lenders and the Definitive
Acquisition Documents shall be in full force and
effect on the Closing Date. Without limiting the
generality of the foregoing, concurrently with the
consummation of the Acquisition, the U.K.
Affiliate shall become a subsidiary of the
Borrower.
3. CONSUMMATION OF ACQUISITION. Concurrently with the
initial borrowing under the Senior Facilities, the
Acquisi- tion shall have been consummated pursuant
to the Definitive Acquisition Documents, no
material provision of which shall have been
amended, supplemented, waived or otherwise
modified in any material respect without the prior
written consent of the Arrangers and the Lenders.
4. ISSUANCE OF SUBORDINATED DEBT. Concurrently with
the initial borrowing under the Senior Facilities,
the Company shall have issued the Subordinated
Annex B-8
<PAGE>
Debt on terms and conditions satisfactory to the
Arrangers and Lenders and shall have received
gross proceeds of not less than $150 million with
respect thereto and such proceeds (net of fees and
transaction costs) shall have been applied in full
to pay a portion of the costs of the Acquisition,
to repay certain indebtedness of the Company and
one or more of the Affiliates and to pay
transaction costs.
5. ISSUANCE OF COMMON AND PREFERRED EQUITY. The Com-
pany shall have received net proceeds from the
issuance of equity, in an amount and on terms
acceptable to Arrangers and Lenders, to the
Investors and/or their affiliates or other persons
previously identified to Arrangers and Lenders and
such cash proceeds shall have been applied in full
to pay a portion of the costs of Acquisition, to
repay certain indebtedness of the Compa- ny and
one or more of the Affiliates and to pay transac-
tion costs.
6. DISCHARGE OF EXISTING DEBT. Concurrently with the
consummation of the Acquisition, (subject to
mutually agreed upon exceptions) pre-existing
indebtedness of the Company and its subsidiaries
(including one or more of the Affiliates) shall
have been repaid in full, all commit- ments
relating thereto shall have been terminated, and
all liens or security interests related thereto
shall have been terminated or released, in each
case on terms satisfactory to Arrangers.
7. SOLVENCY. The Lenders shall have received a
certificate of the chief financial officer of the
Borrower and an opinion of an independent
valuation consultant, in each case in form and
substance satisfactory to the Arrangers supporting
the conclusions that, after giving effect to the
Acquisition and the related transactions
contemplated hereby, the Borrower will not be
insolvent or be ren- dered insolvent by the
indebtedness incurred in connec- tion therewith,
or be left with unreasonably small capital with
which to engage in its businesses, or have
incurred debts beyond its ability to pay such
debts as they mature.
8. SECURITY. Administrative Agent, for the benefit of
the Lenders, shall have been granted perfected
first priority security interests in assets to the
extent described above under the heading
Annex B-9
<PAGE>
"Security" in form and substance satisfactory to
the Arrangers.
9. NO MATERIAL ADVERSE CHANGE. Since December 31,
1996 there shall not have been (x) any adverse
change, in or affecting the general affairs,
industry, management, financial position,
shareholders' equity or results of operations or
prospects of the Company and its subsidiaries and
the Affiliates, taken as a whole, or (y) any
information submitted to the Arrangers that proves
to have been inaccurate, incomplete or misleading
in any material respect, and which, in the case of
either clause (x) or (y), either Arranger, in its
reasonable judgment, deems material.
10. NO DISRUPTION OF FINANCIAL AND CAPITAL MARKETS.
There shall not have been any disruption or
adverse change in the financial or capital markets
generally or in the market for loan syndications
in particular, which either Arranger, in its
reasonable judgment, deem material.
11. FINANCIAL STATEMENTS. The Lenders shall have
received and be satisfied with (w) the audited
financial statements for Company and its
subsidiaries and each of the U.K. and German
Affiliates for fiscal years 1994, 1995 and 1996
(x) unaudited financial statements for the Company
and its subsidiaries and for each of the U.K. and
Ger- man Affiliates for the period from December
31, 1996 through the month most recently ended
prior to the Closing Date, (y) management letters
provided to Company and each of the U.K. and
German Affiliates by their respective auditors
during the last three years and (z) a pro forma
balance sheet for Company and its subsidiaries
giving effect to the Acquisition and an income and
cash flow statement for Company and its
subsidiaries for the twelve month period most
recently ended prior to the Closing Date.
12. CONSENTS AND APPROVALS. All necessary governmental
and third party approvals in connection with the
Senior Facilities, the Acquisition and the other
transactions contemplated by the Senior Facilities
shall have been obtained and remain in effect, and
all applicable waiting periods shall have expired
without any action being taken by any applicable
authority.
Annex B-10
<PAGE>
13. LITIGATION, ETC. There shall exist no action,
suit, investi- gation, litigation or proceeding
pending or threatened in any court or before any
arbitrator or governmental instrumentality that
(i) in the judgement of either Arranger would be
reasonably likely to have a material adverse
effect on the business, condition (financial or
otherwise), operations, performance, properties or
prospects of Company and its subsidiaries
(including the Affiliates), taken as a whole, or
(ii) purports to material- ly and adversely affect
the Senior Facilities, the Acquis- ition or any of
the other transactions contemplated by the Senior
Facilities.
14. PAYMENTS OF AMOUNTS DUE. All costs, fees, expenses
(including, without limitation, reasonable legal
fees and expenses) and other compensation required
to be paid on the Closing Date to the
Administrative Agent, Syndication Agent,
Documentation Agent, Arrangers or the Lenders
shall have been paid to the extent due.
15. CAPITAL STRUCTURE: RELATED AGREEMENTS. All
agreements relating to, and the corporate
structure of, the Company and its subsidiaries and
the Affiliates, all organizational documents of
such entities, the employment contracts of key
employees and executives and all material
contracts, licenses, permits, franchises,
insurance policies and other intangible rights
shall be reasonably satisfactory to the Arrangers.
16. CUSTOMARY CLOSING DOCUMENTS. All documents
required to be delivered under the definitive
financing documents, (including customary legal
opinions), corporate records and documents from
public officials and officers' certifi- cates,
shall have been delivered.
CONDITIONS TO ALL
BORROWINGS: The conditions to all borrowings will include
requirements relating to prior written notice of
borrowing, the accuracy, in all material respects,
of representations and warranties, and the absence
of any default or potential event of default, and
will otherwise be customary and appropriate for
financings of this type.
Annex B-11
<PAGE>
ASSIGNMENTS AND
PARTICIPATIONS: The Lenders may assign all or, in an amount of not
less than $5 million any part of their share of
the Senior Facilities to affiliates or one or more
banks, financial institutions or other entities
that are eligible assignees (to be described in
the Loan Documents) which, in the case of
assignments made by Lenders other than GSCP, are
acceptable to the Administrative Agent, such
consent not to be unreasonably withheld, and upon
such assignment, such affiliate, bank, financial
institution or entity shall become a Lender for
all purposes of the loan documentation; provided
that assignments made to affiliates and to those
persons who are Lenders prior to any such
assignment shall not be subject to the $5 million
minimum assignment requirement. The Lenders will
have the right to sell participations, subject
only to customary limitations on voting rights, in
their share of the Senior Facilities.
REQUISITE LENDERS: Lenders holding 51% of total commitments or
exposure under the Senior Facilities, except that
(x) any amendment which would disproportionately
affect the obligation of any obligor to make
payments on Term Loan A, Term Loan B, the Letter
of Credit Facility or outstandings under the
Revolving Capital Facility shall not be effective
without the approval of holders of 51% of such
class of holders and (y) with respect to matters
relating to the interest rates, maturity,
amortization, collateral issues, the definition of
Requisite Lenders etc., Requisite Lenders will be
defined as Lenders holding 100% of total
commitments or exposure, under the Senior
Facilities.
TAXES, RESERVE
REQUIREMENTS AND
INDEMNITIES: Except as provided in the next sentence, all
payments are to be made free and clear of any
taxes (other than franchise taxes and taxes on
overall net income), imposts, assessments,
with-holdings or other deductions whatsoever.
Foreign Lenders shall furnish to the
Administrative Agent appropriate certificates or
other evidence of exemption from U.S. federal tax
withholding, failing which any such Foreign Lender
shall be subject to withholding, as required by
laws for U.S. federal income taxes, without gross
up.
The Borrower will indemnify the Lenders against
all increased costs of capital resulting from
reserve requirements or otherwise imposed, in each
case subject to customary increased costs, capital
adequacy and similar provisions to the extent not
taken into account in the calculation of the Base
Rate or the Euro-dollar Rate.
Annex B-12
<PAGE>
INDEMNITY: In the event that the Syndication Agent, either
Arranger or the Administrative Agent (each an
"AGENT" and collectively, the "AGENTS") or any of
the Lenders becomes involved in any capacity in
any action, proceeding or investigation brought by
or against any person, including stockholders of
the Company or the Borrower, in connection with or
as a result of either this arrangement or any
matter referred to herein, the Borrower
periodically will reimburse such Agent or Lender
for its reasonable legal and other expenses
(including the cost of any investigation and
preparation) incurred in connection therewith;
provided, however, that if an Agent or Lender, as
the case may be, is found in any such action,
proceeding or investigation to have acted with
gross negligence or in bad faith in connection
therewith, such Agent or Lender, as the case may
be, shall repay such portion of such reimbursed
amounts that is attributable to expenses incurred
in relation to the act or omission of such Agent
or Lender, as the case may be, which is the
subject of such finding. Borrower also will
indemnify and hold each Agent or Lender harmless
against any and all losses, claims, damages or
liabilities to any such person in connection with
or as a result of the Senior Facilities or any
matter related thereto, except to the extent that
any such loss, claim, damage or liability results
from the gross negligence or bad faith of such
Agent or Lender in performing the services that
are the subject hereof. If for any reason the
foregoing indemnification is unavailable to such
Agent or Lender or insufficient to hold it
harmless, then the Borrower shall contribute to
the amount paid or payable by such Agent or Lender
as a result of such loss, claim, damage or
liability in such proportion as is appropriate to
reflect the relative economic interests of the
Borrower, and its stockholders on the one hand and
such Agent or Lender on the other hand in the
matters contemplated hereby as well as the
relative fault of the Borrower and such Agent or
Lender with respect to such loss, claim, damage or
liability and any other relevant equitable
considerations. The reimbursement, indemnity and
contribution obligations of the Borrower shall be
in addition to any liability which the Borrower
may otherwise have, shall extend upon the same
terms and conditions to any affiliate of such
Agent or Lender and the partners, directors,
agents, employees and controlling persons (if
any), as the case may be, of such Agent or Lender
and any such affiliate, and
Annex B-13
<PAGE>
shall be binding upon and inure to the benefit of
any successors, assigns, heirs and personal
representatives of the Borrower and such Agent or
Lender, any such affiliate and any such person.
Except as specifically referred to above, no Agent
or Lender or any of such affiliates, partners,
directors, agents, employees or controlling
persons shall have any liability to the Borrower,
any person asserting claims on behalf of or in
right of the Borrower or any other person in
connection with or as a result of either this
arrangement or any matter referred to herein
except to the extent that any losses, claims,
damages, liabilities or expenses incurred by the
Borrower result from the gross negligence or bad
faith of such Agent or such Lender in performing
the services that are the subject hereof. Any
right to trial by jury with respect to any action
or proceeding arising in connection with or as a
result of either this arrangement or any matter
referred to herein will be waived by the parties.
The provisions of this paragraph shall survive any
termination or completion of this arrangement, and
this paragraph shall be governed by and construed
in accordance with the laws of the State of New
York without regard to principles of conflicts of
laws.
GOVERNING LAW AND
JURISDICTION: The Borrower and the Guarantors will submit to the
non-exclusive jurisdiction and venue of the
federal and state courts of the State of New York
and shall waive any right to trial by jury. New
York law shall govern the Loan Documents.
The foregoing is intended to summarize certain basic terms of the Senior
Facilities. It is not intended to be a definitive list of all of the
requirements of GSCP or UBS in connection with the Senior Facilities.
Annex B-14
Union Bank of Switzerland
New York Branch
299 Park Avenue
New York, New York 10171
August 6, 1997
UBS Partners LLC
299 Park Avenue
New York, New York 10171
Fenway Partners Inc.
152 West 57th Street
New York, New York 10019
RE: BRIDGE LOAN COMMITMENT
----------------------
Gentlemen:
You have advised Union Bank of Switzerland, New York Branch ("UBS" or
the Bridge Lender") that UBS Partners LLC ("UBS Partners") and Fenway Partners,
Inc. ("Fenway") and certain members of management of Xpedite Systems, Inc. (the
"Company" or the "Borrower") and other persons identified by UBS Partners to UBS
(together with UBS Partners and Fenway, the "Investor Group") propose to acquire
the Company through a merger with a newly formed entity owned and controlled by
UBS Partners and Fenway, and to cause the Company, simultaneously with the
consummation of such merger, to acquire all of the issued and outstanding
capital stock of Xpedite Systems, Limited (together with Xpedite Systems, GmbH
and Xpedite Systems, S.A., the "Foreign Affiliates") (such merger and
acquisitions, the "Acquisition"). As part of the financing of the Acquisition,
the repayment of certain indebtedness of the Company and one or more of the
Foreign Affiliates and the payment of fees and expenses incurred in connection
with the transactions contemplated hereby ("Acquisition Purposes"), the Investor
Group will provide to the Company equity financing (the "Equity Financing") and
the Company will arrange up to $129,500,000 in a senior secured credit facility
(the "Credit Facility"), which will be provided to the Company and a U.K.
subsidary thereof. For the purposes of this letter, the terms "you" and "your"
mean and refer to UBS Partners and Fenway, severally in accordance with their
respective equity commitments in the acquisition vehicle. The above listed
actions together are herein referred to as the "Transactions." We further
understand that the precise structure of the Transactions will be under
continuing consideration, may vary from the foregoing and will be subject to our
mutual agreement. Concurrently with the execution and delivery of this letter,
UBS Partners and Fenway are executing and delivering a fee letter (the "Fee
Letter") and an engagement letter (the "Engagement Letter"), each dated the date
hereof.
You have requested that the Bridge Lender commit to lend the Borrower
funds in U.S. dollars in the principal amount of $150 million for the purpose of
financing in part the Transactions (the "Loan").
On the date of the funding of the Loan (the "Funding"), the Borrower
will place into escrow warrants exercisable for nominal consideration (the
"Warrants") representing 3% of the common stock of the Borrower on a fully
diluted basis. In the event that the Loan is not repaid at maturity but is
exchanged for securities as described in Exhibit B (the "Rollover Notes"), the
Bridge Lender will be entitled to one-third of the Warrants (subject to
reduction due to the proration referred to below). If the Rollover Notes are
outstanding six months after their issuance, the Bridge Lender shall be entitled
to an additional one-third of the Warrants (subject to reduction due to the
proration referred to below) and if the Rollover Notes remain outstanding one
year after their issuance, the Bridge Lender shall be entitled to the remaining
one-third of the Warrants (subject to reduction due to proration referred to
below).
On the date of Funding or as soon as practicable thereafter, the
Borrower will issue senior subordinated notes (the "Debt Securities"), which
will be sold in a public offering or private placement as herein provided, to
finance in part the Acquisition (the "Debt Offering"), or if the Loan has been
made, to refinance the Loan (the "Bridge Refinancing").
Accordingly, subject to the terms and conditions set forth below and in
Exhibits A-D hereto, which exhibits are incorporated by reference herein
(collectively such exhibits are referred to as the "Term Sheet"), the Bridge
Lender hereby agrees with you as follows:
1. COMMITMENT. UBS hereby commits to you to provide, or to
cause one or more of its affiliates to provide, subject to the conditions
outlined in this letter (the "Commitment Letter"), in the Fee Letter, the
Engagement Letter and the Term Sheet, $150 million in aggregate principal amount
of the Loan (the "Commitment") in immediately available funds at the Funding.
The Funding will occur simultaneously with the consummation of the other
Transactions. The proceeds of the Loan will be used solely for Acquisition
Purposes.
2. BRIDGE LOAN AGREEMENT. At or prior to the Funding, the
Borrower shall enter into a short-term loan agreement (the "Bridge Loan
Agreement") with the Bridge Lender, substantially in the form of UBS's customary
loan agreement entered into in connection with short term financings. The Bridge
Loan Agreement shall be in form and substance satisfactory to the Bridge Lender
and the Borrower and will reflect, without limitation, the provisions in
Exhibits C and D hereto.
3. CONDITIONS. The obligation of the Bridge Lender to provide
the Loan pursuant to Section 1 shall be subject to the satisfaction at or prior
to the Funding of such conditions as are customarily found in the form of the
Bridge Lender's customary loan agreements entered into in connection with short
term financings, the conditions set
2
<PAGE>
forth elsewhere herein and other conditions appropriate in the reasonable
judgment of the Bridge Lender for this transaction, including, without
limitation, the conditions contained in Exhibit D hereto.
4. INFORMATION AND INVESTIGATIONS. You hereby represent and
covenant that to the best of your knowledge (a) all information and data
(excluding financial projections) concerning the Borrower and its subsidiaries,
the Transactions and the other transactions contemplated hereby (the
"Information") that have been prepared or will be prepared by or on behalf of
you or any of your affiliates or authorized representatives or advisors and that
have been or will be made available to the Bridge Lender or its representatives
or advisors by you or on your behalf in connection with the transactions
contemplated hereby, including information provided in connection with the
syndication of the Loan, taken as a whole, is and will be correct in all
material respects and does not and will not, taken as a whole, contain any
untrue statement of a material fact or omit to state any material fact necessary
in order to make the statements contained therein, taken as a whole, not
misleading in light of the circumstances under which such statements are made
and (b) all financial projections concerning the Borrower and its subsidiaries,
as they relate to the transactions contemplated hereby (the "Projections") that
have been prepared by or on behalf of you or any of your affiliates or
authorized representatives and that have been or will be made available to the
Bridge Lender or its representatives or advisors by you or on behalf of you or
any of your affiliates or authorized representatives or advisors in connection
with the transactions contemplated hereby have been and will be prepared in good
faith based upon assumptions believed by you to be reasonable. It is understood
that such representation concerning the Projections is not intended to indicate
what the actual results of the Borrower and its subsidiaries will be or that any
results contained therein will be achieved. You agree to supplement the
Information and the Projections solely based on written information received by
you, and excluding changes in general market and economic conditions from time
to time until the consummation of the Transactions and, if requested by the
Bridge Lender, for a reasonable period thereafter necessary to complete the
syndication of the Loan, so that the representation and covenant in the
preceding sentence remains correct. In arranging the Loan, including the
syndication thereof, the Bridge Lender will be using and relying primarily on
the Information and the Projections without independent check or verification
thereof.
For all purposes of this Commitment Letter and the Term Sheet,
the "subsidiaries" of the Company shall also be deemed to include those entities
that will become subsidiaries of the Company at the time of closing of the
Transactions.
5. INDEMNIFICATION AND CONTRIBUTION. You agree to indemnify
the Bridge Lender and certain other persons referred to in Exhibit E hereto in
accordance with the terms and provisions set forth in such Exhibit E, which
terms and provisions are incorporated herein and made a part hereof. Upon the
execution and delivery by the Borrower of the Bridge Loan Agreement, all your
obligations under this letter and (with respect to the Bridge Lender only) the
Fee Letter shall terminate.
3
<PAGE>
6. THE BRIDGE LENDER'S FEES. In consideration of the Bridge
Lender's commitment hereunder, you agree to pay or cause to be paid to the
Bridge Lender the fees described in the Fee Letter, the terms and provisions of
which are, without duplication, incorporated herein and made a part hereof.
7. TERMINATION; EFFECTIVENESS. If (i) you have not accepted
this letter agreement by 5:00 p.m. (New York City time) on or prior to the fifth
business day after the date hereof; (ii) the Funding does not occur on or prior
to December 31, 1997; (iii) any circumstance described in conditions (f) and (g)
in Exhibit D shall have occurred; (iv) the Borrower accepts an acquisition or
recapitalization proposal other than that of the Investor Group or upon the
termination of an executed acquisition agreement between the Borrower and the
Investor Group; or (v) the Borrower issues $150 million of senior subordinated
notes in a public offering or private placement to fund the Acquisition, this
letter and the Bridge Lender's Commitment hereunder shall terminate (upon
written notice by the Bridge Lender with respect to its Commitment if an event
described in clause (iii) of this sentence shall occur) unless the Bridge Lender
shall, in its sole discretion, agree to an extension. Notwithstanding the
foregoing, the compensation, reimbursement, indemnification and confidentiality
provisions hereof and the Fee Letter and Sections 14, 15, 17 and 18 of this
Commitment Letter shall survive any termination of this Commitment Letter or the
Bridge Lender's Commitment hereunder.
8. FEES AND EXPENSES. By executing this Commitment Letter, you
agree to reimburse the Bridge Lender and its affiliates upon request made from
time to time, for their reasonable out-of-pocket expenses (including, without
limitation, reasonable expenses of the Bridge Lender's due diligence
investigation, reasonable consultants' fees (if such consultants are engaged by
the Bridge Lender with your consent (which consent shall not be unreasonably
withheld or delayed)), reasonable syndication expenses, appraisal and valuation
fees and expenses, reasonable travel expenses and the reasonable fees,
disbursements and other charges of counsel) incurred in connection with the
Bridge Loan Agreement and related documentation and the negotiation,
preparation, execution and delivery, waiver or modification, administration,
collection and enforcement of this Commitment Letter, the Term Sheet, the Fee
Letter, the Engagement Letter, and the Debt Offering, the Bridge Refinancing or
any other refinancing of the Loan; provided, however, that, subject to Section
5, you shall not be obligated under this Section 8 for any expenses incurred
after you have given the Bridge Lender written notice of the termination of this
Commitment Letter (which you shall be entitled to give at any time).
9. PUBLIC ANNOUNCEMENTS. You acknowledge that the Bridge
Lender may, if the Loan has been made, at its option and expense, place an
announcement in such newspapers and periodicals as it may choose, stating that
the Bridge Lender has acted in the capacity set forth in this agreement.
10. AGREEMENT TO COOPERATE. You agree (consistent with your
obligations under applicable law) to (i) undertake to cooperate with the Bridge
Lender
4
<PAGE>
and provide the Bridge Lender with information possessed by you (including
projections) reasonably required by it in connection with the Debt Offering, as
the case may be, or other means of refinancing the Loan, (ii) cooperate with the
Bridge Lender in its effort to complete a successful syndication of the Loan if
requested to do so by the Bridge Lender, and provide the Bridge Lender in a
timely manner with information possessed by you reasonably required by it in
connection therewith, (iii) assist the Bridge Lender in connection with the
marketing of the Debt Securities pursuant to the Debt Offering (including making
available senior management of the Borrower (as determined by the Bridge Lender)
for investor meetings) and (iv) cooperate with the Bridge Lender in the
Company's preparation of any registration statement or private placement
memorandum relating to the Debt Offering and (v) cooperate with the Bridge
Lender in the Bridge Lender's efforts in achieving a timely syndication,
including (a) providing, and causing your affiliates and advisors to provide, to
the Bridge Lender all information possessed by you reasonably deemed necessary
by the Bridge Lender to complete successfully the syndication, including but not
limited to, information and projections (including, without limitation, any
updated projections requested by the Bridge Lender) prepared by you or on your
behalf relating to the transactions contemplated hereby, and (b) assisting, and
causing your affiliates and advisors to assist, the Bridge Lender in the
preparation of a confidential information memorandum and other marketing
materials to be used in connection with the syndication, including making
available representatives of the Borrower and its subsidiaries. The syndication
efforts will be accomplished by a variety of means, including direct contact
during the syndication between senior management (including, but not limited to,
the chief executive officer, chief financial officer and treasurer of the
Borrower) and advisors and affiliates of the Borrower on the one hand and the
proposed syndicate Lenders on the other hand.
11. SYNDICATION, ETC. The Bridge Lender reserves the right
prior to or after the execution of the Bridge Loan Agreement, and in
consultation with you in each instance, to syndicate (through a private
placement) all or a portion of its commitment and the Loan to one or more
financial institutions (the Bridge Lender and such financial institutions being
referred to herein as the "Lenders") that will become parties to the Bridge Loan
Agreement, and in that connection, promptly following your acceptance of the
Bridge Lender's commitment hereunder, the Bridge Lender may commence the
syndication of the Loan to such Lenders. You agree that you will provide no
compensation to any Lender outside the terms contained herein and in the Fee
Letter in order to obtain its commitment to participate in the Loan. It is
understood and agreed that, except as otherwise provided in the Fee Letter, the
amount and distribution of the fees and other compensation referred to herein
among the Lenders will be at the Bridge Lender's sole discretion. It is
understood and agreed that the Bridge Lender will manage all aspects of the
syndication, including, without limitation, decisions as to the selection of
potential Lenders to be approached and when they will be approached, when their
commitments will be accepted, which Lenders will participate, any naming rights
(including the naming of co-agents, subject to your reasonable approval) and the
final allocations of the commitments among the Lenders.
5
<PAGE>
You agree that the Bridge Lender will act as the sole agent
bank for the Loan and that the Bridge Lender will act as sole syndication agent
and that no additional agents, co-agents or arrangers will be appointed, or
other titles conferred, without the consent of the Bridge Lender.
Your assistance in connection with the syndication will also
include, if the Bridge Lender requests, your assisting the Bridge Lender in
requesting for the Borrower (at your sole expense) credit ratings of one or more
nationally recognized rating agencies.
To ensure an orderly and effective syndication of the Loan,
you agree that until the termination of the syndication (as determined by the
Bridge Lender), you will not, and will not permit any of your affiliates to,
syndicate or issue, attempt to syndicate or issue, announce or authorize the
announcement of the syndication or issuance of, or engage in discussions
concerning the syndication or issuance of, any debt facility or debt security of
the Borrower or any of its subsidiaries, including any renewals thereof (other
than the Debt Offering, the Bridge Refinancing, the notes to be issued upon
rollover of the Loan (the "Rollover Notes"), the Credit Facility, refinancing of
the foregoing and other debt permitted by the Bridge Loan Agreement) without the
prior written consent of the Bridge Lender. Notwithstanding the foregoing, the
Bridge Lender's Commitment hereunder is not subject to the syndication of any
portion of the Loan and the Loan will only be syndicated in the Bridge Lender's
sole discretion.
12. CONFIDENTIALITY. You agree that this letter (including
exhibits), the Fee Letter, the Engagement Letter, the contents of any of the
foregoing or the Bridge Lender's activities pursuant hereto or thereto are
confidential and shall not be disclosed by you to any person, without the prior
written consent of the Bridge Lender other than the Company and its and your
officers, directors, employees, accountants, attorneys and other advisors, and
then only in connection with the Transactions and on a confidential and
need-to-know basis, except that, following your acceptance hereof, you may make
such public disclosures of the terms and conditions hereof as you are required
by applicable law or compulsory legal process to make; PROVIDED, HOWEVER, that
if such disclosure is required by compulsory legal process you agree to give the
Bridge Lender reasonable notice to afford the Bridge Lender the opportunity to
seek a protective order. You agree that you will permit the Bridge Lender to
review and approve any reference to the Bridge Lender in connection with the
Loan or the transactions contemplated hereby contained in any press release
prior to public release.
13. TERMS AND CONDITIONS. This letter is not intended to be,
nor shall it be construed as, an attempt to define or set forth all of the terms
and conditions of the Bridge Loan Agreement. Rather, it is intended only as an
outline of certain principal terms of the basic business understanding around
which legal documentation will be structured. Those matters that are not covered
or made clear herein or in the Fee Letter (none of which will be materially
inconsistent with terms set forth in this letter, the Term Sheets, the Fee
Letter or the Engagement Letter) are subject to the mutual agreement of the
parties.
6
<PAGE>
14. GOVERNING LAW. THIS LETTER SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
15. ASSIGNMENT. This letter and the Bridge Lender's commitment
hereunder shall not be assignable by either party hereto without the prior
written consent of the other party hereto, and any such attempted assignment
shall be void and of no effect; PROVIDED, HOWEVER, that nothing contained in
this Section shall prohibit the Bridge Lender (in its sole discretion) from (i)
performing any of its duties hereunder through any of its affiliates, and you
will owe any related duties hereunder to any such affiliate or (ii) from
granting participations in, or selling assignments (in each case consistent with
federal and state securities laws) of all or a portion of, the Commitment or the
Loan pursuant to arrangements satisfactory to the Bridge Lender; provided that
the Bridge Lender shall consult in each instance with the Borrower in the case
of any such assignments. Except as provided by Section 5 and Exhibit E hereof or
the prior sentence, this letter is intended to be solely for the benefit of the
parties hereto and is not intended to confer any benefits upon, or create any
rights in favor of, any person other than the parties hereto. In addition to the
last sentence of Section 5, the Bridge Lender agrees that UBS Capital and Fenway
may at any time assign any and all of their rights and delegate their
obligations hereunder and (with respect to the Bridge Lender only) under the Fee
Letter to the Borrower (including without limitation rights and obligations with
respect to indemnification and the payment of fees and expenses), provided that
the Bridge Lender shall have received the Borrower's written acceptance and
assumption thereof in a form reasonably acceptable to the Bridge Lender and
thereafter UBS Capital and Fenway will automatically and with no further action
on either of their parts or on the part of the Bridge Lender be fully released
from any liability hereunder and (with respect to the Bridge Lender only) under
the Fee Letter.
16. EXECUTION IN COUNTERPARTS. This letter may be executed in
any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same agreement.
Delivery of an executed counterpart of this letter by telecopier shall be
effective as delivery of a manually executed counterpart of this letter.
17. AMENDMENTS, ETC. No amendment or waiver of any provision
of this letter, nor any consent or approval to any departure therefrom, shall in
any event be effective unless the same shall be in writing and signed by the
parties hereto and then any such waiver, consent or approval shall be effective
only in the specific instance and for the specific purpose for which given.
18. WAIVER OF JURY TRIAL. Each of you and the Bridge Lender
(in each case on its own behalf and, to the extent permitted by applicable law,
on behalf of its shareholders) waives all right to trial by jury in any action,
proceeding or counterclaim
7
<PAGE>
(whether based upon contract, tort or otherwise) related to or arising out of
the Transactions, the transactions contemplated by the Debt Offering or the
other transactions contemplated by this letter, or the performance by the Bridge
Lender of the services contemplated by this letter.
19. This Bridge Loan Commitment Letter supersedes the Bridge
Loan Commitment Letter, dated July 3, 1997, entered into among the parties
hereto.
8
<PAGE>
Please confirm that the foregoing correctly sets forth our
agreement of the terms hereof and the Fee Letter by signing and returning to the
Bridge Lender the duplicate copy of this letter and Fee Letter enclosed
herewith. Upon your acceptance hereof, this letter shall constitute a binding
agreement between you and the Bridge Lender.
Very truly yours,
UNION BANK OF SWITZERLAND
NEW YORK BRANCH
By: UBS SECURITIES LLC, its agent
By: /s/ Nicholas Daifotis
-------------------------------------
Name: Nicholas Daifotis
Title: Managing Director
By: /s/ Philip M. Benedict
-------------------------------------
Name: Philip M. Benedict
Title: Director
Accepted and agreed to as of
August ___ 1997
FENWAY PARTNERS, INC.
By: /s/ Russell W. Steenberg
-----------------------------
Name: Russell W. Steenberg
Title: Managing Director
UBS PARTNERS LLC
By: /s/ Michael Greene
-----------------------------
Name: Michael Greene
Title: Managing Director
By: /s/ James A. Breckenridge
-----------------------------
Name: James A. Breckenridge
Title: Vice President
9
<PAGE>
EXHIBIT A
PRELIMINARY TERM SHEET
SENIOR SUBORDINATED INCREASING RATE NOTES
CAPITALIZED TERMS USED BUT NOT DEFINED HEREIN HAVE THE MEANING
GIVEN TO SUCH TERM IN THE COMMITMENT LETTER TO WHICH THIS EXHIBIT A IS ATTACHED
AND OF WHICH IT FORMS A PART.
ISSUER: Xpedite Systems, Inc. (the "Company" or
the "Borrower").
ISSUE: Unsecured Senior Subordinated Increasing
Rate Notes (together with pay-in-kind
notes described below, the "Bridge
Notes").
PRINCIPAL AMOUNT: $150,000,000
PURCHASER OF ISSUE: An affiliate of Union Bank of Switzerland
("UBS" or the "Initial Purchaser").
USE OF PROCEEDS: To finance a portion of the Acquisition,
to repay certain indebtedness of the
Company and one or more of the Foreign
Affiliates and to pay related transaction
expenses.
MATURITY: One year from date of issue (the "Maturity
Date").
ROLLOVER NOTES: On the Maturity Date, the Bridge Notes
shall be exchanged for an equal principal
amount of senior subordinated rollover
notes (the "Rollover Notes") with the
terms described in Exhibit B.
GUARANTEES: The Company's direct and indirect
subsidiaries which are guarantors of the
obligation of the Company under the Credit
Facility will issue senior subordinated
unsecured guarantees in favor of the
lenders.
INDICATIVE INTEREST RATE AND Interest will be paid quarterly in
PAYMENT DATES: to the 3 month LIBOR rate plus a spread
(the "Spread"). The Spread will initially
be 500 basis points. If the Bridge Notes
are not retired in whole by the end of the
first six-month period following the date
of issuance (the "Issuance Date"), the
Spread will increase 200 basis points and
shall continue to increase by an
additional 25 basis points at the end of
each subsequent three-month period for so
long as the Bridge Notes are
<PAGE>
outstanding. Notwithstanding anything to
the contrary set forth above, (i) in no
case shall the interest rate on the Bridge
Notes exceed 17.0% per annum, and (ii) the
portion, if any, of interest payments
representing a per annum interest rate in
excess of 13.5% shall be paid, at the
Company's option, by issuing additional
Bridge Notes with a principal amount equal
to such excess portion of interest.
Notwithstanding the foregoing (and subject
to clause (ii) of the prior paragraph),
after the occurrence and during the
continuance of an Event of Default
resulting from a failure to make a
required payment in respect of the Bridge
Notes, interest will accrue on the Bridge
Notes at the then applicable rate plus 100
basis points. The Initial Purchaser shall
have the right to sell the Bridge Notes to
a third party (after consultation with the
Borrower) at any time, either in whole or
in part in a private placement.
VOLUNTARY PREPAYMENTS: Borrowings under the Bridge Notes may be
prepaid at any time at par, plus accrued
and unpaid interest.
MANDATORY REPAYMENTS: Subject to any required payment under
Credit Facility, the Bridge Notes will be
required to be repaid at par plus accrued
and unpaid interest with the proceeds of
any public offering or private placement
of debt or equity securities of the
Company, any parent holding company or any
of the Company's subsidiaries, other than,
when no default exists under the Bridge
Loan Agreement, additional equity (up to
an amount, if any, provided as an
exception under the Credit Facility to the
mandatory repayment provisions thereof)
contributed by the original equity holders
and debt issuance under the Credit
Facility, any refinancing thereof and any
debt issuances permitted by the Bridge
Loan Agreement.
In addition, the Bridge Notes will be
required to be repaid with the net cash
after-tax proceeds from Asset Sales in
excess of $20,000,000 not applied to
reduce amounts outstanding under the
Credit Facility. Asset Sales will be
governed by a fair market value standard.
CERTAIN COVENANTS:
The Bridge Notes will contain certain
financial and operating covenants
including, but not limited to, the
2
<PAGE>
following.
LIMITATION ON ADDITIONAL DEBT
The Company will be prohibited from
incurring additional debt.
EXCEPTIONS:
a) The Credit Facility.
b) The Rollover Notes, the Debt
Securities and other debt
incurred to repay the Bridge
Notes, in whole or in part,
provided that any debt incurred
to repay the Bridge Notes in
part must have terms
satisfactory to a majority in
interest of the Lenders.
c) $___ million basket in an amount
to be mutually agreed upon.
d) Other debt to be agreed upon.
ANTILAYERING
Strict antilayering provisions will be
required.
LIMITATIONS ON RESTRICTED PAYMENTS
LIMITATIONS ON LIENS
LIMITATIONS ON ASSET SALES
LIMITATIONS ON TRANSACTIONS WITH
AFFILIATES; provided that the Company will
be permitted to purchase the Company's
German and French Foreign Affiliates.
LIMITATIONS ON MERGERS OR CONSOLIDATIONS
LIMITATIONS ON ISSUANCE OF CAPITAL STOCK
OF SUBSIDIARIES
LIMITATIONS ON PAYMENT RESTRICTIONS
AFFECTING SUBSIDIARIES
SUBORDINATION: Customary for unsecured senior
subordinated bridge financings.
RANKING:
The Bridge Notes will be unsecured senior
subordinated obligations of the Company,
rank PARI PASSU with other senior
subordinated indebtedness of the Company
and will be subordinated to the Credit
Facility on terms acceptable to the Bridge
Lender and the lenders under the Credit
3
<PAGE>
Facility.
CHANGE OF CONTROL: The Company will be required to repay the
Bridge Notes at 100% upon a Change of
Control (to be defined).
EVENTS OF DEFAULT:
Customary Events of Default for a
subordinated bridge loan with notice and
grace periods to be mutually agreed upon.
The vote of the holders of at least 51% in
principal amount of the Bridge Notes will
be required to accelerate the Bridge Notes
upon an Event of Default and the vote of
the holders of at least 51% in principal
amount of the Bridge Notes will be
required to rescind any such acceleration.
AMENDMENTS; VOTING RIGHTS:
The Bridge Loan Agreement and the Bridge
Notes may be amended, supplemented or
waived by the Company with the consent of
the holders of at least a majority in
principal amount of the Bridge Notes;
provided that without the consent of each
holder affected, an amendment, supplement
or waiver may not
(a) postpone or delay any date fixed for
any payment of principal, interest,
fees or other amounts due to the
Lenders except as otherwise provided
in the Bridge Loan Agreement;
(b) reduce the principal of, or the rate
of interest on, any Bridge Notes;
(c) change the aggregate percentage of
the outstanding principal amount of
Bridge Notes which is required for
the holders or any of them to take
any action;
(d) release any subsidiary guarantee;
(e) adversely affect the ranking of the
Bridge Notes;
(f) alter in any manner adverse to the
Lenders, the Company's obligation to
mandatorily prepay the Bridge Notes;
(g) increase restrictions on the right to
exchange Bridge Notes for Rollover
Notes or any amendment to the rate of
such exchange; or
(h) impair the right of the holder of the
Bridge Notes to
4
<PAGE>
institute suit for the enforcement of
any payment on, or right with
respect, to the Bridge Notes or waive
any payment default thereon.
COST AND YIELD PROTECTION: Customary for facilities and
transactions of this type, including
standard protective provisions for
such matters as increased costs,
funding losses, breakage costs,
capital adequacy, illegality, taxes,
changes in capital requirements,
guidelines or policies or their
interpretation or application.
BRIDGE LENDERS'COUNSEL: Fried, Frank, Harris, Shriver &
Jacobson.
5
<PAGE>
EXHIBIT B
PRELIMINARY TERM SHEET
SENIOR SUBORDINATED ROLLOVER NOTES
CAPITALIZED TERMS USED BUT NOT DEFINED HEREIN HAVE THE MEANING
GIVEN TO SUCH TERM IN THE COMMITMENT LETTER TO WHICH THIS EXHIBIT B IS ATTACHED
AND OF WHICH IT FORMS A PART.
ISSUER: Same as Bridge Notes.
ISSUE: Unsecured Senior Subordinated Rollover Notes
(together with any pay-in-kind notes the
"Rollover Notes").
PRINCIPAL AMOUNT: Principal amount issued will be 100% of the
then outstanding principal amount of the
Bridge Notes outstanding at maturity thereof.
FORM: The Rollover Notes will be issued under an
indenture (the "Indenture") which complies
with the Trust Indenture Act of 1939, as
amended. The Company will appoint a trustee
reasonably acceptable to the holders of the
Bridge Notes to act as trustee under the
Indenture. The Rollover Notes and the
Indenture will be fully executed and
deposited into escrow at the closing of the
Bridge Loans. None of the Rollover Notes
shall be deemed to have been issued, for any
purpose, except to the extent released from
such escrow in exchange for a like amount of
Bridge Notes.
MATURITY: 9 years.
GUARANTEES: Same as Bridge Notes.
INTEREST RATE: Interest will be paid semiannually in cash at
either (a) a fixed rate equal to the higher
of: (i) the rate which the Bridge Notes bore
at their maturity plus 50 basis points, and
(ii) the rate applicable to the most recent
(prior to the maturity of the Bridge Notes)
auction of U.S. Treasuries having a maturity
closest to the Rollover Notes plus 700 basis
points or (b) a floating rate equal to 3
month LIBOR plus the spread borne by the
Bridge Notes at their maturity plus 50 basis
points. Each holder of the Bridge Notes
exchanged for the Rollover Notes shall have
the right to select either the fixed rate
option or the floating rate option at the
time of exchange . Notwithstanding anything
to the contrary set forth above, (i) in no
case shall the interest on
<PAGE>
the Rollover Notes exceed 17.0% per annum,
and (ii) the portion, if any, of interest
payments representing a per annum interest
rate in excess of 13.5% shall be paid, at the
Company's option, by issuing additional
Rollover Notes with a principal amount equal
to such excess portion of interest.
TRANSFERS BY INITIAL PURCHASER:
The Initial Purchaser shall have, in
consultation with you in each instance, the
right to sell the Rollover Notes to a third
party at any time, either in whole or in
part. Prior to selling the Rollover Notes to
a third party, the Initial Purchaser shall
give the Company a ten (10) business day
window during which they may call the portion
due to be sold at par plus accrued and unpaid
interest.
FUNDING FEE: 300 basis points, payable upon issuance of
the Rollover Notes.
EQUITY AMOUNT: On the date of the issuance of the Bridge
Notes, warrants (the "Warrants") to acquire
the Company's common stock for a nominal
value representing 3% (as of the issuance
date) of the fully diluted common stock of
the Company will be placed in an escrow
account. The Warrants will expire on the date
of final maturity of the Rollover Notes. The
Warrants will have mutually satisfactory
provisions relating to anti-dilution.
In the event that the Bridge Notes are
exchanged for the Rollover Notes, the Initial
Purchaser shall be entitled to 1/3 of the
Warrants. In addition, the Initial Purchaser
shall be entitled to 1/3 of the Warrants
after the Rollover Notes have been
outstanding for 6 months and 1/3 of the
Warrants after the Rollover Notes have been
outstanding for 1 year. Notwithstanding the
foregoing, each such 1/3 tranche of Warrants
to which the Initial Purchaser shall be
entitled shall be reduced to an amount equal
to the product obtained by multiplying (i)
the number of Warrants equal to 1/3 of the
Warrants by (ii) a fraction, the numerator of
which is the aggregate principal amount of
the Bridge Notes outstanding immediately
prior to the exchange for Rollover Notes, and
the denominator of which is the original
aggregate principal amount of the Bridge
Notes issued on the Funding.
CERTAIN COVENANTS: The Rollover Notes will contain certain
financial and operating covenants including,
but not limited to, the
2
<PAGE>
following (the final terms of which will be
determined based on market requirements):
LIMITATION ON ADDITIONAL DEBT
-----------------------------
The Company and its Subsidiaries shall not
incur any Debt except:
(a) the Rollover Notes and Debt Securities;
(b) the Credit Facility not to exceed $__
million (in an amount to be mutually
agreed upon) (includes amounts
necessary to fund the purchase of the
Foreign Affiliates);
(c) refinancing of (a) or (b) above;
(d) if the ratio of pro forma
EBITDA/Interest is greater than 2.0x;
(e) $_____ million basket (in an amount to
be mutually agreed upon); and
(f) other debt to be agreed upon.
LIMITATION ON RESTRICTED PAYMENTS
---------------------------------
Except for exceptions to be mutually agreed
upon, the Company shall not pay cash
dividends, repurchase any shares of stock,
make investments in any other person or
prepay subordinated debt ("Restricted
Payments") unless:
(a) no default exists or would be
continuing;
(b) the Company could incur $1.00 of Debt;
and
(c) the sum of all Restricted Payments made
would not exceed the sum of 50% of the
Consolidated Net Income (to be defined)
of the Company (or, if Consolidated Net
Income shall be a deficit, minus 100%
of such deficit) for the period plus
the proceeds from the issuance of
capital stock by the Company (other
than to subsidiaries).
LIMITATION ON LIENS
-------------------
Other than Permitted Liens (to be defined)
the Company will not allow liens, for the
benefit of subordinated or pari passu
creditors, on any of its tangible or
intangible assets, including the capital
stock of its subsidiaries without equally and
ratably securing the Rollover Notes.
RESTRICTIONS ON ASSET SALES
---------------------------
The Company and its subsidiaries shall not
sell any material assets, except material
assets acquired after the Closing, unless:
(a) the Company receives fair market
value;
(b) __% (in an amount to be mutually agreed
upon) of the proceeds are received in
cash;
(c) the net cash after-tax proceeds are
reinvested in the business or otherwise
used in accordance with the Credit
Facility or are used to make an offer
to prepay, repay, redeem or purchase
Senior Indebtedness (as defined) and
following payment in full of all
"Senior Indebtedness" required to be
prepaid, purchased, repaid or redeemed
with such net cash after-tax proceeds,
then to make an offer to purchase the
Rollover Notes.
ANTILAYERING
------------
Strict antilayering provisions will be
required.
LIMITATIONS ON TRANSACTIONS WITH AFFILIATES
--------------------------------------------
Subject to exceptions to be mutually agreed
upon, the Company and its subsidiaries shall
not enter into any transactions with any
affiliate except on a basis no less favorable
to the Company or its subsidiaries than could
be obtained from an unaffiliated third party;
provided that the Company will be permitted
to purchase the Company's German and French
Foreign Affiliates.
LIMITATIONS ON MERGERS OR CONSOLIDATIONS
----------------------------------------
The Company shall not merge or consolidate
with any entity (other than with any of its
wholly-owned subsidiaries in a transaction in
which the Company is the surviving
corporation) unless:
<PAGE>
(a) the survivor assumes the Rollover
Notes;
(b) no default or event of default would
exist;
(c) the survivor could incur $1 of Debt;
and
(d) the survivor's net worth would not be
lower than the Company's prior to the
transaction.
LIMITATIONS ON PAYMENT RESTRICTIONS AFFECTING
---------------------------------------------
SUBSIDIARIES
------------
Except pursuant to the Credit Facility or any
refinancing thereof, the Company's
subsidiaries shall not enter into any
agreement restricting the payment of
dividends to or the making of loans or
advances to or the repayment of Debt to the
Company or any of its subsidiaries.
LIMITATION ON ISSUANCE OF CAPITAL STOCK BY
------------------------------------------
SUBSIDIARIES
------------
RANKING: Same as Bridge Notes.
CHANGE OF CONTROL: Upon a Change of Control (to be defined), the
Noteholders shall have the right to put the
Rollover Notes to the Company at par plus
accrued and unpaid interest.
OPTIONAL REDEMPTION: The Rollover Notes shall be non-call for 4
years and then callable at a premium in year
5 and at declining premiums thereafter, with
2 years of par call. Equity/strategic
investor clawback for 1/3 of the Rollover
Notes for the first 3 years at a premium to
be determined. Notwithstanding anything to
the contrary set forth above, any Rollover
Notes held by the Initial Purchaser shall be
callable by the Company at par plus accrued
and unpaid interest.
MANDATORY REDEMPTION: None.
EVENTS OF DEFAULT: Customary for senior subordinated rollover
loans. The vote of the holders of at least
35% in principal amount of the Rollover Notes
will be required to accelerate the Rollover
Notes upon an Event of Default and the vote
of the holders of at least a majority in
principal amount of the Rollover Notes will
be required to rescind such acceleration.
REGISTRATION RIGHTS: The holders of the Rollover Notes and the
Warrants will be entitled to customary
exchange offer and other registration rights
<PAGE>
to permit resale by the holders of Rollover
Notes and Warrants without restriction under
applicable securities laws. Failure to comply
with the registration rights will result in
the Company being required to pay liquidated
damages for any period of time that the
registration rights are not complied with
(such damages to be payable in the form of
additional Rollover Notes if the interest
rate thereon at such time exceeds the
applicable cash interest cap). In addition,
subject to certain exceptions, holders of the
Rollover Loans will have the right to
piggyback in the registration of any debt
securities which are registered by the
Company unless all of the Rollover Notes will
be repaid from the proceeds of such
registered offering.
<PAGE>
EXHIBIT C
SUMMARY OF TERMS FOR BRIDGE LOAN AGREEMENT
------------------------------------------
CAPITALIZED TERMS USED BUT NOT DEFINED HEREIN HAVE THE MEANING
GIVEN TO SUCH TERM IN THE COMMITMENT LETTER TO WHICH THIS EXHIBIT C IS ATTACHED
AND OF WHICH IT FORMS A PART.
(a) Those terms, covenants and
events of default specified in
Exhibit A to the Commitment
Letter to which this Exhibit C
is attached and incorporated by
reference herein, as well as
other provisions customary in
such agreements, on terms not
inconsistent with the
Commitment Letter and modified
as appropriate to reflect the
terms of the Transactions and
the financial condition and
prospects of the Company and
its subsidiaries.
(b) Provisions pursuant to
which the Borrower (and any
guarantor of the Loan) shall
undertake to use its best
efforts to file a registration
statement under the Securities
Act of 1933, as amended, (the
"Securities Act") or prepare an
offering memorandum covering
the Debt Securities to be
issued by the Borrower in a
public offering or, at the
Bridge Lender's option, a
private placement (the "Debt
Offering"), to refinance in
full the Loan and consummate
such Debt Offering as soon as
possible thereafter in an
amount sufficient to refinance
all amounts outstanding under
the Bridge Loan Agreement. Such
Debt Offering shall be on such
terms and conditions as may be
acceptable to UBS Securities
and the Borrower, provided
that, in consultation with the
Company, UBS Securities may
determine the pricing (interest
rate and yield and, based on
market standards, redemption
prices for optional redemptions
and premiums for change of
control offers) of the Debt
Offering, in light of
prevailing circumstances and
market conditions and the
financial condition and
prospects of the Company and
its subsidiaries; provided that
the yield on the Debt
Securities shall in no event
<PAGE>
exceed 15% per annum. The
indenture for the Debt
Securities will be
substantially in the form of
UBS Securities' standard
indenture for high yield debt
securities, modified as
appropriate to reflect the
terms of this transaction and
the financial condition and
prospects of the Company and
its subsidiaries, and in form
and substance reasonably
satisfactory to the Bridge
Lender and the Company. If any
Debt Securities are issued in a
transaction not registered
under the Securities Act to
effect the refinancing of the
Loan, all such Debt Securities
shall be entitled to the
benefit of a registration
rights agreement to be entered
into by the Borrower (and any
guarantor of the Debt
Securities) which will be
substantially in the form of
UBS Securities' registration
rights agreement for high yield
debt securities modified as
appropriate to reflect the
terms of this transaction and
the financial condition and
prospects of the Company and
its subsidiaries and in form
and substance reasonably
satisfactory to UBS Securities
and the Company (which shall
include provisions for a
customary registered exchange
offer with respect to any Debt
Securities). The Borrower (and
any guarantor of the Debt
Securities) will enter into an
underwriting agreement or
securities purchase agreement
relating to the Debt Offering,
which shall be substantially in
the form of UBS Securities'
standard underwriting agreement
or securities purchase
agreement for high yield
offerings of a similar nature,
modified as appropriate to
reflect the terms of this
transaction and the financial
condition and prospects of the
Company and its subsidiaries,
and in form and substance
reasonably satisfactory to the
UBS Securities and the
Borrower. If a "qualified
independent underwriter" is
required by the National
Association of Securities
Dealers, Inc., in connection
with the sale or registration
of the Debt Securities or any
market making activities, the
Borrower will pay such
<PAGE>
underwriter's fee and agree to
indemnify such underwriter on
customary terms. Upon the
funding of the Debt Offering,
any unused commitment under the
Bridge Loan Agreement shall
terminate.
(c) Provisions pursuant to
which the Borrower shall
undertake to (i) cooperate with
the Bridge Lender and provide
the Bridge Lender with
information reasonably required
by it in connection with
refinancing the indebtedness
under the Bridge Loan Agreement
and (ii) cooperate with the
Bridge Lender in Bridge
Lender's efforts to syndicate
the Bridge Loan if requested to
do so by the Bridge Lender and
provide the Bridge Lender in a
timely manner with information
reasonably requested by it in
connection therewith and as
otherwise described ("for you")
in Section 10(v) of the
Commitment Letter.
<PAGE>
EXHIBIT D
SUMMARY OF CONDITIONS
---------------------
CAPITALIZED TERMS USED BUT NOT DEFINED HEREIN HAVE THE MEANING
GIVEN TO SUCH TERM IN THE COMMITMENT LETTER TO WHICH THIS EXHIBIT D IS ATTACHED
AND OF WHICH IT FORMS A PART.
(a) The Borrower (and any
guarantor of the Bridge Notes)
shall have entered into the
Bridge Loan Agreement with the
Bridge Lender as provided for
in Section 2 of the Commitment
Letter and all conditions
precedent thereunder to the
obligation of the Bridge Lender
to provide the Funding shall
have been satisfied.
(b) The Borrower (and any
guarantor of the Loan) shall
have used their reasonable best
efforts to file a registration
statement under the Securities
Act of 1933, as amended, (the
"Securities Act") or prepare an
offering memorandum covering
the Debt Securities to be
issued by the Borrower in a
public offering or, at the
Bridge Lender's option, a
private placement (the "Debt
Offering") and to have
consummated such Debt Offering
prior to the Funding of the
Commitment. The underwriter,
placement agent or initial
purchaser shall have been
provided a reasonable time to
market the Debt Securities
based on market conditions and
the obligations of UBS Capital,
Fenway and the Borrower under
the Engagement Letter shall
have been complied with in all
material respects. The Borrower
shall have cooperated with the
underwriter, placement agent or
initial purchaser in connection
with the marketing of the debt
securities as described hereby.
The terms for such Debt
Offering shall be on such terms
and conditions as may be
acceptable to UBS Securities
and the Borrower, provided
that, in consultation with the
Company, UBS Securities may
determine the pricing (interest
rate and yield and, based on
market standards redemption
prices for optional redemptions
and premiums for change of
control offers) of the Debt
<PAGE>
Offering, in light of
prevailing circumstances and
market conditioning and the
financial conditions and
prospect of the Company and its
subsidiaries; provided that the
yield on the Debt Securities
shall in no event exceed 15%
per annum.
(c) The Borrower shall have
executed and delivered in
escrow the Warrants in the form
attached to the Bridge Loan
Agreement.
(d) The Borrower (and any
guarantor of the Bridge Notes)
shall have executed and
delivered the Bridge Notes in
the form attached to the Bridge
Loan Agreement.
(e) The delivery, prior to the
Funding, of (i) legal opinions
in form and substance
satisfactory to the Bridge
Lender, (ii) officers'
certificates, together with the
accompanying charter documents
and corporate resolutions, in
form and substance satisfactory
to the Bridge Lender, (iii) a
certificate from the chief
financial officer of the
Borrower and, at the Investor
Group's expense, a nationally
recognized appraisal firm or
valuation consultant
satisfactory to the Bridge
Lender in form and substance
satisfactory to the Bridge
Lender with respect to the
solvency of the Borrower,
individually or together with
its subsidiaries taken as a
whole, immediately after the
Funding and (iv) other Funding
documents customary for such
agreements or reasonably
requested by the Bridge Lender.
(f) There shall not have
occurred or become known (i)
any material adverse change in
the business, assets,
liabilities (contingent or
otherwise), operations,
condition (financial or
otherwise), solvency,
properties, prospects or
material agreements of the
Borrower together with its
subsidiaries taken as a whole,
in each case since the date of
the last audited financial
statements of the Borrower, as
the case may be (and before and
<PAGE>
after giving effect to the
Transactions), or (ii) after
the date hereof, any dividend
or distribution of any kind
declared or paid by the
Borrower on its capital stock.
(g) No material adverse change
shall have occurred in the loan
syndication or financial,
banking, or capital markets
from those in effect on the
date hereof that, individually
or in the aggregate, in the
judgment of the Bridge Lender
could reasonably be expected to
adversely affect the ability of
the Bridge Lender to
successfully syndicate the
commitment hereunder or to sell
or place the Debt Securities.
No banking moratorium shall
have been declared by federal
or New York State banking
authorities.
(h) There shall not exist any
threatened or pending action,
proceeding or counterclaim by
or before any court or
governmental, administrative or
regulatory agency or authority,
domestic or foreign, (i)
challenging the consummation of
the Transactions individually
or in the aggregate or the Debt
Offering or any other
transaction contemplated
hereunder, (ii) seeking to
prohibit the ownership or
operation by the Borrower or
any of its subsidiaries of all
or a material portion of any of
its businesses or assets (after
giving effect to the
Transactions), or (iii) seeking
to obtain, or having resulted
in the entry of, any judgment,
order or injunction that (A)
would restrain, prohibit or
impose adverse conditions on
the ability of the Bridge
Lender to make the Loan, (B)
could be reasonably expected to
have a material adverse effect
on the business, assets,
liabilities (contingent or
otherwise), operations,
condition (financial or
otherwise), solvency,
properties, prospects or
material agreements of Borrower
individually or together with
its subsidiaries taken as a
whole, (C) could reasonably be
expected to affect the
legality, validity or
enforceability of the Bridge
Loan Agreement, the Bridge
Notes, the Debt Securities, the
Debt Offering or any documents
<PAGE>
relating thereto or, (D) could
reasonably be expected to
impair the ability of the
Bridge Lender to sell Debt
Securities as contemplated by
the Debt Offering.
(i) The Bridge Lender shall be
satisfied (in its reasonable
judgment) with the proposed and
actual capitalization,
corporate and organizational
structure of the Borrower and
its subsidiaries (after giving
effect to the Transactions),
including as to direct and
indirect ownership and as to
the terms of the indebtedness
and capital stock of the
Borrower and its subsidiaries.
(j) The Borrower shall have
available and delivered to the
extent required by the Bridge
Lender (a) audited and
unaudited historical financial
statements (including unaudited
pro forma financial statements)
of the Borrower and its
subsidiaries acceptable to the
Bridge Lender and as required
by the Securities Act for
registration statements filed
thereunder, including without
limitation, audited financial
statements of the Borrower, and
its subsidiaries and any
guarantors for the three most
recent preceding fiscal years,
and unaudited financial
statements for quarterly and
monthly periods ended at least
45 days prior to the Funding
Date together with, for each
fiscal year, an unqualified
report thereon by Ernst & Young
or such other independent
accounting firm acceptable to
the Bridge Lender, (b) pro
forma financial statements
prepared on a basis consistent
with the historical financial
statements referred to in
clause (a) above, which shall
give effect to the Transactions
and shall comply with
Regulation S-X of the
Securities Act applicable to
registration statements and (c)
all other non-financial
information reasonably
requested by, and acceptable
to, the Bridge Lender or as
required by the Securities Act
of 1933, as amended or by the
rules and regulations
thereunder for registration
statements.
<PAGE>
(k) No event shall have
occurred and be continuing or
would result from the Loan or
the Transactions, or from the
application of the proceeds
therefrom, that shall
constitute a default under the
Bridge Loan Agreement, the
Credit Facility or any other
indebtedness of the Borrower
(other than indebtedness that
will be satisfied in full at
the Funding).
(l) Any defaults in any
material agreements of the
Borrower that may result from
the Transactions have been
resolved or otherwise dealt
with in a manner acceptable to
the Bridge Lender, and all
requisite material governmental
and third party consents and
approvals necessary in
connection with the
Transactions and the financing
thereof, including the Loan,
shall have been obtained
(without the imposition of any
conditions that are not
acceptable to the Bridge
Lender) and shall remain in
effect; all applicable waiting
periods shall have expired
without any action being taken
by any competent authority; and
no law or regulation shall be
applicable that restrains,
prevents or imposes materially
adverse conditions upon any
material component of the
Transactions or the financing
thereof, including the Loan.
(m) The agreement or agreements
(collectively, the "Acquisition
Agreement") pursuant to which
the Acquisition is to be
consummated and all other
documentation and agreements
related to the Transactions
(including the agreements
pursuant to which the Company
will acquire the U.K Foreign
Affiliate) or which, in the
judgment of the Bridge Lender,
affects the Loan in any
respect, including any stock
subscription and financing or
refinancing agreements, shall
be in form and substance
reasonably satisfactory to the
Bridge Lender; and all
conditions precedent under all
documentation to the
consummation of the
Transactions or the financing
or refinancing thereof as the
case may be shall have been
satisfied in all material
<PAGE>
respects (except to the extent
such conditions have been
waived with the prior consent
of the Bridge Lender).
(n) The Borrower shall have
entered into the Credit
Facility with one or more
financial institutions pursuant
to agreements, and terms and
conditions thereunder, in form
and substance reasonably
satisfactory to the Bridge
Lender and all conditions to
borrowings under the Credit
Facility shall have been
satisfied and pursuant to the
Credit Facility the Borrower
shall have received the term
loans, letter of credit and
initial advance under the
revolving credit facility
provided therein in amounts
satisfactory to the Bridge
Lender.
(o) The Borrower shall have
received the Equity Financing
in amounts and pursuant to
agreements, and terms and
conditions thereunder, in form
and substance satisfactory to
the Bridge Lender.
(p) The Acquisition shall
have been consummated
concurrently with the Funding.
(q) All accrued fees and
expenses (including the
reasonable fees and expenses of
counsel to the Bridge Lender)
of the Bridge Lender in
connection herewith the Fee
Letter and the Bridge Loan
Agreement shall have been, to
the extent required to be paid
by you or the Borrower as of
the Funding under the Fee
Letter or the Bridge Loan
Agreement, paid.
(t) Since the date hereof,
other than in connection with
the Transactions, neither the
Borrower nor any of its
subsidiaries shall have
offered, placed or sold
directly or indirectly by
private or public offering or
offerings any securities that
would, in the reasonable
judgment of the Bridge Lender,
impair the ability of the
Bridge Lender to sell the Debt
Securities as contemplated by
the Debt Offering or the
ability of the Bridge Lender to
<PAGE>
syndicate the Loan on terms
acceptable to the Bridge
Lender.
(u) The Borrower shall have
complied with the obligations
set forth for the Borrower
under the Engagement Letter.
<PAGE>
EXHIBIT E
CAPITALIZED TERMS USED BUT NOT DEFINED HEREIN HAVE THE MEANING
GIVEN TO SUCH TERM IN THE COMMITMENT LETTER TO WHICH THIS EXHIBIT E IS ATTACHED
AND OF WHICH IT FORMS A PART.
In connection with the engagement of UBS to assist us with the
bridge loan and related transactions as described in the bridge loan commitment
letter dated August 6, 1997 as amended or modified from time to time (the
"commitment letter") to which this Exhibit E is attached and related activities
prior to and after such date, UBS Capital and Fenway (the "Indemnitors") jointly
and severally agree to indemnify and hold harmless UBS and its affiliates, and
any director, officer, agent or employee of UBS or any of its affiliates and
each other person, if any, controlling UBS or any of its affiliates (UBS and
each such entity or person is referred to as an "indemnified person"), to the
full extent lawful, from and against (and that such indemnified persons shall
have no liability to the Indemnitors or its owners, parents, creditors or
security holders for) any losses, expenses, claims, damages, judgments,
assessments or other liabilities whether or not such claim, action or proceeding
is initiated or brought by or on behalf of the Indemnitors and whether or not
any liability results (collectively referred to as "losses"), and the
Indemnitors will reimburse each indemnified person for all reasonable fees and
expenses including the fees and expenses of counsel (collectively referred to as
"expenses") as they are incurred in investigating, preparing, pursuing or
defending any claim, action, proceeding or investigation, whether or not in
connection with any pending or threatened litigation and whether or not any
indemnified person is a party thereto (collectively referred to as "actions"),
related to, caused by or arising out of (A) the Transactions or any transaction
contemplated by the commitment letter, the Bridge Loan Agreement, the Bridge
Notes or related documents (collectively, the "Loan Documents") or the
execution, delivery or performance of the Loan Documents or any other document
in any way relating to the Loan and the other transactions contemplated by the
Loan Documents or the engagement of UBS pursuant to, and the performance by UBS
or its affiliates of the services contemplated by, the commitment letter, (B)
any untrue statement or alleged untrue statement of a material fact contained in
any oral or written information provided or made available by any Indemnitor or
any of its employees or other agents, which any Indemnitor or any indemnified
person provides to any actual or potential buyers, lenders, sellers, investors,
shareholders or offerees, or any omission or alleged omission to state therein a
material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, or (C) any other
action or failure to act by any Indemnitor or any of its employees or other
agents or by any indemnified person at the request of any Indemnitor or with any
Indemnitor's consent, except that clause (A) and (C)shall not apply with respect
to (i) any indemnified person as to any losses that are finally judicially
determined to have resulted from such indemnified person's bad faith, gross
negligence or material breach of any relevant agreement in favor of an
Indemnitor, (ii) any expenses which, by negative implication, are excluded from
coverage under the Commitment Letter or the Term Sheets attached thereto or
<PAGE>
(iii) were incurred in connection with claims by any Indemnitor against any
indemnified person which have been finally judicially determined in favor of
such Indemnitor.
Upon receipt of actual notice of an action against any
indemnified person with respect to which indemnity may be sought hereunder, such
indemnified person promptly will notify any Indemnitor in writing, provided that
the failure so to notify any such Indemnitor will not relieve any Indemnitor
from any liability that such Indemnitor may have on account of this indemnity or
otherwise, except to the extent any Indemnitor shall have been materially
prejudiced by such failure. The Indemnitors shall have the right to assume the
defense of any action or proceeding, with counsel reasonably satisfactory to the
indemnified persons. Each indemnified person will have the right to employ its
own counsel in any such action, but the fees, expenses and other charges of such
counsel will be at the expense of such indemnified person unless (1) the
employment of counsel by the indemnified person has been authorized in writing
by the Indemnitors, (2) the indemnified person has reasonably concluded (based
on advice of counsel) that there may be legal defenses available to it or other
indemnified persons that are different from or in addition to those available to
the Indemnitors, (3) a conflict or potential conflict exists (based on advice of
counsel to the indemnified person) between the indemnified person and the
Indemnitors (in which case the Indemnitors will not have the right to direct the
defense of such action on behalf of the indemnified person) or (4) the
Indemnitors have not in fact employed counsel to assume the defense of such
action within a reasonable time after receiving notice of the commencement of
the action, in each of which cases the reasonable fees, disbursements and other
charges of counsel will be at the expense of the Indemnitors. In no event shall
the Indemnitors be liable for fees and expenses of more than one counsel (in
addition to any local counsel) separate from their own counsel for all
indemnified persons in connection with any one action or separate but similar or
related actions in the same jurisdiction arising out of the same general
allegations or circumstances. The Indemnitors will not, without the prior
written consent of each indemnified person affected, settle, compromise or
consent to the entry of any judgment in or otherwise seek to terminate any
pending or threatened action in respect to which indemnification or contribution
may be sought hereunder by any indemnified person (whether or not any
indemnified person is a party thereto) unless such settlement, compromise,
consent or termination (i) includes a provision unconditionally releasing each
indemnified person from and holding such indemnified person harmless against all
claims asserted against such indemnified person in such action and (ii) does not
include any statement as to or an admission of fault, culpability or a failure
to act by or on behalf of such indemnified person.
In circumstances in which any indemnified person is entitled
to indemnification as provided herein but such indemnification is for any reason
held unenforceable or insufficient in respect of any losses, each of the
Indemnitors shall, jointly and severally, contribute in such proportion as is
appropriate to reflect the relative benefits received (or anticipated to be
received) by UBS on the one hand and by the Indemnitors on the other hand from
the transactions contemplated by the commitment letter; provided, however, that
<PAGE>
the indemnified persons in the aggregate shall not be responsible for any
amounts in excess of the amount of the fees actually received by UBS pursuant to
the commitment letter. If the allocation provided by the immediately preceding
sentence is unavailable for any reason, each of the Indemnitors shall, jointly
and severally, contribute in such proportion as is appropriate to reflect not
only such relative benefits but also the relative fault of the Indemnitors on
the one hand and UBS on the other hand in connection with the statements,
omissions or other conduct that resulted in such losses, as well as any other
relevant equitable considerations. Benefits received (or anticipated to be
received) by the Indemnitors shall be deemed to be equal to the aggregate value
of the Transactions and benefits received by the indemnified persons shall be
deemed to be equal to the fees payable to UBS pursuant to the commitment letter.
Relative fault shall be determined by reference to, among other things, whether
any alleged untrue statement or omission or any other alleged conduct relates to
information provided by any of the Indemnitors or other conduct by any of the
Indemnitors or the Indemnitors' employees or other agents on the one hand or by
UBS on the other hand. The Indemnitors and UBS agree that it would not be just
and equitable if contribution were determined by pro rata allocation or by any
other method of allocation which does not take account of the equitable
considerations referred to above.
The foregoing agreement shall be in addition to any rights
that any indemnified person may have at common law or otherwise. The Indemnitors
hereby consent to personal jurisdiction, service and venue in any court in which
any claim or proceeding which is subject to this agreement is brought against
you.
Upon the execution and delivery by the Borrower of the Bridge
Loan Agreement, all obligations of the Indemnitors under this letter, including
this Exhibit E, shall terminate.
UBS Securities LLC
299 Park Avenue
New York, New York 10171
August 6, 1997
UBS Partners LLC
299 Park Avenue
New York, New York 10171
Fenway Partners Inc.
152 West 57th Street
New York, New York 10019
RE: ENGAGEMENT LETTER
-----------------
Gentlemen:
You have advised Union Bank of Switzerland, New York Branch
("UBS" or the Bridge Lender") that UBS Partners LLC ("UBS Partners") and Fenway
Partners, Inc. ("Fenway") and certain members of management of Xpedite Systems,
Inc. (the "Company" or the "Borrower") and other persons identified by UBS
Partners to UBS (together with UBS Partners and Fenway, the "Investor Group")
propose to acquire the Company through a merger with a newly formed entity owned
and controlled by UBS Partners and Fenway, and to cause the Company,
simultaneously with the consummation of such merger, to acquire all of the
issued and outstanding capital stock of Xpedite Systems, Limited (together with
Xpedite Systems S.A. and Xpedite Systems GmbH, the "Foreign Affiliates") (such
merger and acquisitions, the "Acquisition"). As part of the financing of the
Acquisition, the repayment of certain indebtedness of the Company and the
Foreign Affiliates and the payment of fees and expenses incurred in connection
with the transactions contemplated hereby ("Acquisition Purposes"), the Investor
Group will provide to the Company equity financing (the "Equity Financing") and
the Company will arrange up to $130,000,000 in a senior secured credit facility
(the "Credit Facility"), which will be provided to the Company and a U.K.
subsidiary thereof. For the purposes of this letter, the terms "you" and "your"
mean and refer to UBS Partners and Fenway, severally in accordance with their
respective equity commitments in the acquisition vehicle.
All capitalized terms not otherwise defined herein shall have
the meaning ascribed to such term in the Commitment Letter (as hereinafter
defined).
By separate letter agreement (the "Commitment Letter"), the
Bridge Lender has committed to provide to the Company the Loan in the amount of
$150 million to be used to finance in part the Acquisition.
<PAGE>
In the event that the Loan is drawn down, the Borrower has
agreed in the Commitment Letter to take certain actions as required therein in
order to attempt to effect the refinancing thereof as soon as possible after the
drawdown by effecting a public offering or private placement (the "Bridge
Refinancing") of senior subordinated debt securities (the "Refinancing
Securities") in an amount sufficient to refinance in full all amounts
outstanding under the financing agreement between Borrower and the Bridge Lender
(the "Bridge Loan Agreement").
Notwithstanding the terms of the Commitment Letter, the
parties hereby agree that it is their intention to consummate an offering of
$150 million of senior subordinated notes (the "Debt Securities") in a public
offering or private placement transaction (the "Debt Offering") as expeditiously
as possible after the date hereof to finance in part the Acquisition and that it
is not intended that the Loan be drawn down unless the Debt Offering cannot be
completed prior to the closing of the Acquisition.
UBS Securities is pleased to act as set forth below in
connection with the Transactions, the Debt Offering, and the Bridge Refinancing
on the terms and conditions set forth herein. This agreement is to confirm our
understanding with respect to our engagement.
Please note that UBS Securities is a full service securities
firm engaged in securities trading and brokerage activities, as well as
providing investment banking and financial advisory services. In the ordinary
course of its trading and brokerage activities, UBS Securities or its affiliates
at any time may hold long or short positions, and may trade or otherwise effect
transactions, for its account or the accounts of customers, in debt or equity
securities of the Company or other entities that may be involved in the
Transactions.
1. RETENTION. Subject to the provisions set forth in this
agreement, you hereby retain UBS Securities to act as set forth below in
connection with the Transactions, the Debt Offering and the Bridge Refinancing:
A. advising and acting as sole underwriter, sole placement agent or
sole initial purchaser (together with any "qualified independent
underwriter" selected by UBS Securities and reasonably acceptable to
you if required) in connection with the issuance of the Debt
Securities to be issued in the Debt Offering or the Refinancing
Securities to be issued in any Bridge Refinancing to the extent the
proceeds thereof will be used to finance in part the Acquisition or
effect the Bridge Refinancing, as the case may be.
B. providing advisory services related to arranging a bridge financing
as a contingent financing alternative in case the Debt Offering is not
consummated on a timely basis.
C. rendering such other financial advisory and investment banking
services as we may mutually agree.
Notwithstanding anything contained herein to the contrary, UBS
Securities shall have the right (but not the obligation) to be the sole
<PAGE>
underwriter, sole placement agent or sole initial purchaser (together with any
"qualified independent underwriter" selected by UBS Securities and reasonably
acceptable to you if required) with respect to the underwriting or placement of
any debt securities issued in connection with the Transactions or the Bridge
Refinancing. Notwithstanding anything herein to the contrary, this agreement is
not intended to and does not create any commitment by or on behalf of UBS
Securities to act as underwriter, initial purchaser or placement agent in
connection with any offering or sale of debt securities; it being agreed that no
obligation of UBS Securities shall exist with respect to underwriting or
participating in any offering of debt securities, unless and until UBS
Securities and the Borrower shall have entered into UBS Securities' customary
underwriting or securities purchase agreement or dealer manager agreement, as
the case may be, and other customary documentation with respect thereto, and
then only in accordance with such documentation.
In its capacities under this Engagement Letter, UBS Securities
shall act as an independent contractor, and any duties of UBS Securities arising
out of its engagement pursuant to this agreement shall be owed solely to the
Borrower.
2. COMPENSATION. Subject to Section 1, you agree to pay, or
cause to be paid, to UBS Securities all of the fees set forth in the Fee Letter.
3. DEBT OFFERING AND BRIDGE REFINANCING. In connection with
the Debt Offering and/or the Bridge Refinancing, you agree (consistent with your
obligations under applicable law) to (i) cooperate with UBS Securities and
provide UBS Securities with information (including projections) possessed by you
reasonably required by it in connection with the Debt Offering or Bridge
Refinancing, (ii) assist UBS Securities in connection with the marketing of the
Debt Securities or Refinancing Securities pursuant to the Debt Offering or
Bridge Refinancing, including making available senior management of the Borrower
(as determined by the UBS Securities) for investor meetings and (iii) provide
UBS Securities with a reasonable time to market any such Debt Securities or
Refinancing Securities based on market conditions at such time. If UBS
Securities determines that conducting the Debt Offering or Bridge Refinancing
pursuant to a registered public offering is appropriate, the Investor Group
shall cause the Company to use its reasonable best efforts to file a
registration statement under the Securities Act of 1933 (the "Securities Act")
relating to the Debt Securities or Refinancing Securities containing such
disclosures as required by applicable law and to use its reasonable best efforts
to cause such registration statement to become effective under the Securities
Act as soon as possible. If the Debt Securities or Refinancing Securities are to
be sold in a private placement (as determined by UBS Securities), including any
transaction under Rule 144A under the Securities Act, the Investor Group will
use its reasonable best efforts, the Company to (i) prepare as soon as possible
an offering memorandum relating to the Debt Securities or Bridge Refinancing and
containing such disclosures as may be required under the Securities Act and
other applicable laws and such other disclosures as are customary and
appropriate for such a document. The parties hereto agree that the Debt Offering
and the Bridge Refinancing will be on such terms and conditions as set forth in
the Commitment Letter. The indenture for the Debt Securities or Refinancing
Securities will be substantially in the form of UBS Securities' standard
indenture for high yield debt securities, modified as appropriate to reflect the
terms of this transaction and the financial condition and prospects of the
<PAGE>
Company and its subsidiaries, and in form and substance reasonably satisfactory
to UBS Securities and the Company. If any Debt Securities or Refinancing
Securities are issued in a transaction not registered under the Securities Act,
all such Debt Securities or Refinancing Securities shall be entitled to the
benefit of a registration rights agreement to be entered into by the Company
(and any guarantor of the Debt Securities) which will be substantially in the
form of UBS Securities' standard registration rights agreement for high yield
debt securities, modified as appropriate to reflect the terms of this
transaction and the financial condition and prospects of the Company and its
subsidiaries, and in form and substance reasonably satisfactory to UBS
Securities and the Company (which shall include provisions for a customary
registered exchange offer with respect to any Debt Securities). The Company (and
any guarantor of the Debt Securities) will enter into an underwriting agreement
or securities purchase agreement relating to the Debt Offering or Bridge
Refinancing, which shall be substantially in the form of UBS Securities'
standard underwriting agreement or securities purchase agreement for high yield
offerings of a similar nature, modified as appropriate to reflect the terms of
this transaction and the financial condition and prospects of the Company and
its subsidiaries, and in form and substance reasonably satisfactory to UBS
Securities and the Company. The Investor Group will cause the Company to use its
reasonable best efforts to comply with the terms of any securities purchase
agreement so as to issue and sell the Debt Securities on or prior to the date of
the closing of the Acquisition.
Indemnification and Contribution. UBS Capital and Fenway
agree to indemnify UBS Securities and certain other persons referred to in
Exhibit A, in accordance with the terms and provisions set forth in such Exhibit
A, which terms and conditions are incorporated herein and made a part hereof.
5. TERMINATION. UBS Securities' engagement hereunder shall
terminate upon the issuance of the Debt Securities in connection with the Debt
Offering or, if any Loan is made in connection with the Bridge Refinancing, the
issuance of the Refinancing Securities, as the case may be, unless extended in
writing by the parties hereto or earlier upon mutual consent in writing.
Notwithstanding any termination of UBS Securities' engagement hereunder, you
shall remain liable for the payment and performance of, subject to the automatic
termination from provisions of Section 4 hereof, your obligations to UBS
Securities hereunder, including without limitation, the payment of all fees and
expenses payable to UBS Securities, as the case may be, pursuant to Section 2 of
this agreement. In addition, Sections 4, 5, 6, 9, 10, 12, 13 and 14 of this
agreement and the provisions relating to the status of UBS Securities as an
independent contractor shall also remain in effect notwithstanding any
termination.
6. USE OF NAME. You agree that, except as required by
applicable law, any reference to UBS Securities in any offering circulars or any
other document prepared in connection with any activity described herein, or in
any press release or other document or communication, is subject to the prior
approval of UBS Securities.
7. PUBLIC ANNOUNCEMENTS. You acknowledge that UBS Securities
may, at its option and expense and after the closing of the Acquisition, place
an announcement in such newspapers and periodicals as UBS Securities may choose,
stating that it has acted in the capacity set forth in this agreement.
<PAGE>
8. NOTICES. Any notice given pursuant to any of the
provisions of this agreement shall be in writing and shall be mailed or
delivered, if to you, at your address set forth on page one of this agreement to
the attention of Mr. Marc Unger and Mr. Russell Steenberg, respectively with a
copy to Robert S. Finley, Esq., at Clifford Chance, One New York Plaza, New
York, New York 10004 and, if to UBS Securities, at the offices of UBS Securities
LLC, 299 Park Avenue, New York, New York 10171 Attention: Nicholas P. Daifotis,
with a copy to Valerie Ford Jacob, Esq., at Fried, Frank, Harris, Shriver &
Jacobson, One New York Plaza, New York, New York 10004.
9. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK (WITHOUT REGARD
TO PRINCIPLES OF CONFLICTS OF LAWS).
10. ASSIGNMENT. This letter shall not be assignable by any
party hereto without the prior written consent of each other party hereto, and
any such attempted assignment shall be void and of no effect; provided, however,
that nothing contained in this Section shall prohibit UBS Securities from
performing any of its duties hereunder through any of its affiliates and you
will owe any related duties hereunder to any such affiliate. Except as
contemplated by Section 4 and Exhibit A, this letter is intended to be solely
for the benefit of the parties hereto and is not intended to confer any benefits
upon, or create any rights in favor of, any person other than the parties
hereto. UBS Securities agrees that UBS Capital and Fenway may at any time assign
any and all of their rights and delegate their obligations hereunder and (with
respect to UBS Securities only) under the Fee Letter to the Borrower (including
without limitation obligations with respect to indemnification and payment of
fees and expenses), provided that UBS Securities shall have received the
Borrower's written acceptance and assumption thereof in a form reasonably
acceptable to UBS Securities and thereafter UBS Capital and Fenway will
automatically and with no further action on either of their parts or on the part
of UBS Securities be fully released from any liability hereunder and (with
respect to UBS Securities only) under the Fee Letter.
11. EXECUTION IN COUNTERPARTS. This letter may be executed in
any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same agreement.
Delivery of an executed counterpart of this letter by telecopier shall be
effective as delivery of a manually executed counterpart of this letter.
12. AMENDMENTS, ETC. No amendment or waiver of any provision
of this letter, nor any consent or approval to any departure therefrom, shall in
any event be effective unless the same shall be in writing and signed by the
parties hereto and then any such waiver, consent or approval shall be effective
only in the specific instance and for the specific purpose for which given.
13 CONFIDENTIALITY. You agree that this letter and UBS
Securities' activities pursuant hereto are confidential and shall not be
<PAGE>
disclosed by you to any person without the prior written consent of UBS
Securities and any such affiliates other than your officers, directors,
employees, accountants, attorneys and other advisors, and then any in connection
with the Transactions and on a confidential and need-to-know basis, except that
you may make such other public disclosures of the terms and conditions hereof as
you are required by applicable law or compulsory legal process to make;
provided, however, that if such disclosure is required by applicable law or
compulsory legal process you agree to give UBS Securities or any of its
affiliates reasonable notice to afford UBS Securities or any of its affiliates
the opportunity to seek a protective order and to cooperate with UBS Securities.
You agree that you will permit UBS Securities or any of its affiliates to review
and approve any reference to UBS Securities or any of its affiliates in
connection with the Transactions contemplated hereby contained in any press
release or similar public disclosure prior to public release.
14. WAIVER OF JURY TRIAL. Each of you and UBS Securities (in
each case on its own behalf and, to the extent permitted by applicable law, on
behalf of its shareholders) waives all right to trial by jury in any action,
proceeding or counterclaim (whether based upon contract, tort or otherwise)
related to or arising out of the Transactions, the Debt Offering, the Bridge
Refinancing, or the other transactions contemplated by this letter, or the
performance by UBS Securities or any of its affiliates of the services
contemplated by this letter.
15. This Engagement Letter supersedes the Engagement Letter,
dated July 3, 1997, entered into among the parties hereto.
<PAGE>
Please confirm that the foregoing correctly sets forth our
agreement by signing and returning to UBS Securities the duplicate copy of the
agreement enclosed herewith.
Yours truly,
UBS SECURITIES LLC
/s/ Nicholas Daifotis
By:-----------------------------------
Name: Nicholas Daifotis
Title: Managing Director
Accepted and agreed to as
of the date set forth above:
UBS PARTNERS LLC
/s/ Michael Greene
By:------------------------------
Name: Michael Greene
Title: Managing Director
/s/ James A. Breckenridge
By:-------------------------------
Name: James A. Breckenridge
Title: Vice Presisdent
FENWAY PARTNERS, INC.
/s/ Russell W. Steenberg
By:-------------------------------
Name: Russell W. Steenberg
Title: Managing Director
<PAGE>
EXHIBIT A
Capitalized terms used but not defined herein have the
meaning given to such term in the Engagement Letter to which this Exhibit A is
attached and of which it forms a part.
In connection with the engagement of UBS Securities to assist
us with the Debt Offering and/or Bridge Refinancing and related transactions as
described in the engagement letter dated August 6, 1997 as amended or modified
from time to time (the "engagement letter") to which this Exhibit A is attached
and related activities prior to and after such date, UBS Capital and Fenway (the
"Indemnitors") jointly and severally agree to indemnify and hold harmless UBS
Securities and its affiliates, and any director, officer, agent or employee of
UBS Securities or any of its affiliates and each other person, if any,
controlling UBS Securities or any of its affiliates (UBS Securities and each
such entity or person is referred to as an "indemnified person"), to the full
extent lawful, from and against, (and that such indemnified persons shall have
no liability to the Indemnitors or its owners, parents, creditors or security
holders for), any losses, expenses, claims, damages, judgments, assessments or
other liabilities whether or not such claim, action or proceeding is initiated
or brought by or on behalf of the Indemnitors and whether or not any liability
results (collectively referred to as "losses"), and the Indemnitors will
reimburse each indemnified person for all reasonable fees and expenses including
the fees and expenses of counsel (collectively referred to as "expenses") as
they are incurred in investigating, preparing, pursuing or defending any claim,
action, proceeding or investigation, whether or not in connection with any
pending or threatened litigation and whether or not any indemnified person is a
party thereto (collectively referred to as "actions"), related to, caused by or
arising out of (A) the Transactions or any transaction contemplated by the
engagement letter, the Debt Securities, the Debt Financing, the Refinancing
Securities, the Bridge Refinancing or related documents (collectively, the
"Documents") or the execution, delivery or performance of the Documents or any
other document in any way relating to the Debt Securities or the Refinancing
Securities and the other transactions contemplated by the Documents or the
engagement of UBS Securities pursuant to, and the performance by UBS or its
affiliates of the services contemplated by, the engagement letter, (B) any
untrue statement or alleged untrue statement of a material fact contained in any
oral or written information provided or made available by any Indemnitor or any
of its employees or other agents, which any Indemnitor or any indemnified person
provides to any actual or potential buyers, lenders, sellers, investors,
shareholders or offerees in connection with the Debt Financing or the Bridge
Refinancing, or any omission or alleged omission to state therein a material
fact necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading, or (C) any other action or failure
to act by any Indemnitor or any of its employees or other agents or by any
indemnified person at the request of any Indemnitor or with any Indemnitor's
consent, except that clause (A) and (C) shall not apply with respect to (i) any
indemnified person as to any losses that are finally judicially determined to
have resulted from such indemnified person's bad faith, gross negligence or
material breach of any relevant agreement in favor of an Indemnitor, (ii) any
expenses which, by negative implication, are excluded from coverage under the
Commitment Letter or the Term Sheets attached thereto or (iii) were incurred in
connection with claims by any Indemnitor against any indemnified person which
have been finally judicially determined in favor of such Indemnitor.
Upon receipt of actual notice of an action against any
indemnified person with respect to which indemnity may be sought hereunder, such
indemnified person promptly will notify any Indemnitor in writing, provided that
the failure so to notify any such Indemnitor will not relieve any Indemnitor
from any liability that such Indemnitor may have on account of this indemnity or
otherwise, except to the extent any Indemnitor shall have been materially
prejudiced by such failure. The Indemnitors shall have the right to assume the
defense of any action or proceeding, with counsel reasonably satisfactory to the
indemnified persons. Each indemnified person will have the right to employ its
own counsel in any such action, but the fees, expenses and other charges of such
counsel will be at the expense of such indemnified person unless (1) the
employment of counsel by the indemnified person has been authorized in writing
by the Indemnitors, (2) the indemnified person has reasonably concluded (based
on advice of counsel) that there may be legal defenses available to it or other
indemnified persons that are different from or in addition to those available to
the Indemnitors, (3) a conflict or potential conflict exists (based on advice of
counsel to the indemnified person) between the indemnified person and the
Indemnitors (in which case the Indemnitors will not have the right to direct the
defense of such action on behalf of the indemnified person) or (4) the
Indemnitors have not in fact employed counsel to assume the defense of such
action within a reasonable time after receiving notice of the commencement of
the action, in each of which cases the reasonable fees, disbursements and other
charges of counsel will be at the expense of the Indemnitors. In no event shall
the Indemnitors be liable for fees and expenses of more than one counsel (in
addition to any local counsel) separate from their own counsel for all
indemnified persons in connection with any one action or separate but similar or
related actions in the same jurisdiction arising out of the same general
allegations or circumstances. The Indemnitors will not, without the prior
written consent of each indemnified person affected, settle, compromise or
consent to the entry of any judgment in or otherwise seek to terminate any
pending or threatened action in respect to which indemnification or contribution
may be sought hereunder by any indemnified person (whether or not any
indemnified person is a party thereto) unless such settlement, compromise,
consent or termination (i) includes a provision unconditionally releasing each
indemnified person from and holding such indemnified person harmless against all
claims asserted against such indemnified person in such action and (ii) does not
include any statement as to or an admission of fault, culpability or a failure
to act by or on behalf of such indemnified person.
In circumstances in which any indemnified person is entitled
to indemnification as provided herein but such indemnification is for any reason
held unenforceable or insufficient in respect of any losses, each of the
Indemnitors shall, jointly and severally, contribute in such proportion as is
appropriate to reflect the relative benefits received (or anticipated to be
received) by UBS Securities on the one hand and by the Indemnitors on the other
hand from the transactions contemplated by the engagement letter; provided,
however, that the indemnified persons in the aggregate shall not be responsible
for any amounts in excess of the amount of the fees actually received by UBS
Securities pursuant to the engagement letter. If the allocation provided by the
immediately preceding sentence is unavailable for any reason, each of the
Indemnitors shall, jointly and severally, contribute in such proportion as is
appropriate to reflect not only such relative benefits but also the relative
fault of the Indemnitors on the one hand and UBS Securities on the other hand in
connection with the statements, omissions or other conduct that resulted in such
losses, as well as any other relevant equitable considerations. Benefits
received (or anticipated to be received) by the Indemnitors shall be deemed to
be equal to the aggregate value of the Transactions including the principal
amount of any Debt Offering or Bridge Refinancing, and benefits received by the
indemnified persons shall be deemed to be equal to the fees payable to UBS
Securities pursuant to the engagement letter. Relative fault shall be determined
by reference to, among other things, whether any alleged untrue statement or
omission or any other alleged conduct relates to information provided by any of
the Indemnitors or other conduct by any of the Indemnitors or the Indemnitors'
employees or other agents on the one hand or by UBS Securities on the other
hand. The Indemnitors and UBS Securities agree that it would not be just and
equitable if contribution were determined by pro rata allocation or by any other
method of allocation which does not take account of the equitable considerations
referred to above.
The foregoing agreement shall be in addition to any rights
that any indemnified person may have at common law or otherwise. The Indemnitors
hereby consent to personal jurisdiction, service and venue in any court in which
any claim or proceeding which is subject to this agreement is brought against
you.
As provided in section 10 of this Agreement, all obligations
of the Indemnitors under this Engagement Letter, including this Exhibit A, may
be terminated.
July 7, 1997
Xpedite Systems, Inc.
446 Highway 35
Eatontown, NJ 07724
Gentlemen:
In connection with the offer of the undersigned and certain members of
management of Xpedite Systems, Inc. ("Xpedite") to acquire all of the capital
stock of Xpedite, Xpedite Systems Ltd. and Xpedite Systems GmbH, as described in
the offer letter (the "Offer Letter") submitted herewith (the "Proposed
Acquisition"), we are pleased to confirm that, subject to (i) execution by
Xpedite and a newly formed entity owned by the undersigned ("Newco") of a
definitive agreement and plan of merger with respect to the Proposed
Acquisition, (ii) satisfaction of all conditions to Newco's obligation to close
under such agreement and plan of merger, and (iii) the concurrent receipt by
Xpedite of debt financing in the amount and on terms no less favorable to
Xpedite than those set forth in the commitment letters from Goldman Sachs Credit
Partners L.P., Union Bank of Switzerland and UBS Securities LLC included with
the Offer Letter, the undersigned will provide, or cause to be provided, to
Xpedite equity financing in an amount sufficient to consummate the Proposed
Acquisition on the terms set forth in the Offer Letter, with each of the
undersigned to provide, or cause to be provided, 50% of such equity financing.
Very truly yours,
UBS PARTNERS LLC
By: /s/Michael Greene
----------------------------
Name: MICHAEL GREENE
Title: MANAGING DIRECTOR
By: /s/James Breckenridge
----------------------------
Name: JAMES BRECKENRIDGE
Title: VICE PRESIDENT
FENWAY PARTNERS, INC.
By: /s/Russell W. Steenberg
----------------------------
Name: RUSSELL W. STEENBERG
Title: MANAGING DIRECTOR
